Walnut Capital Limited — Proxy Solicitation & Information Statement 2003

May 6, 2003

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document or as to the action you should take, 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 HAYWOOD INVESTMENTS LIMITED , you should at once hand this document and the accompanying proxy form 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 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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(Incorporated in the Cayman Islands with limited liability)

PROPOSALS INVOLVING

GENERAL MANDATES TO REPURCHASE SHARES

AND TO ISSUE SHARES OF THE COMPANY

A notice convening an extraordinary general meeting of Haywood Investments Limited (“the Company”) to be held at Unit A, 8th Floor, Wah Kit Commercial Centre, 302 Des Voeux Road Central, Hong Kong on Monday, 26th May, 2003 at 9:40 a.m. (or so soon thereafter as the annual general meeting convened for the same place and date at 9:30 a.m. shall have been concluded or adjourned) is set out on pages 9 to 11 of this document. Whether or not you propose to attend the meeting, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the principal place of business of the Company in Hong Kong at Unit A, 8th Floor, Wah Kit Commercial Centre, 302 Des Voeux Road Central, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof.

Hong Kong, 30th April, 2003

DEFINITIONS

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

• “Companies Law”

the Companies Law (Revised) of the Cayman Islands

• “Company”

Haywood Investments Limited, a company incorporated in the Cayman Islands with limited liability whose shares are listed on the Stock Exchange

• “Directors”

directors of the Company

• “Extraordinary General Meeting”

• the extraordinary general meeting of the Company to be held on Monday, 26th May, 2003 at 9:40 a.m. (or so soon thereafter as the annual general meeting of the Company convened for the same place and date at 9:30 a.m. shall have been concluded or adjourned), notice of which is set out on pages 9 to 11 of this document

• “Hong Kong”

• Hong Kong Special Administration Region of People’s Republic of China

• “Latest Practicable Date”

• 25th April, 2003, being the latest practicable date prior to the printing of this document for ascertaining certain information contained herein

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “Repurchase Proposal”

• the proposal to give a general mandate to the Directors to exercise the powers of the Company to repurchase during the period as set out in the Repurchase Resolution Shares up to a maximum of 10% of the issued share capital of the Company as at the date of the Repurchase Resolution

• “Repurchase Resolution”

• the proposed ordinary resolution as referred to in resolution no.1 of the notice of the Extraordinary General Meeting

• “Share(s)”

• share(s) of HK$0.01 each in the capital of the Company

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DEFINITIONS

“Share Repurchase Rules”	the relevant rules set out in the Listing Rules to regulate
	the repurchase by companies with primary listing on the
	Stock Exchange of their own securities on the Stock
	Exchange
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

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LETTER FROM THE CHAIRMAN

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(Incorporated in the Cayman Islands with limited liability)

Executive Directors: Mr. WONG Fong Kim (Chairman) Mr. LEE Wa Lun, Warren Mr. TAI Ah Lam, Michael Mr. CHAN Cheong Yee

Non-executive Director: Mr. CHANG Hang Vai Independent Non-executive Directors: Mr. HUI Hung, Stephen Dr. WONG Yun Kuen, Edward Mr. HSIEH Dominick

Registered office: Ugland House P.O. Box 309 George Town Grand Cayman Cayman Islands

Principal place of business in Hong Kong: Unit A, 8th Floor Wah Kit Commercial Centre 302 Des Voeux Road Central Hong Kong

Hong Kong, 30th April, 2003

To the shareholders

Dear Sir or Madam,

PROPOSALS INVOLVING GENERAL MANDATES TO REPURCHASE SHARES AND TO ISSUE SHARES OF THE COMPANY

GENERAL MANDATE TO REPURCHASE SHARES

At the extraordinary general meeting of the Company held on 23rd May, 2002, a general mandate was given by the Company to the Directors to exercise the powers of the Company to repurchase Shares. Such mandate will be lapsed at the conclusion of the forthcoming annual general meeting of the Company to be held on 26th May, 2003. The Directors propose to seek your approval of the Repurchase Resolution to be proposed at the Extraordinary General Meeting. An explanatory statement as required under the Share Repurchase Rules to provide the requisite information of the Repurchase Proposal is set out in the appendix hereto.

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LETTER FROM THE CHAIRMAN

GENERAL MANDATE TO ISSUE SHARES

It will also be proposed at the Extraordinary General Meeting two ordinary resolutions respectively granting to the Directors a general mandate to allot, issue and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of passing the resolution and adding to such general mandate so granted to the Directors any Shares representing the aggregate nominal amount of the Shares repurchased by the Company after the granting of the general mandate to repurchase shares up to 10% of the issued share capital of the Company as at the date of the Repurchase Resolution.

EXTRAORDINARY GENERAL MEETING

On pages 9 to 11 of this document, you will find a notice convening the Extraordinary General Meeting at which the following resolutions will be proposed :

• an ordinary resolution to grant to the Directors a general mandate to exercise all powers of the Company to repurchase on the Stock Exchange Shares representing up to 10% of the issued share capital of the Company as at the date of the Repurchase Resolution;

– an ordinary resolution to grant to the Directors a general mandate to authorise the Directors to issue, allot and deal with Shares not exceeding 20% of the issued share capital of the Company as at the date of passing such resolution; and

• an ordinary resolution to extend the general mandate which will be granted to the Directors to issue, allot and deal with additional Shares by adding to it the number of Shares repurchased under the Repurchase Proposal after the granting of the general mandate.

ACTION TO BE TAKEN

A proxy form for use at the Extraordinary General Meeting is enclosed herein. Whether or not you intend to attend the Extraordinary General Meeting, you are requested to complete the proxy form and return it to the principal place of business of the Company in Hong Kong at Unit A, 8th Floor, Wah Kit Commercial Centre, 302 Des Voeux Road Central, Hong Kong not less than 48 hours before the time appointed for holding the Extraordinary General Meeting. Completion and return of a proxy form will not prevent shareholders of the Company from attending and voting at the Extraordinary General Meeting if they so wish.

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LETTER FROM THE CHAIRMAN

RECOMMENDATION

The Directors believe that the Repurchase Proposal and the general mandate for Directors to issue new Shares are all in the best interests of the Company and its shareholders. Accordingly, the Directors recommend that all shareholders should vote in favour of the resolutions set out in the notice of Extraordinary General Meeting as they intend to do themselves in respect of their own holdings, if any.

By Order of the Board Wong Fong Kim Chairman

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EXPLANATORY STATEMENT

APPENDIX

This appendix serves as an explanatory statement, as required by the Share Repurchase Rules, to provide requisite information to you for your consideration of the proposal to permit the repurchase of Shares up to a maximum of 10% of the issued share capital of the Company as at the date of the Repurchase Resolution.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 144,000,000 Shares.

Subject to the passing of the Repurchase 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 Resolution to repurchase a maximum of 14,400,000 Shares.

2. REASONS FOR REPURCHASE

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

3. FUNDING OF REPURCHASES

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 Law. The Companies Law provides that the amount of capital repaid in connection with a share repurchase may be paid out of the profits of the Company or the proceeds of a fresh issue of shares made for the purposes of the repurchase or out of capital subject to and in accordance with the Companies Law. The amount of premium payable on repurchase may only be paid out of either the profits of the Company or out of the share premium account before or at the time the Company’s shares are repurchased in the manner provided for in the Companies Law.

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 31st December, 2002) in the event that the power to repurchase Shares was to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the power to repurchase Shares pursuant to the Repurchase Proposal 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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EXPLANATORY STATEMENT

APPENDIX

4. SHARE PRICES

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

	Highest	Lowest
	HK$	HK$
April 2002	0.395	0.33
May 2002	0.345	0.295
June 2002	0.345	0.226
July 2002	0.33	0.248
August 2002	0.29	0.25
September 2002	0.3	0.185
October 2002	0.28	0.08
November 2002	0.108	0.09
December 2002	0.085	0.054
January 2003	0.088	0.04
February 2003	0.06	0.035
March 2003	0.097	0.073

5. UNDERTAKING

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 Repurchase Resolution and in accordance with the Listing Rules and the applicable laws of the Cayman Islands.

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 or its subsidiaries under the Repurchase Proposal if such is approved by the shareholders of the Company.

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 its subsidiaries, or have undertaken not to do so, in the event that the Repurchase Proposal is approved by the shareholders of the Company.

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EXPLANATORY STATEMENT

APPENDIX

6. TAKEOVERS CODE

If on the exercise of the power to repurchase Shares pursuant to the Repurchase Proposal, 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 Takeovers Code. As a result, 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 Rules 26 and 32 of the Takeovers Code.

As at the Latest Practicable Date, the register maintained by the Company pursuant to Section 336 of the Securities and Future Ordinance shows the following shareholders having interests in Shares of 5% or more of the issued Shares:

		Percentage of
Name	No. of Shares	issued capital
Ever Harvest Investment Limited_(Note 1)_	25,000,000	17.36%
Fortuna Alliance Limited_(Note 2)_	25,000,000	17.36%

Notes:

1. Ever Harvest Investment Limited is wholly owned by Mr. Wong Fong Kim who is deemed to be interested in those shares.

2. Fortuna Alliance Limited is wholly owned by Mr. Lam Andy Siu Wing who is deemed to be interested in those shares.

The Directors are not aware of any consequences which may arise under the Takeovers Code as a result of any repurchases made under the Repurchase Proposal. The Company have no present intention to repurchase Shares to such extent as to result in the amount of Shares held by the public being reduced to less than 25%.

7. SHARES REPURCHASE MADE BY THE COMPANY

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

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NOTICE OF EXTRAORDINARY GENERAL MEETING

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(Incorporated in the Cayman Islands with limited liability)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Company will be held at Unit A, 8th Floor, Wah Kit Commercial Centre, 302 Des Voeux Road Central, Hong Kong on Monday, 26th day of May, 2003 at 9:40 a.m. (or so soon thereafter as the annual general meeting of the Company convened for the same date and place at 9:30 a.m. 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 of the Company:

ORDINARY RESOLUTIONS

1. “ THAT :

• (a) subject to paragraph (b) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase shares of HK$0.01 each 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 of Hong Kong 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;

• (b) the aggregate nominal amount of shares of the Company which the Directors of the Company is authorised to repurchase pursuant to the approval in paragraph (a) above shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution; and the said approval shall be limited accordingly; and

• (c) for the purposes of this Resolution,

“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;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

  - (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the articles of association of the Company to be held; or

  - (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting.”

1. “ THAT :

2. (a) subject to paragraph (c) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares of HK$0.01 each in the capital of the Company and to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such power be and is hereby generally and unconditionally approved;

3. (b) the approval in paragraph (a) above shall authorise the Directors of the Company during the Relevant Period (as hereinafter defined) to make or grant offers, agreements and options (including bonds, warrants and debentures convertible into shares of the Company) which would or might require the exercise of such power after the end of the Relevant Period;

4. (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors of the Company pursuant to the approval in paragraph (a) above, otherwise than (i) a Rights Issue (as hereinafter defined); (ii) an issue of shares as scrip dividends pursuant to the articles of association of the Company from time to time; or (iii) an issue of shares under any option scheme or similar arrangement for the time being adopted for grant or issue of shares or rights to acquire shares of the Company; shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing this Resolution, and the said approval shall be limited accordingly; and

5. (d) for the purpose of this Resolution,

   • “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;

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NOTICE OF EXTRAORDINARY GENERAL MEETING

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by law or the articles of association of the Company to be held; or

• (iii) the date on which the authority set out in this Resolution is revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting; and

“Rights Issue” means an offer of shares open for a period fixed by the Directors of the Company to the holders of shares of the Company on the register on fixed record date in proportion to their then holdings of such shares as at that date (subject 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 outside Hong Kong applicable to the Company).”

1. “ THAT subject to the passing of Resolutions No.1 and No.2 set out in the notice convening the meeting, the general mandate granted to the Directors of the Company to allot, issue and deal with additional shares pursuant to 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 shares in the capital of the Company repurchased by the Company under the authority granted pursuant to Resolution No.1 set out in the notice convening this meeting, provided that such amount of shares so repurchased shall not exceed 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing the said Resolution.”

By Order of the Board Peter Lee Yip Wah Secretary

Hong Kong, 30th April, 2003

Notes:

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

2. To be valid, the proxy form together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof must be deposited at the principal place of business of the Company in Hong Kong at Unit A, 8th Floor, Wah Kit Commercial Centre, 302 Des Voeux Road Central, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

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