00E1008089 Cir.Indb

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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in eSun Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular. (Stock Code: 571) VERY SUBSTANTIAL ACQUISITION, VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTIONS REORGANISATION INVOLVING SHARES IN THE CAPITAL OF LAI FUNG HOLDINGS LIMITED AND LAI SUN DEVELOPMENT COMPANY LIMITED Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders A letter from the Board (as defined herein) is set out on pages 6 to 19 of this circular. A letter from the Independent Board Committee (as defined herein) containing its recommendation is set out on pages 20 to 21 of this circular. A letter from the Independent Financial Adviser (as defined herein) containing its advice to the Independent Board Committee (as defined herein) and the Independent Shareholders (as defined herein) is set out on pages 22 to 49 of this circular. A notice convening the SGM (as defined herein) to be held at 10:30 a.m. on Monday, 20 September 2010 at Salon 1-3, JW Marriott Ballroom, Level 3, JW Marriott Hotel Hong Kong, Pacific Place, 88 Queensway, Hong Kong is set out on pages 293 to 295 of this circular. A form of proxy for use at the SGM is enclosed. Whether or not you intend to be present at the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s (as defined herein) share registrar in Hong Kong, Tricor Tengis Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event, not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting thereof should you so wish. 30 August 2010 CONTENTS Page DEFINITIONS . 1 LETTER FROM THE BOARD Introduction . 6 Shares Swap Agreement. 7 Shareholding Structure . 11 Reasons for and benefits of the Transactions . 12 Principal business activities of LSG, eSun, LSD and Lai Fung . 13 Financial information of Lai Fung . 14 Financial information of LSD . 14 Financial effects to the Group in relation to the Transactions . 15 Listing Rules implications of the Reorganisation . 16 Waiver in relation to Rule 14.68(2)(a)(i) of the Listing Rules . 17 Takeovers Code waivers. 18 SGM . 18 Recommendations . 19 Additional information. 19 LETTER FROM THE INDEPENDENT BOARD COMMITTEE . 20 LETTER FROM PLATINUM SECURITIES. 22 — i — CONTENTS Page APPENDIX I — FINANCIAL INFORMATION ON THE GROUP, THE LSD GROUP AND THE LAI FUNG GROUP . 50 APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION . 55 APPENDIX III — MANAGEMENT DISCUSSIONS AND ANALYSES ON THE GROUP AND THE LAI FUNG GROUP . 70 APPENDIX IV — PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE GROUP. 163 APPENDIX V — PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LAI FUNG GROUP . 177 APPENDIX VI — PROPERTY VALUATION REPORT IN RELATION TO THE LANDED PROPERTY INTERESTS OF THE LSD GROUP . 238 APPENDIX VII — GENERAL INFORMATION . 279 NOTICE OF SGM . 293 — ii — DEFINITIONS In this circular, the following expressions have the following meanings, unless the context otherwise requires: “associate” has the meaning ascribed to it under the Listing Rules; “Board” the board of Directors; “Business Day” means a day on which licensed banks are generally open for business in Hong Kong (excluding Saturdays); “Completion” completion of the Transactions in accordance with the terms of the Shares Swap Agreement; “Completion Date” means the date when Completion shall take place, being the seventh Business Day after satisfaction or waiver of the last of the conditions precedent or such other date as may be agreed between the parties to the Shares Swap Agreement; “connected person” has the meaning ascribed to it under the Listing Rules; “controlling shareholder” has the meaning ascribed to it under the Listing Rules; “Directors” the directors of the Company; “eSun” or the “Company” eSun Holdings Limited, a company incorporated in Bermuda, the shares of which are listed on the Stock Exchange (Stock Code: 571); “eSun Group” or the “Group” the Company and its subsidiaries; “Executive” the executive director of the corporate finance division of the Securities and Futures Commission or any delegate of the executive director; “HK$” Hong Kong dollars, the lawful currency of Hong Kong; — 1 — DEFINITIONS “Hong Kong” Hong Kong Special Administrative Region of the PRC; “Independent Board Committee” the independent board committee of the Company comprising all the independent non-executive Directors, namely Dr. Ng Lai Man, Carmen, Mr. Tong Ka Wing, Carl and Mr. Alfred Donald Yap, which has been established for the purpose of advising the Independent Shareholders as to whether the terms of the Shares Swap Agreement are fair and reasonable and whether the Shares Swap Agreement and the Transactions are in the interests of the Company and its shareholders as a whole; “Independent Financial Adviser” Platinum Securities Company Limited, a licensed or “Platinum Securities” corporation under the SFO licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Shares Swap Agreement and the Transactions; “Independent Shareholders” shareholders of the Company excluding all members of the Lam Family and LSD and its associates; “Knight Frank” Knight Frank Petty Limited, an independent property valuer jointly appointed by LSG and eSun for valuation of the landed property interests of the Lai Fung Group; “Lai Fung” Lai Fung Holdings Limited, a company incorporated in the Cayman Islands, the shares of which are listed on the Stock Exchange (Stock Code: 1125); — 2 — DEFINITIONS “Lai Fung Adjusted Net Asset consolidated net asset value attributable to the Value” shareholders of Lai Fung as set out in the published interim report of Lai Fung for the six months ended 31 January 2010 and adjusted to reflect the fair market value of all the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities) of Lai Fung as at 31 May 2010; “Lai Fung Group” Lai Fung and its subsidiaries; “Lai Fung Transaction” the sale, by LSG, and the purchase by the Company, of LSG’s direct and indirect interests in 3,265,688,037 shares in the capital of Lai Fung pursuant to the terms of the Shares Swap Agreement; “Lam Family” Mr. Lam, Madam U Po Chu (being the mother of Mr. Lam), Mr. Lam Kin Ming (being a brother of Mr. Lam), Mr. Lam Kin Hong, Matthew (being a brother of Mr. Lam) and Mr. Lam Hau Yin, Lester (being a son of Mr. Lam) together with their respective associates; “Latest Practicable Date” 24 August 2010, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular; “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange; “Long Stop Date” means 30 September 2010 or such later date as may be agreed between the parties to the Shares Swap Agreement; “LSD” Lai Sun Development Company Limited, a company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange (Stock Code: 488); — 3 — DEFINITIONS “LSD Adjusted Net Asset Value” consolidated net asset value attributable to the shareholders of LSD as set out in the published interim report of LSD for the six months ended 31 January 2010 and adjusted to reflect (i) the fair market values of all the landed property and related interests (after taking into account the estimated corresponding effects on the deferred tax liabilities and the corresponding financial effects related to the cross- shareholding between LSD and the Company) of LSD and the Company as at 31 May 2010, and (ii) the fair value of a tax indemnity given by LSD to Lai Fung as at 31 May 2010 pursuant to an indemnity deed dated 12 November 1997 entered into between LSD and Lai Fung (after taking into account the financial effects related to the cross-shareholding between LSD and the Company); “LSD Group” LSD and its subsidiaries; “LSD Transaction” the sale, by the Company, and the purchase, by LSG, of the Company’s indirect interests in 5,200,000,000 shares in the capital of LSD pursuant to the terms of the Shares Swap Agreement; “LSG” Lai Sun Garment (International) Limited, a company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange (Stock Code: 191); “LSG Group” LSG and its subsidiaries; “LSG Independent Shareholders” shareholders of LSG excluding all members of the Lam Family; “Mr.

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