Medlive Technology Co., Ltd. — Proxy Solicitation & Information Statement 2006

Dec 14, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED , you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0921)

DISCLOSEABLE TRANSACTION

13 December 2006

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“A Shares”	Domestic ordinary Shares of the Company with a	Domestic ordinary Shares of the Company with a	Domestic ordinary Shares of the Company with a
	nominal value of RMB1.00 each and are listed on the
	Shenzhen Stock Exchange
“Board”	The board of Directors
“Company”	Guangdong Kelon Electrical Holdings Company Limited,
	a company incorporated in the PRC with limited liability
	and listed on the main board of the Stock		Exchange and
	Shenzhen Stock Exchange
“Directors”	The directors of the Company
“Group”	The Company and its Subsidiaries
“H Shares”	Overseas listed foreign shares of the Company with a
	nominal value of RMB1.00 each and are listed on the
	Stock Exchange
“Hong Kong”	The Hong Kong Special Administrative	Region of the
	PRC
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“Land”	A piece of land located at East of Waihuan	Road, Ronggui
	Gaoli Community Residents’ Committee, Shunde
	District, Foshan District, the People’s Republic of China
	( ) with an area of 133,334.05 m2 (document no. Shun Fu Guo Yong
	(2004) No. 1001950)
“Land Disposal”	The disposal of the land use rights of the	Land from the
	Company to the Purchaser pursuant to	the Land Use
	Rights Transfer Agreement
“Land Use Rights Transfer	The land use right transfer agreement dated 18 November
Agreement”	2006 entered between the Company and the Purchaser to
	transfer the land use rights of the Land
“Latest Practicable Date”	12 December 2006, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information in this circular

– 1 –

DEFINITIONS

“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC” “Purchaser”	The People’s Republic of China (Foshan City Shunde
	District Zhao Chuang Real Estate Limited), a company
	incorporated in the PRC with limited liability
“RMB”	Renminbi yuan, the lawful currency of the PRC
“SFO”	The Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong) as amended from time to time
“Share(s)”	Share(s) of RMB1.00 each in the capital of the Company,
	comprising the A Shares and the H Shares
“Shareholder(s)”	Holders of the Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiary” or “Subsidiaries”	Has the meaning defined in sections 2 and 2B of the
	Companies Ordinance (Cap. 32 of the Laws of Hong
	Kong)
“%”	Per cent.

– 2 –

LETTER FROM THE BOARD

GUANGDONG KELON ELECTRICAL HOLDINGS COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 0921)

Executive Directors: Mr. Tang Ye Guo Ms. Yu Shu Min Mr. Xiao Jian Lin Mr. Lin Lan

Independent non-executive Directors: Mr. Zhang Sheng Ping Mr. Lu Qing Mr. Cheung Yui Kai, Warren

Registered office: No. 8 Ronggang Road Ronggui Street Shunde District Foshan City Guangdong Province China

Principal place of business in Hong Kong: Room 2502-2505, Harbour Centre 25 Harbour Road Wanchai Hong Kong

13 December 2006

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

INTRODUCTION

The Board is pleased to announce that on 18 November 2006, the Company entered into a Land Use Rights Transfer Agreement with the Purchaser to dispose of its interests in the Land to the Purchaser for a consideration of RMB127,207,347.72, at approximately RMB954.0499 for each sq.m.

Since the consideration ratio of the Land Disposal is more than 5% but less than 25 % and each of the other applicable percentage ratios as defined in Chapter 14 of the Listing Rules is less than 25%, the Land Disposal constitutes a discloseable transaction of the Company which is subject to the notification and announcement requirements under Rules 14.34 to 14.39 of the Listing Rules.

The purpose of this circular is to provide you with details of the Land Use Rights Transfer Agreement and other information under the Listing Rules.

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LETTER FROM THE BOARD

THE LAND USE RIGHTS TRANSFER AGREEMENT

Date

18 November 2006

Parties

• (1) The Company, as the vendor; and

• (2) the Purchaser, as the purchaser

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Purchaser and the ultimate beneficial owner of the Purchaser are third parties independent of the Company and connected parties (as defined in the Listing Rules) of the Company.

Interest to be transferred

Pursuant to the Land Use Rights Transfer Agreement, the Company has agreed to sell and the Purchaser has agreed to acquire the land use rights of the Land.

Consideration

The consideration for the Land Disposal is RMB127,207,347.72 (at approximately RMB954.0499 for each sq.m.) and is payable by the Purchaser in the following manners:

• (1) The sum of RMB15,000,000 was paid by the Purchaser to the Company as deposit on the date of signing of the Land Use Rights Transfer Agreement, i.e. 18 November 2006;

• (2) The sum of RMB86,765,878.18 to be paid by the Purchaser to the Company within 30 days from the date of signing of the Land Use Rights Transfer Agreement, i.e. on or before 18 December 2006; and

• (3) The sum of RMB25,441,469.54 to be paid by the Purchaser to the Company on the date for the completion for the transfer of the land use rights of the Land.

The Land Disposal is carried out by way of public auction conducted by the Company at a bottom price of RMB90,670,000, being the appraised value of the Land appraised by Guangdong Xin De Real Estate and Land Assets Appraisal Co., Ltd on 27 September 2006. The Purchaser was the highest bidder in the public auction of the Land.

The Land was mortgaged to Bank of China Foshan Branch and Bank of China Foshan Shunde Ronggui Sub-branch and the Land Disposal is subject to the consent of the mortgagee of the Land. The Company is in the course of obtaining consent from the mortgagee.

– 4 –

LETTER FROM THE BOARD

INFORMATION OF THE LAND

The Land has a total area of 133,334.05 m[2] and is located at East of Waihuan Road, Ronggui Gaoli Community Residents’ Committee, Shunde District, Fosan District, the People’s Republic of China ( ) (document no. Shun Fu Guo Yong (2004) No. 1001950). The land was acquired by the Company in 2002. The residual term of use of the Land is 66 years and three months. The Land is for residential use and it has always been left vacant by the Company. Since the Land has always been left vacant by the Company, no net profit or loss (both before and after taxation and extraordinary items) was attributable to the Land for the two financial years immediately preceding the Land Disposal.

The depreciation of the Land for each of the financial years 2004 and 2005 was each in the respective sum of RMB1,300,898.55.

The Land was appraised by Guangdong Xin De Real Estate and Land Assets Appraisal Co., Ltd on 27 September 2006 with a value of RMB90,670,000. As at 31 July 2006, its total book value was RMB89,744,151.79 and its net book value was RMB81,259,825.3. The base land premium adjustment approach and the residual approach were adopted in appraising the Land.

When compared the net book value of the Land as at 31 July 2006, i.e.RMB81,259,825.3, with the consideration for the Land Disposal, i.e.RMB127,207,347.7, there is a premium of value of RMB45,947,522.42. After the payment of relevant taxes of the Land Disposal by the Company, the Company is expected to obtain a gain for the Land Disposal in the approximate sum of RMB36,000,000.00.

The Land is a non-core asset of the Company. Since the majority of the proceeds from the Land Disposal will be used for repayment of part of the bank loans of the Company, the Land Disposal will reduce the liability of the Company. As the Land has always been left vacant by the Company, there will not be any effect on the earnings of the Company in the future. Further, the Land Disposal will also reduce the fixed assets of the Company and since part of the proceeds from the Land Disposal will be used as working capital of the Company, it will also increase the current assets of the Company.

REASONS FOR AND BENEFITS OF THE LAND USE RIGHTS TRANSFER AGREEMENT

The Company is principally engaged in the manufacture and sales of refrigerators and air-conditioners. The Land has always been left vacant and is a non-core asset of the Company. The Land Disposal is an initiative by the Company to dispose of its non-core assets and enhance its assets structure, which will facilitate the optimal utilization of the assets of the Company.

– 5 –

LETTER FROM THE BOARD

The majority, i.e. more than 50%, of the proceeds from the Land Disposal will be used for the repayment of part of the bank loans of the Company and the remaining proceeds will be used as working capital for the Company’s production operation. However, the actual proportion of the application of the proceeds on repayment of bank loans and working capital of the Company will depend on the actual financial and operational conditions of the Company when the proceeds are received by the Company. It will help to lower the gearing ratio of the Company and further improve the operating conditions of the Company.

The Directors consider that the Land Disposal is in the interest of the Company and the Shareholders as a whole and the terms and conditions in the Land Use Rights Transfer Agreement are fair and reasonable.

INFORMATION RELATING TO THE COMPANY

The Company is principally engaged in the manufacture and sales of refrigerators and air-conditioners.

INFORMATION RELATING TO THE PURCHASER

The Company is incorporated in the PRC with limited liability and is principally engaged in property management and real estate businesses.

DISCLOSEABLE AND CONNECTED TRANSACTIONS

Since the consideration ratio of the Land Disposal is more than 5% but less than 25% and each of the other applicable percentage ratios as defined in Chapter 14 of the Listing Rules is less than 25%, the Land Disposal constitutes a discloseable transaction of the Company which is subject to the notification and announcement requirements under Rules 14.34 to 14.39 of the Listing Rules.

SUSPENSION OF TRADING IN THE H SHARES

At the request of the Company, trading in the H Shares was suspended with effect from 10:00 a.m. on 16 June 2005 pending the release of an announcement in relation to price sensitive information. Subject to the further announcements in relation to, amongst others, the financial, production and trading position of the Group, and the satisfaction by the Stock Exchange of the adequacy of the internal control measures of the Company, trading in the H Shares will remain suspended until further notice.

– 6 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is also drawn to the general information as set out in the Appendix of this circular.

Yours faithfully,

By Order of the Board of

Guangdong Kelon Electrical Holdings Company Limited Tang Ye Guo

Chairman

– 7 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in this circular misleading.

2. DISCLOSURE OF INTERESTS

Directors, supervisors and chief executive of the Company

As at the Latest Practicable Date, none of the Directors, supervisors and chief executive of the Company had interests and short positions in the Shares, underlying Shares and/or debentures (as the case may be) of the Company or any its associated corporations (within the meaning of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such Director or chief executive is taken or deemed to have under such provisions of the SFO) or which were required to be entered into the register required to be kept by the Company under section 352 of the SFO or which were otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules.

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had any interest, direct or indirect, in any asset which have been since 31 December 2005, being the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors or supervisors of the Company was materially interested in any contract or arrangement entered into by any member of the Group since 31 December 2005, being the date to which the latest published audited financial statements of the Company were made up, and which was significant in relation to the business of the Group.

– 8 –

GENERAL INFORMATION

APPENDIX

Interests of Substantial Shareholders

Interests in the Company

As at the Latest Practicable Date, so far as the Directors are aware, each of the following persons, not being a Director, supervisor or chief executive of the Company, had an interest in the Shares which falls to be disclosed to the Company and the Stock Exchange under the provisions of Division 2 and 3 of Part XV of the SFO:

			Proportion to
			the relevant	Proportion to
		Number of	class of	the total
		issued	issued share	issued share
		ordinary	capital of the	capital of the
Name	Class of Shares	shares held	Company	Company
Guangdong Greencool	Domestic legal	262,212,194	77.60%	26.43%
Enterprise Development	person shares
Company Limited
Shunde Economic	Domestic legal	68,666,667	20.32%	6.92%
Consultancy Company	person shares
Shenyin Wanguo Securities	H Shares	54,851,000	11.93%	5.53%
(H.K.) Limited
The Hong Kong &	H Shares	51,273,925	11.16%	5.17%
Shanghai Banking
Corporation Limited
Bank of China (Hong	H Shares	49,031,000	10.67%	4.94%
Kong) Limited
Guotai Junan Securities	H Shares	40,920,000	8.90%	4.12%
(Hong Kong) Limited
HSBC Nominees (Hong	H Shares	40,106,904	8.73%	4.04%
Kong) Limited
First Shanghai Securities	H Shares	25,868,000	5.63%	2.61%
Limited

– 9 –

GENERAL INFORMATION

APPENDIX

Interests in other members of the Group

As at Latest Practicable Date, so far as the Directors are aware, the following persons, not being a Director, supervisor or chief executive of the Company, was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group:

		Percentage
		shareholding of
	Shareholders holding 10%	shareholders in
	or more in other members	other members
Other members of the Group	of the Group	of the Group
Guangdong Kelon Air-Conditioner	Weishi Investments	40%
Co., Ltd	Company Limited
Guangdong Kelon Mould Co., Ltd	Hua Yi Compressor	30%
	Company Limited
Foshan Shunde Rongsheng Plastic	Hua Yi Compressor	30%
Products Co., Ltd	Company Limited
Guangdong Huaao Electrical	Foshan City Shunde District	30%
Electronics Co., Ltd.	Yun Long Enquiry
	Service Company Limited
Chengdu Kelon Refrigerator	Chengdu Generator Factory	30%
Co., Ltd.
Yingkou Kelon Refrigerator	Yingkou Yingleng (Group)	14.74%
Co., Ltd.	Bankruptcy Liquidation
	Team
Hangzhou Kelon Electrical	Hangzhou Xiling Group	30%
Company Limited	Company Limited
Xi’an Kelon Cooling Co., Ltd.	Xi’an Gaoke (Group)	29.05%
	Company Limited
Jiangxi Kelon Combine Electrical	Jiangxi Fadasi Domestic	45%
Appliances Co., Ltd.	Electrical Appliances
	Company Limited

– 10 –

GENERAL INFORMATION

APPENDIX

==> picture [378 x 660] intentionally omitted <==

----- Start of picture text -----

||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|Percentage|
|shareholding|of|
|Shareholders|holding|10%|shareholders|in|
|or|more|in|other|members|other|members|
|Other|members|of|the|Group|of|the|Group|of|the|Group|
|Kaifeng|Kelon|Air-Conditioner|Kaifeng|Economic|30%|
|Co.,|Ltd.|Technique|Development|
|(Group)|Company|
|Hua|Yi|Compressor|Company|Huayi|Electrical|Appliances|40.67%|
|Limited|Company|Limited|
|A-share|public|shareholders|30.61%|
|Chongqing|Kelon|Rongsheng|Chongqing|Shang|She|24%|
|Refrigerator|Sales|Co.,|Ltd.|Group|
|Chongqing|Huaqing|24%|
|Commerce|Company|
|Chongqing|Department|24%|
|Building|
|Guangzhou|Antaida|Logistic|Co.,|Guangzhou|Zhongyuan|30%|
|Ltd.|International|Freight|
|Forwarding|Company|
|Limited|
|China|Far|Ocean|Network|25%|
|Company|Limited|
|Wuxi|Small|Swan|Holdings|20%|
|Company|Limited|
|Wuhu|Yingjia|Electrical|Heavenly|King|Incorporated|20%|
|Machinery|Co.,|Ltd|
|Sichuan|Rongsheng|Kelon|Xu|Wei|Ru|24%|
|Refrigerator|Sales|Co.,|Ltd.|
|Beijing|Hengsheng|Xin|Chuang|Foshan|City|Shunde|District|11%|
|Technology|Company|Yun|Long|Enquiry|
|Service|Company|Limited|
|Guangdong|Kelon|Weili|Electrical|20%|
|Appliances|Company|Limited|

----- End of picture text -----

– 11 –

GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, there was no other person (other than a Director, supervisor or chief executive of the Company or a member of the Group), who had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

3. SERVICE AGREEMENTS

As at the Latest Practicable Date, none of the Directors, proposed directors, supervisors or proposed supervisors of the Company had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the Company within one year without payment of compensation (other than statutory compensation).

4. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2005, being the date to which the latest published audited financial statements of the Group were made up.

– 12 –

GENERAL INFORMATION

APPENDIX

5. COMPETING INTEREST

As at the Latest Practicable Date, the following directors of the Company or their respective associates have interests in the following businesses which are considered to compete or are likely to compete, either directly or indirectly, with the businesses of the Group other than those businesses where the Directors were appointed as directors to represent the interests of the Company and/or the Group pursuant to the Listing Rules:

		Description of
	Name of entity	business of the
	which business is	entity which is
	considered to	considered to
	compete or likely	compete or likely
	compete with the	to compete with	Nature of interest
	business of the	the business of	of the Director in
Name of Director	Group	the Group	the entity
Mr. Tang Ye Guo	The Subsidiaries of	Production of	Director
	Hisense Group	air-conditioning/
		electrical
		products
Ms. Yu Shu Min	The Subsidiaries of	Production of	Director and/or
	Hisense Group	air-conditioning/	senior
		electrical	management
		products
Mr. Xiao Jian Lin	Hisense Group or	Production of	Director
	its Subsidiaries	air-conditioning/
		electrical
		products
Mr. Lin Lan	Hisense Group	Production of	Senior
		air-conditioning/	Management
		electrical
		products

As at the Latest Practicable Date, save as disclosed above, none of the directors of the Company or their respective associates has interests in the businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group.

– 13 –

GENERAL INFORMATION

APPENDIX

6. LITIGATION

As at the Latest Practicable Date, so far as the Directors are aware, the following litigation or claims of material importance are pending or threatened against the Company and its subsidiaries:

No.	Name of case	Plaintiff	Claim Amount	Particulars	Status
			(RMB)
1.	Claims against the	Zhejiang	19,853,000.00	The plaintiff alleged that it had	The Court has
	Company initiated by	Hangxiao		undertaken the construction	adjourned to
	Zhejiang Hangzhou			works of the Company’s plain	proceed with
	Xiu Ganggou			warehouse factories No. 1 and	the case.
	Holdings Company			No. 2 pursuant to a construction
	Limited (“Zhejiang			contract with the Company and
	Hangxiao”) in			the Company defaulted in
	relation to a			payment of RMB1,193,000 in
	construction contract			construction fees. The plaintiff
				sued the Company for payment
				of RMB1,193,000 in
				construction fees and
				RMB17,660,000 in default
				penalties and the cost of legal
				proceedings.
2.	Claims against	China	140,000,000.00	China Construction Bank	The Court has
	Jiangxi Kelon and the	Construction		Corporation Nanchang Changbei	adjourned to
	Company initiated by	Bank		Branch applied to the court for	proceed with
	China Construction	Corporation		pre-trial security order on the	the case.
	Bank Corporation	Nanchang		basis of dispute over the loan
	Nanchang Changbei	Changbei		contract and guarantee contract.
	Branch in relation to	Branch		On 5 August, the High Court of
	the loan contract and			Jiangxi Province ordered to
	guarantee contract			freeze Jiangxi Kelon’s 80%
				shareholdings in Shangqiu
				Kelon. During the freezing
				period, such shareholdings shall
				not be pledged or transferred
				without the court’s prior
				consent.

– 14 –

GENERAL INFORMATION

APPENDIX

No.	Name of case	Plaintiff	Claim Amount	Particulars	Status
			(RMB)
3.	Claims against	Henan	18,000,000.00	The plaintiff applied for a pre-	The Court has
	Jiangxi Kelon and	Province		trial security order from the	adjourned to
	Kaifeng Kelon Air-	Kaifeng		court to seize properties worth	proceed with
	Conditioner Co., Ltd.	Economic		of RMB18,000,000 of Jiangxi	the case.
	(“Kaifeng Kelon”) by	Technology		Kelon and Kaifeng Kelon. The
	Kaifeng Economic	Development		equipment, factory and the land
	Technology	(Group)		use right of Kaifeng Kelon were
	Development (Group)	Company		seized.
	Company in relation
	to joint venture
	contract
4.	Claims initiated by	Can	221,942,108.01	The plaintiff alleged that it had	The Court has
	CNA/MC Appliance	International		entered into a contract with the	adjourned to
	Corporation against	Inc./MC		defendant on 29 December 2003	proceed with
	the Company and	Appliance		to purchase 108,108 units of	the case.
	Kelon International	Corporation		MCBR1000W refrigerators, that
	Incorporation			the defendant failed to perform
				its obligations as set out in the
				contract on a timely basis and
				that the goods delivered were
				defective.

7. MISCELLANEOUS

• (1) The company secretary and qualified accountant of the Company is Mr. Dai Zu Mian. Mr. Dai is a member of the Association of Chartered Certified Accountants in the United Kingdom and is a certified public accountant in the PRC.

• (2) The English text of this circular shall prevail over its Chinese text.

– 15 –