Success Universe Group Limited — Proxy Solicitation & Information Statement 2002

Jul 12, 2002

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold all your shares in Tern Properties Company Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

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.

TERN PROPERTIES COMPANY LIMITED

(Incorporated in Hong Kong with limited liability)

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES

A notice convening the Extraordinary General Meeting of Tern Properties Company Limited (the “Company”) to be held in the conference room of Woo, Kwan, Lee & Lo, 26th Floor, Jardine House, 1 Connaught Place, Hong Kong on Friday, 6 September 2002 at 12:15 p.m. (or so soon thereafter as the Annual General Meeting of the Company convened for the same day and place shall have been concluded or adjourned) is set out on pages 7 to 9 of this circular. Whether or not you intend to be present at the Extraordinary General Meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting should you so wish.

12 July 2002

TERN PROPERTIES COMPANY LIMITED

(Incorporated in Hong Kong with limited liability)

Directors:

Registered office:

Mr. Chan Hoi Sow (Chairman and Managing Director) Mr. Chan Siu Keung, Leonard Mr. Chan Yan Tin, Andrew Mr. Lee Yip Wah, Peter Mr. Lee Ka Sze, Carmelo*

26th Floor Tern Centre, Tower I 237 Queen’s Road Central Hong Kong

* Non-Executive Director

** Independent Non-Executive Directors

12 July 2002

To the shareholders,

Dear Sir or Madam,

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES

INTRODUCTION

Pursuant to the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and the Companies Ordinance (Cap. 32 of the Laws of Hong Kong) (the “Companies Ordinance”), listed companies incorporated in Hong Kong may in certain circumstances, if authorised by their Articles of Association purchase their own shares.

At the extraordinary general meeting of the Company held on 7 September 2001, general mandates were given to the Directors to exercise the powers of the Company to repurchase shares of the Company (“Shares”) and to issue Shares. Under the terms of the Listing Rules, these general mandates will lapse at the conclusion of the forthcoming annual general meeting of the Company. Ordinary resolutions will therefore be proposed at an extraordinary general meeting of the Company to be held on 6 September 2002 (the “Extraordinary General Meeting”), immediately following the Annual General Meeting of the Company convened for that day to approve general mandates to repurchase Shares and to issue Shares.

The purpose of this circular is to provide you with information regarding the proposed general mandates to repurchase Shares and to issue Shares.

– 1 –

GENERAL MANDATE TO REPURCHASE SHARES

An ordinary resolution will be proposed at the Extraordinary General Meeting to approve a general mandate to be given to the Directors to exercise the powers of the Company to repurchase at any time until the next Annual General Meeting of the Company or such earlier period as stated in the ordinary resolution Shares up to a maximum of 10% of the issued share capital of the Company at the date of passing the ordinary resolution (the “Repurchase Mandate”).

An explanatory statement as required under the Listing Rules to provide the requisite information is set out in the appendix hereto.

GENERAL MANDATE TO ISSUE SHARES

At the Extraordinary General Meeting, an ordinary resolution will be proposed that the Directors be given a general mandate to issue at any time until the next Annual General Meeting of the Company or such earlier period as stated in the ordinary resolution new Shares representing up to 20% of the share capital of the Company in issue at the date of passing the resolution (the “Issue Mandate”). In addition, an ordinary resolution will be proposed to authorise extension of the Issue Mandate by adding to it the number of Shares repurchased under the Repurchase Mandate.

EXTRAORDINARY GENERAL MEETING

Set out on pages 7 to 9 of this circular is a notice convening the Extraordinary General Meeting to consider the ordinary resolutions relating to the Repurchase Mandate and the Issue Mandate.

A form of proxy for use at the Extraordinary General Meeting is enclosed. Whether or not you intend to be present at the Extraordinary General Meeting, you are requested to complete the form of proxy and return it to the registered office of the Company in accordance with the instructions printed thereon not less than 48 hours before the time fixed for holding the Extraordinary General Meeting.

RECOMMENDATION

The Directors believe that the Repurchase Mandate, the Issue Mandate and the extension of the Issue Mandate are in the best interests of the Company and its shareholders as a whole and recommend you to vote in favour of the ordinary resolutions nos. 1 to 3 to be proposed at the Extraordinary General Meeting.

Yours faithfully, Chan Hoi Sow

Chairman

– 2 –

APPENDIX

EXPLANATORY STATEMENT

This appendix serves as an explanatory statement, as required by the Listing Rules, to provide requisite information to shareholders for their consideration of the Repurchase Mandate and also constitutes the memorandum as required under Section 49BA(3) of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong).

1. LISTING RULES

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase their shares on the Stock Exchange or on any other stock exchange on which the shares of the companies may be listed and recognised by the Securities and Futures Commission and the Stock Exchange for this purpose subject to certain restrictions, the most important of which are summarized below:

• (a) The shares proposed to be purchased by the company are fully-paid up.

• (b) The company has previously sent to its shareholders an explanatory statement complying with the Listing Rules.

• (c) The shareholders of the company have given a specific approval or a general mandate to the directors of the company to make such purchase, by way of an ordinary resolution which complies with the Listing Rules and which has been passed at a general meeting of the company duly convened and held and the company has delivered a copy of such resolution, together with the necessary supporting documentation, to the Stock Exchange in accordance with the Listing Rules.

2. SHARE CAPITAL

As at 5 July 2002 (the latest practicable date prior to the printing of this circular (the “Latest Practicable Date”), the issued share capital of the Company comprised 307,812,522 Shares.

Subject to the passing of the proposed ordinary resolution and on the basis that no further Shares are issued or repurchased prior to the Extraordinary General Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 30,781,252 Shares.

– 3 –

3. REASONS FOR REPURCHASE

The Directors believe that it is in the best interests of the Company and its shareholders to have a general authority from shareholders to enable the Directors to repurchase Shares in the market. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net assets of the Company and/or its earnings per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and its shareholders.

4. FUNDING OF REPURCHASES

It is proposed that repurchases of Shares under the Repurchase Mandate in these circumstances would be financed from available cash flow or working capital facilities of the Company and its subsidiaries.

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. The Companies Ordinance provides that the amount of capital repaid in connection with a share repurchase may only be paid from the distributable profits of the company or from the proceeds of a new issue of shares made for the purpose. The Companies Ordinance further provides that the amount of premium payable on repurchase may only be paid out of the distributable profits of the company. Where the repurchased shares were issued at a premium, any premium payable on repurchase may be paid out of the proceeds of a fresh issue of shares made for the purposes of the share repurchase up to certain limits specified by the Companies Ordinance.

There might be material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited accounts contained in the annual report for the year ended 31 March 2002) in the event that the proposed repurchases of Shares were to be carried out 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.

– 4 –

5. 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 Latest Practicable Date were as follows:

	Highest	Lowest
	Price	Price
	HK$	HK$
2001
July	1.350	1.350
August	–*	–*
September	–*	–*
October	–*	–*
November	–*	–*
December	1.300	1.100
2002
January	1.100	1.040
February	1.120	1.040
March	1.170	1.140
April	–*	–*
May	1.500	1.250
June	–*	–*

* There were no transactions during the month.

6. GENERAL

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the proposed ordinary resolution 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 under the Repurchase Mandate if such Repurchase Mandate is approved by the shareholders.

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 by the shareholders.

If as a result of a share repurchase, a shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Hong Kong Code on Takeovers and Mergers (the “Takeover Code”). As a result, a shareholder or a group of shareholders acting in concert, depending on

– 5 –

the level of increase of the shareholders’ interest, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rules 26 and 32 of the Takeover Code.

As at the Latest Practicable Date, Mr. Chan Hoi Sow and his associates were beneficially interested in 171,332,896 Shares representing approximately 55.66% of the issued share capital of the Company. In the event that the Directors exercised the Repurchase Mandate in full, then (if the present shareholdings otherwise remained the same) the shareholding of Mr. Chan Hoi Sow and his associates in the Company would be increased to approximately 61.85% of the issued share capital of the Company. The Directors are not aware of any consequences which may arise under the Takeover Code as a consequence of any purchases made under the Repurchase Mandate.

7. SHARE REPURCHASE MADE BY THE COMPANY

The Company had not repurchased any of its Shares (whether on the Stock Exchange or otherwise) in the six months preceding the Latest Practicable Date.

– 6 –

TERN PROPERTIES COMPANY LIMITED

(Incorporated in Hong Kong with limited liability)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Tern Properties Company Limited (the “Company”) will be held in the conference room of Woo, Kwan, Lee & Lo, 26th Floor, Jardine House, 1 Connaught Place, Hong Kong on Friday, 6 September 2002 at 12:15 p.m. (or so soon thereafter as the Annual General Meeting of the Company convened for the same day and place shall have been concluded or adjourned) for the purpose of considering and, if thought fit, passing the following resolutions which will be proposed as Ordinary Resolutions:

ORDINARY RESOLUTIONS

1. “ THAT :

2. (i) subject to paragraph (ii) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all powers of the Company to repurchase shares in the capital of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or on any other stock exchange on which the shares of the Company may be listed and recognised by the Securities and Futures Commission and the Stock Exchange for this purpose, subject to and in accordance with all applicable laws and the requirements of the Rules Governing the Listing of Securities on the Stock Exchange or of any other stock exchange as amended from time to time, be and is hereby generally and unconditionally approved;

3. (ii) the aggregate nominal amount of the shares in the capital of the Company to be repurchased by the Company pursuant to the approval in paragraph (i) of this Resolution shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this Resolution, and the said approval shall be limited accordingly; and

4. (iii) for the purposes of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of :

   • (a) the conclusion of the next Annual General Meeting of the Company;

   • (b) the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held; or

– 7 –

  - (c) the revocation or variation of the authority given under this Resolution by ordinary resolution of the shareholders in general meeting.”

1. “ THAT :

2. (i) subject to paragraph (iii) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make and grant offers, agreements and options (including bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require shares to be allotted be and is hereby generally and unconditionally approved;

3. (ii) the approval in paragraph (i) of this Resolution shall authorise the Directors of the Company during the Relevant Period to make and grant offers, agreements and options (including bonds, debentures, notes and other securities which carry rights to subscribe for or are convertible into shares of the Company) which would or might require shares to be allotted after the end of the Relevant Period;

4. (iii) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (i) of this Resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined) or (ii) the exercise of any rights of subscription or conversion under any existing bonds, debentures, notes and other securities of the Company; or (iii) the exercise of options granted under any share option scheme or any similar arrangement for the time being adopted for the grant or issue to executives and/or employees of the Company and/or any subsidiaries of shares or rights to acquire shares in the Company; or (iv) any scrip dividend scheme or similar arrangement providing for the allotment and issue of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Memorandum and Articles of Association of the Company, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this Resolution, and the said approval shall be limited accordingly;

5. (iv) for the purposes of this Resolution, “Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

   • (a) the conclusion of the next Annual General Meeting of the Company;

– 8 –

• (b) the expiration of the period within which the next Annual General Meeting of the Company is required by law to be held; or

• (c) the revocation or variation of the authority given under this Resolution by ordinary resolution of the shareholders in general meeting; and

• “Rights Issue” means an offer of shares or issue of options, warrants or other securities giving the right to subscribe for shares of the Company open for a period fixed by the Directors of the Company to holders of shares whose names appear on the register of members of the Company (and, where appropriate, to holders of other securities of the Company entitled to the offer) on a fixed record date in proportion to their then holdings of such shares of the Company (or, where appropriate, such other securities), (subject in all cases to such exclusions or other arrangements as the Directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory applicable to the Company).”

• “ THAT conditional upon the passing of Ordinary Resolutions Nos. 1 and 2 set out in the notice convening this meeting, the general mandate granted to the Directors of the Company to allot, issue and deal with additional shares pursuant to Ordinary Resolution No. 2 set out in the notice convening this meeting be and is hereby extended by the addition thereto of an amount representing the aggregate nominal amount of the share capital of the Company repurchased by the Company under the authority granted pursuant to Ordinary Resolution No. 1 set out in the notice convening this meeting, provided that such extended amount shall not exceed 10% of the aggregate nominal amount of the share capital of the Company in issue at the date of passing this Resolution.”

By Order of the Board Lee Yip Wah, Peter Secretary

Hong Kong, 12 July 2002

Notes:

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of authority, must be deposited at the registered office of the Company at 26th Floor, Tern Centre, Tower I, 237 Queen’s Road Central, Hong Kong not less than 48 hours before the time appointed for holding the meeting or adjourned meeting.

– 9 –