10:13 <01168> & <00622> - Joint Announcement & Resumption (7) provide synergies and logistics support for the development of Enerchina's possible future coal gasification business in China. The directors of Enerchina believe that the terms of the Acquisition and the transactions contemplated under the Acquisition Agreement are fair and reasonable and in the interests of Enerchina and the Enerchina Shareholders as a whole. The directors of Enerchina confirm that neither the business of Panva Gas nor the composition of the board of directors of Panva Gas will be affected as a direct result of the Acquisition/Disposal. IX. REASONS FOR THE DISPOSAL Since Sinolink is the ultimate parent of Enerchina and Panva Gas, it can enjoy the benefits to Enerchina from the Disposal as stated in section VIII above. With Panva Gas being a subsidiary of Enerchina after the Disposal, Sinolink will concentrate its resources in overseeing its investment in the energy sector through the management of Enerchina. This will lead to a better and more efficient allocation of resources. Furthermore, the directors of Sinolink believe that the Disposal will lead to a realignment of the business divisions of Sinolink's main operating subsidiaries with Panva Gas's business being covered under the umbrella of "energy" business of Enerchina. This has the benefit of generating a simpler and clearer division of business lines between Sinolink's group of companies. The directors of Sinolink believe that the terms of the Disposal and the transactions contemplated under the Acquisition Agreement are fair and reasonable and in the interests of Sinolink and the Sinolink Shareholders as a whole. X. GENERAL Major Transaction The Disposal constitutes a major transaction for Sinolink under the Listing Rules and will accordingly be subject to the approval of the Sinolink Shareholders. Pursuant to Rule 14.44(2) of the Listing Rules, a written approval has been obtained from Asia Pacific which, as at the date of this announcement, holds approximately 58.56 % in nominal value of the shares of Sinolink giving the right to attend and vote at a special general meeting to approve the Disposal. No general meeting of the Sinolink Shareholders will need to be convened as all the conditions set out in Rule 14.44 of the Listing Rules have been met by Sinolink. As no Sinolink Shareholder has a material interest in the Disposal, no Sinolink Shareholder is required to abstain from voting if Sinolink were to convene a special general meeting for the approval of the Disposal. A circular containing, amongst other things, details of the Disposal will be sent to the Sinolink Shareholders in accordance with the relevant requirements of the Listing Rules. Very Substantial Acquisition and Connected Transaction The Acquisition constitutes a very substantial acquisition for Enerchina under the Listing Rules and will accordingly be subject to the approval of the Enerchina Shareholders at a special general meeting of Enerchina. As the Acquisition involves the allotment and issue of the Consideration Shares by Enerchina, an application will be made by Enerchina to the Stock Exchange for the listing of and permission to deal in the Consideration Shares to be issued by Enerchina on the Completion Date. As at the date of this announcement, Sinolink, the controlling shareholder of Enerchina, and its associates beneficially own approximately 62.37% of the issued share capital of Enerchina. Sinolink is therefore a connected person of Enerchina. Accordingly, the Acquisition constitutes a connected transaction for Enerchina under the Listing Rules and is subject to the approval of the independent shareholders of Enerchina at a special general meeting of Enerchina. The voting in respect of the approval of the resolutions regarding the Acquisition will be conducted by way of poll. Sinolink and its associates will abstain from voting for such resolutions. An independent board committee of Enerchina comprising of Mr. Lu Yungang has been formed to give recommendation to the independent shareholders of Enerchina in respect of the Acquisition. DBS Asia Capital Ltd has been appointed as the independent financial adviser to advise the independent board committee and the independent shareholders of Enerchina. A circular containing, amongst other things, (i) details of the Acquisition; (ii) advice of the independent financial adviser; (iii) recommendation of the independent board committee; and (iv) a notice convening a special general meeting of Enerchina to approve the Acquisition, will be sent to the Enerchina Shareholders in accordance with the relevant requirements of the Listing Rules. V. INFORMATION ON KENSON AND SUPREME ALL Each of Kenson and Supreme All is an investment holding company, wholly-owned by Sinolink. Their only assets as at the date of this announcement are their respective shareholdings in Panva Gas as stated below. Kenson and Supreme All hold 381,298,462 and 169,491,525 PG Shares respectively, representing approximately 40.47% and 17.98% of the issued share capital of Panva Gas respectively. The net loss before and after taxation and extraordinary items of Kenson for the year ended 31 December 2003 was HK$2,514,241 (mainly attributable to finance expenses associated with the issue of an exchangeable note). The net profit before and after taxation and extraordinary items of Kenson for the year ended 31 December 2004 was HK$146,845,805 (mainly attributable to the gain from the placing of PG Shares to independent third parties). The net profit before and after taxation and extraordinary items of Supreme All for the year ended 31 December 2003 was HK$2,809,671 (mainly attributable to interest income). The net loss before and after taxation and extraordinary items of Supreme All for the year ended 31 December 2004 was HK$9,290 (mainly attributable to administrative costs). VI. INFORMATION ON PANVA GAS Panva Gas, a company listed on GEM of the Stock Exchange, together with its subsidiaries, are principally engaged in the sale and distribution of natural gas and liquefied petroleum gas and the construction of gas pipelines in the PRC. The audited net profit before taxation and extraordinary items of Panva Gas for the two years ended 31 December 2003 and 31 December 2004 were HK$231,949,000 and HK$283,799,000 respectively. The audited net profit after taxation and extraordinary items of Panva Gas for the two years ended 31 December 2003 and 31 December 2004 were HK$209,074,000 and HK$264,088,000 respectively. VII. INFORMATION ON THE DISPOSAL Based on the net asset value of the Sale Shares of approximately HK$1,009,288,000 as at 31 December 2004, taking into account that all loans due from/to Kenson and Supreme All with respect to Sinolink will be eliminated prior to the Completion Date, Sinolink expects to recognise in its income statement a gain of approximately HK$168 million from the Disposal arising in respect of the dilution in the effective interest of Sinolink in Panva Gas assuming that: (a) Sinolink will be interested in 64.33% of Enerchina based on the Assumption which in itself is subject to possible changes depending on the steps or combination of steps taken by Sinolink and Enerchina to maintain the Public Float on the Completion Date; and (b) any gain or loss resulting from any placing down exercise of existing Enerchina Shares by Sinolink on or before the Completion Date has not been taken into account. Despite the above, there will not be any change in control of Panva Gas from the perspective of Sinolink as Panva Gas will remain as a subsidiary of Sinolink immediately after completion of the Acquisition/Disposal. For information purpose, the original cost of the PG Shares to Sinolink held through Kenson and Supreme All was approximately HK$150,293,965. VIII. REASONS FOR THE ACQUISITION The directors of Enerchina believe that the Acquisition has the following benefits to Enerchina: 1. the Acquisition will enable the results of Panva Gas to be consolidated in the accounts of Enerchina. This will serve to improve the earnings and assets base of Enerchina. As a result of the Acquisition, Enerchina will also issue and allot the Consideration Shares to Sinolink as consideration. In order to maintain the Public Float, Sinolink will either have to place down its Enerchina Shares or Enerchina will have to place new Enerchina Shares to independent investors. In both cases, this will enlarge the shareholder base of Enerchina. The increase in the earnings, assets and shareholder base of Enerchina will allow it to attract more investors and raise further capital (if necessary) to expand its business operations; 2. the directors of Enerchina believe that there is substantial growth opportunities in the natural gas and liquefied petroleum gas industry in China which will lead to growth potential in the earnings of Panva Gas and ultimately benefit Enerchina; and 3. Enerchina is considering to expand into the coal gasification business and the clean energy sector of China. The vast presence of Panva Gas in China with its extensive gas distribution network will