Wai Kee Holdings Limited — Proxy Solicitation & Information Statement 2003

Apr 11, 2003

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.

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WAI KEE HOLDINGS LIMITED ( )

(Incorporated in Bermuda with limited liability)

Directors: Registered Office: William Zen Wei Pao (Chairman) Clarendon House Derek Zen Wei Peu (Vice Chairman) Church Street Yue Pak Lim Hamilton HM 11 Keter Fong Shiu Leung Bermuda Patrick Lam Wai Hon Leslie Cheng Chi Pang Principal Place of Business: Steve Wong Che Ming** Unit 702B, 7th Floor Samuel Wan Siu Kau ** East Ocean Centre 98 Granville Road Tsimshatsui Kowloon Hong Kong

* Non-Executive Director

• ** Independent Non-Executive Director

11th April, 2003

To the Shareholders

Dear Sir or Madam,

GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE NEW SHARES

INTRODUCTION

At the forthcoming annual general meeting of Wai Kee Holdings Limited (the “Company”) to be held on 12th May, 2003 (the “Annual General Meeting”), an ordinary resolution will be proposed to grant to the directors of the Company (the “Directors”) a general mandate to repurchase shares of the Company up to a maximum of 10% of the issued share capital of the Company as at the date of passing the resolution (the “Repurchase Mandate”). In addition, an ordinary resolution will be proposed to provide the Directors with a general mandate to allot and issue new shares of the Company up to an amount not exceeding 20% of the issued share capital of the Company as at the date of passing such resolution and adding to such

Wai Kee Holdings Limited

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general mandate by a separate resolution any shares repurchased by the Company pursuant to the Repurchase Mandate. Details of these resolutions are set out in Ordinary Resolutions Nos. 5(A) to 5(C) in the notice convening the Annual General Meeting which is contained in the accompanying December 2002 Annual Report.

This circular serves as an explanatory statement required by the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolutions.

SHARE CAPITAL

As at 4th April, 2003 being the latest practicable date prior to the printing of this circular (the “Latest Practicable Date”), there were 782,274,034 shares of HK$0.10 each of the Company (the “Shares”) in issue. Subject to the passing of the relevant ordinary resolution and on the basis that no further Shares are issued or repurchased prior to the date of the Annual General Meeting, the Company would be authorised to repurchase up to a maximum of 78,227,403 Shares.

REASONS FOR THE REPURCHASES

The Directors believe that it is in the best interests of the Company and its shareholders (the “Shareholders”) to have general authority from the Shareholders to enable the Directors to repurchase Shares on the Stock Exchange. Such repurchase may, depending on marketing conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share of the Company and/or its earnings per Share and will only be made when the Directors believe that such repurchase will benefit the Company and its Shareholders.

FUNDING OF THE REPURCHASES

It is proposed that repurchases of securities under the Repurchase Mandate would be financed from available cash flow or working capital facilities of the Company and its subsidiaries. In repurchasing the securities, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and Bye-laws and the laws of Bermuda. The laws of Bermuda provide that the amount of capital repaid in connection with a share repurchase may only be paid out of either the capital paid up on the relevant Shares, or funds of the Company which would otherwise be available for dividend or distribution or the proceeds of a new issue of Shares made for the purpose of the repurchase. The amount of premium payable on the repurchase may only be paid out of either funds of the Company which would otherwise be available for dividend or distribution or out of the share premium account before the Shares are repurchased.

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the latest published audited accounts of the Company for the nine months ended 31st December, 2002), in the event that the proposed Repurchase Mandate was 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 or the gearing levels of the Company which in the opinion of the Directors are from time to time appropriate for the Company.

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Wai Kee Holdings Limited

SHARE PRICES

The highest and lowest prices at which the Shares have been traded on the Stock Exchange in each of the previous twelve months prior to the printing of this circular were as follows:

	**Per **	Share
	Highest		Lowest
	HK$		HK$
2002
April	0.75		0.60
May	0.84		0.69
June	0.81		0.65
July	0.69		0.52
August	0.76		0.61
September	0.71		0.65
October	0.77		0.62
November	0.69		0.62
December	0.68		0.62
2003
January	0.76		0.65
February	0.73		0.67
March	0.74		0.67

DISCLOSURE OF INTERESTS

None of the Directors nor, to the best of their knowledge and belief having made all reasonable enquiries, any of their associates has any present intention, in the event that the Repurchase Mandate is approved by the Shareholders, to sell any of the Shares to the Company.

No connected person (as defined in the Listing Rules) has notified that he/she has a present intention to sell any of the Shares to the Company, or has undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

UNDERTAKING OF THE DIRECTORS

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 repurchase pursuant to the proposed resolution in accordance with the Listing Rules and the laws of Bermuda.

EFFECT OF THE TAKEOVERS CODE

If a shareholder’s proportionate interest in the voting rights of the Company increases as a result of the Directors exercising the powers of the Company to repurchase Shares pursuant to the Repurchase Mandate, such increase will be treated as an acquisition of voting rights for the purposes of Rule 32 of the Code on Takeovers and Mergers (the “Takeovers Code”). Accordingly, a shareholder or group of shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

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Wai Kee Holdings Limited

As at the Latest Practicable Date and for the purpose of the Securities (Disclosure of Interest) Ordinance of Hong Kong, Mr. William Zen Wei Pao, Mr. Derek Zen Wei Peu and Vast Earn Group Limited (“Vast Earn”) were interested in 10% or more of the issued ordinary share capital of the Company:

		Approximate percentage of the
		issued ordinary share capital
	Number of	of the Company as at the
Name	Shares held	Latest Practicable Date
William Zen Wei Pao (note)	187,381,843	23.95%
Derek Zen Wei Peu (note)	172,861,078	22.10%
Vast Earn	213,868,000	27.34%

Note: Mr. William Zen Wei Pao and Mr. Derek Zen Wei Peu are brothers and are presumed to be acting in concert with each other by reason that they are close relatives. As at the Latest Practicable Date, the aggregate number of Shares held by them was 360,242,921 Shares, amounting to approximately 46.05% of the issued ordinary share capital of the Company.

In the event that the Directors exercise in full the power to repurchase the Shares pursuant to the Repurchase Mandate and assuming that there are no alteration to the existing shareholdings of Mr. William Zen Wei Pao, Mr. Derek Zen Wei Peu and Vast Earn, the combined shareholding of Mr. William Zen Wei Pao and Mr. Derek Zen Wei Peu will be increased to approximately 51.17% and the shareholding of Vast Earn will be increased to 30.38%. Accordingly, Mr. William Zen Wei Pao and Mr. Derek Zen Wei Peu will incur an obligation to make a mandatory offer under Rule 26 of the Takeovers Code as the aggregate percentage shareholding of Mr. William Zen Wei Pao and Mr. Derek Zen Wei Peu has increased by more than 2% of the voting rights of the Company. In addition, Vast Earn will also incur an obligation to make an offer under Rule 26 of the Takeovers Code by reason that Vast Earn will have increased its holding of voting rights of the Company to over 30% of the voting rights of the Company. The Directors do not intend to exercise in full their power to repurchase Shares.

SHARE REPURCHASES MADE BY THE COMPANY

In the six months preceding the date of this circular, the Company has made the following purchase of Shares on the Stock Exchange:

			Number of Shares	Price per Shares	Price per Shares
Date			Repurchased	Highest	Lowest
				HK$	HK$
24th	October,	2002	470,000	0.65	0.64
			470,000

PROXY FORM

A form of proxy for use at the Annual General Meeting is enclosed with the December 2002 Annual Report. Whether or not the Shareholders are able to attend the meeting, they are requested to complete the enclosed form of proxy and return it to the Company’s Branch Share Registrars in Hong Kong, Secretaries Limited at G/F., Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time of the meeting. Completion and return of the form of proxy will not preclude the Shareholders from attending and voting at the meeting should they wish to do so.

RECOMMENDATION

The Directors consider that the granting of the general mandates to repurchase shares and issue new shares are in the best interests of the Company and the Shareholders and accordingly recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the Annual General Meeting.

Yours faithfully, William Zen Wei Pao Chairman

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Wai Kee Holdings Limited