Power Assets Holdings Limited — Proxy Solicitation & Information Statement 2002

Apr 10, 2002

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

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HONGKONG ELECTRIC HOLDINGS LIMITED 香港電燈集團有限公司

(Incorporated in Hong Kong with limited liability)

PROPOSALS FOR GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES AND AMENDMENTS TO ARTICLES OF ASSOCIATION

3rd April, 2002

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HONGKONG ELECTRIC HOLDINGS LIMITED 香港電燈集團有限公司

(Incorporated in Hong Kong with limited liability)

Directors:

GEORGE C. MAGNUS (Chairman) CANNING FOK KIN-NING (Deputy Chairman)

Registered Office: 44 Kennedy Road Hong Kong

TSO KAI-SUM (Group Managing Director)

• RONALD JOSEPH ARCULLI

SUSAN M.F. CHOW

ANDREW J. HUNTER

KAM HING-LAM

• HOLGER KLUGE

FRANCIS LEE LAN-YEE

• VICTOR LI TZAR-KUOI

• RALPH RAYMOND SHEA

• FRANK J. SIXT

• WONG CHUNG-HIN

• EWAN YEE LUP-YUEN

• Independent Non-Executive Director

3rd April 2002

To the Shareholders,

Dear Sir or Madam,

PROPOSALS FOR GENERAL MANDATES TO ISSUE SHARES AND TO REPURCHASE SHARES AND AMENDMENTS TO ARTICLES OF ASSOCIATION

INTRODUCTION

The purpose of this circular is to provide you with information regarding the general mandates to issue shares and to repurchase shares which are proposed to be granted to the Directors, and the proposed amendments to the Company’s articles of association. These resolutions will be proposed at the Annual General Meeting of the Company convened for 9th May 2002.

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SHARE BUYBACK AND SHARE ISSUE GENERAL MANDATES

On 10th May 2001 a general mandate was given to the Directors to exercise the powers of the Company to repurchase shares of the Company. Such mandate will lapse at the conclusion of the forthcoming Annual General Meeting of the Company. It is therefore proposed to seek your approval of an ordinary resolution to be proposed at the Annual General Meeting granting the Directors a general mandate to repurchase shares representing not more than 10 per cent. of the share capital of the Company in issue at the date of passing the resolution (the “Buyback Mandate”). In accordance with the relevant rules set out in the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) regulating the repurchase by companies of their own securities on the Stock Exchange, the Company is required to send Shareholders an explanatory statement containing information reasonably necessary to enable Shareholders to make an informed decision on whether to vote for or against the resolution to approve the purchase by the Company of its own shares. This explanatory statement is set out in Appendix I to this document.

Ordinary resolutions will also be proposed at the Annual General Meeting (i) to grant the Directors a general mandate to issue and otherwise deal with shares up to a limit equal to 20 per cent. of the issued shares of the Company at the date of passing of such resolution and (ii) to approve the addition of repurchased shares (up to a maximum of 10 per cent. of the issued shares of the Company at the date of passing of such resolution) to the 20 per cent. general mandate.

AMENDMENTS TO EXISTING ARTICLES OF ASSOCIATION

It will also be proposed at the Annual General Meeting a special resolution to amend the existing articles of association of the Company. The proposed amendments will enable the Company to take advantage of new legislation and recent changes to the Listing Rules to offer shareholders the choice to receive either the full annual report and accounts or a summary financial report, to receive such documents, notices and other documents in printed copy, through the Company’s computer network or by other forms of electronic communication, and in English or Chinese. The Company will send the full annual report and the summary financial report to shareholders in the various aforesaid modes in accordance with all applicable laws, rules and regulations. The proposed amendments and their effects are set out in Appendix II to this document.

ANNUAL GENERAL MEETING

The ordinary resolutions and special resolution are set out in full in the notice of Annual General Meeting included in the Annual Report. Whether or not you intend to be present at the Meeting, you are requested to complete the form of proxy and return it to the registered office of the Company at the address stated above in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding the Meeting. The Directors believe that the resolutions set out in the notice of the Meeting are in the best interests of the Company and its Shareholders as a whole and recommend you to vote in favour of such resolutions at the Meeting.

Yours faithfully, GEORGE C. MAGNUS CHAIRMAN

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APPENDIX I

The following is the Explanatory Statement required to be sent to shareholders under the Listing Rules and also constitutes the Memorandum required under section 49BA of the Companies Ordinance.

SHARE CAPITAL

As at 3rd April 2002 (the latest practicable date prior to the printing of this document), the issued share capital of the Company comprised 2,134,261,654 shares of HK$1 each (“Shares”).

Exercise in full of the Buyback Mandate, on the basis that no further Shares are issued prior to the date of the Annual General Meeting, could accordingly result in up to 213,426,165 Shares being repurchased by the Company during the course of the period ending on the earlier of the date of the Annual General Meeting in 2003, and the date upon which such authority is revoked or varied.

REASONS FOR REPURCHASE

The Directors believe that it is in the best interests of the Company and its shareholders to seek a general authority from shareholders to enable the Directors to purchase Shares of the Company in the market. Such purchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets and/or earnings per Share. The Directors are seeking a general mandate to repurchase Shares to give the Company the flexibility to do so if and when appropriate. The number of Shares to be repurchased on any occasion and the price and other terms upon which the same are repurchased will be decided by the Directors at the relevant time having regard to the circumstances then prevailing.

FUNDING OF REPURCHASE

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its Memorandum and Articles of Association and the Companies Ordinance. It is envisaged that the funds required for any repurchase would be derived from the distributable profits of the Company.

There could be material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited consolidated accounts contained in the annual report for the year ended 31st December 2001) in the event that the Buyback Mandate were to be exercised in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the Buyback Mandate to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

SHARE PRICES

The highest and lowest prices at which the Shares have traded on the Stock Exchange during each of the previous twelve months before the printing of this document were as follows:

	Highest	Lowest
	HK$	HK$
April 2001	28.05	26.30
May 2001	28.45	26.30
June 2001	30.10	27.20
July 2001	30.10	27.70
August 2001	30.40	27.95
September 2001	31.00	28.20
October 2001	32.30	29.10
November 2001	31.40	28.30
December 2001	29.00	27.65
January 2002	28.95	27.70
February 2002	29.60	28.10
March 2002	30.00	28.65

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DISCLOSURE OF INTERESTS

The Directors have given an undertaking to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make all repurchases pursuant to the Buyback Mandate in accordance with the Listing Rules and the applicable laws of Hong Kong.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, their associates, have any present intention to sell any Shares to the Company if the Buyback Mandate is approved and exercised. No other connected persons (as defined in the Listing Rules) have notified the Company that they have a present intention to sell Shares to the Company, or have undertaken not to do so, in the event that the Buyback Mandate is approved and exercised.

As at 3rd April 2002 (the latest practicable date prior to the printing of this document), Cheung Kong Infrastructure Holdings Ltd. (“CKI”) and its subsidiary Hyford Ltd. held through certain subsidiaries of Hyford Ltd. (including Monitor Equities S.A. and Univest Equity S.A.) a total of 829,599,612 Shares, representing 38.87% of the issued share capital of the Company. By virtue of their direct and/or indirect shareholdings in CKI, Hutchison Whampoa Ltd. and its subsidiaries. Hutchison International Ltd. and Hutchison Infrastructure Holdings Ltd., Cheung Kong (Holdings) Limited, Li Ka-Shing Unity Trustee Company Limited as trustee of The Li Ka-Shing Unity Trust, Li Ka-Shing Unity Trustee Corporation Limited as trustee of The Li Ka-Shing Unity Discretionary Trust, Li KaShing Unity Holdings Limited and Messrs. Li Ka-Shing, Victor Li Tzar-kuoi and Richard Li Tzar-kai (collectively the “Substantial Shareholders”) were each deemed to hold these same 829,599,612 Shares.

In the event that the Directors exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Buyback Mandate, then (if the present shareholdings otherwise remained the same) the shareholding of CKI in the Company would be increased to approximately 43.19% of the issued share capital of the Company and similarly, so would the deemed shareholdings of each of the Substantial Shareholders be increased. In the opinion of the Directors such increase may give rise to an obligation to make a mandatory offer under Rule 26.1 of the Hong Kong Code on Takeovers and Mergers.

SHARE PURCHASE MADE BY THE COMPANY

The Company has not purchased any of its Shares (whether on the Stock Exchange or otherwise) in the six months preceding the date of this document.

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APPENDIX II

The following are the proposed amendments to be made to the existing articles.

1. Article 2:

• (i) Add the following definitions:

• “Electronic communication” shall mean a communication sent by electronic transmission in any form through any medium.

“Listing Rules” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended from time to time.

“Summary financial report” has the meaning assigned thereto in the Companies Ordinance.

• (ii) Add the words “including an electronic communication” after the words “visible form” in the definition of “Writing” or “printing”.

The definition will read ““Writing” or “printing” shall include writing, printing, lithography, photography, typewriting and every other mode of representing words or figures in a visible form, including an electronic communication.”

• (iii) Add the following new paragraph at the end of Article 2:

• “References to applicable laws, rules and regulations shall include the Companies Ordinance and all regulations made thereunder, and the Listing Rules. References to a notice or document shall include a notice or document recorded or stored in any digital, electronic, electric, magnetic or other retrievable form or medium”.

This is to define new terms which will appear in the amendments below and widen the scope of the definition of notice and document to include any form of recording media.

2. Article 157:

• (i) Renumber Article 157 as Article 157(a).

Add the words “Subject to Articles 157(b) and 157(c)” at the beginning of Article 157(a).

The Article will read “Subject to Articles 157(b) and 157 (c), every Balance Sheet of the Company shall be signed pursuant to the provisions of the Ordinance, and a copy of every Balance Sheet (including every document required by law to be annexed thereto) which is to be laid before the Company in general meeting, together with a copy of the Directors’ Report and a copy of the Auditors’ Report, shall not less than twenty-one days before the date of the meeting, be sent to every member of, and every holder of debentures of, the Company and every person registered under Article 47; Provided that this Article shall not require a copy of those documents to be sent to any person of whose address the Company is not aware or to more than one of the joint holders of any shares or debentures”.

• (ii) Add the following as Article 157(b):

• “157(b) The requirement to send to a person referred to in Article 157(a) the documents referred to in that Article, whether under that Article or under the Companies Ordinance, shall be deemed satisfied where, in accordance with applicable laws, rules and regulations, a copy of a summary financial report is sent to such person, and that person has agreed or is deemed to have agreed to treat the receipt of such summary financial report as discharging the Company’s obligation to send to him a copy of the documents referred to in Article 157(a).”

• (iii) Add the following as Article 157(c):

• “157(c) The requirement to send to a person referred to in Article 157(a) the documents referred to in that Article or a summary financial report, whether under that Article or under the Companies Ordinance, shall be deemed satisfied where, in accordance with applicable laws, rules and regulations, the Company publishes copies of the documents referred to in Article 157(a) and, if applicable, a summary financial

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report, on the Company’s computer network or in any other permitted manner (including by sending them in any form of electronic communication), and that person has agreed or is deemed to have agreed to treat the publication or receipt of such documents in such manner as discharging the Company’s obligation to send to him a copy of such documents.”

This is to enable the Company to offer shareholders the choice to receive either a summary financial report (as defined in the Companies Ordinance) or the full annual report and accounts, and to receive such documents in printed copy, through the Company’s website or by means of other forms of electronic communication.

3. Article 161:

• (i) Add the following after the words “Hong Kong”:

“or by sending it in accordance with applicable laws, rules and regulations as an electronic communication to the member at his electronic address or by publishing it in accordance with applicable laws, rules and regulations on the Company’s computer network”.

• (ii) Add the words “or documents” after the words “In the case of joint holders of a share all notices”.

The Article will read “Any notice or document may be served by the Company on any member either personally or by sending it through the post in a prepaid letter addressed to such member at his registered address as appearing in the Register of Members or by advertisement in one daily Chinese and one daily English newspaper circulating in Hong Kong or by sending it in accordance with applicable laws, rules and regulations as an electronic communication to the member at his electronic address or by publishing it in accordance with applicable laws, rules and regulations on the Company’s computer network. In the case of joint holders of a share all notices or documents shall be given to that one of the joint holders whose name stands first in the Register of Members, and notice so given shall be sufficient notice to all the joint holders.”

This is to enable the Company to offer shareholders, including joint holders, the choice to receive notices and other documents in printed copy, through the Company’s website or by means of other forms of electronic communication.

4. Article 162:

• (i) Add the words “or document” after the word “notice” where it appears in Article 162.

• (ii) Add the following at the end of Article 162:

“Any notice or document sent as an electronic communication shall be deemed to be given on the day on which it is transmitted from the server of the Company or its agent. Any notice or document published on the Company’s computer network shall be deemed to have been served or delivered on the day following that on which a notification is sent to the member that the notice or document is available on the Company’s computer network”.

The Article will read “Any notice or document sent by post shall be deemed to have been served on the day following that on which the envelope or wrapper containing the same is put into a Post Office situated within Hong Kong and in proving such service it shall be sufficient to prove that the envelope or wrapper containing the notice or document was properly prepaid, addressed and put into such Post Office, and a certificate in writing signed by the Secretary or other person appointed by the Board that the envelope or wrapper containing the notice or document was so addressed and put into such Post Office shall be conclusive evidence thereof. Any notice or document sent as an electronic communication shall be deemed to be given on the day on which it is transmitted from the server of the Company or its agent. Any notice or document published on the Company’s computer network shall be deemed to have been served or delivered on the day following that on which a notification is sent to the member that the notice or document is available on the Company’s computer network”.

This is to provide when notice or document is deemed to be served if sent by electronic communication or by publication on the Company’s computer network.

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5. Article 162A:

Add a new Article 162A:

“Subject to applicable laws, rules and regulations, any notice or document, including the documents referred to in Article 157(a) and a summary financial report, may be given to a member either in the English language or the Chinese language”.

This is to enable the Company to offer shareholders the choice to receive the financial reports, notices and other documents in either the English or the Chinese language.

6. Article 164:

Add the words “or made electronically” after the word “printed”.

The Article will read ”The signature to any notice to be given by the Company may be written or printed or made electronically”.

This is to allow the signature to any notice to be made electronically.

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