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THIS DOCUMENT 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, company secretary,
professional accountant or other professional adviser.
If you have sold or transferred all your shares in New Heritage Holdings Ltd., you should at once hand
this circular to the purchaser or the transferee 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 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 the Cayman Islands with limited liability)
(Stock Code: 95)
DISCLOSEABLE TRANSACTION
AND
CONNECTED TRANSACTION
SUBSCRIPTION OF US$5,500,000 CONVERTIBLE NOTE
IN KEY APEX LIMITED
Independent Financial Adviser to the Independent Board Committee
and Independent Shareholders
CIMB-GK Securities (HK) Ltd
A letter from the Independent Board Committee is set out on page 9 of this circular and a letter from the
independent financial adviser to the Independent Board Committee and the Independent Shareholders is set
out on pages 10 to 13 of this circular.
A notice convening the EGM to be held on 13 July 2007 at 9 : 30 a.m. at Falcon Room II, Luk Kwok Hotel,
72 Gloucester Road, Wanchai, Hong Kong is set out on pages 24 to 25 of this circular. Whether or not you
are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in
accordance with the instructions printed thereon to the Company’s branch share registrar and transfer office
in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Hong
Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the
EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person
at the EGM should you so wish.
Company’s Website: www.nh-holdings.com
20 June 2007
CONTENTS
Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Convertible Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Reasons for subscribing for the Convertible Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Information on the parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Financial effects of the CN Subscription Agreement on the Group . . . . . . . . . . . . . . . . . 7
6. Listing Rules requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. The EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. Procedures for demanding a poll by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 9
LETTER FROM CIMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
APPENDIX I — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
APPENDIX II — VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
—i—
DEFINITIONS
In this circular, the following expressions have the following meanings unless the context requires
otherwise:
‘‘Announcement’’ the announcement of the Company dated 29 May 2007
‘‘associates’’ has the meaning ascribed to it under the Listing Rules
‘‘Board’’ the board of Directors
‘‘Business Day’’ a day (other than Saturday, Sunday or a public holiday) on which banks in
Hong Kong are generally open for business
‘‘BVI’’ British Virgin Islands
‘‘CIMB’’ CIMB-GK Securities Limited, a licensed corporation to perform type 1
(dealing in securities), type 4 (advising on securities) and type 6 (advising
on corporate finance) regulated activities under the SFO and the independent
financial adviser to the Independent Board Committee and the Independent
Shareholders in connection with the CN Subscription Agreement
‘‘CN Subscription the subscription agreement dated 28 May 2007 and entered into between
Agreement’’ Healthy Castle and Key Apex in respect of the Convertible Note
‘‘Company’’ New Heritage Holdings Ltd., a company incorporated in the Cayman Islands
with limited liability and the shares of which are listed on the main board of
the Stock Exchange
‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘Conversion Date’’ the date upon which the Convertible Note is converted, being the conversion
date referred to in the paragraph headed ‘‘Convertible Note’’ of this circular
‘‘Conversion Price’’ the price at which the Convertible Note is converted, which is set out in the
paragraph headed ‘‘Convertible Note’’ of this circular
‘‘Conversion Shares’’ 100 shares, being the shares to be allotted and issued to the holder of the
Convertible Note upon conversion of the Convertible Note, which represents
approximately 10% of the enlarged issued share capital of Key Apex
‘‘Convertible Note’’ the convertible note to be issued by Key Apex to Healthy Castle pursuant to
the CN Subscription Agreement
‘‘Director(s)’’ director(s) of the Company
‘‘EGM’’ the extraordinary general meeting of the Company to be convened on 13 July
2007 for the purpose of approving the CN Subscription Agreement and all
other related transactions, the notice of which is set out on pages 24 to 25 of
this circular
‘‘Group’’ the Company and its subsidiaries
‘‘Healthy Castle’’ Healthy Castle Investments Limited, a company incorporated in the BVI and
is an indirect wholly-owned subsidiary of the Company
‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC
—1—
DEFINITIONS
‘‘Independent Board the independent board committee of the board of Directors, comprising Mr.
Committee’’ WONG Gary Ka Wai, Mr. SUN Leland Li Hsun and Mr. CHAN Norman
Enrique, all being the independent non-executive Directors
‘‘Independent the Shareholders who are not involved in or interested in the CN
Shareholders’’ Subscription Agreement
‘‘Independent Third Party’’ (Shanghai Jiading Xu Integrated
Residential Construction Development Limited), a domestic enterprise
established under the laws of the PRC
‘‘Key Apex’’ Key Apex Limited, a company incorporated in the BVI and is held as to 75%
by Ultra Plan Limited and 25% by Asia Investment Services Limited
‘‘Land’’ the piece of land (or as appropriate, the land use right of the piece of land) in
Shanghai at Lots No. 6-1 and 6-2, No. 51 Bei Le Road, Jiading New City,
Jiading District, Shanghai, the PRC with a site area of approximately
130,965 square meters
‘‘Latest Practicable Date’’ 8 June 2007, being the latest practicable date for ascertaining certain
information contained in this circular
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange
‘‘PRC’’ the People’s Republic of China (for the purpose of this circular, excluding
Hong Kong, the Macau Special Administrative Region and Taiwan)
‘‘PRC Company’’ a company to be established in the PRC as a project company for the
residential and commercial property development project located on the
Land, and in which Key Apex will hold 99% interests
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the laws of Hong
Kong)
‘‘Shareholders’’ holders of the Shares
‘‘Shares’’ the ordinary shares of HK$0.01 each in the capital of the Company
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited or, as the case maybe, the main
board operated by the Stock Exchange
‘‘US$’’ United States dollars, the lawful currency of the United States of America
‘‘%’’ per cent
The contents of the Company’s website will not form part of this circular. The Directors will not be
responsible for the accuracy or completeness of the information of third parties included in this circular.
For the purpose of this circular, unless otherwise indicated, the exchange rates at HK$7.8 = US$1.00
and HK$1 = RMB1 have been used, where applicable, for the purpose of illustration only and do not
constitute a representation that any amount has been, could have been or may be exchanged.
For ease of reference, the names of certain PRC entities have been included in this circular in both
English and Chinese languages. The English names are the unofficial translation of their respective Chinese
names, and in the event of any inconsistency, the Chinese version shall prevail.
—2—
LETTER FROM THE BOARD
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 95)
Executive Directors: Registered Office:
Mr. TAOCHAIFU Choofuang Clifton House
(also known as CF Tao) (Chairman) 75 Fort Street
Mr. TAO Richard (Vice Chairman) P.O. Box 1350 GT
Mr. TAO Paul (also known as TAOCHAIFU Porn) George Town
(Managing Director) Grand Cayman
Mr. KONG Mui Sum Lawrence Cayman Islands
Mr. YIM Chun Leung
Head Office and Principal
Non-executive Director: Place of Business:
Mr. CHAN Bernard Charnwut Room 2301, 23/F
Fortis Bank Tower
Independent Non-Executive Directors: 77–79 Gloucester Road
Mr. WONG Gary Ka Wai Wanchai, Hong Kong
Mr. SUN Leland Li Hsun
Mr. CHAN Norman Enrique 20 June 2007
To the Shareholders
Dear Sir/Madam,
DISCLOSEABLE TRANSACTION
AND
CONNECTED TRANSACTION
SUBSCRIPTION OF US$5,500,000 CONVERTIBLE NOTE
IN KEY APEX LIMITED
1. INTRODUCTION
It was announced in the Announcement that on 28 May 2007, Healthy Castle entered into the CN
Subscription Agreement with Key Apex. Pursuant to the CN Subscription Agreement, Key Apex agreed to
issue to Healthy Castle the Convertible Note in the principal amount of US$5,500,000 (equivalent to
approximately HK$42,900,000).
The Independent Board Committee has been established to advise the Independent Shareholders on the
Convertible Note. CIMB has been appointed to advise the Independent Shareholders and the Independent
Board Committee who will make recommendation to the Independent Shareholders as to how to vote on the
ordinary resolution in respect of the Convertible Note and the transactions contemplated thereunder.
The purpose of this circular is to set out, among other things, (i) details of the CN Subscription
Agreement; (ii) a letter from CIMB containing its advice to the Independent Board Committee on the CN
Subscription Agreement and the transactions contemplated thereunder; (iii) the recommendation of the
—3—
LETTER FROM THE BOARD
Independent Board Committee regarding the CN Subscription Agreement and the transactions contemplated
thereunder to the Independent Shareholders; (iv) a valuation report of the Land; and (v) a notice of the
EGM.
2. CONVERTIBLE NOTE
The principal terms of the CN Subscription Agreement are as follows:
Date: 28 May 2007
Issuer: Key Apex, a company incorporated in the BVI on 8 November 2006 and is
held as to 75% by Ultra Plan Limited (‘‘Ultra Plan’’) and 25% by Asia
Investment Services Limited (‘‘Asia Investment’’). Both Asia Investment
and Ultra Plan are deemed to be controlled by associates of Mr. Bernard C.
Chan, a non-executive Director, pursuant to the Listing Rules. Mr. Bernard
C. Chan is a connected person of the Company
Noteholder: Healthy Castle, an indirect wholly-owned subsidiary of the Company
Principal amount: US$5,500,000 (equivalent to approximately HK$42,900,000)
Coupon: Zero
Transferability: The Convertible Note is non-transferrable
Maturity date: First anniversary of the issue date of the Convertible Note, which date can be
extended subject to prior written consent of the holder of the Convertible
Note
Repayment: Should no Conversion Shares have been issued to the holder of the
Convertible Note, the Convertible Note shall be repaid in cash on the day of
the first anniversary of the issue date of the Convertible Note
Automatic conversion: Up to the amount of the total conversion price of the Convertible Note
represented by the Convertible Note certificate will, without any action
required on the part of Healthy Castle or Key Apex, on the Conversion Date
be mandatorily and automatically converted into the Conversion Shares,
which represents 10% of the enlarged issued share capital of Key Apex. The
total conversion price is a sum equals to the Conversion Price multiplied by
the total number of Conversion Shares, which equals US$100 (equivalent to
approximately HK$780)
Conversion will automatically take place on the Conversion Date before the
maturity of the Convertible Note and conversion cannot be stopped nor
Healthy Castle can choose to convert at any time
Conversion price: The price at which each Conversion Share will be issued upon conversion of
the Convertible Note will be the current par value of each share of Key Apex
(i.e. US$1.00)
—4—
LETTER FROM THE BOARD
Conversion date: The date which falls three (3) days after the date when the PRC Company
has obtained the land use right certificate to the Land and if such date is not
a Business Day, it shall be postponed to the immediately following Business
Day, or such other date as it may from time to time be mutually agreed
between Key Apex and the holder of the Convertible Note
Shareholder’s loan: The balance of the principal amount of the Convertible Note after deduction
of the total conversion price of US$5,499,900 (equivalent to approximately
HK$42,899,220) shall without further action on the part of Healthy Castle or
Key Apex be from the Conversion Date treated as an interest-free
shareholder’s loan advanced by Healthy Castle to Key Apex, which is of
the same term as other existing shareholder’s loan of Key Apex
Conditions precedent
Completion of the issue and subscription of the Convertible Note shall be conditional upon all
consents or approvals, including but not limited to consents or approvals from the Shareholders, any
relevant governmental authorities, regulatory bodies, banks or creditors, which are required and
necessary in respect of Healthy Castle’s entry into the CN Subscription Agreement.
Should the conditions not be fulfilled within six months from the date of the CN Subscription
Agreement (or such other date as agreed by the parties in writing), the CN Subscription Agreement
shall lapse and become null and void and the parties shall be released from all obligations under the
CN Subscription Agreement. According to the Listing Rules, the CN Subscription Agreement is
subject to approval by Independent Shareholders. As at the date of this circular, all the conditions have
been fulfilled except approval from the Independent Shareholders at the EGM has not been obtained.
Completion
Completion of the issue and subscription of the Convertible Note shall take place within three
Business Days after the date on which Healthy Castle informed Key Apex that all conditions precedent
have been fulfilled.
3. REASONS FOR SUBSCRIBING FOR THE CONVERTIBLE NOTE
Upon conversion of the Convertible Note, the Group will become a shareholder of Key Apex holding
10% of its enlarged issued share capital. The Directors considered that the shareholding interests in Key
Apex, which in turn will hold 99% interests in the PRC Company, will enable the Group to be indirectly
interested in the Land and the project located thereon, and diversify the Group’s investment in property
development projects geographically. The terms of the CN Subscription Agreement were negotiated on an
arm’s length basis. Given that the CN Subscription Agreement is able to provide the Group a way of exit if
PRC Company is unable to obtain the land use right certificate for the Land and this way of exit is not
available to other investors of Key Apex, the Directors, including the independent non-executive Directors,
are of the view that the terms are fair and reasonable so far as the Company is concerned and in the interests
of the Company and the Shareholders taken as a whole. As advised by Key Apex, two shareholders of Key
Apex, namely Ultra Plan and Asia Investment have agreed to fund the investment and operation of Key
Apex, including its obligation to repay the Convertible Note at maturity if the Convertible Note is not
converted in accordance with the CN Subscription Agreement. As at the Latest Practicable Date, Ultra Plan
and Asia Investment had contributed shareholders’ loans in the aggregate sum of US$5,500,000 (equivalent
to approximately HK$42,900,000) to Key Apex. Such shareholders’ loans have no fixed date of repayment.
—5—
LETTER FROM THE BOARD
Based on the above, the Directors consider that Key Apex has the financial capability to repay the
Convertible Note at maturity if the Convertible Note is not converted in accordance with the CN
Subscription Agreement.
4. INFORMATION ON THE PARTIES
The Group is principally engaged in property development and property investment businesses in
Suzhou, the PRC. Healthy Castle is a company incorporated in the BVI and is indirectly wholly-owned by
the Company. The principal business of Healthy Castle is investment holding.
Key Apex is a company incorporated in the BVI and is held as to 75% by Ultra Plan. Ultra Plan is
deemed to be controlled by associates of Mr. Bernard C. Chan pursuant to the Listing Rules. The principal
business of Key Apex is investment holding and will be interested in 99% of the equity interest in the PRC
Company, which is the project company for the residential and commercial property development project
located on the Land. The remaining 1% equity interest in the PRC Company will be held by
(Shanghai Jiading Xu Integrated Residential Construction
Development Limited), a domestic enterprise established under the laws of the PRC, which and its
ultimate beneficial owner(s) to best of the Directors’ knowledge, information and belief having made all
reasonable inquiry, are independent of the Company and its connected persons (the ‘‘Independent Third
Party’’).
Key Apex advised that the establishment of the PRC Company with the Independent Third Party as a
shareholder is for the purpose of facilitating the acquisition of the Land and the Independent Third Party is a
passive investor to the PRC Company and will not have any board representation in the PRC Company. The
Independent Third Party will contribute 1% of the cost for acquisition of the Land in cash to the PRC
Company for the acquisition of the Land. Key Apex and the Independent Third Party have won the bid to
acquire the land use right to the Land in a public auction and the price for the Land was RMB315,000,000
(equivalent to approximately HK$315,000,000).
To the knowledge of the Directors, Key Apex has only commenced its business recently and no
accounts have been prepared and save for cash, being the shareholders’ loans in the sum of US$5,500,000
(equivalent to HK$42,900,000) which has no fixed date for repayment, it had no significant assets and
liabilities as at the Latest Practicable Date. As advised by Key Apex, at the Latest Practicable Date, the PRC
Company has not been established, no land grant contract has been entered into with respect to the Land.
The total investment amount of development of the Land is expected to be approximately US$55,000,000
(equivalent to approximately HK$429,000,000), which will be contributed by shareholders of Key Apex
(including Heathy Castle) in cash in proportion to their respective shareholding in Key Apex.
To the knowledge of the Directors, there is no development plan for the Land nor any capital
commitment has been made to the project to be located on the Land at this stage. The balance between the
expected total investment amount of the Land of US$55,000,000 (equivalent to approximately
HK$429,000,000) and the valuation amount of the Land of approximately RMB315,000,000 (equivalent
to approximately HK$315,000,000) is intended to be used for the development and construction of the Land.
As advised by Key Apex, RMB32,000,000 (equivalent to approximately HK$32,000,000) being part of the
land premium of the Land has been paid and as at the Latest Practicable Date, the outstanding land premium
of the Land was RMB283,000,000 (equivalent to approximately HK$283,000,000). As further advised by
Key Apex, the land title of the Land is currently vested with the relevant local land authority. Material
conditions for the acquisition of the land use right to the Land include the payment of the outstanding land
premium and the establishment of the PRC Company to enter into the relevant land use right assignment
contract with the relevant local land bureau. The Directors understand from Key Apex that application
documents for setting up of the PRC Company have been submitted to the relevant local office of Shanghai
—6—
LETTER FROM THE BOARD
Foreign Economic Relation and Trade Commission of its approval and the receipt of such documents have
been duly acknowledged by such office. The Directors further understand from Key Apex that upon the
establishment of the PRC Company, it will immediately proceed to obtain the legal ownership of the land
use right of the Land and no timetable in this regard has been given by the relevant authority. Upon
establishment, the PRC Company will enter into the formal land use right assignment contract directly with
the relevant land bureau.
5. FINANCIAL EFFECTS OF THE CN SUBSCRIPTION AGREEMENT ON THE GROUP
Upon conversion of the Convertible Note, the Group will become a shareholder of Key Apex holding
10% of its enlarged issued share capital and Key Apex will be treated as a long-term investment of the
Group. The Convertible Note will not have a material effect on the consolidated net asset value of the
Company upon conversion. The Directors considered that the shareholding interests in Key Apex, which in
turn will hold 99% interests in the PRC Company, will enable the Group to be indirectly interested in the
Land.
6. LISTING RULES REQUIREMENTS
Since any of the percentage ratios under Chapter 14 of the Listing Rules for the CN Subscription
Agreement exceeds 5% or more but less than 25%, the CN Subscription Agreement constitutes a
discloseable transaction of the Company under the Listing Rules. As Key Apex is a connected person of the
Company and the consideration under the Convertible Note is more than HK$10,000,000, the CN
Subscription Agreement (including the shareholder’s loan contemplated thereunder) also constitutes a
connected transaction and financial assistance of the Company under the Listing Rules. In light of all of the
above, the CN Subscription Agreement is subject to the reporting, announcement and Independent
Shareholders’ approval requirements, by way of poll at the EGM, as set out in the relevant provisions of
Chapters 14 and 14A of the Listing Rules.
7. THE EGM
Mr. Bernard C. Chan is interested in the CN Subscription Agreement. Mr. Bernard C. Chan and his
associates will abstain from voting in favour of the resolution to approve the CN Subscription Agreement
and all other related transactions at the EGM should any of them hold shares in the Company as at the EGM.
Pursuant the Listing Rules, the vote of the Independent Shareholders in respect of the CN Subscription
Agreement and the transactions contemplated thereunder at the EGM will be taken by poll.
The Independent Board Committee has been established to advise the Independent Shareholders on the
Convertible Note. CIMB has been appointed as the independent financial adviser to advise the Independent
Board Committee who has been made recommendation to the Independent Shareholders as to how to vote
on the ordinary resolution in respect of the CN Subscription Agreement and the transactions contemplated
thereunder.
8. PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS
Article 72 of the Company’s articles of association sets out the following procedure by which the
Shareholders may demand a poll.
—7—
LETTER FROM THE BOARD
At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands
unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any
demand for a poll) demanded:
(a) by the chairman of the meeting;
(b) at least two members present in person or, in the case of a member being a corporation, by its
duly authorised representative or by proxy for the time being entitled to vote at the meeting; or
(c) any member or members present in person or, in the case of a member being a corporation, by its
duly authorised representative or by proxy and representing not less than one-tenth of the total
voting rights of all the members having the right to vote at the meeting; or
(d) a member of members present in person or, in the case of a member being a corporation, by its
duly authorised representative or by proxy and holding shares in the Company conferring a right
to vote at the meeting being shares on which an aggregate sum has been paid equal to not less
than one-tenth of the total sum paid up on all the shares conferring that right.
9. RECOMMENDATION
Your attention is drawn to the letter from the Independent Board Committee set out on page 9 of this
circular which contains the recommendation of the Independent Board Committee to the Independent
Shareholders concerning the CN Subscription Agreement and the transactions contemplated thereunder and
the letter from CIMB set out on pages 10 to 13 of this circular containing its advice to the Independent
Board Committee and to the Independent Shareholders in this regard. The Independent Board Committee,
having taken into account the advice of CIMB in relation to the CN Subscription Agreement and the
transactions contemplated thereunder, is in the opinion that the CN Subscription Agreement and the
transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole
and are fair and reasonable as far as the Independent Shareholders are concerned. Accordingly, the
Independent Board Committee recommended to the Independent Shareholders to vote in favour of the
relevant resolutions to be proposed in the EGM to approve the CN Subscription Agreement and the
transactions contemplated thereunder.
10. GENERAL
A notice convening the EGM to be held on 13 July 2007 at 9 : 30 a.m. at Falcon Room II , Luk Kwok
Hotel, 72 Gloucester Road, Wanchai, Hong Kong is set out on pages 24 to 25 of this circular. Whether or
not you are able to attend the EGM, you are requested to complete and return the enclosed form of proxy in
accordance with the instructions printed thereon to the Company’s branch share registrar and transfer office
in Hong Kong, Tricor Investor Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Hong
Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the
EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person
at the EGM should you so wish.
By Order of the Board
New Heritage Holdings Ltd.
TAO Richard
Vice Chairman
—8—
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
The following is the text of a letter from the Independent Board Committee setting out its
recommendation to the Independent Shareholders in relation to the CN Subscription Agreement.
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 95)
20 June 2007
To the Independent Shareholders
Dear Sir/Madam
DISCLOSEABLE TRANSACTION
AND
CONNECTED TRANSACTION
SUBSCRIPTION OF US$5,500,000 CONVERTIBLE NOTE
IN KEY APEX LIMITED
We have been appointed to advise you in respect of the CN Subscription Agreement and the
transactions contemplated thereunder, details of which are set out in the letter from the Board on pages 3 to
8 of the circular of the Company dated 20 June 2007 (the ‘‘Circular’’), of which this letter forms part.
Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless
specified otherwise.
We wish to draw your attention to the letter from the Board as set out on pages 3 to 8 of the Circular
and the letter of advice from CIMB as set out on pages 10 to 13 of the Circular.
Having taken into account the advice and recommendation of CIMB, we consider that the terms of the
CN Subscription Agreement and the transactions contemplated thereunder are in the interests of the
Company and the Shareholders as a whole and are fair and reasonable as far as the Independent
Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of
the resolution to be proposed at the EGM to approve the CN Subscription Agreement and the transactions
contemplated thereunder.
Yours faithfully
Independent Board Committee
Mr. WONG Gary Ka Wai Mr. SUN Leland Li Hsun
Mr. CHAN Norman Enrique
Independent non-executive Directors
—9—
LETTER FROM CIMB
25/F Central Tower
28 Queen’s Road Central
CIMB-GK Securities (HK) Limited Hong Kong
20 June 2007
To the Independent Board Committee and the Independent Shareholders of
New Heritage Holdings Ltd.
Dear Sirs,
DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION
INTRODUCTION
We refer to our appointment to advise the Independent Board Committee and the Independent
Shareholders in respect of the terms of the CN Subscription Agreement and the transactions contemplated
thereunder, details of which are set out in a circular (‘‘Circular’’) to the Shareholders dated 20 June 2007, of
which this letter forms part. Capitalised terms used in this letter shall have the same meanings ascribed to
them in this circular unless the context otherwise requires.
The Independent Board Committee comprising all the independent non-executive Directors, namely
Mr. Wong Gary Ka Wai, Mr. Sun Leland Li Hsun and Mr. Chan Norman Enrique has been established to
advise the Independent Shareholders as to whether the terms of the CN Subscription Agreement and the
transactions contemplated thereunder are fair and reasonable and whether the terms of the CN Subscription
Agreement and the transactions contemplated thereunder are in the interests of the Company and the
Shareholders as a whole.
In formulating our recommendation, we have relied on the information and facts contained or referred
to in the Circular. We have also assumed that the information and representations contained or referred to in
the Circular were true and accurate at the time they were made and continue to be so up to the date of the
EGM. We have no reason to doubt the truth, accuracy and completeness of the information and
representations provided to us by the Directors. We have also been advised by the Directors and believe that
no material facts have been omitted from the Circular.
We consider that we have reviewed sufficient information and documents to satisfy ourselves that we
have a reasonable basis to assess the fairness and reasonableness of the terms of the CN Subscription
Agreement in order to reach an informed view, to justify reliance on the accuracy of the information
contained in the Circular and to provide a reasonable basis for our recommendation. We have not, however,
conducted an independent verification of the information nor have we conducted any form of in-depth
investigation into the businesses and affairs or the prospects of the Company, Key Apex, the PRC Company
or any of their respective subsidiaries or associates.
— 10 —
LETTER FROM CIMB
PRINCIPAL FACTORS AND REASONS CONSIDERED
In assessing the fairness and reasonableness of the terms of the CN Subscription Agreement, we have
taken into account the following principal factors and reasons:
Background and reasons
The Group is principally engaged in property development and investment in the PRC. On 28 May
2007, Healthy Castle, an indirect wholly-owned subsidiary of the Company, entered into the CN
Subscription Agreement with Key Apex, a connected person of the Company. Pursuant to the CN
Subscription Agreement, Key Apex agreed to issue to Healthy Castle the Convertible Note. Upon
conversion of the Convertible Note, the Group will become a shareholder of Key Apex holding 10% of its
enlarged issued share capital. The Group’s shareholding interests in Key Apex, which in turn will hold 99%
interests in the PRC Company, will enable the Group to be indirectly interested in the Land and the project
located thereon.
As noted from the annual report of the Company for the year ended 31 December 2006, the Group is
mainly focusing on property development and investment in the cities of Suzhou and Beijing, the PRC. The
Land is located in Shanghai at Lots, No. 6-1, 6-2, No. 51 Bei Le Road, Jiading New District, Shanghai, the
PRC with a site area of approximately 130,965 square meters. The shareholding interests in Key Apex will
expand the Group’s investment in property development projects geographically, which the Directors
consider is in the interest of the Group.
In view of the foregoing, we consider that the entering into of the CN Subscription Agreement is in
line with the business scope of the Company and provides an opportunity for the Company to engage in
property development project in Shanghai. Accordingly, we consider the entering into of the CN
Subscription Agreement is in the interests of the Company and the Shareholders as a whole.
Terms of the CN Subscription Agreement
We note that the principal amount of the zero coupon Convertible Note is US$5,500,000 (equivalent to
approximately HK$42,900,000) and the maturity date of the Convertible Note shall be the first anniversary
of the issue date of the Convertible Note (‘‘Maturity Date’’), which date can be extended subject to prior
written consent of the holder of the Convertible Note. Should no Conversion Shares have been issued to the
holder of the Convertible Note, the Convertible Note shall be repaid on the day of the first anniversary of
the issue date of the Convertible Note. If the PRC Company can obtain the land use right certificate for the
Land on or before the first anniversary of the issue date of the Convertible Note, conversion will
automatically take place on the Conversion Date, being three days after the date when the PRC Company
has obtained the land use right certificate to the Land, or such other date as it may from time to time be
mutually agreed between Key Apex and the holder of the Convertible Note. The total conversion price is a
sum equals to the Conversion Price multiplied by the total number of Conversion Shares, which equals
US$100 (equivalent to approximately HK$780). The balance of the principal amount of the Convertible
Note after deduction of the total conversion price of US$5,499,900 (equivalent to approximately
HK$42,899,220) shall be treated as an interest-free shareholder’s loan advanced by Healthy Castle to Key
Apex.
As advised by the Company, the terms of the CN Subscription Agreement were negotiated on an arm’s
length basis. Upon conversion of the Convertible Note, the Group will become a shareholder of Key Apex
holding 10% of its enlarged issued share capital. We note that the principal amount of the Convertible Note
is equivalent to 10% of the estimated investment amount of approximately US$55,000,000 (equivalent to
— 11 —
LETTER FROM CIMB
approximately HK$429,000,000) for the development of the Land. To the knowledge of the Directors, the
total investment amount for the development of the Land will be contributed by Key Apex’s shareholders in
cash proportion to their respective equity interests in Key Apex.
To the knowledge of the Directors, Key Apex has only commenced its business recently and no
accounts have been prepared. As at the Latest Practicable Date, two shareholders of Key Apex, namely
Ultra Plan Limited and Asia Investment Services Limited had contributed shareholders’ loans in the
aggregate sum of US$5,500,000 (equivalent to approximately HK$42,900,000) to Key Apex, which has no
fix date of repayment. Save for such shareholders’ loan, Key Apex had no significant assets and liabilities as
at the Latest Practicable Date. To the knowledge of the Directors, Key Apex and the Independent Third
Party have won the bid to acquire the land use right to the Land in a public auction and the price for the
Land was RMB315,000,000 (equivalent to approximately HK$315,000,000). As noted from the valuation
report of the Land (‘‘Valuation’’) performed by DTZ Debenham Tie Leung Limited, an independent valuer
(‘‘Independent Valuer’’) set out in Appendix II of this Circular, the Independent Valuer has ascribed no
commercial value to the Land as the certificate for the use of state-owned land has not been obtained as at
the valuation date. However, the Independent Valuer is of the opinion that the capital value of the Land as at
the valuation date would be approximately RMB320 million, assuming that the PRC Company has obtained
the certificate for the use of state-owned land and the outstanding land premium was fully settled. The
Independent Valuer has valued the Land by direct comparison method by making reference to comparable
transactions as available in the relevant market. We have been advised by the Independent Valuer that given
the particulars of the Land, the above valuation methodologies are commonly used in arriving at the
Valuation. The Directors understand from Key Apex that the balance between the total investment amount
for the development of the Land of approximately US$55,000,000 (equivalent to approximately
HK$429,000,000) and the Valuation amount of the Land of approximately RMB315,000,000 (equivalent
to approximately HK$315,000,000) is intended to be used for the development and construction of the Land.
We note that as at the Latest Practicable Date, the PRC Company has not been established and no land
grant contract has been entered into with respect to the Land. However, pursuant to the CN Subscription
Agreement, if PRC Company is unable to obtain the land use right certificate for the Land prior to the
Maturity Date, the Group would not be required to convert the Convertible Note and the Convertible Note
shall be repaid by Key Apex on the day of the first anniversary of the issue date of the Convertible Note.
Views
Having taken into account the above consideration, we consider that the terms of the CN Subscription
Agreement are fair and reasonable so far as the Company and the Independent Shareholders of the Company
are concerned.
POSSIBLE FINANCIAL EFFECTS
Net asset value
Completion of the issue and subscription of the Convertible Note should not have a material effect to
the consolidated net asset value of the Group. Upon conversion of the Convertible Note, the Group will
become a shareholder of Key Apex holding 10% of its enlarged issued share capital. As the Land is acquired
at market value, the Convertible Note will not have a material effect on the consolidated net asset value of
the Group upon conversion.
— 12 —
LETTER FROM CIMB
Working Capital
As advised by the Company, the consideration of the Convertible Note of US$5,500,000 (equivalent to
approximately HK$42,900,000) will be funded by internal resource of the Group. Based on the annual
report of the Company for the year ended 31 December 2006, the Company had a cash reserve of
approximately HK$132.1 million. Given the above, we concur with the view of the Directors and consider
that the subscription of the Convertible Note will not have a material adverse effect to the cash position of
the Group.
RECOMMENDATION
Having considered the background and reasons, the terms of the CN Subscription Agreement and the
possible financial effects of the CN Subscription Agreement to the Group, we consider the CN Subscription
Agreement and the transactions contemplated thereunder are fair and reasonable and in the interests of the
Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders, and
the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary
resolution to be proposed at the EGM to approve the CN Subscription Agreement and the transactions
contemplated thereunder.
Yours faithfully,
For and on behalf of
CIMB-GK Securities (HK) Limited
Alex Lau Heidi Cheng
Executive Vice President Senior Vice President
— 13 —
APPENDIX I GENERAL INFORMATION
1. RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Listing Rules for the purpose of giving
information with regard to the Company. The Directors collectively and individually accept full
responsibility for the accuracy of the information contained in this circular and confirm, having made all
reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of
which would make any statement herein misleading.
2. INTERESTS OF DIRECTORS AND CHIEF EXECUTIVE OF THE COMPANY
As at the Latest Practicable Date, the interests and short positions of the Directors and the chief
executive of the Company in the Shares, underlying Shares and debentures of the Company or any of its
associated corporations (within the meaning of Part XV of the SFO) which (a) were required to be notified
to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interests and short positions which they were taken or deemed to have under such provisions of the SFO), or
(b) were required, pursuant to section 352 of the SFO, to be entered in the register required to be kept by the
Company, or (c) were required, pursuant to the Model Code as set out in appendix 10 to the Listing Rules
adopted by the Company, to be notified to the Company and the Stock Exchange, were as follows:
Interests in the Shares and the underlying Shares under equity derivatives (as defined in Part
XV of the SFO)
Number of Approximate
underlying percentage of
Shares the issued
(under equity share capital
Long position/ Number of derivatives of Aggregate of the
Name of Director Short position Capacity Shares held the Company) interests Company
Mr. TAOCHAIFU Long Position Interests of 320,713,896 326,513,896 40.63
Choofuang controlled (Note 1)
corporation
Long Position Personal 5,800,000
interest (Note 2)
Mr. TAO Richard Long Position Personal 6,767,029 6,400,000 13,167,029 1.85
interest (Note 2)
Mr. TAO Paul Long Position Personal 6,767,029 6,400,000 13,167,029 1.85
interest (Note 2)
Mr. KONG Mui Sum Long Position Personal 1,691,423 6,400,000 8,091,423 1.13
Lawrence interest (Note 2)
Mr. YIM Chun Leung Long Position Personal 822,000 6,400,000 7,222,000 1.01
interest (Note 2)
Notes:
(1) The Shares include the 55,915,750 new Shares to be issued and allotted to Belbroughton Limited pursuant to the
subscriptions of new shares under the master transfer agreement dated 17 October 2006 (the ‘‘Master Transfer
Agreement’’) and the percentage of shareholding is based on the enlarged issued share capital. Belbroughton Limited is a
company incorporated in the BVI and the legal and beneficial owner of 320,713,896 Shares. Belbroughton Limited is
wholly owned by Seal United Investments Limited (‘‘Seal United’’), a company incorporated in the BVI and the entire
— 14 —
APPENDIX I GENERAL INFORMATION
issued share capital of which is owned by Mr. TAOCHAIFU Choofuang (‘‘Mr. Tao’’), and his spouse, Mrs. TAO POON
Lai Yew Nancy (‘‘Mrs. Tao’’) in equal proportion. Accordingly, Seal United as well as Mr. Tao and Mrs. Tao are deemed
to be interested in 320,713,896 Shares.
(2) Share options were granted on 4 April 2006 to all executive Directors. The share options are exercisable between 10 April
2006 and 9 April 2009 at the exercise price of HK$0.86 per Share.
(3) The percentage of Mr. TAO Richard, Mr. TAO Paul, Mr. KONG Mui Sum Lawrence and Mr. YIM Chun Leung does not
take into account the new Shares to be issued pursuant to the Master Transfer Agreement.
Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief
executive of the Company had any interests or short positions in the Shares, underlying Shares or
debentures of the Company or any of its associated corporations (within the meaning of Part XV of the
SFO) which (a) were required to be notified to the Company and the Stock Exchange pursuant to
Divisions 7 and 8 of Part XV of the SFO, or (b) were required, pursuant to section 352 of the SFO, to
be entered in the register required to be kept by the Company, or (c) were required, pursuant to the
Model Code adopted by the Company, to be notified to the Company and the Stock Exchange.
3. INTERESTS OF THE SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as was known to the Directors or the chief executive of the
Company based on the register maintained by the Company pursuant to Part XV of the SFO, the following
persons (other than a Director or the chief executive of the Company) had, or were deemed or taken to have
interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the
Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, were directly or indirectly,
interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all
circumstances at general meetings of any other member of the Group or had any option in respect of such
capital:
Approximate
percentage of
the issued share
Long position/ Number of capital of the
Name of Shareholder Short position Capacity Shares held Company
Belbroughton Limited (Note 1) Long position Beneficial owner 320,713,896 39.91
Seal United Investments Limited Long position Interests of controlled 320,713,896 39.91
(Note 1) corporation
Mrs. TAO POON Lai Yew Nancy (Note 1) Long position Interests of controlled 320,713,896 39.91
corporation
Peeli Limited (Note 2) Long position Beneficial owner 148,257,660 18.45
Mr. TAO Shing Pee (Note 2) Long position Interests of controlled 148,257,660 18.45
corporation
Ms. LIU Kwan Li (Note 2) Long position Interests of controlled 148,257,660 18.45
corporation
Oriental Pearl International Inc. (Note 3) Long position Beneficial owner 41,003,200 5.75
Mr. KINOSHITA James Hajime (Note 3) Long position Interests of controlled 41,003,200 5.75
corporation
— 15 —
APPENDIX I GENERAL INFORMATION
Approximate
percentage of
the issued share
Long position/ Number of capital of the
Name of Shareholder Short position Capacity Shares held Company
Mrs. KINOSHITA CHEUNG Yuen Shiu Lana Long position Interests of controlled 41,003,200 5.75
(Note 3) corporation
Spinnaker Capital Limited (Note 4) Long position Investment manager 65,000,000 9.11
Spinnaker Asset Management — SAM Long position Investment manager 65,000,000 9.11
Limited (Note 4)
Notes:
(1) The Shares include the 55,915,750 new Shares to be issued and allotted to Belbroughton Limited pursuant to the
subscriptions of new shares under the Master Transfer Agreement. Belbroughton Limited is a company incorporated in
the BVI and the legal and beneficial owner of 320,713,896 Shares. Belbroughton Limited is wholly owned by Seal
United, a company incorporated in the BVI, the entire issued share capital of which is owned by Mr. Tao, and his spouse,
Mrs. Tao, in equal proportion. Accordingly, Seal United as well as Mr. Tao and Mrs. Tao are deemed to be interested in
320,713,896 Shares.
(2) Peeli Limited is a company incorporated in the BVI and the entire issued share capital of which is held by Mr. TAO
Shing Pee and his spouse, Ms. LIU Kwan Li, in equal proportion. The Shares include the 34,101,460 new Shares to be
issued and allotted to Mr. TAO Shing Pee pursuant to the Master Transfer Agreement. Mr. TAO Shing Pee, the brother of
Mr. Tao.
(3) Oriental Pearl International Inc. is the legal and beneficial owner of 41,003,200 Shares, which is owned by Mr.
KINOSHITA James Hajime and Mrs. KINOSHITA CHEUNG Yuen Shiu Lana in equal proportion. Accordingly, Mr.
KINOSHITA James Hajime and Mrs. KINOSHITA CHEUNG Yuen Shiu Lana, both being independent third parties, are
deemed to be interested in 41,003,200 Shares.
(4) Spinnaker Capital Limited and Spinnaker Asset Management — SAM Limited are investment managers and each of them
is deemed to be interested in the Shares held by Spinnaker Global Emerging Markets Fund Limited, Spinnaker Global
Opportunity Fund Limited and Spinnaker Global Strategic Fund Limited, which holds 4.55%, 1.91% and 2.64% interests
in the Shares, respectively.
(5) The percentage of Belbroughton Limited, Seal United, Mrs. Tao, Peeli Limited, Mr. TAO Shing Pee and Ms. LIU Kwan
Li takes into the new Shares to be issued and allotted under the Master Transfer Agreement and based on the enlarged
issued share capital while that of Oriental Pearl International Inc., Mr. KINOSHITA James Hajime, Mrs. KINOSHITA
CHEUNG Yuen Shiu Lana, Spinnaker Capital Limited and Spinnaker Asset Management — SAM Limited does not take
into accounts the new Shares to be issued and allotted pursuant to the Master Transfer Agreement.
Save as disclosed above, as at the Latest Practicable Date, so far as is known to the Directors or chief
executive of the Company, no other persons (not being a Director or chief executive of the Company) had
any interests or short positions in the Shares or underlying Shares which are required to be disclosed to the
Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, nor
were there any persons, directly or indirectly, interested in 10% or more of the nominal value of any class of
share capital carrying rights to vote in all circumstances at general meetings of any other member of the
Group or held any option in respect of such capital.
— 16 —
APPENDIX I GENERAL INFORMATION
4. CLAIMS AND LITIGATIONS
As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration
of material importance and no litigation or claim of material importance was known to the Directors to be
pending or threatened against any member of the Group.
5. SERVICE CONTRACTS
Each of the executive Directors has entered into a service contract with the Company for an initial
term of two years commencing on 1 December 2005 (the ‘‘Commencement Date’’). Under each such
contract, either the Company or the executive Director may, after 6 months of the Commencement Date,
terminate the appointment of the executive Director by giving the other party not less than 3 months’ written
notice of termination or by payment in lieu of such notice.
Each of the non-executive Director and the independent non-executive Directors has entered into a
letter of appointment with the Company for a term of three years commencing on 14 November 2005; such
letter of appointment may be terminated by either party by giving one month’s written notice.
6. COMPETING INTERESTS
Mr. Tao, Chairman of the Company, and his family members (including Mr. TAO Richard, Vice
Chairman, and Mr. TAO Paul, Managing Director) are interested in certain properties in the PRC which may
constitute a competing business to the Group; the properties include 40 apartments in Suzhou Garden Villa
(which form part of the Suzhou Properties and have a total gross floor area of approximately 6,636 square
metres) and two villas in Suzhou Garden Court of a total gross floor area of 770.38 square metres developed
by a subsidiary of the Company.
7. MATERIAL CONTRACTS
The following contracts (not being contracts entered into under the ordinary course of business of the
Group) have been entered into by the Group within the two years immediately preceding the date of this
circular and are or may be material:
(a) the share transfer agreement dated 10 July 2006 and entered into between the Group and certain
independent third parties with respect to the subscription of 180,000 shares of HK$1.00 each in
China Malls Limited for cash at par;
(b) the subscription agreement dated 28 August 2006 and entered into between the Group and
Spinnaker Global Opportunity Fund Limited with respect to the subscription of 65,000,000 new
Shares at a consideration of HK$0.60 per Share;
(c) the share transfer agreement dated 28 August 2006 and entered into between the Group and
Spinnaker Global Opportunity Fund Limited with respect to the transfer of 40% interests in
Suzhou New Heritage Wuzhong Limited;
(d) the master transfer agreement dated 17 October 2006 and entered into between the Company and
the vendors as stated therein in relation to (a) the purchase by the Group of 82 units in Suzhou
Garden Villa (the ‘‘Suzhou Properties’’) at an aggregate consideration of RMB87,975,000; and
(b) the issue and allotment of up to 90,017,210 new shares of HK$0.01 each in the Company at
an issue price of HK$0.6405 per new Share Agreement;
— 17 —
APPENDIX I GENERAL INFORMATION
(e) the joint venture and subscription agreement dated 21 March 2007 entered into between New
Heritage Development Limited (‘‘NHDL’’), Spinnaker Global Opportunity Fund Limited (‘‘GO
Fund’’), Spinnaker Global Emerging Markets Fund Limited (‘‘GEM Fund’’) and Spinnaker
Global Strategic Fund Limited (‘‘GS Fund’’) in relation to, among others, (a) subscription of
9,999 shares at a consideration of HK$1.00 each in Prosper View Group Limited (the ‘‘JV
Company’’) ; and (b) contribution of a shareholder loan of US$11,424,000 (equivalent to
approximately HK$88,124,736) in cash to the JV Company;
(f) the shareholder loan agreement dated 21 March 2007 entered into between NHDL, GO Fund,
GEM Fund, GS Fund, the JV Company and the Company, whereby NHDL, GO Fund, GEM
Fund and GS Fund shall contribute a total of approximately US$22,400,000 (equivalent to
approximately HK$172,793,600) to the JV Company;
(g) the supplemental agreement dated 26 March 2007 with respect to the share transfer agreement
referred to paragraph (c) above;
(h) the sale and purchase agreement dated 11 April 2007 entered into between New Heritage
Corporation Limited and Onsite Investment Limited (‘‘Onsite Investment’’) with respect to the
sale of 9.615% of the issued share capital of NHDL (the ‘‘Transfer’’) and an interest-free loan in
the principal sum of HK$12,000,000 to be advanced by Onsite Investment to NHDL (the
‘‘Loan’’) ;
(i) the CN Subscription Agreement; and
(j) all of the contracts (except item (a)) referred to in the paragraph headed ‘‘Summary of material
contracts’’ in appendix VII of the prospectus of the Company dated 22 November 2005.
8. MATERIAL ADVERSE CHANGE SINCE 31 DECEMBER 2006
The Directors confirm that, as at the Latest Practicable Date, there are no material adverse changes in
the financial or trading position or prospect of the Group since 31 December 2006, the date to which the
latest published audited financial statements of the Group were made up.
9. QUALIFICATION OF EXPERT AND CONSENT
The following are the qualifications of the experts who have given opinion or advice which is
contained in this circular:
Name Qualification
CIMB a licensed corporation to perform type 1 (dealing in
securities), type 4 (advising on securities) and type 6
(advising on corporate finance) regulated activities under
the SFO
DTZ Debenham Tie Leung Limited Property valuer
Each of CIMB and DTZ Debenham Tie Leung Limited has given and has not withdrawn its written
consent to the issue of this circular with the inclusion therein a copy of its advice and/or references to its
name, in the form and context in which they respectively appear.
— 18 —
APPENDIX I GENERAL INFORMATION
10. MISCELLANEOUS
(a) Save as Mr. Bernard C. Chan’s interests in the CN Subscription Agreement, the Transfer and the
Loan, none of the Directors nor any persons referred to in paragraph 9 in this appendix has since
31 December 2006, being the date to which the latest published audited accounts of the Group
have been made up, any direct or indirect interests in any assets acquired or disposed of by or
leased to or proposed to be acquired or disposed of by or leased to any member of the Group.
(b) The Company Secretary of the Company is Ms. CHAN Meily (MBA, ACS, ACIS).
(c) The Qualified Accountant of the Company is Mr. LAU Kam Kwok, Dickson (CPA).
(d) The Hong Kong branch share registrar and transfer office of the Company is Tricor Investor
Services Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Hong Kong.
(e) The circular has been prepared in both English and Chinese. In the case of any discrepancy, the
English text shall prevail.
11. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the office of the Company at
Room 2301, 23/F., Fortis Bank Tower, 77–79 Gloucester Road, Wanchai, during normal business hours on
any weekday up to and including 4 July 2007 :
(a) the memorandum and articles of association of the Company;
(b) the published annual report of the Company for each of the two financial years ended 31
December 2006;
(c) the service contracts of the Directors as referred to in paragraph 5 of this appendix;
(d) the contracts referred to in paragraph 7 of this appendix; and
(e) the written consent referred to in paragraph 9 of this appendix.
— 19 —
APPENDIX II VALUATION REPORT
10th Floor
Jardine House
1 Connaught Place
Central
Hong Kong
20 June 2007
The Directors
New Heritage Holdings Ltd.
Room 2301, 23rd Floor
Fortis Bank Tower
77–79 Gloucester Road
Wan Chai
Hong Kong
Dear Sirs,
Re: Lot Nos. 6-1 and 6-2, No. 51 Bei Le Road, Jiading New City, Jiading District, Shanghai, the PRC
Instructions, Purpose & Date of Valuation
In accordance with your instructions for us to value the captioned property interest of New Heritage
Holdings Ltd. (referred to as the ‘‘Company’’) and its subsidiaries (together referred to as the ‘‘Group’’) in
the People’s Republic of China (the ‘‘PRC’’) (as more particularly described in the attached valuation
certificate), we confirm that we have inspected the property, made relevant enquiries and obtained such
further information as we consider necessary for the purpose of providing you with our opinion of the value
of the property interest as at 31 May 2007.
Definition of Market Value
Our valuation of the property represents its Market Value which in accordance with the Valuation
Standards on Properties of the Hong Kong Institute of Surveyors is defined as ‘‘the estimated amount for
which a property should exchange on the date of valuation between a willing buyer and a willing seller in an
arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion’’.
Valuation Basis And Assumption
Our valuation excludes an estimated price inflated or deflated by special terms or circumstances such
as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by
anyone associated with the sale, or any element of special value.
We have relied on the information and advice given by the Group regarding the title to the property
interest and the interest of the Group in the property.
In valuing the property interest, we have complied with the requirements set out in Chapter 5 and
PN12 of the Listing Rules of Hong Kong Stock Exchange and Clearing Limited and the Valuation Standards
(First Edition 2005) on Valuation of Properties published by The Hong Kong Institute of Surveyors.
— 20 —
APPENDIX II VALUATION REPORT
Method of Valuation
The PRC Company has obtained the notice of confirmation of transaction from Shanghai Jiading
Building and Land Resources Administrative Bureau in respect of the property but the land grant contract of
the property has not been executed yet and the Certificate for the Use of State-owned Land has not been
obtained, thus we have attributed no commercial value to the property interest. However, for reference
purpose, on the assumption that the outstanding land premium was fully settled and the Certificate for the
Use of State-owned Land has been obtained, we have valued the property by Direct Comparison Method by
making reference to comparable transactions as available in the relevant market.
Source of Information
We have been provided with extracts of documents in relation to the titles to the property interests.
However, we have not inspected the original documents to ascertain any amendments, which may not
appear on the copies handed to us.
In the course of our valuation, we have relied to a considerable extent on the information given by the
Group in respect of the property in the PRC and have accepted advice given to us on such matters as
planning approvals or statutory notices, easements, tenure, site and gross floor area and all other relevant
matters.
Dimensions, measurements and areas included in the valuation certificate are based on information
provided to us and are therefore only approximations. We have no reason to doubt the truth and accuracy of
the information provided to us by the Group which is material to the valuations. We were also advised by
the Group that no material facts have been omitted from the information provided.
Site Inspection
We have inspected the property. However, we have not carried out investigations on site to determine
the suitability of the ground conditions and the services etc. for any future development. Our valuations are
prepared on the assumption that these aspects are satisfactory and that no unexpected costs or delays will be
incurred during the construction period. Unless otherwise stated, we have not been able to carry out detailed
on-site measurements to verify the site and gross floor area of the property and we have assumed that the
areas shown on the documents handed to us are correct.
No allowance has been made in our valuations for any charges, mortgages or amounts owing on the
property interest nor for any expenses or taxation which may be incurred in effecting a sale. Unless
otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an
onerous nature which could affect its value.
Currency & Exchange Rates
Unless otherwise stated, all sums stated in our valuation are in Renminbi, the official currency of the
PRC.
We enclose herewith our valuation certificate.
— 21 —
APPENDIX II VALUATION REPORT
Yours faithfully,
for and on behalf of
DTZ Debenham Tie Leung Limited
Andrew K. F. Chan
Registered Professional Surveyor (GP)
China Real Estate Appraiser
MSc., M.H.K.I.S., M.R.I.C.S
Director
Note: Mr. Andrew K. F. Chan is a Registered Professional Surveyor who has over 19 years of experience in the valuation of properties
in the PRC.
— 22 —
APPENDIX II VALUATION REPORT
VALUATION CERTIFICATE
Capital value in
Particulars of existing state as at
Property Description and tenure occupancy 31 May 2007
Lot Nos. 6-1 and 6-2, The property comprises a vacant site with a total site area of The property is a No commercial value
No. 51 Bei Le Road, approximately 130,965 sq.m. (1,409,707 sq.ft.). vacant site pending (see Note 1 below)
Jiading New City, for future
Jiading District, The property is proposed to be developed for commercial development.
Shanghai, and residential uses with planned total gross floor area of
the PRC approximately 250,000 sq.m. (2,691,000 sq.ft.).
The land use rights of the property will be granted to the
PRC Company for a term of 40 years and 70 years for
commercial and residential uses respectively.
Notes:
(1) We have attributed no commercial value to the property interest as the Certificate for the Use of State-owned Land has not been
obtained. However, for reference purpose, on the assumption that the PRC Company has obtained the Certificate for the Use of
State-owned Land and the outstanding land premium was fully settled, our opinion of the capital value of the property in its
existing state as at 31 May 2007 is RMB320,000,000.
(2) According to Transaction Confirmation Notice ( ) dated 12 February 2007 issued by Shanghai Jiading Building and
Land Resources Administrative Bureau, the property has been transacted to
(Shanghai Jiading District Integrated Residential Construction Development Limited) and Key Apex Limited ( ) at
a total land premium of RMB315,000,000.
(3) According to the Group, Key Apex Limited ( ) is a company related to the Group whilst
(Shanghai Jiading District Integrated Residential Construction Development
Limited) is an enterprise independent of the Group. Upon conversion of the Convertible Note, the Group will become a
shareholder of Key Apex Limited ( ) holding 10% of its enlarged issued share capital.
(4) As advised by the Group, a project company (the ‘‘PRC Company’’), in which Key Apex Limited ( ) will hold 99%
interests and (Shanghai Jiading District Integrated Residential Construction
Development Limited) will hold the remaining 1% interest, is going to be established in the PRC to apply for the land use
rights certificate and for the development of the property.
(5) As advised by Key Apex Limited ( ), RMB32,000,000 being part of the land premium has been paid. The
outstanding land premium is RMB283,000,000. The title of the land is currently vested with the local land authority. Upon full
settlement of the land premium, the title of the land will be granted to the PRC Company.
(6) According to the Building and Land Survey Report dated 20 December 2006 prepared by Jiading Real Estate Survey Firm, the
total site area of the property is 130,965 sq.m. (1,409,707 sq.ft.).
(7) The status of title and grant of major approvals and licences in accordance with the PRC legal opinion and information provided
by the Group are as follows:
Shanghai Certificate of Real Estate Ownership No
Grand Contract of Land Use Rights No
Business Licence No
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NOTICE OF EGM
(incorporated in the Cayman Islands with limited liability)
(Stock Code: 95)
NOTICE IS HEREBY GIVEN that an extraordinary general meeting of New Heritage Holdings Ltd.
(the ‘‘Company’’) will be held on 13 July 2007 at 9 : 30 a.m. at Falcon Room II , Luk Kwok Hotel, 72
Gloucester Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing the
following resolution which will be proposed as ordinary resolution of the Company:
ORDINARY RESOLUTION
(1) ‘‘THAT
the execution of the subscription agreement (the ‘‘CN Subscription Agreement’’) dated 28 May 2007
entered into between Healthy Castle Investments Limited (‘‘Healthy Castle’’) and Key Apex Limited
(‘‘Key Apex’’) in respect of the convertible note to be issued by Key Apex to Healthy Castle pursuant to the
CN Subscription Agreement (a copy of the CN Subscription Agreement has been produced to the meeting
and marked ‘‘A’’ and initialled by the chairman of the meeting for identification purpose) and the
transactions contemplated thereunder (including the shareholder’s loan) be and are hereby confirmed,
ratified and approved; and that any one or more of the directors of the Company be and is/are hereby
authorised to sign or execute such other documents or supplemental agreements or deeds on behalf of the
Company, to do all such things and take all such actions as he may consider necessary or desirable for the
purpose of giving effect to the CN Subscription Agreement and completing the transactions contemplated
thereunder with such changes as any such director(s) may consider necessary, desirable or expedient.’’
By Order of the Board
New Heritage Holdings Ltd.
TAO Richard
Vice Chairman
Hong Kong, 20 June, 2007
Principal place of business in Hong Kong:
Room 2301, 23/F
Fortis Bank Tower
77–79 Gloucester Road
Wanchai, Hong Kong
Notes:
1. Any member of the Company entitled to attend and vote at the meeting is entitled to appoint another
person as his proxy to attend and vote instead of him. A member who is the holder of two or more
shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting
of the Company or at a class meeting. A proxy need not be a member. A proxy shall be entitled to
exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy
as such member could exercise. In addition, a proxy shall be entitled to exercise the same powers on
behalf of a member which is a corporation and for which he acts as proxy as such member could
exercise if it were an individual member.
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NOTICE OF EGM
2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney
duly authorised in writing, or if the appointor is a corporation, either under seal or under the hand of
an officer or attorney duly authorised.
3. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it
is signed or a notarially certified copy of that power or authority shall be deposited at the Company’s
branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 26/F.,
Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time for holding
the meeting or adjourned meeting or poll (as the case may be) at which the person named in such
instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid.
Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting
in person at the meeting or poll concerned.
4. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy or
by representative, shall be accepted to the exclusion of the votes of the other joint holders; and for this
purpose seniority shall be determined by the order in which the names stand in the register.
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