Power Assets Holdings Limited — Proxy Solicitation & Information Statement 2009

Apr 9, 2009

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim 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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香港電燈集團有限公司 Hongkong Electric Holdings Ltd.

(Incorporated in Hong Kong with limited liability)

(Stock Code: 6)

PROPOSED GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES AND DIRECTORS PROPOSED TO BE RE-ELECTED

14th April 2009

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Executive Directors

Non-executive Directors Ronald Joseph ARCULLI LEE Lan-yee, Francis George Colin MAGNUS

FOK Kin-ning, Canning (Chairman) Ronald Joseph ARCULLI TSO Kai-sum (Group Managing Director) LEE Lan-yee, Francis CHOW WOO Mo-fong, Susan George Colin MAGNUS Andrew John HUNTER KAM Hing-lam _Independent Non-executive Directors* LI Tzar-kuoi, Victor Holger KLUGE Neil Douglas MCGEE Ralph Raymond SHEA Frank John SIXT WONG Chung-hin WAN Chi-tin YUEN Sui-see CHAN Loi-shun (Alternate Director to Mr. KAM Hing-lam)_

* Also Alternate Director to Mr. FOK Kin-ning, Canning and Mr. Frank John SIXT

14th April 2009

To the Shareholders,

Dear Sir or Madam,

PROPOSED GENERAL MANDATES TO ISSUE NEW SHARES AND TO REPURCHASE SHARES AND DIRECTORS PROPOSED TO BE RE-ELECTED

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 re-election of the Directors who are due to retire. These resolutions will be proposed at the Annual General Meeting of the Company convened for 14th May 2009 (“AGM”).

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PROPOSED GENERAL MANDATES FOR SHARE REPURCHASE AND ISSUE OF NEW SHARES

On 15th May 2008 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 AGM. It is therefore proposed to seek your approval at the AGM of an ordinary resolution granting the Directors a general mandate to repurchase during the Relevant Period (as defined hereinbelow) 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 “Repurchase Mandate”). Relevant Period means the period from the passing of this resolution until whichever is the earliest of: (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; and (iii) the revocation or variation of this resolution by an ordinary resolution of the shareholders of the Company in general meeting. 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 circular.

Ordinary resolutions will also be proposed at the AGM (i) to grant the Directors a general mandate to issue and otherwise deal with additional shares not exceeding 20 per cent. of the issued shares of the Company at the date of passing of the 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.

DIRECTORS PROPOSED TO BE RE-ELECTED

Mr. Neil Douglas McGee, Mr. Ralph Raymond Shea, Mr. Wan Chi-tin and Mr. Wong Chung-hin will retire by rotation at the AGM in accordance with Article 116 of the Company’s Articles of Association. The abovementioned Directors, being eligible, offer themselves for reelection. The particulars of these Directors which are required to be disclosed by the Listing Rules are set out in Appendix II to this circular.

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ANNUAL GENERAL MEETING

The resolutions to be proposed at the AGM 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 in accordance with the instructions printed thereon and return it to the registered office of the Company at the address stated above no later than 48 hours before the time 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, FOK Kin-ning, Canning 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 6th April 2009 (the latest practicable date prior to the printing of this circular), the issued share capital of the Company comprised 2,134,261,654 ordinary shares of HK$1 each (“Shares”).

Exercise in full of the Repurchase Mandate (10% of the issued share capital of the Company), on the basis that no further Shares are issued prior to the date of the AGM, 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 2010, 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 2008) in the event that the Repurchase Mandate were to be exercised in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the Repurchase 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.

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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 circular and during the period from 1st April 2009 to 6th April 2009 (the latest practicable date prior to the printing of this circular) were as follows:

	Highest	Lowest
	HK$	HK$
April 2008	50.50	46.60
May 2008	49.80	44.50
June 2008	49.00	45.80
July 2008	47.35	45.00
August 2008	51.65	44.90
September 2008	52.00	45.00
October 2008	49.75	36.70
November 2008	46.10	39.05
December 2008	44.95	40.00
January 2009	47.70	41.10
February 2009	48.65	43.35
March 2009	50.15	44.10
1st April 2009 to 6th April 2009	46.00	44.10

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 Repurchase 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 Repurchase 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 Repurchase Mandate is approved and exercised.

As at 6th April 2009 (the latest practicable date prior to the printing of this circular), Cheung Kong Infrastructure Holdings Limited (“CKI”) and its subsidiary Hyford Limited held through certain subsidiaries of Hyford Limited (including Monitor Equities S.A. and Univest Equity S.A.) a total of 829,599,612 Shares, representing approximately 38.87% of the issued share capital of the Company. By virtue of their direct and/or indirect shareholdings in CKI,

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Hutchison Whampoa Limited and its subsidiaries, Hutchison International Limited and Hutchison Infrastructure Holdings Limited, 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 Ka-Shing Unity Trustcorp Limited as trustee of another discretionary trust, Messrs. Li Ka-shing and Li Tzar-kuoi, Victor (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 Repurchase 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 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 circular.

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APPENDIX II

The following is the information required to be disclosed by the Listing Rules on the Directors proposed to be re-elected at the AGM.

1. Mr. Neil Douglas MCGEE , aged 57, has been an Executive Director of the Company since December 2005 and became Group Finance Director on 1st February 2006. He is also Director of all subsidiaries of the Company including The Hongkong Electric Company, Limited (“HEC”). Mr. McGee worked with the Hongkong Electric Group (“Group”) and the Hutchison Whampoa Group from 1978 holding legal, corporate finance and corporate secretarial positions. He then joined Husky Oil Ltd. in 1998 as Vice President and Chief Financial Officer and from 2000 to October 2005, he served as Vice President and Chief Financial Officer of Husky Energy Inc.. Mr. McGee holds a Bachelor of Arts degree and a Bachelor of Laws degree. Save as disclosed above, Mr. McGee does not have any relationship with any other director, senior management or substantial or controlling shareholders of the Company. He does not have any interest in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”). The annual remuneration package for Mr. McGee for the year 2008 under his service contract with the Company amounted to approximately HK$6.72 million. The emoluments were determined with reference to the Company’s performance and profitability, as well as remuneration benchmarks in the industry and the prevailing market conditions. He is also entitled to a Director’s fee per annum (2008: HK$70,000). Mr. McGee does not have any information to disclose pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules. There are no other matters of significance concerning the Director that need to be brought to the attention of shareholders.

2. Mr. Ralph Raymond SHEA , aged 75, has been a Director of the Company since May 1985 and is currently an Independent Non-executive Director of the Company. He is also a Director of HEC. Mr. Shea is a solicitor of the Supreme Court of England and of Hong Kong. He does not have any relationship with any other director, senior management or substantial or controlling shareholders of the Company. Mr. Shea does not have any interest in the shares of the Company within the meaning of Part XV of the SFO. There is a service contract dated 15th October 2007 between the Company and Mr. Shea appointing him as an Independent Non-executive Director of the Company for an initial term up to 31st December 2008 which automatically renews for successive 12-month periods, subject to retirement by rotation and re-election in accordance with the Company’s articles of association. He is entitled to a Director’s fee per annum (2008: HK$70,000) and further fees for serving as member of the Audit Committee and the Remuneration Committee (2008: HK$70,000 and HK$20,000 respectively). Mr. Shea does not have any information to disclose pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules. There are no other matters of significance concerning the Director that need to be brought to the attention of shareholders.

3. Mr. WAN Chi-tin , aged 58, has been an Executive Director of the Company since December 2005. He is also a Director of HEC and certain subsidiaries of the Company. Mr. Wan worked with the Group from 1978, holding various positions. Between September 2000 and June 2003, he served as Chief Executive Officer of Powercor Australia Limited and CitiPower Pty., associate companies of the Group in Australia.

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He returned to Hong Kong in July 2003 taking up the role of General Manager (Corporate Development) of the Group. Mr. Wan holds a Bachelor of Science degree in Electrical Engineering and is also a Chartered Engineer. He is an Honorary Fellow of the Energy Institute, a Fellow of the Institution of Engineering and Technology and a Fellow of the Hong Kong Institution of Engineers. Mr. Wan does not have any relationship with any other director, senior management or substantial or controlling shareholders of the Company. He does not have any interest in the shares of the Company within the meaning of Part XV of the SFO. The annual remuneration package for Mr. Wan for the year 2008 under his service contract with the Company amounted to approximately HK$8.04 million. The emoluments were determined with reference to the Company’s performance and profitability, as well as remuneration benchmarks in the industry and the prevailing market conditions. He is also entitled to a Director’s fee per annum (2008: HK$70,000). Mr. Wan does not have any information to disclose pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules. There are no other matters of significance concerning the Director that need to be brought to the attention of shareholders.

1. Mr. WONG Chung-hin , aged 75, has been a Director of the Company since May 1985 and is currently an Independent Non-executive Director of the Company. Mr. Wong is also a Director of HEC. He is an Independent Non-executive Director of Hutchison Whampoa Limited (a substantial shareholder of the Company within the meaning of Part XV of the SFO) and The Bank of East Asia, Limited, both being listed companies. Save as disclosed above, Mr. Wong does not have any relationship with any other director, senior management or substantial or controlling shareholders of the Company. He does not have any interest in the shares of the Company within the meaning of Part XV of the SFO. There is a service contract dated 15th October 2007 between the Company and Mr. Wong appointing him as an Independent Non-executive Director of the Company for an initial term up to 31st December 2008 which automatically renews for successive 12-month periods, subject to retirement by rotation and re-election in accordance with the Company’s articles of association. He is entitled to a Director’s fee per annum (2008: HK$70,000) and further fees for serving as member of the Audit Committee and the Remuneration Committee (2008: HK$70,000 and HK$20,000 respectively). Mr. Wong does not have any information to disclose pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules. There are no other matters of significance concerning the Director that need to be brought to the attention of shareholders.

This Circular has been posted in both the English and Chinese languages on the Company’s website at www.heh.com. If shareholders who have chosen to receive corporate communications___________ through the Company’s website are unable to gain access to the Circular, they may request that a copy of this Circular be sent to them free of charge by mail.

Shareholders may at any time choose to receive all future corporate communications either in printed form or through the Company’s website by writing to the Company at the registered office, 44 Kennedy Road, Hong Kong or the share registrar, Computershare Hong Kong Investor Services Limited at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong or by emailing to the Company’s email address at mail@heh.com.

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