09:43 SINOGAS<00260> - Announcement & Resumption of Trading (12) REASONS FOR THE GLOBAL KING SUBSCRIPTION AND THE OPEN OFFER, AND USE OF PROCEEDS The use of LPG and CNG in the PRC is becoming more popular, partly due to government policies in the PRC in promoting natural gas as a more environmental friendly energy source and partly due to the fact that natural gas is more cost-efficient than other energy sources such as petroleum. In addition to the use of LPG and CNG in households and for industrial purposes, LPG and CNG have also become increasingly popular energy sources for motor vehicles. The Sino Gas Board believes that the consumption of LPG and CNG will grow together with the growth of car ownership and gross domestic product in the PRC. Given the promising prospects of the LPG/CNG business in the PRC, the Sino Gas Directors consider that the Global King Subscription provides an opportunity for Sino Gas to step up its investment in the LPG/CNG business. In light of the growth in car ownership due to the improving living standards in the PRC, the Sino Gas Group intends to expand its natural gas business, through its subsidiaries, by constructing more LPG/CNG refueling gas stations in various cities in the PRC. The net proceeds of the Open Offer are expected to be approximately HK$128.0 million. The Sino Gas Board intends to use the net proceeds of the Open Offer as to approximately HK$83.0 million for the aforesaid construction of LPG/CNG refueling gas stations (including the payment of the consideration of the Global King Subscription) and the investment in gas and energy related business, and as to approximately HK$45.0 million as general working capital for the expansion of the LPG/CNG business. The Sino Gas Directors consider that it is in the best interest of Sino Gas and the Sino Gas Shareholders to raise capital by way of the Open Offer, which will allow all Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interest in Sino Gas. WARNING OF THE RISK OF DEALINGS IN SINO GAS SHARES Sino Gas Shareholders and potential investors should note that the Global King Subscription and the Open Offer, which are subject to a number of conditions precedent, may or may not be completed. In addition, the Open Offer is conditional upon the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out in the sub-paragraph headed "Termination of the Underwriting Agreement" above). Accordingly, the Open Offer may or may not proceed. Sino Gas Shareholders and potential investors should therefore exercise caution when dealing in the Sino Gas Shares, and if they are in any doubt about their position, they should consult their professional advisers. Sino Gas Shareholders should note that the trading of Sino Gas Shares on an ex-entitlement basis is expected to commence on 29 June 2005. Sino Gas Shareholders should also note that dealings in such Sino Gas Shares will take place while the conditions to which the Underwriting Agreement is subject remain unfulfilled. Any Sino Gas Shareholders or other persons dealing in such Sino Gas Shares up to the date on which all conditions to which the Open Offer is subject are fulfilled (which is expected to be 26 July 2005), will accordingly bear the risk that the Open Offer cannot become unconditional and may not proceed. Any Sino Gas Shareholders or potential investors contemplating selling or purchasing Sino Gas Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional adviser. EXPECTED TIMETABLE OF THE OPEN OFFER 2005 Despatch of the circulars to the Sino Gas Shareholders containing, among others, notices of Sino Gas EGM 20 June