CHINA SHANSHUI CEMENT GROUP LIMITED 中國山水水泥集團有 …en.shandongshanshui.com/Static/attachment/2017-03-12/58c... · 2017-03-12 · If you are in any doubtas to any aspect

If you are in any doubt as to any aspect about this circular or as to the action to be taken, you should consult your licensedsecurities dealer, registered institution in securities, bank manager, solicitor, professional accountant or other professionaladviser.

If you have sold or transferred all your shares in China Shanshui Cement Group Limited, you should at once hand thiscircular to the purchaser or the transferee or to the bank, licensed securities dealer, registered institution in securities or otheragent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and HKSCC take no responsibilityfor the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim anyliability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of thiscircular.

This circular appears for information only and does not constitute an invitation or offer to Shareholders or any other personsto acquire, purchase, or subscribe for securities of the Company.

CHINA SHANSHUI CEMENT GROUP LIMITED中國山水水泥集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 691)

(I) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE;(II) REFRESHMENT OF THE SCHEME MANDATE LIMIT; AND

(III) NOTICE OF EGM

Financial adviser to the Company

Manager

Placing agents

Capitalized terms used in this cover page shall have the same meanings as those defined in this circular.

A letter from the Board is set out on pages 6 to 23 of this circular.

A notice convening the EGM to be held at 10 a.m. on Friday, 17 February 2017 at Room 1 and Room 2, United ConferenceCentre Limited, 10/F., United Centre, 95 Queensway, Admiralty, Hong Kong is set out on pages 24 to 26 of this circular.Whether or not you intend to attend the EGM, you are requested to complete the enclosed form of proxy in accordance withthe instructions printed thereon and return the same to the Company’s share registrar and transfer office in Hong Kong,Computershare Hong Kong Investor Services Ltd at Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East,Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time scheduled for the EGMor any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending or voting inperson at the EGM or any adjourned meeting thereof should you so wish.

Shareholders and potential investors of the Company should note that the Placing is conditional upon, among others,the Placing Agreement having become unconditional and the Placing Agents having not terminated the PlacingAgreement in accordance with the terms thereof. Accordingly, the Placing may or may not proceed and the publicfloat of the Shares may or may not be restored.

In the event that the public float of the Shares is not restored, trading in the Shares will continue to be suspended.Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Shares. Ifthey are in any doubt about their position, they should consult their professional advisers.

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

30 December 2016

Page

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

CONTENTS

– i –

In this circular, unless the context otherwise requires, the following terms shall have the

following meaning:

“ABCI” ABCI Securities Company Limited, a licensed

corporation to carry on business in type 1 regulated

activity (dealing in securities) and type 4 regulated

activity (advising on securities) under the SFO

“ACC” Asia Cement Corporation, a Substantial Shareholder

holding 708,263,500 Shares as at the Latest Practicable

Date

“Adoption Date” 14 June 2008, the adoption date of the Share Option

Scheme

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Board” the board of directors of the Company

“Business Day” a day, other than Saturdays, Sundays or public holidays

or a day on which a tropical cyclone warning signal No.

8 or above or a black rainstorm warning signal is hoisted

in Hong Kong at any time between 9:00 a.m. and 4:00

p.m. on which banks generally are open for business in

Hong Kong

“CNBM” China National Building Material Company Limited, a

Substantial Shareholder holding 563,190,040 Shares as at

the Latest Practicable Date

“Company” China Shanshui Cement Group Limited, a company

incorporated in the Cayman Islands with limited liability

whose issued Shares are listed on the Main Board of the

Stock Exchange (stock code: 691)

“Completion” completion of the Placing

“Completion Date” the third Business Day after the day on which the last

condition to the Placing Agreement has been fulfilled or

such other date as may be agreed between the Company

and the Placing Agents in writing

DEFINITIONS

– 1 –

“CSI” China Shanshui Investment Company Limited, a

Substantial Shareholder holding 847,908,316 Shares as at

the Latest Practicable Date

“Director(s)” the director(s) of the Company

“EGM” the extraordinary general meeting of the Company to be

convened and held to consider and, if thought fit, to

approve, among other things, the Placing Agreement, the

grant of the Specific Mandate and the Refreshment of

Scheme Mandate Limit

“Engagement Letters” the separate engagement letters entered into between the

Company and each of the Manager, FCSL, SHKIS and

ABCI in respect of the Placing

“Existing Scheme Mandate

Limit”

the mandate limit of 260,336,000 Shares which may be

issued upon the exercise of all Options granted/to be

granted under the Share Option Scheme

“FCSL” First Capital Securities Limited, a licensed corporation to

carry on business in type 1 regulated activity (dealing in

securities) under the SFO

“Group” the Company and its subsidiaries

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“HKSCC” Hong Kong Securities Clearing Company Limited

“Hong Kong” the Hong Kong Special Administrative Region of the

People’s Republic of China

“Incumbent Directors” the Directors whose appointment were approved by the

Shareholders at the extraordinary general meeting of the

Company held on 1 December 2015 and other Directors

appointed thereafter

“Independent Third Party(ies)” a person, persons, company or companies which is or are

independent of, and not connected with (within the

meaning under the Listing Rules) or acting in concert

with, any directors, chief executive or substantial

shareholders of the Company, any of its subsidiaries or

any of their respective associate(s)

DEFINITIONS

– 2 –

“Last Trading Day” 15 April 2015, being the last trading day of the Shares on

the Stock Exchange before suspension of trading in the

Shares with effect from 16 April 2015

“Latest Practicable Date” 23 December 2016, being the latest practicable date prior

to the printing of this circular for ascertaining certain

information for inclusion in this circular

“Listing Rules” the Rules Governing the Listing of Securities on the

Stock Exchange

“Long Stop Date” 5:00 p.m. (Hong Kong time) on 28 March 2017 or such

later date as may be agreed by the Company and the

Placing Agents in writing

“Manager” Cinda International Securities Limited, a licensed


activity (dealing in securities) under the SFO

“Options” right(s) to subscribe for Share(s) pursuant to the Share

Option Scheme

“Placees” professional, institutional and other investors selected

and procured by or on behalf of the Placing Agents to

subscribe the Placing Shares

“Placing” the offer by way of private placing of the Placing Shares

by or on behalf of the Placing Agents on a best effort

basis pursuant to the Placing Agreement

“Placing Agents” the placing agents appointed by the Company under the

Placing Agreement (including the Manager, FCSL,

SHKIS and ABCI) and each a “Placing Agent”

“Placing Agreement” the amended and restated placing agreement dated 28

November 2016 and entered into between the Company,

the Manager, FCSL, SHKIS and ABCI to amend and

restate the terms and conditions of the Prior Placing

Agreement

“Placing Price” not less than HK$0.50 per Placing Share

DEFINITIONS

– 3 –

“Placing Shares” not less than 910,000,000 new Shares and not more than

950,000,000 new Shares proposed to be allotted and

issued under the Placing, each a Placing Share

“Possible Offerors” ACC and CNBM

“PRC” the People’s Republic of China but excluding, for the

purpose of this circular, Hong Kong, Macau Special

Administrative Region of the People’s Republic of China

and Taiwan

“Prior Placing Agreement” the placing agreement dated 6 October 2016 and entered

into between the Company, SHKIS and ABCI in relation

to the Placing

“Refreshment of Scheme

Mandate Limit”

the proposed refreshment of the total number of Shares

which may be issued upon exercise of all Options to be

granted under the Share Option Scheme and which must

not in aggregate exceed 10% of the total number of

Shares in issue as at the date of approval of the refreshed

limit by the Shareholders

“RMB” Renminbi, the lawful currency of the PRC

“SFC” the Securities and Futures Commission

“SFO” the Securities and Futures Ordinance (Chapter 571 of the

Laws of Hong Kong)

“Share(s)” ordinary share(s) of nominal value of US$0.01 each in

the share capital of the Company

“Share Option Scheme” the share option scheme of the Company adopted on 14

June 2008

“Shareholder(s)” the shareholder(s) of the Company

“SHKIS” Sun Hung Kai Investment Services Limited, a licensed


activity (dealing in securities) and type 4 regulated

activity (advising on securities) under the SFO

DEFINITIONS

– 4 –

“Specific Mandate” the specific mandate to be granted by the Shareholders to

the Board at the EGM for the allotment and issue of up to

950,000,000 Placing Shares pursuant to the Placing

Agreement

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Substantial Shareholders” the substantial Shareholders of the Company, namely

Tianrui, CSI, ACC and CNBM as of the Latest

Practicable Date

“Tianrui” Tianrui Group Company Limited, a Substantial

Shareholder holding 951,462,000 Shares as at the Latest

Practicable Date

“Upfront fee” the fee payable and paid to each of the Placing Agents

pursuant to their respective Engagement Letters entered

into with the Company

“US$” United States dollar, the lawful currency of the United

States of America

“Yu Yuan” Yu Yuan Investment Corporation Limited, a Shareholder

holding 142,643,000 Shares as at the Latest Practicable

Date

“Zhangs” Zhang Caikui and Zhang Bin, former directors of the

Company

“%” per cent.

DEFINITIONS

– 5 –



(Stock code: 691)

Executive Directors

Mr. LIU Yiu Keung, Stephen (Chairman)

Mr. LI HepingMr. HWA Guo Wai, Godwin

Non-executive Director

Mr. CHONG Cha Hwa

Independent Non-executive Directors

Ms. HO Man Kay, AngelaMr. LAW Pui CheungMr. WONG Chi KeungDr. CHING Siu MingMr. LO Chung Hing

Alternate Director

Mr. YEN Ching Wai, David

Registered office

P.O. Box 10008Willow House, Cricket SquareGrand Cayman KY1-1001Cayman Islands

Principal office in Hong Kong

Room 2609, 26/FTower 2, Lippo Centre89 Queensway, AdmiraltyHong Kong

To the Shareholders

30 December 2016

Dear Sir or Madam,

(I) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE;(II) REFRESHMENT OF THE SCHEME MANDATE LIMIT; AND

(III) NOTICE OF EGM

References are made to the announcements of the Company dated 12 September 2016, 6

October 2016, 18 November 2016 and 28 November 2016 in relation to, among others, the

Placing.

In order to restore the public float of the Company, on 12 September 2016, the Company

entered into an Engagement Letter with each of SHKIS and ABCI. Pursuant to the Engagement

Letters, SHKIS and ABCI agreed to act as co-placing agents of the Company to, subject to the

signing of the Prior Placing Agreement and the terms and conditions in the Prior Placing

LETTER FROM THE BOARD

– 6 –

Agreement, place on a best efforts basis not less than 910,000,000 Placing Shares and not morethan 950,000,000 Placing Shares at not less than the Placing Price of HK$0.50 per Share to notless than six independent Placees.

On 6 October 2016, the Company entered into the Prior Placing Agreement with SHKISand ABCI in respect of the Placing.

On 18 November 2016, the Company entered into an engagement letter with each of theManager and FCSL, pursuant to which the Manager and FCSL agreed to act as placing agentsof the Company in addition of SHKIS and ABCI for the Placing.

On 28 November 2016, the Company, the Manager, FCSL, SHKIS and ABCI entered intothe Placing Agreement to amend and restate the Prior Placing Agreement on the terms andconditions set forth therein, which shall amend, restate, supersede and replace in its entirely thePrior Placing Agreement, and to accept the rights created pursuant thereto in lieu of the rightsgranted to them under the Prior Placing Agreement, subject to the terms and conditions of thePlacing Agreement.

In addition, since the Existing Scheme Mandate Limit has been utilized as toapproximately 82.43%, the Company proposed the Refreshment of Scheme Mandate Limit.

The purpose of this circular is to provide you with, among other things, (i) details of thePlacing and the Refreshment of Scheme Mandate Limit; and (ii) the notice convening theEGM.

1. PLACING AGREEMENT

Date: 28 November 2016 (amended and restated the Prior Placing

Agreement)

Parties: (i) the Company as the issuer

(ii) the Manager as the manager of the Placing

(iii) the Manager, FCSL, SHKIS and ABCI as the Placing Agents

To the best of the Directors’ knowledge, information and belief having made allreasonable enquiries, the Placing Agents and their respective ultimate beneficial owner(s) areIndependent Third Parties.

Placing Obligation and Placing Shares

The Company shall offer not less than 910,000,000 Placing Shares and not more than950,000,000 Placing Shares for subscription and the Placing Agents agree to, use their bestefforts, as agents of the Company to procure, either by themselves or through their sub-placingagents, the Placees to subscribe the Placing Shares at a placing price of not less than HK$0.50per Placing Share, on the terms and conditions of the Placing Agreement.


– 7 –

The number of new Shares to be placed by each of the Placing Agents under the Placing

shall be determined between the Manager and the other Placing Agents subject to prior

consultation with and written approval of the Company, provided that the number of Shares to

be placed under the Placing Agreement shall be in aggregate no less than 910,000,000 Placing

Shares and no more than 950,000,000 Placing Shares. The Manager shall have the discretion

(after consultation with and obtaining the written approval of the Company) to allocate to each

Placing Agent such number of Placing Shares (or none of the Placing Shares) which may be

placed by such Placing Agent subject to the terms of and in accordance with the Placing

Agreement.

The choice of the Placees for the Placing Shares shall be determined by the Manager and

the Placing Agents, subject to (i) the prior approval of the Company in writing and (ii) the

requirements of the Listing Rules and the Placing Agents shall take reasonable steps to ensure

that none of the Placing Shares will be placed to any connected person (as defined in the

Listing Rules) of the Company.

The obligations of the Placing Agents under the Placing Agreement (and, in particular,

each of their obligations in relation to the placing of the Placing Shares on a best efforts basis)

shall be several only and not joint, nor joint and several. Each Placing Agent shall be under no

obligation to purchase any of the Placing Shares as principal.

The Company may at any time appoint one or more additional placing agents (each a

“New Placing Agent”) in connection with the Placing and upon signing a deed of adherence

between the Company and the New Placing Agent, the New Placing Agent will be bound by

the terms and conditions of the Placing Agreement as if it were a party to the Placing

Agreement as one of the Placing Agents.

The minimum number of the Placing Shares will represent approximately (i) 26.9% of the

total number of Shares in issue as at the Latest Practicable Date; and (ii) 21.2% of the total

number of Shares as enlarged by the allotment and issue of such number of Placing Shares

(assuming there is no other change in the share capital of the Company).

The maximum number of the Placing Shares will represent approximately (i) 28.1% of the

total number of Shares in issue as at the Latest Practicable Date; and (ii) 21.9% of the total

number of Shares as enlarged by the allotment and issue of such number of Placing Shares

(assuming there is no other change in the share capital of the Company).

The aggregate nominal values of the minimum and maximum number of Placing Shares

amount to US$9,100,000 and US$9,500,000, respectively.

Placees

The Placees shall be professional, institutional and other investors selected and procured

by or on behalf of the Placing Agents.


– 8 –

Each of the Placing Agents, on a several basis, undertakes to the Company that it shalluse its best effort to ensure that:

(i) it will, together with other Placing Agent, place the Placing Shares to not less thansix independent Placees and the Placing will be a private placement of securities andnot an offer to the public;

(ii) the Placees (and their ultimate beneficial owners) will be parties independent of andnot acting in concert (as defined in the Hong Kong Code on Takeovers and Merger)with the Company or its connected persons (as defined in the Listing Rules); and

(iii) each of the Placees will not hold such Placing Shares, as represent 10% or more ofthe Company’s enlarged issued share capital as at the Completion Date.

Placing Price

The Placing Price will be not less than HK$0.50 per Placing Share. The final PlacingPrice will be determined between the Company and the Placing Agents with reference to,among other things, market conditions and potential investors’ response to the Placing.

The minimum Placing Price of HK$0.50 represents:

(i) a discount of approximately 92.1% to the closing price of HK$6.29 per Share asquoted on the Stock Exchange on the Last Trading Day; and

(ii) a discount of approximately 55.0% to the unaudited consolidated net assets perShare of approximately HK$1.11 as at 30 June 2016 (based on the Company’sunaudited consolidated net assets attributable to owners of the Company ofRMB3,214,709,000 (equivalent to approximately HK$3,761,210,000) as at 30 June2016 and 3,379,140,240 Shares in issue as at the Latest Practicable Date).

The minimum Placing Price was arrived at after arm’s length negotiation between theCompany and the Placing Agents with reference to, among other things, (i) the net currentliabilities of the Group of approximately RMB17,630 million as at 30 June 2016; (ii) the netasset per Share of the Group of HK$1.11 as at 30 June 2016; (iii) price to book ratio of cementcompanies listed on the Stock Exchange; (iv) the prolonged suspension of trading in the Sharessince 16 April 2015; and (v) the outstanding financial liabilities of the Group and litigationsinvolving the Group.

Undertakings

The Company has undertaken to the Placing Agents, among other things:

(i) the Company shall notify the Placing Agents forthwith if the Stock Exchangeindicates to it that trading of the Shares on the Stock Exchange would not resumefollowing Completion; and


– 9 –

(ii) other than the allotment and issue of the Placing Shares, no further shares orsecurities convertible into equity securities of the Company may be issued by theCompany or form the subject of any agreement to such an issue within 90 daysimmediately after Completion Date.

Mandate to issue the Placing Shares

The Placing Shares proposed to be issued under the Placing Agreement will be allottedand issued under the Specific Mandate to be obtained at the EGM.

Ranking of Placing Shares

The Placing Shares, when issued and fully paid, will rank pari passu in all respects withthe Shares in issue on the date of allotment and issue of the Placing Shares.

Application for listing

The Company will apply to the Stock Exchange for the listing of, and permission to dealin, the Placing Shares.

Placing commission payable to the Placing Agents

The Company had paid a non-refundable Upfront Fee of HK$500,000 to each of thePlacing Agents upon signing of their respective Engagement Letters.

In addition to the Upfront Fee, the Company shall pay the Placing Agents a commissionof 3% of the aggregate Placing Price of the Placing Shares actually placed by each of thePlacing Agents.

The Upfront Fee and the commission rate of the Placing were arrived at after arm’s lengthnegotiations between the Company and the Placing Agents with reference to the prevailingmarket conditions and the financial conditions of the Group. The Directors consider that theplacing commission is fair and reasonable and in the interests of the Company and theShareholders as a whole.

Based on the minimum Placing Price of HK$0.50 per Placing Share, the net Placing Price(after deduction of all expenses) is approximately HK$0.48 per Placing Share (assuming aminimum of 910,000,000 Placing Shares are successfully placed) or HK$0.48 per Placing Price(assuming a maximum of 950,000,000 Placing Shares are successfully placed).

Conditions of the Placing

Completion of the Placing is conditional upon the fulfilment of the following conditions:

(i) the passing of the ordinary resolutions by the Shareholders at the EGM approvingthe Specific Mandate and the Placing in accordance with the memorandum ofassociation and articles of association of the Company and the Listing Rules; and


– 10 –

(ii) listing of and permission to deal in all the Shares to be allotted and issued in thePlacing being granted by the Listing Committee of the Stock Exchange in principleand dealings in such Shares being allowed by the Stock Exchange subject to therestoration of the public float of the Shares in compliance with Rule 8.08(1)(a) ofthe Listing Rules immediately after the allotment and issue of such Shares (and suchlisting and permission not subsequently being revoked).

None of the conditions precedent as set out above is capable of being waived by any partyto the Placing Agreement.

If any of the above conditions precedent are not fulfilled by the Long Stop Date, allobligations and liabilities of the parties under the Placing Agreement shall cease and terminateand no party shall have any claim against the other in relation thereto save for antecedentbreaches of the provisions of the Placing Agreement.

Completion of the Placing

Completion shall take place on the third Business Day after the day on which the lastconditions precedent set out above has been fulfilled or such other date as may be agreedamong the parties to the Placing Agreement.

Since not less than 910,000,000 Placing Shares and not more than 950,000,000 PlacingShares will be allotted and issued subject to fulfillment of the conditions precedent set outabove in the Placing, the public Shareholders will hold not less than 25% issued share capitalof the Company and the public float of the Shares will be restored upon completion of thePlacing.

An application will be made by the Company to the Stock Exchange for the resumptionof trading in the Shares upon completion of the Placing.

Termination

Notwithstanding anything contained in the Placing Agreement, if at any time prior to 8:00a.m. (Hong Kong time) on the Completion Date,

(a) there develops, occurs or comes into force:

(i) any new law or regulation or any change (whether or not permanent) ordevelopment (whether or not permanent) involving a prospective change inexisting laws or regulations or the interpretation or application thereof by anycourt or other competent authority and which in the opinion of the PlacingAgent or the Company would prejudice the success of the Placing; or

(ii) any event, or series of events beyond the control of the Placing Agent or theCompany (including, without limitation, any calamity, act of government,strike, labour dispute, lock-out, fire, explosion) and which in the opinion of thePlacing Agent or the Company would prejudice the success of the Placing, or


– 11 –

(iii) flooding, earthquake, civil commotion, economic sanctions, epidemic,

pandemic, outbreak of infectious disease, outbreak or escalation of hostilities,

act of terrorism and act of God) involving Hong Kong, the PRC, the United

Kingdom or the United States, or the declaration by Hong Kong, the PRC, the

United Kingdom, the European Union or the United States of war or a state of

emergency or calamity or crisis and which in the opinion of the Placing Agent

or the Company would prejudice the success of the Placing; or

(iv) any change (whether or not permanent) or development (whether or not

permanent) involving a prospective change in local, national or international

financial, political, economic, legal or military conditions and which in the

opinion of the Placing Agent or the Company would prejudice the success of

the Placing; or

(v) any change (whether or not permanent) or development (whether or not

permanent) involving a prospective change in local, national or international

securities market conditions or currency exchange rates or exchange controls

and which in the opinion of the Placing Agent or the Company would prejudice

the success of the Placing; or

(vi) a general moratorium on commercial banking activities in Hong Kong, the

PRC, London or New York declared by the relevant authorities or a material

disruption in commercial banking or securities settlement or clearance services

in Hong Kong, the PRC, the United Kingdom or the United States and which

in the opinion of the Placing Agent or the Company would prejudice the

success of the Placing; or

(vii) any moratorium, suspension or material restriction on trading in shares or

securities generally on the Stock Exchange, the Shanghai Stock Exchange, the

Shenzhen Stock Exchange, the London Stock Exchange, or the New York

Stock Exchange due to exceptional financial circumstances or otherwise and

which in the opinion of the Placing Agent or the Company would prejudice the

success of the Placing; or

(b) there is any change, or any development involving a prospective change, in or

affecting the business, general affairs, management, prospects, assets and liabilities,

shareholders’ equity, results of operations or position, financial or otherwise, of the

Company and its subsidiaries (other than those already disclosed to the public on or

before the date of the Placing Agreement) as a whole, which, in the opinion of the

Placing Agent or the Company is or is likely to be adverse to the Placing, or makes

or is likely to make it impracticable or inadvisable or inexpedient to proceed

therewith; or


– 12 –

(c) the Placing Agents shall receive notification or shall otherwise become aware that

any of the representations and warranties provided by the Company as set out in the

Placing Agreement was, when given, untrue or inaccurate in any material respect

and the effect of such breach would, in the reasonable opinion of the Placing Agents,

adversely affect the success of the Placing or otherwise make it inexpedient or

inadvisable for the Placing to proceed;

then and in any such case, with respect to the Placing, if any of the events set out above occur

at any time on or prior to 8:00 a.m. (Hong Kong time) on the Completion Date, (A) each of

the Placing Agents (excluding the Manager) may terminate its obligations under the Placing

Agreement without liability to the Company or any other parties by giving notice in writing to

the Company and the Manager; and (B) the Manager or the Company may terminate the

Placing Agreement without liability to the Company or any other parties by giving notice in

writing to the Company and the other parties.

Shareholders and potential investors of the Company should note that the Placing isconditional upon, among others, the Placing Agreement having become unconditional andthe Placing Agents having not terminated the Placing Agreement in accordance with theterms thereof. Accordingly, the Placing may or may not proceed and the public float of theShares may or may not be restored.

In the event that the public float of the Shares is not restored, trading in the Shareswill continue to be suspended. Shareholders and potential investors of the Company areadvised to exercise caution when dealing in the Shares. If they are in any doubt abouttheir position, they should consult their professional advisers.

2. REASON FOR THE PLACING AND USE OF PROCEEDS

The Group is principally engaged in the manufacturing and sale of cement, clinker and

concrete. Trading in the Shares has been suspended since 16 April 2015 due to insufficiency

of public float of the Shares.

As disclosed in the interim report of the Company for the six months ended 30 June 2016,

the Group had current assets of approximately RMB4,283.1 million and current liabilities of

approximately RMB21,913.1 million, and a net current liabilities position of approximately

RMB17,630.0 million.

After the approval of the appointment of the Incumbent Directors by the Shareholders at

the extraordinary general meeting of the Company held on 1 December 2015, the Incumbent

Directors have been trying to resolve the liquidity problem of the Group and restore the public

float of the Company with the assistance of its advisers.

However, from 21 July 2015 to 10 May 2016, the Company was in an offer period and

restricted to issue any new Shares as a result of the possible voluntary general offer purported

to be made by the Possible Offerors. On 18 April 2016, the Company submitted a “put up or


– 13 –

shut up” ruling application to SFC requiring the Possible Offerors either to “put up” an offeror “shut up”. On 26 April 2016, SFC ruled that the Possible Offerors should on or before 26May 2016 “put up” an offer or “shut up”. On 10 May 2016, the Possible Offerors announcedtheir decision of not to proceed with the possible offer and the offer period of the Companyceased thereafter.

In order to restore the public float of the Company, the Company proposed a combinationof open offer and placing (the “Proposal”) with an aim to ease the liquidity problem of theGroup and restore the public float of the Company at the same time. However, no response wasreceived from certain Substantial Shareholders and the market sentiment and feedback on suchopen offer was not positive as reported by the potential underwriters. The Proposal was setaside as a result.

The Company subsequently proposed to conduct the Placing after discussion with itsadvisers and the Placing Agents. Upon completion of the Placing, public float of the Companywill be restored which will facilitate the future fund raisings of the Company to resolve itsliquidity issue. As at the Latest Practicable Date, the Company does not have any plan offurther equity fund raisings and will consider conducting further equity fund raisings in thefuture subject to market conditions.

Based on the minimum number of 910,000,000 Placing Shares and the maximum numberof 950,000,000 Placing Shares, the gross proceeds (before expenses) will range fromapproximately HK$455 million to HK$475 million, respectively, and the estimated netproceeds of the Placing will range from approximately HK$436.85 million to approximatelyHK$456.25 million, respectively. The Company intends to apply such net proceeds to settle theoutstanding debt of the Group (excluding the debt owed to the Substantial Shareholders).

The Directors consider that the Placing is fair and reasonable and in the interests of theCompany and the Shareholders as a whole.

3. UPDATES ON THE GROUP

(i) The Company’s control over subsidiaries and books and records

As at the Latest Practicable Date, save for (1) Shandong Shanshui Zhonggong Co., Ltd.(a 99.99%-owned subsidiary of the Company, “Shanshui Zhonggong”); (2) Rushan ShanshuiCement Co., Ltd. (a 67%-owned subsidiary of the Company,“Rushan Shanshui”); (3) QixiaCity Xinhao Cement Co., Ltd. (a wholly-owned subsidiary of the Company, “XinhaoCement”); (4) Dongying Shanshui Cement Co., Ltd. (a 99%-owned subsidiary of the

Company, “Dongying Shanshui”); (5) Jinan Changqing Shanshui Micro Finance Co., Ltd (a

49%-owned subsidiary of the Company, “Shanshui Micro Finance”); (6) the loss of the

company seal (the “Seal”) of Shandong Shanshui Cement Group Company Limited (a

wholly-owned subsidiary of the Company, “Shandong Shanshui”); and (7) certain documents

of the Group which may be retained by the former management and is being investigated by

the Company, the Company has control over all of its subsidiaries and have full access to their

books and records.


– 14 –

Shanshui Zhonggong

After the Incumbent Directors took over the management of Shandong Shanshui in

January 2016, the Incumbent Directors found that Shandong Shanshui sold 55% interest

in Shanshui Zhonggong to two suppliers of the Group with a total consideration of

RMB94.05 million. After the disposal transaction, Shandong Shanshui’s remaining

interest in Shanshui Zhonggong is 44.99%. As at 31 December 2015, the new

management of Shandong Shanshui re-assessed the recoverable amount of the investment

in Shanshui Zhonggong with reference to its value in use, which is derived by using

discounted cash flow analysis. Since the value in use calculated by the discounted cash

flow analysis is lower than the carrying amount of investment in Shanshui Zhonggong,

the Company has fully impaired the investment in Shanshui Zhonggong of RMB79.33

million for the year ended 31 December 2015.

Due to continuous efforts by the previous management of Shandong Shanshui to

frustrate the Company, as at the Latest Practicable Date, the previous management of

Shandong Shanshui is still physically occupying the premises, facilities and in possession

of the books and records of Shanshui Zhonggong, as such, the Company have yet to have

full access to its books and records. Shandong Shanshui has applied to the PRC Court in

August 2016 to rescind its books and the share transfer agreement signed by the Zhangs,

by unlawfully using the Seal, with the creditors. However, Shandong Shanshui has not

received a judgment from the PRC Court as of the Latest Practicable Date.

Rushan Shanshui, Xinhao Cement and Dongying Shanshui

Rushan Shanshui and Xinhao Cement is being controlled by the minority

shareholders and the former shareholder respectively and Dongying Shanshui has

subcontracted its right of operation to Shengli Oilfield Shengli Cement Plant (Shengli

Oilfield Yinghai Industrial Group Co., Ltd. being the current right holder) from 1

November 2006 to 31 December 2016. As at 30 June 2016, assets of Rushan Shanshui,

Xinhao Cement and Dongying Shanshui represents 0.22%, 1.04% and 0.37% of the

Group’s total assets as at 30 June 2016 respectively. The Company can access to their

accounting records via a web-based accounting software but cannot gain access to their

office and facilities.

Shanshui Micro Finance

Shanshui Micro Finance is believed to be still under the management of the Zhangs.

The operation of Shanshui Micro Finance is to provide financing to qualified individual

borrowers. The Group dominated the loan approval process of Shanshui Micro Finance

and the loan balances of each qualified borrower are guaranteed by his/her receivables

from the Group. Due to these reasons, the former directors of the Company are of the

view that the Group has (i) existing rights that give it the current ability to direct the

relevant activities which significantly affect Shanshui Micro Finance’s returns; (ii)

exposure and rights to variable returns from its involvement with Shanshui Micro


– 15 –

Finance; and (iii) the ability to affect the returns of Shanshui Micro Finance through itspower over Shanshui Micro Finance. Accordingly, the Group has treated Shanshui MicroFinance as a subsidiary in 2015.

As at 31 December 2015, the principal of loans of Shanshui Micro Finance to thirdparties is approximately RMB151 million. As the new management has been unable toobtain the original contracts or other reliable information relating to the identity of theborrowers and the terms of the loans from Shanshui Micro Finance, the Company hasfully impaired these receivables as at 31 December 2015.

As at 30 June 2016, since the new management of the Company has lost control onShanshui Micro Finance’s operations and is still not able to recover books and accountsof Shanshui Micro Finance for the period from January 2016 to June 2016, the Companyhas treated Shanshui Micro Finance as an associate for the period and further made animpairment loss of RMB49 million on the investment cost of Shanshui Micro Finance inits interim report 2016.

As at the Latest Practicable Date, the Company was informed by its PRC lawyer,Tiantai Law Firm, that the Zhangs are still in an attempt to change the shareholdings ofShanshui Micro Finance but such application has not been completed because it involvesacts prohibited by the PRC government. Therefore, the new managements of theCompany are of the view that the Group has lost the control of Shanshui Micro Finance.

Shandong Shanshui

The Seal has been illegally retained by Zhangs. The illegitimate use of the Seal bythe Zhangs to enter into contracts, to make any form of representation of giving up rights,or to dispose of the assets, would seriously prejudice the legitimate rights of the Companyand cause damages to the Company and its shareholders. Despite that a civil ruling hasbeen served upon the Zhangs and Chen Xueshi by the People’s Court of Haiding District,Beijing on 28 June 2016 which prohibits them from using or authorizing others to use theSeal, there may still stand a possibility for them to use the Seal by way of dating backdocuments to and before 28 June 2016 in order to obviate the restrictions imposed by the

civil ruling (although the Company is not aware of or is made aware of this incident). In

this regard, Shandong Shanshui would be exposed to adverse legal consequences arising

out of such unauthorized contracts or documents (if any). Moreover, as Shandong

Shanshui is not in possession of the Seal, it is unable to change its corporate information

filed and difficulties ensued in carrying out corporate acts and legal actions properly.

In relation to the application for issuance of a new Seal of Shandong Shanshui, the

Company has been negotiating with the Police of Jinan City but no avail. As at the Latest

Practicable Date, the Police of Jinan City has refused to process the application of

Shandong Shanshui to issue a new official seal. The Company is applying to the Haidian

District People’s Court of Beijing to claim for return of the Shandong Shanshui’s official

seal from its former directors, and the case has been pending for the date of hearing from

the court.


– 16 –

The National People’s Congress (“NPC”) Standing Committee adopted significant

amendments to China’s wholly foreign-owned enterprise and Sino-foreign joint venture

(collectively, foreign-invested enterprise or “FIE”) laws on 3 September 2016. The

amendments replace existing Ministry of Commerce (“MOFCOM”) approval

requirements with filing requirements, for all FIEs (provided they are not subject to

national market access restrictions).

On 26 October 2016, the Company has filed all necessary documents related to the

change of legal representative and directors of Shandong Shanshui with the local

MOFCOM, however, the filing was rejected for the reason of further information required

to be submitted. The local MOFCOM refused to state what the missing documents are.

The Company’s PRC lawyer is of the view that such rejection is not consistent with the

stated PRC laws, and has already escalated the matter to the MOFCOM in Beijing.

As at the Latest Practicable Date, the Company is in discussion with its PRC lawyer

with the steps and procedures to restore control to the subsidiaries involved, to apply for

issuance of a new Seal and to complete the filing of the change of legal representative and

directors of Shandong Shanshui.

Having considered (i) the Company has already written off the relevant amounts incurred

in Shanshui Zhonggong and Shanshui Micro Finance in its 2015 annual results and 2016

interim results respectively; and (ii) the assets of Rushan Shanshui, Xinhao Cement and

Dongying Shanshui represented approximately 0.22%, 1.04% and 0.37% of the Group’s total

assets as at 30 June 2016 respectively, the Company considered the above incidents has no

material adverse effect on the Company’s financial position.

(ii) The Company’s financial position

As at the Latest Practicable Date, the Group breached default clauses of the lending

agreements of short-term bank loans totaling RMB1,352 million, other borrowings totaling

RMB2,794 million and long-term bonds totaling RMB7,277 million which are included in the

Group’s interest-bearing borrowings. Through commencing legal proceedings, several banks

have demanded the Group to repay the overdue principal of bank loans, other borrowings and

long-term bonds of approximately RMB4,239 million. These facts and circumstances indicate

the existence of multiple material uncertainties that may cast significant doubt on the Group’s

ability to continue as a going concern.

It is the Group’s continuous effort to address its financial position especially with regards

to the outstanding financial liabilities. On 15 December 2016, Shandong Shanshui, as the

borrower, Tianrui, in addition, together with Shandong Shanshui, the “Undertaking Parties”

and China Cinda Asset Management Company Limited (Shandong branch) (“CindaShandong”, as the investor and the lender) entered into a debt investment framework

agreement (“Framework Agreement”) relating to Cinda Shandong or its related parties

intending to carry out debt investment in Shandong Shanshui in order to resolve its relevant

debt default issues and to replenish its liquidity. To the extent that is in compliance with all the


– 17 –

relevant Listing Rules, the Company will cooperate with Cinda Shandong which will acquirethe defaulted bonds issued by Shandong Shanshui in the open market in tranches based onconsideration(s) negotiated with Shandong Shanshui’s creditors. Cinda Shandong or its relatedparties will grant an entrusted loan (the “Entrusted Loan”) to Shandong Shanshui throughNanyang Commercial Bank (China) Limited, a wholly-owned subsidiary of China Cinda AssetManagement Company Limited, in accordance with the fulfillment of the relevant conditionsby Shandong Shanshui. Cinda Shandong or its related parties will invest an aggregate amountof up to RMB8 billion.

Shandong Shanshui, Tianrui and Cinda Shandong shall separately enter into legallybinding agreements in respect of each Entrusted Loan, subject to the obtaining of the necessaryapprovals by the parties thereto. Further announcement will be made by the Company whenthere is a material development in this regard.

(iii) The Company’s litigation

Claim against the former Board

On 4 December 2015, a Writ of Summons (the “Writ”) (HCA 2880 of 2015) was issuedby the Company (the “Action”) against the former Directors namely the Zhangs and Li CheungHung. On 17 December 2015, China Shanshui Cement Group (Hong Kong) Company Limited(“HK Cement”) and China Pioneer Cement (Hong Kong) Company Limited (“ChinaPioneer”) (which are the wholly owned subsidiaries of the Company) were added as plaintiffsand an additional of 5 former directors, namely Chang Zhangli, Wu Ling-Ling (also known asDoris Wu), Lee Kuan-Chun (also known as Champion Lee), Zeng Xuemin and Shen Bing wereadded as defendants in the Writ.

According to the Writ, the Company’s claims in the Writ against the former Directors arefor (inter alia) (1) various injunctive reliefs, including restraining them from acting on theunlawfully altered articles of association of Shandong Shanshui, an order for identifying thecurrent whereabouts of or return the books, records, accounts or computer data or otherdocuments etc. of the Group (the “Group’s Records”), and (2) damages and/or equitablecompensation as a result of the misconduct of the former Directors.

On 24 December 2015, the Company obtained the interlocutory injunction orders (the“December Injunction Orders”) against Zhang Caikui, Zhang Bin, Li Cheung Hung, ChangZhangli and Wu Ling-Ling compelling them to (inter alia) disclose and deliver the Group’sRecords to the Company. The December Injunction Orders were continued and remain ineffect.

On 8 January 2016, the December Injunction Orders (as varied) continued and theCompany obtained further interlocutory injunction orders (the “January Injunction Orders”)against the Zhangs to (inter alia) restrain them from acting upon or exercising any power orentitlement pursuant to the unlawfully altered articles of association of Shandong Shanshui andexecute amendments to the said unlawfully altered articles of association of ShandongShanshui to invalidate or reverse the unlawful amendments. The January Injunction Ordersremain in effect.


– 18 –

On 7 April 2016, CNBM and ACC were joined as the defendants to the Action premisedon the conspiracy claim.

The parties have filed all the pleadings in the Action and the pleadings stage has nowclosed. The Action is now at the discovery stage.

Following the non-compliance of the December Injunction Orders and the JanuaryInjunction Orders on the part of the Zhangs, the Company has commenced committalproceedings against them (HCMP 1574 of 2016) and leave has been granted to set the casedown for trial with procedural directions for parties to file evidence for interlocutoryapplication(s).

The Company also on 4 November 2016 obtained a worldwide injunction against theZhangs (the “Mareva Injunction”) and issued a summons on 7 November 2016 (the“Plaintiffs’ Summons”). On 18 November 2016, the Mareva Injunction (as varied) continuedand directions were given by the Court to file affidavit evidence for the disposal of thePlaintiffs’ Summons.

The substantive hearing of the Company’s application for leave to cross-examine LiCheung Hung was heard on 1 September 2016 with judgment handed down on 13 October 2016in favour of the Plaintiffs. Li Cheung Hung appealed against the Judgement which wasdismissed on 15 November 2016. The cross-examination is fixed for 2 March 2017.

Other litigation

CSI issued an action (HCMP 593 of 2015) against (inter alia) the Company in 2015seeking an order to set aside the share options issued by the Company (details of which pleaserefer to the public announcement dated 27 January 2015 of the Company). The matter ispresently held in abeyance following the Company’s undertaking to the High Court of HongKong that it (whether by itself, its directors, servants, agents or otherwise howsoever) will nottake any step to implement the share options offered as described in its public announcementdated 27 January 2015 until a certain period of time or further Order of the High Court of HongKong.

The Company issued a writ of summons on 12 May 2015 (HCA 1048 of 2015) (and thevalidity of which has been extended for 12 months until 11 May 2017) against the former Boardof directors of the Company for breach of the directors’ service agreements, an account for therelevant misappropriated funds and/or damages to be assessed and declaratory relief. The writwas issued by the Board led by the Zhangs and the current Board is looking into the claims.

The substantive hearing of the Company’s non-party disclosure application against theStock Exchange and the SFC is presently fixed for 11 January 2017.

Save for the above, as at the Latest Practicable Date, the Company is not aware of anymaterial update on the Company’s financial position, litigations, control over its subsidiariesand books and records of its subsidiaries since the issuance of the interim report 2016 of theGroup.


– 19 –

4. CHANGES IN SHAREHOLDING STRUCTURE

For illustration purpose only and based on information available to the Company, set outbelow is the shareholding structure of the Company (i) as at the Latest Practicable Date; and(ii) upon Completion (assuming there being no other change in the share capital of theCompany).

Upon Completion

As at the LatestPracticable Date

Assuming the minimumnumber of PlacingShares are placed

Assuming the maximumnumber of PlacingShares are placed

No. of Shares % No. of Shares % No. of Shares %

Tianrui 951,462,000 28.16% 951,462,000 22.18% 951,462,000 21.98%CSI 847,908,316 25.09% 847,908,316 19.77% 847,908,316 19.59%ACC 708,263,500 20.96% 708,263,500 16.51% 708,263,500 16.36%CNBM 563,190,040 16.67% 563,190,040 13.13% 563,190,040 13.01%Yu Yuan (Note) 142,643,000 4.22% 142,643,000 3.33% 142,643,000 3.29%

Public Shareholders

Placees – – 910,000,000 21.22% 950,000,000 21.94%Other public

Shareholders 165,673,384 4.90% 165,673,384 3.86% 165,673,384 3.83%

Sub-total 165,673,384 4.90% 1,075,673,384 25.08% 1,115,673,384 25.77%

Total 3,379,140,240 100.00% 4,289,140,240 100.00% 4,329,140,240 100.00%

Note: ACC controls the exercise of voting rights of the 142,643,000 Shares owned by Yu Yuan.

5. FUND RAISING EXERCISE OF THE COMPANY DURING THE PAST 12MONTHS

The Company has not carried out any fund raising activities during the 12 monthsimmediately preceding the Latest Practicable Date.

6. REFRESHMENT OF SCHEME MANDATE LIMIT

The Company adopted the Share Option Scheme pursuant to a Shareholders’ resolutionpassed on 14 June 2008. Save for the Share Option Scheme, the Company has no other shareoption scheme currently in force.

Pursuant to the Share Option Scheme and in compliance with Chapter 17 of the ListingRules, the maximum number of Options which may be granted under the Share Option Schemeand any other schemes of the Company shall not in aggregate exceed 10% of the total numberof issued Shares as at the date of approval and adoption of the Share Option Scheme.


– 20 –

The Company may seek approval from the Shareholders in general meeting for refreshing

the Existing Scheme Mandate Limit provided that:

(i) the total number of Shares in respect of which options may be granted under the

Share Option Scheme and any other schemes of the Company under the limit as

refreshed must not exceed 10% of the total number of Shares in issue as at the date

of the Shareholder’s approval; and

(ii) options previously granted under the Share Option Scheme and any other share

option schemes of the Company, whether outstanding, cancelled, lapsed in

accordance with its applicable rules or already exercised, will not be counted for the

purpose of calculating the limit as refreshed.

At the Adoption Date, the Existing Scheme Mandate Limit was granted to allow the

Company to grant Options entitling holders to subscribe for Shares not exceeding 10% of the

then issued Shares as at the date of the approval of the Share Option Scheme, which amounted

to 260,336,000 Options to subscribe for 260,336,000 Shares. During the period from the

Adoption Date to the Latest Practicable Date, no refreshment of the Existing Scheme Mandate

Limit has been approved by the Shareholders.

Since the adoption of the Share Option Scheme, Options to subscribe for 7,400,000

Shares were granted on 25 May 2011 and Options to subscribe for 207,300,000 Shares

(including the Options to subscribe for 20,000,000 Shares and 23,600,000 Shares conditionally

granted to Zhang Bin and Zhang Caikui (Zhang Caikui was deemed to be a substantial

Shareholder due to his interest in CSI and Zhang Bin is his associate), respectively, subject to

the approval of the Shareholders which has not yet been obtained) were granted on 27 January

2015.

Since no extraordinary general meeting of the Company was held for the approval of the

grant of 43,600,000 Options in aggregate conditionally granted to Zhang Bin and Zhang

Caikui, such Options have not become unconditional and may not be exercised.

Out of the Options to subscribe for 7,400,000 Shares granted on 25 May 2011, 100,000

Shares were lapsed in accordance with the terms of the Share Option Scheme and therefore will

not be counted for the purpose of the Existing Scheme Mandate Limit pursuant to Note 1 to

Rule 17.03(3) of the Listing Rules.

Save for the above, none of the Options granted on 25 May 2011 and 27 January 2015

have been exercised or cancelled or lapsed.

Accordingly, taking into account all the Options granted and conditionally granted, the

outstanding Existing Scheme Mandate Limit as of the Latest Practicable Date is 45,736,000

Shares, representing approximately 17.57% of the Existing Scheme Mandate Limit.


– 21 –

Assuming that there is no change in the number of issued Shares between the period fromthe Latest Practicable Date and the date of the EGM, after the relevant resolution is passed atthe EGM approving the Refreshment of Scheme Mandate Limit, the number of Shares that mayfall to be allotted and issued upon exercise in full of the Options that may be further grantedunder the Share Option Scheme would be 337,914,024 Shares (representing 10% of the3,379,140,240 Shares in issue as at the Latest Practicable Date and the date of EGM, assumingthere being no change in the share capital of the Company).

The Refreshment of Scheme Mandate Limit is conditional upon:

(a) the passing by the Shareholders of an ordinary resolution at the EGM to approve,among other things, the Refreshment of Scheme Mandate Limit; and

(b) the Listing Committee of the Stock Exchange granting the listing of, and permissionto deal in, 10% of the Shares in issue at the date of approval of the Refreshment ofScheme Mandate Limit which may be issued pursuant to the exercise of Options tobe granted under the Share Option Scheme.

Since the Adoption Date, the total number of Shares which may be issued upon exerciseof all the Options granted were 214,700,000 Shares, representing approximately 82.47% of theExisting Scheme Mandate Limit, out of which Options to subscribe for 100,000 Shares,representing approximately 0.038% of the Existing Scheme Mandate Limit, were lapsed as atthe Latest Practicable Date. Save for the Share Option Scheme, the Company has no otherscheme as at the Latest Practicable Date. The number of securities which may be issued uponexercise of all outstanding Options granted and yet to be exercised under the Share OptionScheme and any other scheme represent less than 30% of the Company’s issued shares.

The Board considers that it is in the interest of the Company and the Shareholders as awhole to seek the approval of the Shareholders for the Refreshment of Scheme Mandate Limitso as to offer additional flexibility for the Board to grant new Options as the Board mayconsider appropriate from time to time. The Company intends to grant new Options to theemployees of the Group after resumption of trading in the Shares to provide incentives to themfor their continuing commitment and contribution to the Group in the future.

Application will be made to the Listing Committee of the Stock Exchange for the grantof listing of, and permission to deal in, 10% of the Shares in issue at the date of approval ofthe Refreshment of Scheme Mandate Limit which may be issued pursuant to the exercise ofOptions to be granted under the Share Option Scheme.

7. GENERAL

A notice convening the EGM is set out on pages 24 to 26 of this circular. The EGM will

be held at Room 1 and Room 2, United Conference Centre Limited, 10/F, United Centre, 95

Queensway, Admiralty, Hong Kong, at 10 a.m. on Friday, 17 February 2017 for the purpose of,

among others, considering and, if thought fit, to approve, among others, the Placing

Agreement, the grant of the Specific Mandate and the Refreshment of Scheme Mandate Limit.


– 22 –

To the best of the knowledge, information and belief of the Directors and having making

all reasonable enquiries, none of the Shareholders have a material interest in the transactions

contemplated under the Placing Agreement, the Specific Mandate and the Refreshment of

Scheme Mandate Limit. Accordingly, no Shareholders will be required to abstain from voting

on the resolutions relating to the Placing Agreement, the grant of the Specific Mandate and the

Refreshment of Scheme Mandate Limit at the EGM.

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend

the EGM in person, please complete the accompanying form of proxy in accordance with the

instructions printed thereon and return it to the Company’s share registrar and transfer office

in Hong Kong, Computershare Hong Kong Investor Services Ltd at Shops 1712-1716, 17/F,

Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any

event not later than 48 hours before the time appointed for holding of the EGM. Completion

and return of the form of proxy will not preclude you from attending and voting in person at

the EGM or any adjournment thereof (as the case may be) should you so wish and in such

event, the proxy shall be deemed to be revoked.

8. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full

responsibility, includes particulars given in compliance with the Listing Rules for the purpose

of giving information with regard to the Company. The Directors, having made all reasonable

enquiries, confirm that to the best of their knowledge and belief the information contained in

this circular is accurate and complete in all material respects and not misleading or deceptive,

and there are no other matters the omission of which would make any statement herein or this

document misleading.

9. RECOMMENDATION

The Directors consider that the terms of the Placing Agreement are on normal commercial

terms, and the Placing Agreement, the grant of the Specific Mandate and the Refreshment of

Scheme Mandate Limit are fair and reasonable and are in the interests of the Company and the

Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in

favour of the relevant resolutions to be proposed at the EGM.

By Order of the Board

China Shanshui Cement Group LimitedLiu Yiu Keung, Stephen

Chairman


– 23 –



(Stock code: 691)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “EGM” or the

“Meeting”) of China Shanshui Cement Group Limited (the “Company”) will be held at Room

1 and Room 2, United Conference Centre Limited, 10/F, United Centre, 95 Queensway,

Admiralty, Hong Kong, at 10 a.m. on Friday, 17 February 2017 for the purpose of considering

and, if thought fit, passing with or without amendments, the following resolutions as ordinary

resolutions of the Company:

ORDINARY RESOLUTIONS

“THAT:

1 (a) the conditional placing agreement (the “Prior Placing Agreement”) dated 6

October 2016 and entered into between the Company as issuer and ABCI

Securities Company Limited (“ABCI”) and Sun Hung Kai Investment Services

Limited (“SHKIS”) as placing agents which has been amended and restated by

the conditional amended and restated placing agreement (the “PlacingAgreement”) dated 28 November 2016 and entered into between the Company

as issuer and ABCI, SHKIS, Cinda International Securities Limited and First

Capital Securities Limited as new placing agents in relation to the placing of

not less than 910,000,000 new Shares and not more than 950,000,000 new

shares (the “Placing Shares”) of US$0.01 each in the share capital of the

Company at a placing price of not less than HK$0.50 per Placing Share, copies

of the Prior Placing Agreement and the Placing Agreement are produced to the

Meeting marked “A” and signed by the Chairman of the Meeting for the

purpose of identification, and the transactions contemplated thereunder be and

are hereby approved, confirmed and ratified;

(b) the directors of the Company be and are hereby granted the Specific Mandate

(as defined in the circular of the Company dated 30 December 2016) to

exercise all the powers of the Company to allot and issue the Placing Shares,

subject to and in accordance with the terms and conditions set out in the

Placing Agreement;

NOTICE OF EGM

– 24 –

(c) any one director of the Company or any two directors of the Company, if the

affixation of the common seal is necessary, be and is/are hereby authorised for

and on behalf of the Company to execute (and, if necessary, affix the common

seal of the Company on) any and all such other documents, instruments and

agreements and to do all such acts or things deemed by him/them to be

incidental to, ancillary to or in connection with the matters contemplated under

the Placing Agreement as he/they may in his/their absolute discretion consider

necessary, desirable or expedient to give effect to the Placing Agreement and

the implementation of all transactions contemplated thereunder and to agree

with such variation, amendment or waiver as, in his/their own opinion, in the

interest of the Company and its shareholders as a whole;

2 subject to and conditional upon The Stock Exchange of Hong Kong Limited granting

the listing of, and permission to deal in, such number of shares of the Company

which may fall to be allotted and issued pursuant to the exercise of the options

which may be granted under the share option scheme adopted by the Company on

14 June 2008 (the “Share Option Scheme”), the existing scheme mandate limit in

respect of the granting of share options to subscribe for shares of the Company under

the Share Option Scheme be refreshed and renewed so that the aggregate number of

shares of the Company which may be allotted and issued pursuant to the grant or

exercise of the share options under the Share Option Scheme (excluding options

previously granted, outstanding, cancelled, lapsed or exercised) and any other share

option scheme(s) of the Company shall not exceed 10% of the number of Shares in

issue as at the date of passing this resolution (the “Refreshed Limit”); and that the

directors of the Company be and are hereby authorised to grant share options under

the Share Option Scheme up to the Refreshed Limit and to exercise all the powers

of the Company to allot, issue and deal with shares of the Company pursuant to the

exercise of such share options and to do such acts and execute such documents for

or incidental to such purpose.”

By Order of the Board

China Shanshui Cement Group LimitedLiu Yiu Keung, Stephen

Chairman

Hong Kong, 30 December 2016

Registered office

P.O. Box 10008

Willow House, Cricket Square

Grand Cayman KY1-1001

Cayman Islands

Principal office in Hong Kong

Room 2609, 26/F

Tower 2, Lippo Centre

89 Queensway, Admiralty

Hong Kong

NOTICE OF EGM

– 25 –

Notes:

1. The register of shareholders of the Company will be closed from Tuesday, 14 February 2017 to Friday,17 February 2017, both days inclusive, during which period no transfer of shares will be registered. In orderto qualify for attending and voting at the annual general meeting, all transfers, accompanied by the relevantshare certificates, must be lodged for registration with the Company’s share registrar and transfer office inHong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, HopewellCentre, 183 Queen’s Road East, Wanchai, Hong Kong by no later than 4:30 p.m. on Monday, 13 February 2017.

2. A form of proxy for use at the meeting is enclosed herewith. The instrument appointing a proxy shall be inwriting under the hand of the appointer or his/her attorney duly authorized in writing or, if the appointer is acorporation, either under its seal or under the hand of any officer, attorney or other person authorized to signthe same.

3. Any shareholder entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attendand vote instead of him. A proxy need not be a shareholder of the Company.

4. In order to be valid, a form of proxy in the prescribed form together with the power of attorney or otherauthority (if any) under which it is signed must be deposited at the Company’s share registrar and transferoffice in Hong Kong, Computershare Hong Kong Investor Services Ltd at Shops 1712-1716, 17/F, HopewellCentre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48hours before the time scheduled for the EGM or any adjournment thereof.

5. Completion and return of the form of proxy will not preclude you from attending and voting in person at themeeting or at any adjourned meeting thereof (as the case may be) should you so wish, and in such an event,the form of proxy shall be deemed to be revoked.

6. Where there are joint registered holders of any share, any one of such joint holders may vote, either in personor by proxy, in respect of such shares as if he/she was solely entitled thereto, but if more than one of such jointholders are present at the meeting, whether in person or by proxy, the joint registered holder present whosename stands first on the register of members in respect of the shares shall be accepted to the exclusion of thevotes of the other registered holders.

7. If Typhoon Signal No. 8 or above is expected to be hoisted or a Black Rainstorm Warning Signal is expectedto be in force any time after 7:30 a.m. on the date of the meeting, then the meeting will be postponed. TheCompany will post an announcement on the website of the Company at (www.shanshuicement.com) andHKExnews website (www.hkexnews.hk) to notify shareholders of the date, time and place of the rescheduledmeeting.

The meeting will be held as scheduled when an Amber or a Red Rainstorm Warning Signal is in force.Shareholders should decide on their own whether they would attend the meeting under bad weather conditionbearing in mind their own situations.

As at the date of this circular, the Board comprises 3 executive directors, namely, LIU Yiu

Keung, Stephen (YEN Ching Wai, David as his alternate), LI Heping and HWA Guo Wai,

Godwin; and 1 non-executive director, namely, CHONG Cha Hwa; and 5 independent

non-executive directors, namely, HO Man Kay, Angela, LAW Pui Cheung, WONG Chi Keung,

CHING Siu Ming and LO Chung Hing.

NOTICE OF EGM

– 26 –

Documents

CHINA SHANSHUI CEMENT GROUP LIMITED 中國山水水泥集團有 …en.shandongshanshui.com/Static/attachment/2017-03-12/58c... · 2017-03-12 · If you are in any doubtas to any aspect