LETTER FROM THE BOARD

Transcription

1 (Incorporated in Hong Kong with limited liability) (Stock Code: 0006) Executive Directors Mr. FOK Kin Ning, Canning (Chairman) Mr. TSAI Chao Chung, Charles (Chief Executive Officer) Mr. CHAN Loi Shun Mr. Andrew John HUNTER Mr. Neil Douglas MCGEE Mr. WAN Chi Tin Non-executive Directors Mr. LI Tzar Kuoi, Victor Mr. Frank John SIXT Registered Office Rooms th Floor, Hutchison House 10 Harcourt Road Hong Kong Company Secretary Mr. Alex NG Independent Non-executive Directors Mr. IP Yuk-keung, Albert Mr. Ralph Raymond SHEA Mr. WONG Chung Hin Mr. WU Ting Yuk, Anthony 20 October 2015 To the Shareholders Dear Sir or Madam, (1) PROPOSED MERGER OF CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED AND POWER ASSETS HOLDINGS LIMITED INVOLVING A SHARE EXCHANGE OFFER TO THE SCHEME SHAREHOLDERS OF POWER ASSETS HOLDINGS LIMITED FOR THE CANCELLATION OF ALL THE SCHEME SHARES BY WAY OF A SCHEME OF ARRANGEMENT AND (2) PROPOSED PAYMENT OF CONDITIONAL SPECIAL DIVIDEND BY CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED 1. INTRODUCTION On 8 September 2015, the respective boards of directors of CKI, the Offeror (a whollyowned subsidiary of CKI), the Company and CKH Holdings jointly announced that, on the same date, the CKI Board and the Offeror Board requested the Board to put forward the Proposal to the Scheme Shareholders regarding the proposed merger of CKI and the 1

2 Company by way of the Scheme. On 7 October 2015, the respective boards of directors of CKI, the Offeror, the Company and CKH Holdings jointly announced the new proposed Cancellation Consideration payable to the Scheme Shareholders. The Scheme involves the proposed cancellation of all the Scheme Shares, in consideration for which each Scheme Shareholder (other than the Non-Qualifying Overseas Shareholders) will receive new CKI Shares in the share exchange ratio of CKI Shares for every one Scheme Share held as at the Record Time, and the subsequent issue of new Shares to the Offeror. On completion of the Proposal, (a) the Company will become an indirect wholly-owned subsidiary of CKI, (b) the listing of the Shares on the Stock Exchange will be withdrawn and (c) CKI will cease to be a subsidiary of CKH Holdings, which will remain as the controlling shareholder of CKI immediately following completion of the Proposal and will hold (through its wholly-owned subsidiaries) approximately 48.76% of the CKI Shares then in issue. CKI and the Offeror have appointed HSBC as their financial adviser in connection with the Proposal. CKH Holdings has appointed Goldman Sachs as its financial adviser in connection with the Proposal. The Board has established the Independent Board Committee, comprising Mr. Ip Yukkeung, Albert, Mr. Ralph Raymond Shea, Mr. Wong Chung Hin and Mr. Wu Ting Yuk, Anthony, all of whom are independent non-executive Directors, to make recommendations to the Disinterested Shareholders in respect of the Proposal. Mr. Li Tzar Kuoi, Victor and Mr. Frank John Sixt, who are non-executive Directors, have not been appointed to the Independent Board Committee as they are also executive CKI Directors. BofAML has been appointed as the financial adviser to the Company in respect of the Proposal. Platinum has been appointed as the independent financial adviser, with the approval of the Independent Board Committee, to advise the Independent Board Committee in respect of the Proposal. The purpose of this document is to provide you with further information regarding the Proposal and to give you notices of the Court Meeting and the General Meeting respectively. 2. THE PROPOSAL It is proposed that, subject to the fulfilment (or, where relevant, waiver) of the conditions precedent as set out in Conditions Precedent to the Proposal in the Explanatory Statement, the Proposal will be implemented by way of a scheme of arrangement of the Company under Division 2 of Part 13 of the Companies Ordinance, pursuant to which all of the Scheme Shares will be cancelled and, in consideration for such cancellation, each Scheme Shareholder whose name appears in the register of members of the Company at the Record Time (other than the Non-Qualifying Overseas Shareholders) will receive new CKI Shares in the share exchange ratio of CKI Shares for every one Scheme Share held as at the Record Time. 2

3 Under the Scheme, the share capital of the Company will, on the Effective Date, be reduced by the cancellation and extinguishment of the Scheme Shares, and immediately upon such reduction of capital taking effect, the share capital of the Company will be restored to its former amount by the issuance to the Offeror, credited as fully paid, of the same number of new Shares as is equal to the number of Scheme Shares cancelled. All the credit arising in the books of account of the Company as a result of such capital reduction will be applied by the Company in paying up in full the newly created Shares, which will be allotted and issued to the Offeror. Completion of the Proposal is subject to the fulfilment (or, where relevant, waiver) of certain conditions precedent, as further described in Conditions Precedent to the Proposal in the Explanatory Statement. 3. REASONS FOR AND BENEFITS OF THE PROPOSAL The Proposal is intended to deliver value to the shareholders of both CKI and the Company. For CKI, as the listed company holding the merged businesses, the Proposal would equip it with a stronger balance sheet and significant cash balance to capture global opportunities for the Enlarged CKI Group in the broader infrastructure sectors, including both power and non-power sectors. For the Company, the Proposal would enable the Scheme Shareholders to exchange their shares in the Company for new shares in CKI, which has a proven track record of earnings and dividend growth, and allow them to remain invested in the enhanced infrastructure platform that will be created. From 2010 to 2014, CKI s dividend per share grew at a compound annual growth rate of approximately 10.7%. Immediately following completion of the Proposal, CKH Holdings will remain as the controlling shareholder of CKI, with a shareholding of approximately 48.76%. The resulting significantly larger public float of CKI Shares, both in terms of percentage and the number of shares, should enhance the liquidity of the CKI Shares. The Proposal would allow the shareholders of both CKI and the Company to participate in the future growth of the merged businesses. Upon completion of the Proposal, the Enlarged CKI Group will be in a stronger competitive position and shareholders of both CKI and the Company would benefit as further explained in Objectives and Benefits of the Proposal in the Explanatory Statement. 4. INFORMATION ON THE CKI GROUP, THE OFFEROR, THE GROUP AND THE ENLARGED CKI GROUP Information (including selected financial information) on the CKI Group, the Offeror and the Group, as well as the unaudited pro forma financial information of the Enlarged CKI Group which illustrates the effect of the Proposal, is set out in the Appendices to this document. Your attention is drawn to these Appendices. This information is provided solely to assist Shareholders in their consideration of the Scheme. 3

4 5. INTENTIONS OF CKI WITH REGARD TO THE GROUP Your attention is drawn to Intentions of CKI with Regard to the Group in the Explanatory Statement. 6. OVERSEAS SHAREHOLDERS AND ADS HOLDERS If you are an Overseas Shareholder, your attention is drawn to Non-Qualifying Overseas Shareholders in the Explanatory Statement and Information for Overseas Shareholders in this document. If you are an ADS Holder, your attention is drawn to Important Notice and Actions to be Taken in this document and ADS Holders and Actions to be Taken in the Explanatory Statement. 7. CKI SPECIAL DIVIDEND The CKI Board intends to declare, on a conditional basis, the CKI Special Dividend in the amount of HK$7.50 per CKI Share to all CKI Shareholders (including holders of CKI Shares issued pursuant to the Scheme) as at the CKI Dividend Record Time on the Effective Date. The payment of the CKI Special Dividend will be conditional upon the satisfaction of both of the following conditions: (a) the passing of an ordinary resolution by the Shareholders at the General Meeting to agree to the payment by CKI of the CKI Special Dividend and (b) the Scheme having become effective. The Proposal is not conditional upon the payment of the CKI Special Dividend becoming unconditional. Your attention is drawn to Proposed Dividend Arrangement in the Explanatory Statement. 8. RECOMMENDATIONS Having taken into account the objectives and reasons for, and the benefits of, the Proposal and its effects as set out in this document, the Directors (other than those on the Independent Board Committee whose views are set out below and in Letter from the Independent Board Committee in this document) consider that (i) the terms of the Proposal are fair and reasonable and (ii) the Proposal is in the interests of the Shareholders as a whole. The Independent Board Committee, having considered (a) the objectives and reasons for, and the benefits of, the Proposal and its effects as set out in this document and (b) the terms of the Proposal and having taken into account the advice of the Independent Financial Adviser, and in particular, the factors, reasons and recommendations set out in Letter from the Independent Financial Adviser in this document, considers that the terms of the Proposal are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole. 4

5 Accordingly, the Directors (including those on the Independent Board Committee) recommend that: (1) the Disinterested Shareholders vote in favour of the resolution to approve the Scheme at the Court Meeting; and (2) the Shareholders vote in favour of the special resolution to approve the Scheme and the implementation of the Scheme, including the reduction and restoration of the issued share capital of the Company under the Scheme, at the General Meeting. 9. COURT MEETING AND GENERAL MEETING A notice convening the Court Meeting to be held at the Grand Ballroom, 1st Floor, Harbour Grand Kowloon, 20 Tak Fung Street, Hung Hom, Kowloon, Hong Kong on Tuesday, 24 November 2015 at 2:00 p.m. is set out on pages N-1 and N-2 of this document. A notice convening the General Meeting to be held at the same venue on the same date at 2:30 p.m. (or as soon thereafter as the Court Meeting shall have been concluded or adjourned) is set out on pages N-3 to N-5 of this document. The Court has directed that the Court Meeting be held for the purpose of considering and, if thought fit, passing a resolution to approve the Scheme, with or without modification. The Scheme is subject to the approval by the Disinterested Shareholders at the Court Meeting in the manner referred to in Conditions Precedent to the Proposal in the Explanatory Statement. Following the conclusion or adjournment of the Court Meeting, the General Meeting will be held for the purpose of considering and, if thought fit, passing (a) a special resolution to approve the Scheme and the implementation of the Scheme and (b) an ordinary resolution to agree to the payment by CKI of the CKI Special Dividend. 10. ACTIONS TO BE TAKEN Your attention is drawn to Actions to be Taken in the Explanatory Statement for details of the actions which you should take as a Shareholder or a Beneficial Owner whose Shares are held by a Registered Owner or deposited in CCASS or an ADS Holder in relation to the Court Meeting and the General Meeting. If you are an Overseas Shareholder, your attention is drawn to Non-Qualifying Overseas Shareholders in the Explanatory Statement and Information for Overseas Shareholders in this document. 11. FURTHER INFORMATION You are urged to read carefully (1) the letter from the Independent Board Committee set out on pages 7 and 8 of this document, (2) the letter from the Independent Financial Adviser set out on pages 9 to 62 of this document, (3) the Explanatory Statement set out on pages 63 to 99 of this document and (4) the Appendices. In addition, a copy of the Scheme is set out on pages S-1 to S-9 of this document. 5

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