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Investment in Shui on Land Limited Very Substantial Acquisition and Connected Transactions

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Investment in Shui on Land Limited Very Substantial Acquisition and Connected Transactions THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any 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 or transferred all your shares in Shui On Construction and Materials 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 or transfer was effected for transmission to the purchaser or the transferee. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no 14.40 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. * (Incorporated in Bermuda with limited liability) INVESTMENT IN SHUI ON LAND LIMITED App. 1B VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTIONS Independent Financial Adviser to the Independent Board Committee A letter from the Independent Board Committee is set out on page 30 of this circular. A letter from BNP Paribas Peregrine Capital Limited, the independent financial adviser to the Independent Board Committee is set out on pages 31 to 44 of this circular. A notice convening a special general meeting of Shui On Construction and Materials Limited to be held at Room 103, 1/F Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong, 2:30 p.m. on 15 April 2004 is set out on pages 228 to 231 at the end of this circular. Whether or not you are able to attend the meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s registrars in Hong Kong, Standard Registrars Limited at 28th Floor, 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 appointed for the holding of the special general meeting or any adjournments thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meetings should you so wish. * For identification purpose only 23 March 2004 CONTENTS Page Definitions ............................................................... 1 Letter from the Board ..................................................... 6 Letter from the Independent Board Committee .................................. 30 Letter from the Independent Financial Adviser .................................. 31 Appendix I — Financial Information on the Group ......................... 45 Appendix II — Accountants’ Report on Rainbow City ........................ 116 Appendix III — Accountants’ Report on Taipingqiao Properties ................. 133 Appendix IV — Proforma Combined Financial Information on Rainbow City and Taipingqiao Properties ................................... 170 Appendix V — Valuation Report ......................................... 176 Appendix VI — General Information ...................................... 220 Notice of Special General Meeting ............................................ 228 — i — DEFINITIONS In this circular, the following expressions have the following meanings unless the context requires otherwise: “Agreements” the Rainbow Sale and Purchase Agreement, the Taipingqiao Sale and Purchase Agreement, and the Subscription and Shareholders’ Agreement “Assets Injection” the transfer of the shares and related indebtedness of the Contributed Companies and their underlying assets into SOL under the Rainbow Sale and Purchase Agreement and the Taipingqiao Sale and Purchase Agreement “associates” has the meaning as ascribed to the term under the Listing Rules “BNP Paribas Peregrine” BNP Paribas Peregrine Capital Limited, a corporation deemed licensed to conduct type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO “Board” the board of Directors “Cash Injection” the cash subscription for 50 million Junior Preference Shares by NRI Limited under the Subscription and Shareholders’ Agreement “Company” Shui On Construction and Materials Limited, a company incorporated in Bermuda and listed on the main board of the Stock Exchange “Contributed Companies” Foresight Profits Limited and the Taipingqiao Holding Vehicles “Debt” all amounts which Hollyfield Holdings Limited, a wholly- owned subsidiary of Foresight Profits Limited, owes to the Company immediately before completion of the Rainbow Sale and Purchase Agreement (note: as at 31 January 2004: HK$763 million) “Director(s)” the director(s) of the Company “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China — 1 — DEFINITIONS “Independent Board Committee” an independent committee of the Board comprising Mr. Anthony Griffiths and Professor Michael John Enright, both of whom are independent non-executive directors of the Company “IFA” BNP Paribas Peregrine, the independent financial adviser to the Independent Board Committee “Independent Shareholders” shareholders of the Company other than members of the Shui On Group and its associates “Independent Valuer” Chesterton Petty Ltd. “Investors” Ergo Tru Asia Limited, Metro Holdings Limited, Citicorp International Finance Corporation, Ocean Equity Holdings Limited, Value Partners Funds, Standard Chartered Bank, Shanghai Hotel Investments Limited, Jebsen and Company Limited and each of their Permitted Nominees “IPO” an initial public offering of the shares in the capital of SOL and the consequential listing of such shares on an internationally recognized stock exchange “Junior Preference Shares” junior convertible redeemable participating preference shares of US$0.01 each (about HK$0.078) in the share capital of SOL having the rights and benefits and being subject to the restrictions set out in the New Articles of Association “Latest Practicable Date” 19 March 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “New Articles of Association” the articles of association setting out, among other things, the rights of the Preference Shares to be adopted by SOL before the first closing of the Subscription and Shareholders’ Agreement “NRI Limited” New Rainbow Investments Limited, a company established in the British Virgin Islands and a wholly owned subsidiary of the Company “Ordinary Shares” ordinary shares of par value US$0.01 each (about HK$0.078) in the share capital of SOL — 2 — DEFINITIONS “Permitted Nominees” nominees which may be appointed by Ergo Tru Asia Limited, Metro Holdings Limited, Citicorp International Finance Corporation, Ocean Equity Holdings Limited, Value Partners Funds, Standard Chartered Bank, Shanghai Hotel Investments Limited or Jebsen and Company Limited to take up the Preference Shares under the Subscription and Shareholders’ Agreement, which include their affiliates “PRC” the People’s Republic of China, and for the purpose of this announcement, excluding Hong Kong, the Macau Special Administrative Region and Taiwan “Preference Shares” Junior Preference Shares and Senior Preference Shares “Qualifying IPO” an IPO at a minimum market capitalisation set out in the New Articles of Association “Rainbow City” the residential housing development project, also known as “Rui Hong Xin Cheng ”, located in Hongkou District, Shanghai comprising the land parcels identified as Hongkou District Lots 11 and 174 (merged and designated as Lot 149), South of Lot 1, North of Lot 1, Lot 2, Lot 3, Lot 4, Lot 6, Lot 7, Lot 8, East of Lot 9, West of Lot 9 and Lot 10, respectively “Rainbow Sale and Purchase the sale and purchase agreement dated 18 February 2004 Agreement” relating to the sale of shares of Foresight Profits Limited and the Debt entered into between the Company and SOL “Senior Preference Shares” senior convertible redeemable participating preference shares of US$0.01 each (about HK$0.078) in the share capital of SOL having the rights and benefits and being subject to the restrictions set out in the New Articles of Association “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” Special General Meeting to be convened by the Company to consider, among other things, the Rainbow Sale and Purchase Agreement and the Cash Injection “Shanghai Xintiandi” the retail, commercial and ancillary residential developments located within the Taipingqiao Area on the land parcels identified as Luwan District Lot Nos. 109-1, 109-2, 112-1 and 112-2 “Share Capital” the share capital of SOL, comprising the Ordinary Shares and the Preference Shares — 3 — DEFINITIONS “Shareholder(s)” holder(s) of shares of par value HK$1.00 each in the issued share capital of the Company “Shui On Company” Shui On Company Limited, the controlling shareholder interested in approximately 68.52% of the issued share capital of the Company “Shui On Group” Shui On Company and its subsidiaries but excluding the Company and its subsidiaries “Shui On Investment” Shui On Investment Company Limited, a wholly owned subsidiary of Shui On Company “Shui On Properties” Shui On Properties
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