10:19 WEIQIAO TEXTILE<02698> - Announcement (2) an arm's length basis and are normal commercial terms. The Board considers the Transaction to be fair and reasonable, and is in the interests of the Company and the Shareholders, taken as a whole. The Company will convene an EGM for the purpose of seeking the approval of the Independent Shareholders of the Transaction (including the relevant proposed annual caps). According to the Listing Rules, Holding Company and its associates will abstain from voting in respect of the resolution relating to the Transaction. The votes to be taken at the EGM in relation to approval of the Transaction (including the relevant proposed annual caps) will be taken by poll. The Independent Board Committee will be established to advise the Independent Shareholders in relation to the Transaction. Watterson Asia Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Transaction. A circular containing, inter alia, further details of the Transaction, the letter from the Independent Board Committee to the Independent Shareholders, the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, and the notice of EGM will be despatched to the Shareholders as soon as practicable. Particulars of the Transaction are set forth below, and will be disclosed in the Company's 2005 annual report and accounts. 1. The Supplemental Agreement Reference is made to the prospectus of the Company dated 15 September 2003 which states that the Company and Holding Company entered into the Supply of Electricity and Steam Agreement on 25 August 2003. Under the Supply of Electricity and Steam Agreement, Holding Company has agreed to supply electricity and steam to the Group for a term of 10 years commencing from the date thereof. Under the terms of the Supply of Electricity and Steam Agreement, either party may terminate the Supply of Electricity and Steam Agreement from time to time by providing 30 days' written notice of termination in relation to the provision of electricity and/or steam. In the event that Holding Company proposes to terminate the provision of either electricity or steam to the Group, and the Company is unable to find an alternative energy provider on terms comparable to those available from Holding Company (which fact shall be communicated by the Company to Holding Company from time to time), then unless permitted by the Company, Holding Company must continue to provide electricity and/or steam to the Group in accordance with the terms of the Supply of Electricity and Steam Agreement in respect of any energy already contracted to be provided. For the reasons set out in the section headed `Reasons for and benefits of entering into the Transaction', on 13 May 2005, the Company and Holding Company entered into the Supplemental Agreement for the purpose of specifying the pricing bases under the Supply of Electricity and Steam Agreement for the three years ending 31 December 2007. Thereafter, the Company and Holding Company may negotiate a new set of pricing bases, depending on the market and industry conditions then. 2. Revised pricing terms Purchase of electricity Pursuant to the Supplemental Agreement, it has been agreed that the price at which electricity is to be provided to the Group by Holding Company shall be charged as follows: (i) if the aggregate amount of electricity to be purchased by the Group from Holding Company in any financial year of the Company is equal to or less than that similarly purchased for the financial year ended 31 December 2004 (i.e. 1,519,000,000 kWh) (the `Planned Electricity Purchase'), the price at which electricity to be provided to the Group by Holding Company shall be the lower of either RMB0.35 per kWh (including VAT at the rate of 17%) or the then prevailing market price; and (ii) if the aggregate amount of electricity to be purchased by the Group from Holding Company in any financial year of the Company exceeds the Planned Electricity Purchase, the price for the Planned Electricity Purchase shall be the same as (i) above. The price for any excess purchase shall be adjusted, but must not be higher than the then prevailing market price. Purchase of steam It has been further agreed that the price at which steam is to be provided to the Group by Holding Company shall be charged as follows: