ANANDA WING ON TRAVEL (HOLDINGS) LIMITED (Incorporated in Bermuda with limited liability)

Transcription

1 4th SEHK Proof 30/10/2003 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult your licensed securities dealer or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Ananda Wing On Travel (Holdings) Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. ANANDA WING ON TRAVEL (HOLDINGS) LIMITED (Incorporated in Bermuda with limited liability) App PROPOSED OFFER FOR ALL THE SHARES IN APEX QUALITY GROUP LIMITED AND PROPOSED DISPOSAL OF APPROXIMATELY 49.3% INTEREST IN ROSEDALE HOTEL GROUP LIMITED AND MAJOR AND CONNECTED TRANSACTIONS Financial adviser to Ananda Wing On Travel (Holdings) Limited Independent financial adviser to the Independent Director AMS Corporate Finance Limited A letter from the board of directors of Ananda Wing On Travel (Holdings) Limited is set out on pages 5 to 15 of this circular. A letter from the independent director of Ananda Wing On Travel (Holdings) Limited to the independent shareholders is set out on page 16 of this circular. A letter from AMS Corporate Finance Limited, the independent financial adviser to the independent director of Ananda Wing On Travel (Holdings) Limited, is set out on pages 17 to 32 of this circular. A notice convening a special general meeting of Ananda Wing On Travel (Holdings) Limited to be held at 8th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong on Monday, 17 November, 2003 at 10:15 a.m. (or so soon or later thereafter as the special general meeting of Ananda Wing On Travel (Holdings) Limited convened on the same day and at the same place at 10:00 a.m. shall have been concluded or adjourned) is set out on pages 190 to 191 of this circular. A form of proxy for use at the special general meeting is enclosed. Whether or not they are able to attend the special general meeting in person and vote at such meeting, shareholders are advised to read the notice and complete the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and return it to the head office and principal place of business of Ananda Wing On Travel (Holdings) Limited at 7th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the special general meeting. Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the meeting or any adjourned meeting if they so wish. 31st October, th SEHK Proof 30/10/2003 Ananda Wing On Cover(BMI)

2 CONTENTS Definitions Letter from the Board Letter from the Independent Director Letter of advice from AMS Appendix I Financial information on the Group Appendix II Accountants report on the Apex Group Appendix III Additional financial information on the Apex Group Appendix IV Financial information on the Enlarged Group Appendix V Property valuation on the Rosedale Group (excluding the Apex Group) Appendix VI Property valuation on the Apex Group Appendix VII General information Notice of Special General Meeting Accompanying document Form of proxy Page i 4th SEHK Proof 30/10/2003 Ananda Wing On Contents(BMI)

3 DEFINITIONS In this circular, the following expressions have the following meanings unless the context requires otherwise: AMS Apex Apex Group Apex Offer Apex Shares associate(s) Board BVI CEL China Strategic Company Completion Date Consolidated Rosedale Share(s) Convertible Notes AMS Corporate Finance Limited, a corporation deemed licensed under the SFO, the independent financial adviser to the Independent Director in connection with the Apex Offer and the Rosedale Share Sale Agreement Apex Quality Group Limited, a company incorporated in the BVI with limited liability and currently a wholly owned subsidiary of Rosedale Apex and its subsidiaries upon completion of the Rosedale Group Reorganisation the possible unconditional voluntary offer referred to herein to acquire all Apex Shares not already held by Millennium Target and parties acting in concert with it (other than China Strategic) at a price of HK$0.26 per Apex Share in cash ordinary shares of US$1.00 each in the issued share capital of Apex, the par value of which will be reduced to US$0.02 each before completion of the Rosedale Group Reorganisation the meaning ascribed to it under the Listing Rules the board of Directors the British Virgin Islands China Enterprises Limited, a 55.2% owned subsidiary of China Strategic and the securities of which are traded on the OTC (overthe-counter) Bulletin Board in the United States of America China Strategic Holdings Limited, a company incorporated in Hong Kong with limited liability and the securities of which are listed on the main board of the Stock Exchange Ananda Wing On Travel (Holdings) Limited, a company incorporated in Bermuda with limited liability and the securities of which are listed on the main board of the Stock Exchange the date of completion of the Rosedale Share Sale Agreement issued and unissued ordinary share(s) of US$0.02 each in the issued share capital of Rosedale upon the Rosedale Capital Reorganisation becoming effective the outstanding convertible notes of the Company in the aggregate amount of approximately HK$ million, convertible into new Shares at HK$0.032 per Share at any time by the holders of the Convertible Notes up to and including 19th April, th SEHK Proof 30/10/2003 Ananda Wing On Definition(BMI)

4 DEFINITIONS Directors Enlarged Group Group Hong Kong Independent Director Independent Shareholders Joint Announcement Latest Practicable Date Listing Rules Millennium Target Mr. Chan PRC Record Date Reduced Rosedale Share(s) Rosedale Rosedale Capital Reduction the directors of the Company the Company and its subsidiaries immediately after completion of the Apex Offer (on the assumption that the Apex Shares subject to the Apex Offer (other than the 62,821,662 Apex Shares to be owned by China Strategic) are all tendered by way of acceptance) but before the completion of the Rosedale Share Sale Agreement the Company and its subsidiaries the Hong Kong Special Administrative Region of the PRC Mr. Kwok Ka Lap, Alva, one of the independent non-executive Directors Shareholders other than CEL and its associates and parties acting in concert with any of them the joint announcement dated 8th August, 2003, made by the Company, Apex, Millennium Target, Rosedale and Velocity in relation to, among other things, the Rosedale Group Reorganisation, Rosedale Capital Reorganisation, Rosedale Share Sale Agreement, the Apex Offer 28th October, 2003, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein the Rules Governing the Listing of Securities on the Stock Exchange Millennium Target Holdings Limited, a company incorporated in the BVI and a wholly-owned subsidiary of the Company Mr. Chan Yeung Nam, the sole beneficial shareholder and director of Velocity the People s Republic of China the record date, to be fixed, to determine entitlements to the distribution in specie of the Apex Shares by Rosedale issued and unissued shares of US$0.002 each in the share capital of Rosedale created from the Rosedale Capital Reduction and Rosedale Share Subdivision but prior to implementation of the Rosedale Share Consolidation Rosedale Hotel Group Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange the proposed cancellation of US$0.018 of the paid-up capital on each issued Rosedale Share and reduction of the nominal value of each of the issued Rosedale Shares from US$0.02 to US$0.002 and the cancellation of the entire share premium account of Rosedale, details of which were set out in the Joint Announcement Para (10) Para (9) Para (3) 2 4th SEHK Proof 30/10/2003 Ananda Wing On Definition(BMI)

5 DEFINITIONS Rosedale Capital Reorganisation Rosedale Convertible Note Rosedale Convertible Note Placing Agreement Rosedale Group Rosedale Group Reorganisation Rosedale SGM Circular Rosedale Share(s) Rosedale Share Consolidation Rosedale Shareholder(s) Rosedale Share Sale Agreement the proposed capital reorganisation of Rosedale involving the Rosedale Capital Reduction, the Rosedale Share Subdivision and the Rosedale Share Consolidation the outstanding convertible note of Rosedale in the amount of HK$66 million, convertible into new Rosedale Shares at HK$0.3 per Rosedale Share at any time up to and including 26th November, 2004 the placing agreement dated 28th October, 2002 relating to the placing of convertible notes issued by Rosedale in the aggregate principal amount of HK$45 million entered into between Rosedale and BNP Paribas Peregrine Securities Limited Rosedale and its subsidiaries the proposed internal group reorganisation of Rosedale which, if approved and implemented, will result in (i) Rosedale continuing as a public listed company in Hong Kong concentrating on businesses other than hotel and leisure-related businesses in which the Rosedale Group has engaged in the past including property investment and development in the PRC; (ii) Apex holding principally all assets and liabilities of the Rosedale Group in relation to the hotel and leisure-related businesses; and (iii) the Rosedale Shareholders receiving by way of distribution in specie of Apex Shares on a one Apex Share for one Consolidated Rosedale Share basis, details of which were set out in the Joint Announcement a circular issued by Rosedale to its shareholders on 31st October, 2003 containing, among other things, details of the Rosedale Group Reorganisation, the Rosedale Capital Reorganisation, change of board lot size, change of company name, a notice convening a special general meeting of Rosedale and the letters of advice from the independent board committee of Rosedale and its independent financial adviser, Chateron Corporate Finance Limited ordinary share(s) of US$0.02 each in the issued share capital of Rosedale the proposed consolidation of every ten Reduced Rosedale Shares into one Consolidated Rosedale Share, details of which were set out in the Joint Announcement holder(s) of Rosedale Shares or Consolidated Rosedale Shares, as the case may be a sale and purchase agreement dated 9th July, 2003 entered into between, inter alia, Velocity and the Company for the proposed acquisition by Velocity of 1,366,666,666 Rosedale Shares from the Company, representing approximately 49.3% of the issued share capital of Rosedale as at the date of the Rosedale Share Sale Agreement 3 4th SEHK Proof 30/10/2003 Ananda Wing On Definition(BMI)

6 DEFINITIONS Rosedale Share Subdivision SFO SGM Share(s) Shareholder(s) Stock Exchange Tai Fook Capital Tai Fook Securities Velocity HK$ US$ sq. ft. sq. m. the proposed subdivision of each authorised but unissued Rosedale Share into ten Reduced Rosedale Shares, details of which were set out in the Joint Announcement the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) a special general meeting to be held by the Company to approve, among other things, the making of the Apex Offer; the Rosedale Share Sale Agreement and the transactions contemplated thereunder ordinary share(s) of HK$0.01 each in the issued share capital of the Company holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited Tai Fook Capital Limited, a corporation licensed under the transitional arrangements to carry out Type 6 regulated activity for the purposes of the SFO, which is the financial adviser to the Company and Millennium Target Tai Fook Securities Company Limited, a licensed corporation to carry on Types 1, 3 and 4 regulated activities for the purposes of the SFO, which will make the Apex Offer on behalf of Millennium Target Velocity International Limited, a company incorporated in the BVI with limited liability and beneficially wholly-owned by Mr. Chan Hong Kong dollar, the lawful currency of Hong Kong United States dollar, the lawful currency of the United States of America square foot or square feet square metre(s) % per cent. For the purpose of illustration only and unless otherwise stated, amounts denominated in US$ have been translated into HK$ at a rate of US$1.00 = HK$7.80. Such translation should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate or at all. 4 4th SEHK Proof 30/10/2003 Ananda Wing On Definition(BMI)

7 LETTER FROM THE BOARD ANANDA WING ON TRAVEL (HOLDINGS) LIMITED (Incorporated in Bermuda with limited liability) App Executive Directors: Registered office: Mr. Yu Kam Kee, Lawrence M.B.E., J.P. (Chairman) Clarendon House Dr. Chan Kwok Keung, Charles 2 Church Street Dr. Yap, Allan Hamilton HM 11 Mr. Cheung Hon Kit (Managing Director) Bermuda Mr. Chan Pak Cheung, Natalis Mr. Lui Siu Tsuen, Richard Head Office and Principal Ms. Luk Yee Lin, Ellen Place of Business: 7th Floor Non-Executive Directors: Paul Y. Centre Mr. Chan Yeuk Wai (Honorary Chairman) 51 Hung To Road Mr. Fok Kin-ning, Canning Kwun Tong Ms. Shih, Edith (alternate to Mr. Fok Kin-ning, Canning) Kowloon Hong Kong Independent Non-Executive Directors: Mr. Lai Hing Chiu, Dominic Mr. Kwok Ka Lap, Alva 31st October, 2003 To the Shareholders and for information only, to the holders of the Convertible Notes Dear Sir or Madam, PROPOSED OFFER FOR ALL THE SHARES IN APEX QUALITY GROUP LIMITED AND PROPOSED DISPOSAL OF APPROXIMATELY 49.3% INTEREST IN ROSEDALE HOTEL GROUP LIMITED AND MAJOR AND CONNECTED TRANSACTIONS INTRODUCTION Overview The Board is pleased to announce that the following transactions were/will be entered into by the Company as disclosed in the Joint Announcement. 5 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

8 LETTER FROM THE BOARD (i) The Apex Offer Subject to the Rosedale Group Reorganisation being implemented in full and the approval by the Independent Shareholders, Tai Fook Securities, on behalf of Millennium Target, will make an unconditional voluntary cash offer to acquire from all the shareholders of Apex (other than those Apex Shares then owned by Millennium Target and parties acting in concert with it) all issued Apex Shares at a price of HK$0.26 per Apex Share. China Strategic is regarded as a concert party of Millennium Target and has irrevocably undertaken to Millennium Target not to accept the Apex Offer in respect of the 62,821,662 Apex Shares which will be distributed to its wholly-owned subsidiaries which are Rosedale Shareholders. (ii) The Rosedale Share Sale Agreement The Company has entered into the Rosedale Share Sale Agreement with Velocity on 9th July, 2003 pursuant to which and subject to, inter alia, the implementation of the Rosedale Group Reorganisation in full and the approval by the Independent Shareholders, Velocity agreed to acquire 1,366,666,666 Rosedale Shares (or 136,666,666 Consolidated Rosedale Shares) from the Company, representing approximately 49.3% of the issued share capital of Rosedale as at the date of the Rosedale Share Sale Agreement, for HK$88 million, equivalent to approximately HK$ per Rosedale Share (or HK$0.644 per Consolidated Rosedale Share). The purposes of this circular is to, among other things, (i) give you further information about the Apex Offer and the Rosedale Share Sale Agreement; (ii) set out the recommendations of the Independent Director to the Independent Shareholders in relation to the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder; (iii) set out the advice of AMS to the Independent Director in relation to the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder; and (iv) give you notice of the SGM at which ordinary resolutions, will be proposed to consider and, if thought fit, to approve, among other matters, the Apex Offer, the Rosedale Share Sale Agreement and the transactions contemplated thereunder. 6 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

9 LETTER FROM THE BOARD The group and shareholding structures of Rosedale as at the date of the Joint Announcement The chart below shows in summary form (i) the structure of Rosedale Group; and (ii) the shareholding structure of Rosedale as at the date of the Joint Announcement: Public Rosedale Shareholders China Strategic (Note 1) 28.1% 22.6% (Note 3) 55.2% CEL 32.2% Ananda Wing On (Note 1) 100% Millennium Target 49.3% Rosedale (Note 1) Investment properties/properties under construction 75% interest in Paul Y. Plaza in Guangzhou, the PRC Investment properties/properties held for sale 86% interest in certain properties and car parks in Shenzhen Development Centre in Shenzhen, the PRC Hotel properties 81% interest in Rosedale Hotel & Suites Guangzhou, Guangzhou, the PRC 95% interest in Rosedale Hotel & Suites Beijing, Beijing, the PRC 100% interest in Best Western Rosedale on the Park, Causeway Bay, Hong Kong Right to acquire 60% interest in Golden Gulf Hotel, Luoyang, the PRC at HK$90.6 million Properties under/held for development 70% interest in certain parcels of land in Area 18, Jiangbei Road, Jiangbei District, Huizhou, the PRC 100% interest in development site of Tai Shan Oriental Pointe (formerly named as Lang De Dong), Dong Men, Fu Cheng Town, Tai Shan Municipality, Guangdong Province, the PRC Properties held for sale 100% interest in certain unsold portion of Chuang s Garden, Danshui, the PRC Other assets and liabilities (Note 2) Notes: 1. Listed on the main board of Stock Exchange. 2. Mainly represents holding in certain dormant companies. 3. Indirect interest held by wholly-owned subsidiaries. THE APEX OFFER The Rosedale Group Reorganisation Upon completion of the Rosedale Group Reorganisation, Rosedale will have 277,408,596 Consolidated Rosedale Shares in issue and based on such, Apex will issue 277,408,596 Apex Shares and will distribute all such Apex Shares to the Rosedale Shareholders whose names appear on the register of members of Rosedale on the Record Date. Based on the existing shareholding structure of Rosedale and upon completion of the Rosedale Group Reorganisation, the Company and China Strategic (a presumed party acting in concert with the Company and Millennium Target) will be beneficially interested in a total of 136,666,666 Apex Shares and 62,821,662 Apex Shares respectively, representing approximately 49.3% and 22.6% respectively of the expected issued share capital of Apex. As such, the aggregate Apex Shares which will be beneficially owned by the Company and its concert parties (including China Strategic) will amount to 199,488,328 Apex Shares, representing approximately 71.9% of the issued share capital of Apex upon completion of Rosedale Group Reorganisation. 7 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

10 LETTER FROM THE BOARD Possible unconditional voluntary offer for the Apex Shares Subject to the approval by the Independent Shareholders of the Apex Offer and completion of the Rosedale Group Reorganisation, Tai Fook Securities, on behalf of Millennium Target, will make an unconditional voluntary cash offer to the shareholders of Apex to acquire all the Apex Shares, other than those Apex Shares which will be owned by the Company, its associates and parties acting in concert with it (the Apex Offer will also be extended to China Strategic but it has irrevocably undertaken to Millennium Target not to accept the Apex Offer in respect of its approximately 22.6% interest in the Apex Shares), on the following basis: Para (7)(1 Para (7)(3 Para (1)(a for each Apex Share* HK$0.26 in cash * The Apex Shares will be issued based on the number of the Consolidated Rosedale Shares in issue on the Record Date. The Apex Shares subject to the Apex Offer will be acquired with the right to receive all dividends and distributions declared, paid or made on or after the date of the issue of the Apex Shares and free from all third party rights. Since Apex is a company incorporated in the BVI and its register of members is located there, no transfer duty is payable on any transfer of the Apex Shares. Consideration The offer price for the Apex Shares has been determined based on arm s length negotiations after taking into account the pro forma consolidated net tangible assets of Apex Group upon completion of the Rosedale Group Reorganisation, and the prevailing market performance of the Rosedale Shares prior to suspension of trading in the Rosedale Shares on the Stock Exchange on 30th June, On the basis that 277,408,596 Apex Shares are expected to be in issue upon completion of the Rosedale Group Reorganisation, the Apex Offer values the entire issued share capital of Apex at approximately HK$72.13 million. Upon completion of the Rosedale Group Reorganisation and based on 136,666,666 Apex Shares and 62,821,662 Apex Shares which will be beneficially owned by Millennium Target and certain subsidiaries of China Strategic respectively, 77,920,268 Apex Shares (representing approximately 28.1% of the share capital of Apex to be in issued) will be subject to the Apex Offer and its total value will amount to approximately HK$20.26 million. The consideration payments to the accepting shareholders of Apex in the Apex Offer will be funded by internal resources of the Group. Given that China Strategic has undertaken not to accept the Apex Offer, it will continue to be beneficially interested in approximately 22.6% of the share capital of Apex in issue upon the close of the Apex Offer. Millennium Target will therefore not be able to avail itself of any compulsory acquisition or redemption provisions under the applicable laws. As at the Latest Practicable Date, no Rosedale Shareholder (other than China Strategic) had undertaken or notified Millennium Target of an intention to accept or reject the Apex Offer. Possible major and connected transaction for the Company Since China Strategic, through its wholly owned subsidiaries, will continue to be a substantial shareholder of Apex upon the distribution of the Apex Shares under the Rosedale Group Reorganisation and it is now an associate of CEL, the controlling Shareholder of the Company holding approximately 32.2% of the issued share capital of the Company, the Apex Offer constitutes a connected transaction for the Company under the Listing Rules and is therefore subject to the approval of the Independent Shareholders. The Apex Offer will also constitute a major transaction for the Company under the Listing Rules if Apex becomes a subsidiary of the Company during or upon completion of the Apex Offer. Para (7)(7 Para (7)(5 Para (1)(c Para (7)(1 Para (1)(d 8 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

11 LETTER FROM THE BOARD Financial effects of the Apex Offer on the Group Upon completion of the Apex Offer and on the assumption that the Apex Shares subject to the Apex Offer (other than the 62,821,662 Apex Shares to be owned by China Strategic) are all tendered by way of acceptance, the Group shall, based on the pro forma consolidated net assets of the Apex Group as at 30th June, 2003 on the assumption that the completion of the Rosedale Group Reorganisation had taken place, amounting to approximately HK$461.1 million as disclosed in the Rosedale SGM Circular, recognise a negative goodwill on consolidation of approximately HK$109.2 million which shall be recognised to the income statement over the remaining average useful life of the properties acquired under the Apex Offer. Para (8) Para (7)(6 The group and shareholding structures of Rosedale and Apex as at the date of the Joint Announcement and adjusted for the effects immediately after the implementation of Rosedale Group Reorganisation but before the completion of the Rosedale Share Sale Agreement The chart below shows in summary form (i) the structures of the Rosedale Group and Apex Group, and (ii) the shareholding structures of Rosedale and Apex as at the date of the Joint Announcement and adjusted for the effects immediately after the implementation of the Rosedale Group Reorganisation but before the completion of the Rosedale Share Sale Agreement: Public Rosedale Shareholders 28.1% China Strategic (Note 1) 22.6% (Note 3) CEL 55.2% 32.2% Ananda Wing On (Note 1) 100% Millennium Target 49.3% Rosedale (Note 1) Apex Para Investment properties/properties under construction 75% interest in Paul Y. Plaza in Guangzhou, the PRC Investment properties/properties held for sale 90% interest in certain properties and car parks in Shenzhen Development Centre in Shenzhen, the PRC (Note 4) Properties held for sale 100% interest in certain unsold portion of Chuang s Garden, Danshui, the PRC Properties under/held for development 70% interest in certain parcels of land in Area 18, Jiangbei Road, Jiangbei District, Huizhou, the PRC 100% interest in development site of Tai Shan Oriental Pointe (formerly named as Lang De Dong), Dong Men, Fu Cheng Town, Tai Shan Municipality, Guangdong Province, the PRC Hotel properties 81% interest in Rosedale Hotel & Suites Guangzhou, Guangzhou, the PRC 95% interest in Rosedale Hotel & Suites Beijing, Beijing, the PRC 100% interest in Best Western Rosedale on the Park, Causeway Bay, Hong Kong Right to acquire 60% interest in Golden Gulf Hotel, Luovang, the PRC at HK$90.6 million Other assets and liabilities (Note 2) (7)(3 Para (1)(b Notes: 1. Listed on the Stock Exchange. 2. Mainly represents holding in certain dormant companies. 3. Through wholly owned subsidiaries. 4. Subject to third party consent/approval. 9 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

12 LETTER FROM THE BOARD Intentions of the Company regarding Apex Apex was incorporated in the BVI with limited liability. Upon completion of the Rosedale Group Reorganisation, Apex s principal activity will be investment holding and its subsidiaries will be principally engaged in hotel and leisure-related businesses. The Apex Group will not conduct any business other than hotel and leisure-related businesses or hold any other material assets other than those assets related to hotel and leisure-related businesses which would be inherited from the Rosedale Group Reorganisation unless prior approval from its shareholders is obtained. The board of directors of Apex will not dispose of any assets of the Apex Group upon completion of the Apex Offer. The Company will not inject any asset into Apex or propose to the board of directors of Apex to dispose of any assets or make any change to the principal business of the Apex Group of hotel and leisure-related businesses. No application will be made for the listing of the Apex Shares on the Stock Exchange or any other stock exchange. Para (7)(4 Rosedale brandname There is no agreement in relation to the use of the name Rosedale by the hotels of the Apex Group and Apex will not change its name to Rosedale before the closing of the Apex Offer. As the Apex Shares will be distributed pro-rata to all Rosedale Shareholders whose names appear on the register of members of Rosedale on the Record Date and the name Rosedale will not be sold to any party, no valuation will be carried out on the name. Financial information of the Apex Group Details in respect of the financial information on the Apex Group including, among other things, the accountants report on the Apex Group containing the proforma combined profit and loss accounts for the three years ended 31st December, 2002 and the six months ended 30th June, 2003 (prepared on the bases to be set out therein respectively) are disclosed in the Appendix II to this circular. ROSEDALE SHARE SALE AGREEMENT The Company entered into the Rosedale Share Sale Agreement with Velocity on 9th July, 2003, the principal terms of which are set out as follows: Parties to the Rosedale Share Sale Agreement Para (4)(1 Para (1)(a Vendor: Purchaser: Guarantor: The Company Velocity Mr. Chan Assets to be sold by the Company and acquired by Velocity 1,366,666,666 Rosedale Shares (or 136,666,666 Consolidated Rosedale Shares upon the Rosedale Capital Reorganisation becoming effective), representing approximately 49.3% of the issued share capital of Rosedale or the Company s entire equity interest in Rosedale as at the date of the Rosedale Share Sale Agreement. Para (4)(2 Para (1)(b 10 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

13 LETTER FROM THE BOARD Consideration Cash of HK$88 million, equivalent to approximately HK$ per Rosedale Share (or HK$0.644 per Consolidated Rosedale Share). The consideration is payable by Velocity as follows: Para (4)(5 Para (1)(c (i) (ii) (iii) (iv) HK$10 million was paid to the Company upon the signing of the Rosedale Share Sale Agreement; HK$10 million on the Completion Date; HK$50 million on or before the next business day falling six calendar months from the Completion Date; and the balance of HK$18 million on or before the next business day falling twelve calendar months from the Completion Date. The consideration under the Rosedale Share Sale Agreement has been arrived at after arm s length negotiations taken into account the pro forma net asset value of the Rosedale Group (before and after the Rosedale Group Reorganisation) and the market performance of the Rosedale Shares prior to suspension of trading in the Rosedale Shares on the Stock Exchange on 30th June, The proceeds of approximately HK$88 million (before expenses) will be used as general working capital and for the business development of the travel-related business of the Group. In the event that the Rosedale Share Sale Agreement lapses, the HK$10 million deposit paid will be returned by the Company to Velocity. Para (4)(7 Para (4)(1 Share mortgage Velocity has agreed to grant a share mortgage upon completion of the Rosedale Share Sale Agreement in favour of the Company by pledging the 136,666,666 Consolidated Rosedale Shares to the Company as security for payment of the balance of the consideration of HK$68 million referred to in items (iii) and (iv) under the section headed Consideration above. The charged shares, being 136,666,666 Consolidated Rosedale Shares to be acquired by Velocity pursuant to Rosedale Share Sale Agreement, represent a continuing security for the due and punctual payment of the balance of the consideration of HK$68 million and the due and punctual performance and observance by Velocity of all its obligations contained in the Rosedale Share Sale Agreement. The share mortgage arrangement is a commercial arrangement between Velocity and the Company and has been agreed after arm s length negotiations. The Directors consider that the pledging of the 136,666,666 Consolidated Rosedale Shares with a value of HK$88 million based on the selling price under the Rosedale Share Sale Agreement to be sufficient as a security for the punctual payment of the balance of the consideration of HK$68 million by Velocity. As a result of the aforesaid share mortgage arrangement, the Company is presumed to be acting in concert with Velocity and it will not rebut the presumption. Conditions Completion of the Rosedale Share Sale Agreement is subject to: (i) (ii) (iii) completion of the Rosedale Group Reorganisation; the Rosedale Shares or Consolidated Rosedale Shares (as the case may be) remaining listed and traded on the Stock Exchange, save for any temporary suspension; the Rosedale Convertible Note having been redeemed in full; 11 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

14 LETTER FROM THE BOARD (iv) (v) the Rosedale Convertible Note Placing Agreement having been terminated; and all necessary approvals or consents from all third parties, the relevant governmental or regulatory authorities in Hong Kong and other jurisdictions as may be required by the parties thereto or any of them for the consummation of the transactions contemplated under the Rosedale Share Sale Agreement having been obtained (including approval by the Independent Shareholders in respect of the Rosedale Share Sale Agreement). Velocity may waive any of the conditions above except condition (i) at any time before completion of the Rosedale Share Sale Agreement by notice in writing to the Company. The terms and conditions of the Rosedale Share Sale Agreement have been agreed between the Company and Velocity after arm s length negotiations. Velocity has no intention to take up the Rosedale Convertible Note. The Rosedale Convertible Note Placing Agreement has been long outstanding with no long-stop date. Velocity and the Company therefore agreed to include conditions (iii) and (iv) above as conditions precedent of the Rosedale Share Sale Agreement. Completion The long-stop date for the fulfilment of the conditions precedent of the Rosedale Share Sale Agreement is 31st December, If the Rosedale Share Sale Agreement fails to become unconditional by such date or any other date as may be agreed between the parties thereto, the Rosedale Share Sale Agreement shall lapse. Major and connected transaction for the Company Given that China Strategic (through its wholly owned subsidiaries) is a substantial shareholder of Rosedale and it is an associate of CEL, the controlling Shareholder of the Company holding approximately 32.2% of the issued share capital of the Company, the Rosedale Share Sale Agreement constitutes a connected transaction for the Company under the Listing Rules and is therefore subject to the approval of the Independent Shareholders. Based on the audited consolidated net tangible asset of Rosedale as at 31st December, 2002, the Rosedale Share Sale Agreement will also constitute a major transaction for the Company under the Listing Rules. Financial effects of the Rosedale Share Sale Agreement on the Group Upon completion of the Rosedale Share Sale Agreement and based on the unaudited proforma net assets of Rosedale Group as at 30th June, 2003, the Group shall recognise a loss of approximately HK$12.9 million. Para (4)(1 Para (1)(d Para (4)(6 Para (5),( 12 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

15 LETTER FROM THE BOARD The group and shareholding structures of Rosedale and Apex as at the date of the Joint Announcement and adjusted for the effects immediately after the implementation of Rosedale Group Reorganisation and completion of Rosedale Share Sale Agreement The chart below shows in summary form (i) the structures of the Rosedale Group and Apex Group, and (ii) the shareholding structure of Rosedale and Apex as at the date of the Joint Announcement and adjusted for the effects immediately after the implementation of the Rosedale Group Reorganisation and completion of the Rosedale Share Sale Agreement: Public Rosedale Shareholders 28.1% China Strategic (Note 1) 22.6% (Note 3) CEL 55.2% 32.2% Ananda Wing On (Note 1) 100% Velocity Millennium Target 49.3% 49.3% Rosedale (Note 1) Apex Para (4)(3 Investment properties/properties under construction 75% interest in Paul Y. Plaza in Guangzhou, the PRC Investment properties/properties held for sale 90% interest in certain properties and car parks in Shenzhen Development Centre in Shenzhen, the PRC (Note 4) Properties held for sale 100% interest in certain unsold portion of Chuang s Garden, Danshui, the PRC Properties under/held for development 70% interest in certain parcels of land in Area 18, Jiangbei Road, Jiangbei District, Huizhou, the PRC 100% interest in development site of Tai Shan Oriental Pointe (formerly named as Lang De Dong), Dong Men, Fu Cheng Town, Tai Shan Municipality, Guangdong Province, the PRC Hotel properties 81% interest in Rosedale Hotel & Suites Guangzhou, Guangzhou, the PRC 95% interest in Rosedale Hotel & Suites Beijing, Beijing, the PRC 100% interest in Best Western Rosedale on the Park, Causeway Bay, Hong Kong Right to acquire 60% interest in Golden Gulf Hotel, Luoyang, the PRC at HK$90.6 million Other assets and liabilities (Note 2) Para (1)(b Notes: 1. Listed on the Stock Exchange. 2. Mainly represents holding in certain dormant companies. 3. Through wholly owned subsidiaries. 4. Subject to third party consent/approval. 13 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

16 LETTER FROM THE BOARD REASONS FOR THE ROSEDALE SHARE SALE AGREEMENT AND THE ROSEDALE GROUP REORGANISATION Given the Rosedale Group Reorganisation is one of the conditions precedent to the Rosedale Share Sale Agreement, the Company, upon completion of the Rosedale Share Sale Agreement, would effectively realise its investment in the Rosedale Group but retaining its interest in the Apex Group. The Directors consider that the existing hotel and leisure-related businesses of the Rosedale Group could have a synergy effect on the existing travel-related business of the Group. For example, crossmarketing opportunities will exist between the Group s travel-related business and the Apex Group s hotel and leisure-related businesses after completion of the Rosedale Group Reorganisation despite the lossmaking history of Rosedale. Through such cross-marketing activities, it is anticipated that the resources of both the Group and the Apex Group could be utilised in a more efficient manner. In addition, the Directors consider that the expertise of the Group s management in running its travel-related business could be value added to the operation of hotel and leisure-related businesses of the Apex Group, in particular in the areas of sales and marketing and product development. Although the Company only completed its acquisition of approximately 49.3% equity interest in Rosedale in December 2002, the Directors consider that its management resources can be more focused in running its existing travel-related business and the hotel and leisure-related businesses of the Apex Group after the disposal of the non-hotel and non-leisure related businesses of the Rosedale Group as a result of completion of the Rosedale Group Reorganisation and the Rosedale Share Sale Agreement. Based on the aforesaid, the Directors consider that the Rosedale Share Sale Agreement is beneficial to the Company and its Shareholders as a whole. Since the Rosedale Group Reorganisation is one of the conditions precedent to the Rosedale Share Sale Agreement, the Company, being the controlling shareholder of Rosedale, considers that it is beneficial for it and the Shareholders to put forward the proposal of the Rosedale Group Reorganisation to the board of Rosedale. Para (4)(9 Para (5) Para (7)(9 THE SGM Set out on pages 190 to 191 of this circular is a notice convening the SGM to be held at 8th Floor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong on Monday, 17th November, 2003 at 10:15 a.m. (or so soon or later thereafter as the special general meeting of the Company convened on the same day and at the same place at 10:00 a.m. shall have been concluded or adjourned), at which ordinary resolutions will be proposed to approve (a) the making of the Apex Offer; and (b) the Rosedale Share Sale Agreement and the transactions contemplated thereunder. Whether or not they are able to attend the meeting in person and vote at such meeting, Shareholders are advised to read the notice and complete the enclosed form of proxy in accordance with the instructions printed thereof as soon as possible and return it to the Company s head office and principal place of business at 7th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding such meeting. Completion and return of the form of proxy will not preclude Shareholders from attending and voting in person at the meeting or any adjourned meeting if they so wish. RECOMMENDATIONS The Directors consider that the making of the Apex Offer, the Rosedale Share Sale Agreement and the transactions contemplated thereunder, are in the best interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of all the ordinary resolutions to be proposed at the SGM. AMS has been appointed as the independent financial adviser of the Company to advise the Independent Director regarding the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder. 14 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

17 LETTER FROM THE BOARD Mr. Lai Hing Chiu, Dominic, an independent non-executive Director, is a senior partner of Messrs. Iu, Lai & Li, the legal advisers to the Company in relation to the Apex Offer and the Rosedale Share Sale Agreement. As such, the Directors consider that Mr. Lai is not eligible to advise the Independent Shareholders in respect of the Apex Offer and the Rosedale Share Sale Agreement. The Independent Director has been appointed to advise the Independent Shareholders in respect of the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder. The Independent Director, having taken into account the advice of AMS, considers that the terms of the Apex Offer and the Rosedale Share Sale Agreement are fair and reasonable and that the making of the Apex Offer and the disposal of the Rosedale Shares pursuant to the Rosedale Share Sale Agreement are in the interests of the Group and the Shareholders as a whole. The Independent Director recommends the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM in respect of the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder. FURTHER INFORMATION Your attention is drawn to the letter of advice from the Independent Director to the Independent Shareholders in relation to the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder set out on page 16 of this circular, the letter of advice from AMS to the Independent Director in relation to the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder set out on pages 17 to 32 of this circular and the additional information set out in the appendices to this circular. Yours faithfully, For and on behalf of the Board of Ananda Wing On Travel Holdings Limited Dr. Chan Kwok Keung, Charles Executive Director 15 4th SEHK Proof 30/10/2003 Ananda Wing On Letter(BMI)

18 LETTER FROM THE INDEPENDENT DIRECTOR ANANDA WING ON TRAVEL (HOLDINGS) LIMITED (Incorporated in Bermuda with limited liability) To the Independent Shareholders Dear Sir or Madam, 31st October, 2003 PROPOSED OFFER FOR ALL THE SHARES IN APEX QUALITY GROUP LIMITED AND PROPOSED DISPOSAL OF APPROXIMATELY 49.3% INTEREST IN ROSEDALE HOTEL GROUP LIMITED AND MAJOR AND CONNECTED TRANSACTIONS I refer to the circular dated 31st October, 2003 issued to the Shareholders (the Circular ), of which this letter forms part. Unless the context otherwise requires, terms used in this letter shall have the same respective meanings as defined in the Circular. I have been appointed as the Independent Director to advise you as to whether, in my opinion, the making of the Apex Offer and the disposal of the Rosedale Shares pursuant to the Rosedale Share Sale Agreement are in the interests of the Group and the Shareholders as a whole, AMS has been appointed as the independent financial adviser to advise me in connection with the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder. Having taken into account the advice of AMS and, in particular, the principal factors and recommendation set out in the letter from AMS on pages 17 to 32 of the Circular, I consider that the terms of the Apex Offer and the Rosedale Share Sale Agreement are fair and reasonable in the circumstances and that the making of the Apex Offer and the disposal of the Rosedale Shares pursuant to the Rosedale Share Sale Agreement are in the interests of the Group and the Shareholders as a whole. I therefore recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the making of the Apex Offer and the Rosedale Share Sale Agreement and the transactions contemplated thereunder. Yours faithfully, Kwok Ka Lap, Alva Independent Non-Executive Director 16 4th SEHK Proof 30/10/2003 Ananda Wing On LetterIBC(BMI)

19 LETTER OF ADVICE FROM AMS The following is the text of a letter from AMS which has been prepared for the purpose of inclusion in this circular: Para (7) AMS Corporate Finance Limited 20th Floor Hong Kong Diamond Exchange Building 8-10 Duddell Street Central Hong Kong 31 October 2003 App (5)(3 To the Independent Director of Ananda Wing On Travel (Holdings) Limited Dear Sirs, INTRODUCTION MAJOR AND CONNECTED TRANSACTIONS We refer to our appointment as the independent financial adviser to advise the Independent Director of Ananda Wing On Travel (Holdings) Limited (the Company ) in respect of the terms of the Apex Offer and the Rosedale Share Sale Agreement, details of which are set out in the letter from the Board (the Letter ) contained in the circular dated 31 October 2003 issued by the Company to the Shareholders (the Circular ), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise. On 8 August 2003, the Company jointly with other parties announced, among other things, that (i) subject to completion of the Rosedale Group Reorganisation and the approval by the Company s independent shareholders (the Independent Shareholders ) of the Apex Offer, Tai Fook Securities, on behalf of Millennium Target, which is a wholly-owned subsidiary of the Company, will make an unconditional voluntary cash offer at HK$0.26 per Apex Share to the shareholders of Apex to acquire all the Apex Shares, other than those already owned by the Company and parties acting in concert with it; and (ii) the Rosedale Share Sale Agreement was entered into between the Company and Velocity on 9 July 2003 pursuant to which Velocity has conditionally agreed to acquire from the Company 1,366,666,666 Rosedale Shares (equivalent to 136,666,666 Consolidated Rosedale Shares), which represent the entire equity interest of approximately 49.3% held by the Company in the issued share capital of Rosedale, for HK$88 million. As China Strategic, an associate of CEL, which is the controlling shareholder of the Company, is a substantial shareholder of Rosedale and will also be a substantial shareholder of Apex upon the issue of the Apex Shares pursuant to the Rosedale Group Reorganisation, each of the Apex Offer and the Rosedale Share Sale Agreement constitutes a connected transaction of the Company under the Listing Rules and is subject to the approval of the Independent Shareholders at a general meeting of the Company. The Independent Shareholders should note that the making of the Apex Offer is not conditional on completion of the Rosedale Share Sale Agreement, nor vice versa. Mr. Kwok Ka Lap, Alva, one of the independent non-executive Directors, has been appointed to consider the making of the Apex Offer and the transactions contemplated under the Rosedale Share Sale Agreement and to advise the Independent Shareholders on the fairness and reasonableness of these transactions. As the independent financial adviser to the Independent Director, our role is to give an independent opinion to the Independent Director as to whether or not each of the Apex Offer and the Rosedale Share Sale Agreement is fair and reasonable so far as the Independent Shareholders are concerned. 17 4th SEHK Proof 30/10/2003 Ananda Wing On LetterAMS(BMI)

20 LETTER OF ADVICE FROM AMS BASIS OF OUR OPINION In formulating our opinion, we have relied on the information and representations contained or referred to in the Circular and the information and representations provided to us by the Company, its advisers and the Directors. We have assumed that all information and representations contained or referred to in the Circular and all information and representations which have been provided by the Company and the Directors, for which they are solely and wholly responsible, were true and accurate at the time when they were made and continue to be so at the date hereof. The Directors have confirmed, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, misleading. We have no reason to doubt the truth, accuracy or completeness of the information provided to us by the Company, its advisers and the Directors. We consider that we have reviewed sufficient information to reach an informed view. We have not, however, conducted an independent verification of the information provided, nor have carried out any form of in-depth investigation into the business and affairs of the Group or the Rosedale Group or the prospects of the market in which they operate. PRINCIPAL FACTORS AND REASONS CONSIDERED In formulating our opinion regarding the terms of the Apex Offer and the Rosedale Share Sale Agreement, we have taken into consideration the following principal factors and reasons: I. The Apex Offer (i) Background of and reason for the Apex Offer As stated in the Letter, subject to completion of the Rosedale Group Reorganisation, Millennium Target, which is a wholly-owned subsidiary of the Company, and China Strategic will be interested in 136,666,666 Apex Shares and 62,821,662 Apex Shares respectively, representing approximately 49.3% and 22.6% respectively of the then issued share capital of Apex. Since China Strategic is presumed to be a party acting in concert with the Company under the Takeovers Code, the aggregate Apex Shares which will be beneficially owned by the Company and parties acting in concert with it will amount to 199,488,328 Apex Shares, representing approximately 71.9% of the issued share capital of Apex upon completion of the Rosedale Group Reorganisation. Apex will principally hold all assets and liabilities of the Rosedale Group in relation to the hotel operations. The board of directors of Apex currently comprises all the executive directors of Rosedale. As indicated in the Joint Announcement, the composition of the board of Apex will change upon closing of the Apex Offer. It was also mentioned in the Letter that the Company has no plan to inject any assets to Apex or propose the board of directors of Apex to dispose of any assets or make any change to the principal business of the Apex Group. The principal assets of the Apex Group following completion of the Rosedale Group Reorganisation are briefly summarised as follows: (a) 100% interest in Best Western Rosedale on The Park, Causeway Bay, Hong Kong ( ROTP ) As advised by the Directors, ROTP is a 30-storey deluxe international business class hotel completed in 2000 with 274 guest rooms and a total gross floor area of approximately 102,173 sq. ft.. Based on the valuation report by RHL Appraisal Ltd. in respect of the hotel properties of the Apex Group (the Apex Property Valuation Report ) set out in Appendix VI to the Circular, ROTP had an open market value of HK$600,000,000 as at 31 July th SEHK Proof 30/10/2003 Ananda Wing On LetterAMS(BMI)