09:53 CHINA GAS HOLD<00384> - Announcement & Resumption (5) Yichang China Gas & City Gas Company Limited is contributed as to 49% by Shenzhen Natural Gas, as to 21% by Wuhan China Natural Gas Investment Company Limited and as to 30% by Yichang City Natural Gas Company Limited. Yichang China Gas & City Gas Company Limited is principally engaged in the design, construction and operation of natural gas pipeline network and ancillary facilities as well as provision of piped natural gas in Yichang, Hubei Province, the PRC. For details of the formation of Yichang China Gas & City Gas Company Limited, please refer to the Company's announcement dated 10 December 2002. 2. The net proceeds of about HK$45,000,000 derived from the issue of the Tranche 1 Bonds, will be used entirely as second stage capital contribution in the Group's natural gas projects in Huainan and Wuhu, the PRC, through Shenzhen Natural Gas. The net proceeds derived from the Tranche 2 Bonds, the Tranche 3 Bonds, the Tranche 4 Bonds and the Tranche 5 Bonds (if issued) will, depending on the extent those Bonds are issued, be used for capital contribution in the Group's existing or future natural gas projects and/or for working capital purposes. Details regarding the issue of the Bonds are set out in the Company's announcement dated 30 October 2003. The net proceeds of about HK$50,000,000 derived from the placing of an aggregate of 70,000,000 Shares in October 2003 have been earmarked as the general working capital of the Group. Although a balance of about HK$44,000,000 of such net proceeds remains unutilised as at the date of this announcement, the Company has no intention to alter the intended use of such unutilised proceeds. In order to raise further funds for the Group's investment in natural gas projects in the PRC, the Directors consider the Placing and the Subscription to be in the interests of the Group and the Shareholders as a whole. PROPOSED GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES In connection with the enlarged issued share capital of the Company as a result of the Subscription, the Directors also propose to seek approval from the Shareholders at the SGM for the grant of general mandates to (i) allot and issue new Shares not exceeding 20% of; and (ii) repurchase Shares not exceeding 10% of, the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares. SGM Since the Vendor is a substantial shareholder of the Company and the Subscription Shares will be allotted and issued to the Vendor more than 14 days after the date of the Placing and Subscription Agreement, the Subscription constitutes a connected transaction on the part of the Company under Rule 14.23 of the Listing Rules and will be subject to, among other things, the approval of the Independent Shareholders at the SGM. The SGM will be convened and held to consider and, if thought fit, to approve, among other things, the Subscription and the transactions contemplated thereunder including but not limited to the allotment and issue of the Subscription Shares to the Vendor pursuant to the Placing and Subscription Agreement, and the grant of the general mandates. The Vendor and its associates will abstain from voting for the resolution approving the Subscription and the transactions contemplated thereunder including but not limited to the allotment and issue of the Subscription Shares at the SGM. The Independent Board Committee comprising Mr. Zhao Yu Hua, Dr. Mao Er Wan and Ms. Wong Sin Yue, Cynthia, being all the independent non-executive Directors, will be formed to advise the Independent Shareholders as to the fairness and reasonableness of the Subscription. An independent financial adviser will be appointed to advise the Independent Board Committee in this regard. GENERAL INFORMATION A circular containing, among other things, details of the Placing and Subscription Agreement, the proposed grant of the general mandates, the letter of advice from the independent financial adviser to the Independent Board Committee and the recommendation of the Independent Board Committee to the Independent Shareholders and the notice of the SGM will be despatched to the Shareholders within 21 days after the publication of this announcement. RESUMPTION OF TRADING Trading in Shares on the Stock Exchange was suspended at the request of the Company from 9:30 a.m. on 7 November 2003 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in Shares at 9:30 a.m. on 12 November 2003. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions shall have the following meaning: