09:11     CHINA GAS HOLD<00384>-Announcement&Resumption of Trading(2)         

    share capital of the Company as at the date of this announcement; and     
    (ii) approximately 9.0% of the issued share capital of the Company as     
    enlarged by the allotment and issue of the Subscription Shares.           
                                                                              
    The Subscriber undertakes that it will not dispose of any of the          
    Subscription Shares (or any securities issued by the Company in           
    accordance with the anti-dilution provision set out below) within a       
    period of two years from the date of Completion unless there occurs any   
    of the following events in which case the Subscriber shall not be         
    subject to any lock up restriction:                                       
                                                                              
    (a)        there occurs a material change in shareholding of the three    
    largest Shareholders as at the date of the Agreement following any        
    disposal by such Shareholders such that their shareholding in the         
    Company decreases by 25% or more as calculated from the date of the       
    Agreement; or                                                             
                                                                              
    (b)        any significant change in the nature of business of the        
    Group; or                                                                 
                                                                              
    (c)        the joint venture agreement is not finalised and entered into  
    within six months from the date of the Agreement (or an extended period   
    of anther six months if mutually agreed by the Company and the            
    Subscriber); or                                                           
                                                                              
    (d)        any material breach of warranties given by the Company; or     
                                                                              
    (e)        failure by the Company to appoint the person nominated by the  
    Subscriber as a Director in accordance with and within the time periods   
    specified in the Agreement; or                                            
                                                                              
    (f)        any policy announcement of the PRC government which has a      
    profound effect on the viability and profitability of the business of     
    the Group.                                                                
                                                                              
    In the event of any subscription agreement(s) entered into between the    
    Company and strategic investor(s) within six months from the date of      
    Completion whereby the lock up period is less than two years, then the    
    lock up period for the Subscription Shares and/or any securities issued   
    by the Company to and held by the Subscriber shall be the same as that    
    specified in such agreement(s).                                           
                                                                              
    Subscription Price                                                        
    The subscription price of HK$1.158 per Subscription Share represents:     
                                                                              
    (i)        a discount of approximately 23.3% to the closing price of      
    HK$1.51 per Share as quoted on the Stock Exchange on 18 February 2005,    
    being the last trading day before the date of the Agreement;              
                                                                              
    (ii)        a discount of approximately 21.8% to the average closing      
    price of HK$1.48 per Share as quoted on the Stock Exchange for the last   
    five consecutive trading days up to and including 18 February 2005; and   
                                                                              
    (iii)        a discount of approximately 20.1% to the average closing     
    price of HK$1.449 per Share as quoted on the Stock Exchange for the last  
    ten consecutive trading days up to and including 18 February 2005.        
                                                                              
    The Subscription Price was arrived at after arm's length negotiations     
    between the Company and the Subscriber with reference to the closing      
    prices as shown above. Given that the Subscriber will be a valuable       
    strategic business partner of the Group and the introduction of it as a   
    strategic investor of the Company could strengthen the Group's position   
    as a leading natural gas investor in the PRC, the Directors consider      
    that the Subscription Price and the terms of the Agreement are fair and   
    reasonable and are in the interests of the Company and the Shareholders   
    as a whole.                                                               
                                                                              
    Rights                                                                    
    The Subscription Shares, when allotted and issued, will rank equally in   
    all respects among themselves and with the Shares in issue on the date    
    of allotment and issue of the Subscription Shares.                        
                                                                              
    Anti-dilution provision                                                   
    The Company undertakes to the Subscriber under the Agreement that:        
                                                                              
    (a)        any equity share issuance to potential strategic investors     
    that the Company is in discussion with as at the date of the Agreement,   
    being Korea Gas Corporation and City Gas Pte Ltd., shall be at a price    
    not less than the Subscription Price (as may be adjusted for any stock    
    split, subdivision, share consolidation and bonus share issuance, if      
    any);                                                                     
                                                                              
    (b)         it shall not issue any warrants or options to any person      
    within a period of 12 months from the date of the Agreement save and      
    except that it may grant share option to its eligible employees in