09:34 CH CONSERVATION<00290> - Announcement & Resumption (6) incineration and processing business, the Board is of the view that the Disposal could allow the Group to continue to have an exposure to the waste incineration and process business through its interest in the Preference Shares and the New Options and to enjoy potential returns from the two power plants in Dongguan and Guilin, both of which will be managed by the management of CSCP. As the Preference Shares are convertible into ordinary shares of CSCP as well as redeemable by CSCP on the third anniversary of the date of allotment of the Preference Shares, the Directors consider that the holding of the Preference Shares could provide the Group with an opportunity to enjoy a stable interest return with redemption in full amount as well as to capture any potential returns from the businesses of CSCP by converting the Preference Shares into CSCP Shares and exercising the New Options. The Group is able to increase its share of returns from the businesses of CSCP by increasing its interest in CSCP via the exercise of the New Options at the current share price of CSCP within the option period. On such basis, the Directors are of the view that the terms of the S&P Agreement including, inter alia, the issue and allotment of the Preference Shares and the granting of the New Options, are fair and reasonable in so far as the Shareholders are concerned and in the best interest of the Company and the Shareholders. In spite of the Disposal, the Company will continue its diversification policy. As stated in previous announcement, the Company has entered into an investment framework agreement in relation to the proposed acquisition of up to 49% of the equity interest in a pharmaceutical products distribution and investment company in the PRC, the Disposal could also allow the Group to allocate more resources on the proposed investment on the pharmaceutical business while at the same time continue to enjoy the potential returns from the waste incineration and processing business through its interest in CSCP. GENERAL The Disposal constitutes a major transaction for the Company under the Listing Rules. As CSCP is deemed to be an associate of Mr. Hon who is a Director and a substantial shareholder of the Company and an associate of Mr. Chan who is a Director and the Chairman of the Company, the Disposal also constitutes a connected transaction for the Company under the Listing Rules and is therefore subject to the approval of the Independent Shareholders at the EGM by poll. Mr Hon and its associates, being the substantial shareholder of the Company interested in approximately 14.20 % of the issued share capital of the Company as at the date of this announcement, will abstain from voting at the EGM in respect of the resolutions to approve the S&P Agreement and transactions contemplated thereunder. A separate resolution will be proposed at the EGM for the independent Shareholders to approve the holding of the Preference Shares by the Company as consideration of the Disposal in light of the confirmation by the then directors of the Company in the prospectus of the Company dated 11 April 2001 that, among others, the Group will cease to engage in investing in securities after the new listing of the Company. The Board currently intends to exercise the conversion rights attaching to the Preference Shares and the New Options at appropriate time when depending on the prevailing market conditions during the three years conversion/exercise period. In the event the Board exercises such conversion rights attaching to the Preference Shares at the minimum conversion price of HK$0.50 per Preference Share and/or the New Options at the fixed subscription price of HK$0.76 per New Option Share, the Company would be interested in a maximum of approximately 16.45% of the issued share capital of CSCP as enlarged by the issue of the 152,000,000 Conversion Shares and the 50,000,000 New Option Shares. Under such circumstance, the transaction will constitute a major transaction of the Company. In light of the intention of the Board, a separate resolution will be proposed at the EGM for the Independent Shareholders to approve the exercise of the conversion rights attaching to the Preference Shares and the New Options in whole or in part at any time during the conversion/exercise period. A circular containing, inter alia, details of the Disposal, the S&P Agreement, the recommendation from the independent board committee and the advice of the independent financial adviser in respect of the S&P Agreement and transactions contemplated thereunder, the Preference Shares and the New Options and a notice to convene the EGM, will be despatched to the Shareholders as soon as practicable. RESUMPTION OF TRADING At the request of the Company, trading of the Shares on the Stock Exchange was suspended with effect from 9:30 a.m. on Tuesday, 29 March 2005. The Company has applied for resumption of trading of the Shares on the Stock Exchange with effect from 9:30 a.m. on Wednesday, 13 April