SPECIAL DEAL AND NOTICE OF EGM - CIG Yangtze Ports · If you are in any doubtas to any aspect of this circular or as to the action to be taken, you should consult your stockbroker

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult yourstockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or otherprofessional adviser.

If you have sold or transferred all your shares in CIG Yangtze Ports PLC, you should at once hand this circular,together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer orother agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8233)

SPECIAL DEALAND

NOTICE OF EGM

Independent Financial Adviser to the SD Independent Board Committeeand the SD Independent Shareholders

A letter from the SD Independent Board Committee containing its recommendation to the SD IndependentShareholders is set out on page 12 of this circular. A letter from the Independent Financial Adviser containing itsadvice to the SD Independent Board Committee is set out on pages 13 to 23 of this circular.

A notice convening the EGM to be held at Unit A, 29/F, Admiralty Centre I, 18 Harcourt Road, Admiralty, HongKong on Tuesday, 15 November 2011 at 10:30 a.m. is set out on pages EGM-1 to EGM-2 of this circular. Whetheror not you are able to attend the EGM, you are requested to complete and return the accompanying form of proxy inaccordance with the instructions printed thereon to the share registrar and transfer office of the Company,Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before thetime appointed for holding of the EGM or any adjournment thereof (as the case may be). Completion and return ofthe form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereofshould you so wish but the authority of your proxy will be invalidated forthwith.

* For identification purpose only

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

31 October 2011

GEM has been positioned as a market designed to accommodate companies to which a higherinvestment risk may be attached than other companies listed on the Stock Exchange. Prospectiveinvestors should be aware of the potential risks of investing in such companies and should makethe decision to invest only after due and careful consideration. The greater risk profile and othercharacteristics of GEM mean that it is a market more suited to professional and othersophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities tradedon GEM may be more susceptible to high market volatility than securities traded on the mainboard of the Stock Exchange and no assurance is given that there will be a liquid market in thesecurities traded on GEM.

CHARACTERISTICS OF GEM

– i –

Page

Characteristics of GEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Letter from the SD Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Letter from Asian Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Appendix I — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EGM-1

CONTENTS

– ii –

In this circular, the following expressions have the following meanings unless the context

otherwise requires:

‘‘acting in concert’’ has the meaning ascribed thereto under the Takeovers Code

‘‘associates’’ has the meaning ascribed thereto under the GEM Listing Rules

‘‘Board’’ the board of Directors

‘‘Business Day’’ a day (other than Saturday, Sunday, public holiday and any

day on which a typhoon signal 8 or above is hoisted or a black

rainstorm warning is given in Hong Kong at any time during

9:00 a.m. to 5:00 p.m.) on which banks in Hong Kong are

open for general banking business

‘‘BVI’’ British Virgin Islands

‘‘Chow Holdings’’ Chow Holdings Limited, a company incorporated in BVI with

limited liability and is ultimately beneficially owned by Mr.

Chow, being one of the Vendors under the S&P Agreement

‘‘CIG China’’ CIG China Holdings Limited, a company incorporated in the

Cayman Islands with limited liability and is ultimately

beneficially owned by Mr. Chow, being one of the Vendors

under the S&P Agreement

‘‘Company’’ CIG Yangtze Ports PLC (stock code: 8233), a company

incorporated in the Cayman Islands with limited liability, the

issued Shares of which are listed on GEM

‘‘Completion’’ completion of the sale and purchase of the Sale Shares in

accordance with the terms and conditions of the S&P

Agreement

‘‘Composite Document’’ the composite offer and response document dated 21 October

2011 jointly issued by the Offeror and the Company in relation

to the Offers

‘‘Connected Person(s)’’ has the meaning ascribed thereto under the GEM Listing Rules

‘‘Directors’’ directors of the Company

‘‘EGM’’ extraordinary general meeting(s) to be convened by the

Company to consider and, if thought fit, approve the Service

Agreement by the SD Independent Shareholders

‘‘Executive’’ the Executive Director of the Corporate Finance Division of

the SFC or any of his delegates

‘‘GEM’’ the Growth Enterprise Market of the Stock Exchange

DEFINITIONS

– 1 –

‘‘GEM Listing Rules’’ the Rules Governing the Listing of Securities on GEM

‘‘GF Securities’’ GF Securities (Hong Kong) Brokerage Limited, a licensed

corporation to carry out type 1 regulated activity under the

SFO

‘‘Group’’ the Company and its subsidiaries

‘‘Harbour Master’’ Harbour Master Limited, a company incorporated in the BVI

with limited liability, which is a wholly-owned subsidiary of

The Yangtze Ventures II Limited which, in turn, is an indirect,

non-wholly-owned subsidiary of SOCAM Development

Limited (formerly known as Shui On Construction and

Materials Limited) (Stock code: 983), being one of the

Vendors under the S&P Agreement

‘‘Hong Kong’’ Hong Kong Special Administrative Region of the PRC

‘‘Independent Financial Adviser’’ or

‘‘Asian Capital’’

Asian Capital (Corporate Finance) Limited, a licensed

corporation to carry out Type 1 (dealing in securities), Type 4

(advising on securities), Type 6 (advising on corporate finance)

and Type 9 (asset management) regulated activities under the

SFO and the independent financial adviser appointed by the

Company and approved by the SD Independent Board

Committee to advise the SD Independent Board Committee on

the Service Agreement

‘‘Independent Third Parties’’ the parties who, to the best of the Directors’ knowledge,

information and belief and having made all reasonable

enquiries, are independent of and not connected with any of

the Director(s), chief executive(s) of the Company or

substantial Shareholder(s) or any of the subsidiaries or their

respective associate(s)

‘‘Joint Announcements’’ the announcements dated 30 September 2011, 3 October 2011

and 12 October 2011 respectively jointly issued by the

Company and the Offeror in relation to, among others, the

S&P Agreement, the Offers and the Service Agreement

‘‘Latest Practicable Date’’ 28 October 2011, being the latest practicable date prior to the

printing of this circular for ascertaining certain information in

this circular

‘‘Mr. Chow’’ Mr. Chow Kwong Fai, Edward, an existing sole executive

Director

‘‘Mr. Yan’’ Mr. Yan Zhi, the ultimate beneficial owner of the Offeror

DEFINITIONS

– 2 –

‘‘Offeror’’ Zall Infrastructure Investments Company Limited (卓爾基業投

資有限公司*), a company incorporated in BVI with limited

liability and is ultimately beneficially owned by Mr. Yan

‘‘Offers’’ the Share Offer and the Option Offer

‘‘Offer Share(s)’’ issued Share(s) and Shares which may be issued by the

Company following the Latest Practicable Date, other than

those already owned by the Offeror and parties acting in

concert with it

‘‘Optionholder(s)’’ holder(s) of the Share Option(s)

‘‘Option Offer’’ the offer made by GF Securities on behalf of the Offeror for

the cancellation of the outstanding Share Options other than

those already owned by or agreed to be acquired by the

Offeror and its parties acting in concert pursuant to the

Takeovers Code

‘‘PRC’’ the People’s Republic of China which, for the purpose of this

circular, shall exclude Hong Kong, Macau Special

Administrative Regions of PRC and Taiwan

‘‘S&P Agreement’’ the sale and purchase agreement dated 21 September 2011

entered into among the Offeror, the Vendors, the Vendors’

Guarantor and Mr. Yan in relation to the sale and purchase of

the Sale Shares

‘‘Sale Shares’’ 599,888,141 Shares acquired by the Offeror from the Vendors

pursuant to the terms and conditions of the S&P Agreement

‘‘SD Independent Board Committee’’ the independent committee of the Board comprising five non-

executive Directors, namely Mr. Lee Jor Hung, Dannis, Mr.

Goh Pek Yang, Michael, Mr. Lee Kang Bor, Thomas, Dr.

Wong Tin Yau, Kelvin and Mr. Fan Chun Wah, Andrew,

established to give recommendation to the SD Independent

Shareholders regarding the terms of the Service Agreement.

Mr. Wong Yuet Leung, Frankie, the remaining non-executive

Director, is a director of Harbour Master, one of the Vendors

in the S&P Agreement. He will not serve as a member of the

SD Independent Board Committee as his significant connection

with Harbour Master and the Company within the 2 years prior

to the commencement of the offer period for the Offers may

reasonably likely affect the objectivity of his advice

DEFINITIONS

– 3 –

‘‘SD Independent Shareholder(s)’’ Shareholders other than (i) the Vendors, its associates and

parties acting in concert with any of them; (ii) the Offeror, Mr.

Yan and the parties acting in concert with any one of them;

and (iii) any Shareholders who are involved in or interested in

the Service Agreement or any transactions contemplated

therein (including Mr. Chow)

‘‘Service Agreement’’ the service agreement to be entered into between Mr. Chow

and the Company in relation to the appointment of Mr. Chow

as a consultant of the Company, following Completion

‘‘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 HK$0.10 each in the issued share capital

of the Company

‘‘Share Offer’’ the unconditional mandatory offer made by GF Securities for

and on behalf of the Offeror to acquire all the issued Shares

(other than those already owned or agreed to be acquired by

the Offeror and parties acting in concert with it) pursuant to

the Takeovers Code

‘‘Share Option’’ option(s) to subscribe for Shares granted under the Share

Option Scheme

‘‘Share Option Scheme’’ the share option scheme adopted by the Company on 2

September 2005

‘‘Shareholders’’ holders of the issued Shares

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

‘‘Takeovers Code’’ the Hong Kong Code on Takeovers and Mergers

‘‘Trading Day’’ a day on which securities can be freely traded on the Stock

Exchange during whole of the normal trading hours of the

Stock Exchange regardless of whether any trades actually

occur

‘‘Unbeatable’’ Unbeatable Holdings Limited, a company incorporated in BVI

with limited liability and is ultimately beneficially owned by

Mr. Chow, being one of the Vendors under the S&P

Agreement

‘‘Vendors’’ collectively, Chow Holdings, CIG China, Harbour Master and

Unbeatable

DEFINITIONS

– 4 –

‘‘Vendors’ Guarantor’’ Mr. Chow

‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

‘‘%’’ per cent.


DEFINITIONS

– 5 –


(Stock Code: 8233)

Executive Director:

Mr. Chow Kwong Fai, Edward

Non-executive Directors:

Mr. Wong Yuet Leung, Frankie

Mr. Lee Jor Hung, Dannis

Mr. Goh Pek Yang, Michael

Independent Non-executive Directors:

Mr. Lee Kang Bor, Thomas

Dr. Wong Tin Yau, Kelvin

Mr. Fan Chun Wah, Andrew

Registered Office:

P.O. Box 309

GT Ugland House

South Church Street

George Town

Grand Cayman

Cayman Islands

Head Office and Principal Place

of Business in Hong Kong:

2909A Bank of America Tower

12 Harcourt Road

Central

Hong Kong

31 October 2011

To the Shareholders

Dear Sir or Madam,

SPECIAL DEALAND

NOTICE OF EGM

INTRODUCTION

Reference is made to the Joint Announcements dated 30 September 2011, 3 October 2011 and 12

October 2011 respectively and the Composite Document dated 21 October 2011 in relation to, among

others, the S&P Agreement, the Offers and the Service Agreement.

As all the conditions precedent to the S&P Agreement have been fulfilled or, where applicable,

waived, Completion took place on 3 October 2011. The Offeror and parties acting in concert with it own

in aggregate 13,548,000 Shares, representing approximately 1.15% of the then entire issued share capital

of the Company immediately before Completion. Immediately following Completion, the Offeror and

parties acting in concert with it own in aggregate 613,436,141 Shares, representing approximately

52.12% of the then entire issued share capital of the Company.


LETTER FROM THE BOARD

– 6 –

Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a mandatory

unconditional cash offer and GF Securities has, on behalf of the Offeror, made mandatory unconditional

cash offers to acquire all the issued Shares and to cancel all the outstanding Share Options not already

owned or agreed to be acquired by the Offeror and parties acting in concert with it. Details of the terms

of the Offers are set out in the Joint Announcements and the Composite Document.

The Offeror and parties acting in concert with it own in aggregate 760,830,357 Shares,

representing approximately 64.64% of the then entire issued share capital of the Company as at the

Latest Practicable Date.

Pursuant to the S&P Agreement, Mr. Chow, the existing sole executive Director, and Mr. Wong

Yuet Leung, Frankie, an existing non-executive Director, will resign as Directors with effect on the

earliest date on which such resignation may take effect under the Takeovers Code (being the closing

date of the Offers). Following Completion and for the purpose of ensuring continuity of the Group’s

business, it is proposed that subject to compliance with the requirements under Rule 25 of the Takeovers

Code with respect to special deal, Mr. Chow will enter into a separate service agreement with the

Company in relation to his appointment as a consultant of the Company with effect upon the resignation

of Mr. Chow as an executive Director becoming effective.

The purpose of this circular is to provide you with, among others, (i) details of the Service

Agreement; (ii) a letter of recommendation from the SD Independent Board Committee to the SD

Independent Shareholders on the Service Agreement; (iii) a letter of advice from the Independent

Financial Adviser to the SD Independent Board Committee on the Service Agreement; and (iv) the

notice of the EGM.

SPECIAL DEAL

Since Mr. Chow, the existing sole executive Director, will resign as a Director, for the purpose

ensuring continuity of the Group’s business, it is proposed that subject to compliance with the

requirement under Rule 25 of the Takeovers Code with respect to special deal, Mr. Chow will enter into

the Service Agreement with the Company in relation to his appointment as a consultant of the Company

for a term of two years commencing from the date of the Service Agreement with a monthly fee of

HK$150,000, which is the same as his current monthly salary as an executive Director, and an

additional payment of HK$150,000 on each anniversary of his commencement of service as consultant

under such the Service Agreement. The Service Agreement will be entered into between Mr. Chow and

the Company after the SD Independent Shareholders’ approval having been obtained at the EGM.

Principal terms of the Service Agreement

Parties:

(1) The Company

(2) Mr. Chow


– 7 –

Duties:

Pursuant to the Service Agreement, Mr. Chow will be appointed as a consultant to the Company

during the term of his employment:

(i) to provide active assistance and advice to the Board and cooperate fully with the Board with

regard to all business activities and the development, expansion and diversification of its

business as the Board may from time to time require;

(ii) to provide strategic and other advice and active assistance with employee and independent

contractor relations and issues surrounding the retention and/or termination of employees or

independent contractors, which may include but not limited to making appropriate contact

with such employees or independent contractors as the Board may from time to time require;

(iii) to provide strategic and other advice and active assistance with the Group’s relations with the

relevant authorities and officers and issues surrounding renewal of applicable permits,

licenses, approvals and authorisations and operations of the Group, which may include but

not limited to making appropriate contact with such relevant authorities and officers as the

Board may from time to time require;

(iv) to perform to the best of his skill and ability such duties in connection with the Group as the

Board may from time to time require;

(v) to discharge of his duties and exercise of his powers observing and complying with all

resolutions, regulations and lawful directions and instructions from time to time made or

given by the Board and faithfully and diligently serve the Group and use his best endeavours

to promote and protect the business and interests thereof;

(vi) to devote his efforts, attention, abilities and time to the business of the Group and use his

best endeavours to assist in the maintenance and development of the business of the Group;

(vii) not to be engaged or interested in or concerned with any business which is in any respect in

competition with the business of the Group;

(viii) to comply with, and exercise his best endeavours to procure the Company’s compliance with,

the GEM Listing Rules, the Takeovers Code and the Code on Share Repurchases, the

memorandum and the articles of association of the Company, and all other applicable laws,

rules, regulations, guidelines and practice notes which are binding on or applicable to the

Group or Mr. Chow;

(ix) to co-operate in any investigation conducted by the listing division and/or listing committee

of the Stock Exchange or other regulatory authorities in connection with the Group’s business

and affairs, including but not limited to answering promptly and openly all questions

addressed to him, providing promptly to the Stock Exchange and other regulatory authorities

(in writing if so requested) all such information as the Stock Exchange and other regulatory

authorities may require in relation thereto and attending before any meeting or hearing at

which he is requested to appear; and


– 8 –

(x) to forthwith notify the Board upon occurrence of any circumstances which may render Mr.

Chow unsuitable to act as a consultant of the Company.

It is proposed that Mr. Chow shall perform his duties in any place in Hong Kong, the PRC or any

part of the world which the Board may reasonably require for the proper performance and exercise of

his duties under the Service Agreement. It is also proposed that Mr. Chow shall, if and so long as he is

so required by the Company, carry out the duties of his office on behalf of any subsidiary for the time

being of the Company.

Mr. Chow shall at all times keep the Board promptly and fully informed (in writing if so

requested) of his conduct of the business or affairs of the Company or the Group and provide such

information and explanations as the Board may require in connection therewith.

Mr. Chow shall not (except with the prior sanction of a resolution of the Board) be directly or

indirectly engaged in or concerned with or interested in any other business which is in any respect in

competition with or in opposition to any business for the time being carried on by any company in the

Group, subject to certain de minimis threshold.

Term of engagement:

The term of engagement shall be two years commencing from the date of the Service Agreement.

Fee and benefits:

A fee of HK$150,000 per month payable in arrears at the end of each calendar month and an

additional payment of HK$150,000 at the end of the first and second anniversary of his appointment

hereunder. No variable remuneration is payable under the Service Agreement. Mr. Chow shall also be

entitled to use an office car provided by the Company during the term of his engagement under the

Service Agreement. In addition, a personal assistant or secretary shall be hired by the Company to assist

Mr. Chow.

Having regard to Mr. Chow’s professional background, his experience in the infrastructure

industry, in particular, port development, operation and management, and his knowledge in running a

listed company (the Company in particular), his social, professional status and network, the Company

considered the fee to be reasonable and acceptable.

Termination:

Termination of the Service Agreement by either the Company or Mr. Chow shall require either

party giving not less than three calendar months’ prior notice in writing at the first anniversary of the

initial term or at any time thereafter.

Reasons for entering into the Service Agreement

Pursuant to the S&P Agreement, Mr. Chow, and Mr. Wong Yuet Leung, Frankie, an existing non-

executive Director, will resign as Directors and the Offeror currently intends to nominate Mr. Yan as a

non-executive Director and Mr. Duan Yan (‘‘Mr. Duan’’) as an executive Director to the Board.


– 9 –

The Board proposed to engage Mr. Chow, who is an existing non-executive Director and is

experienced in the Company’s operation, as a consultant to provide active assistance and advice to the

Board and cooperate fully with the Board with regard to all business activities and the development,

expansion and diversification of its business as the Board may from time to time for the purpose

ensuring continuity of the Group’s business.

TAKEOVERS CODE IMPLICATIONS

The Service Agreement constitutes a special deal for the Company under Rule 25 of the Takeovers

Code and requires consent of the Executive. Such consent, if granted, will be subject to (i) an

independent financial adviser publicly stating that in its opinion the terms of the Service Agreement are

fair and reasonable; and (ii) the approval of the Service Agreement by the SD Independent Shareholders

by way of poll at the EGM. Shareholders including (i) the Vendors, its associates and parties acting in

concert with any of them; (ii) the Offeror, Mr. Yan and the parties acting in concert with any of them;

and (iii) any Shareholders who are involved in or interested in the Service Agreement or any

transactions contemplated therein (including Mr. Chow) shall abstain from voting on the proposed

resolution approving the Service Agreement at the EGM.

Mr. Chow has declared his interest in the Service Agreement and has abstained from voting on the

resolution.

The Company has applied to the Executive for consent under Rule 25 of the Takeovers Code in

relation to the Service Agreement. Should any of the approval of the Service Agreement by the SD

Independent Shareholders or the consent of the Executive to the Service Agreement be not forthcoming,

the Company and Mr. Chow will not enter into the Service Agreement.

GEM LISTING RULES IMPLICATIONS

Given that Mr. Chow is a Director, he is a Connected Person of the Company and therefore the

Service Agreement constitutes a continuing connected transaction of the Company under chapter 20 of

the GEM Listing Rules. Pursuant to chapter 20 of the GEM Listing Rules, as the applicable percentage

ratios on an annual basis represent less than 5%, the Service Agreement is subject to the reporting and

announcement requirements.

SD INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The SD Independent Board Committee comprising five non-executive Directors, namely Mr. Lee

Jor Hung, Dannis, Mr. Goh Pek Yang, Michael, Mr. Lee Kang Bor, Thomas, Dr. Wong Tin Yau, Kelvin

and Mr. Fan Chun Wah, Andrew, has been formed to make recommendations to the SD Independent

Shareholders in respect of voting on the resolution to approve the Service Agreement. Mr. Wong Yuet

Leung, Frankie, the remaining non-executive Director, is a director of Harbour Master, one of the

Vendors in the S&P Agreement. He will not serve as a member of the SD Independent Board Committee

as his significant connection with Harbour Master and the Company within the 2 years prior to the

commencement of the offer period for the Offers may reasonably likely affect the objectivity of his

advice.

Asian Capital have been appointed as the Independent Financial Adviser to advise the SD

Independent Board Committee in respect of the terms of the Service Agreement.


– 10 –

EGM

The notice of the EGM is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you

are able to attend the EGM, you are requested to complete and return the accompanying form of proxy

in accordance with the instructions printed thereon to the share registrar and transfer office of the

Company, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor,

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

not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof

(as the case may be). 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 should you so wish but the authority of

your proxy will be invalidated forthwith.

The result of the voting at the EGM will be announced by the Company in accordance with the

Takeovers Code.

RECOMMENDATION

The Board (except Mr. Chow and Mr. Wong Yuet Leung, Frankie who had abstained from voting)

considers that the terms of the Service Agreement are on normal commercial terms, fair and reasonable,

and in the interests of the Company and the Shareholders as a whole.

Your attention is drawn to (i) the letter from the SD Independent Board Committee which is set

out on page 12 of this circular; and (ii) the letter of advice from the Independent Financial Adviser

which is set out on pages 13 to 23 of this circular.

ADDITIONAL INFORMATION

Your attention is also drawn to Appendix I to this circular set out on pages 24 to 30.

Yours faithfully,

For and on behalf of

CIG Yangtze Ports PLCIvan Cheung

Company Secretary


– 11 –


(Stock Code: 8233)

31 October 2011

To the SD Independent Shareholders

Dear Sir or Madam,

SPECIAL DEAL

We have been appointed to form the SD Independent Board Committee to advise you, as an SD

Independent Shareholder, in connection with the Service Agreement, details of which have been set out

in the letter from the Board contained in the circular to the Shareholders dated 31 October 2011 (the

‘‘Circular’’), of which this letter forms part. Terms defined in the Circular have the same meanings when

used herein unless the context otherwise requires.

Having considered the terms of the Service Agreement and the advice and recommendation of

Asian Capital as the independent financial adviser in relation to the Service Agreement as set out in the

Circular, we are of the opinion that the Service Agreement and the respective terms are fair and

reasonable so far as the Company and the SD Independent Shareholders are concerned. We therefore

recommend the SD Independent Shareholders to vote in favour of the resolutions to be proposed at the

EGM to approve the Service Agreement.

Yours faithfully,


SD Independent Board Committee of

CIG Yangtze Ports PLC

Mr. Lee Jor Hung, Dannis Mr. Goh Pek Yang, MichaelNon-executive Director Non-executive Director

Mr. Lee Kang Bor, Thomas Dr. Wong Tin Yau, Kelvin Mr. Fan Chun Wah, AndrewIndependent Non-executive

Director

Independent Non-executive

Director

Independent Non-executive

Director


LETTER FROM THE SD INDEPENDENT BOARD COMMITTEE

– 12 –

The following is the text of a letter of advice from the Independent Financial Adviser, which has

been prepared for the purpose of incorporation into this circular in respect of the Service Agreement.

Suite 1006, Bank of America Tower

12 Harcourt Road, Central

Hong Kong

31 October 2011

To: The SD Independent Board Committee of CIG Yangtze Ports PLC

Dear Sirs,

SPECIAL DEAL IN RESPECT OF THE SERVICE AGREEMENTTO BE ENTERED INTO BETWEEN CIG YANGTZE PORTS PLC

AND MR. CHOW KWONG FAI, EDWARD

INTRODUCTION

We refer to our engagement as the independent financial adviser to advise the SD IndependentBoard Committee of CIG Yangtze Ports PLC as to whether the terms of the Service Agreement are fairand reasonable and the SD Independent Shareholders as to the voting on the Service Agreement. TheCompany dispatched to the Shareholders a circular dated 31 October 2011 (the ‘‘Circular’’), of whichthis letter forms a part. Capitalised terms used in this letter shall have the same meanings as defined inthe Circular unless the context requires otherwise.

We are independent of, and are not connected with, the Company, the Offeror and any partiesacting in concert with any of them and accordingly, we are considered eligible to give independentadvice to the SD Independent Board Committee and the SD Independent Shareholders for the purpose ofRule 2.1 of the Takeovers Code. Our appointment has been approved by the SD Independent BoardCommittee.

We will receive a fee from the Company for our role as the independent financial adviser to theSD Independent Board Committee in relation to the Service Agreement. Apart from this normalprofessional fee payable to us in connection with this appointment and a related appointment in respectof the Offers, no arrangements exist whereby we will receive any fees or benefits from the Company,the Offeror or any parties acting in concert with any of them.

BACKGROUND

On 30 September 2011, the Offeror and the Company jointly announced, among other things, thatpursuant to the S&P Agreement, the Vendors conditionally agreed to sell and the Offeror conditionallyagreed to acquire an aggregate of 599,888,141 Shares, representing approximately 50.97% of the entireissued share capital of the Company as at 30 September 2011, the date of the joint announcement inrelation to, among others, the S&P Agreement, the Offers and the Service Agreement. The aggregate

LETTER FROM ASIAN CAPITAL

– 13 –

consideration for the Sale Shares was HK$215,959,730.76 (equivalent to HK$0.36 per Sale Share).

Immediately before Completion, the Offeror was interested in 13,548,000 Shares, representing

approximately 1.15% of the then entire issued share capital of the Company. As a result of the

acquisition of the Sale Shares, immediately following Completion, the Offeror was interested in a total

of 613,436,141 Shares, representing approximately 52.12% of the then entire issued share capital of the

Company.

Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make the Share Offer to

acquire all the Shares not already owned or agreed to be acquired by the Offeror and parties acting in

concert with it. In addition, the Offeror is also obliged to extend the Option Offer to cancel all the Share

Options not already owned by the Offeror and parties acting in concert with it in accordance with Rule

13 of the Takeovers Code.

Pursuant to the S&P Agreement, Mr. Chow, the existing sole executive Director, and Mr. Wong

Yuet Leung, Frankie, an existing non-executive Director, will resign as Directors with effect on the

earliest date on which such resignation may take effect under the Takeovers Code (being the closing

date of the Offers).

Since Mr. Chow will resign as a Director, for the purpose of ensuring continuity of the Group’s

business, it has been proposed that subject to compliance with the requirements under Rule 25 of the

Takeovers Code with respect to special deal, Mr. Chow will enter into the Service Agreement in relation

to his appointment as a consultant of the Company for a term of two years with effect upon the

resignation of Mr. Chow as an executive Director becoming effective.

The Service Agreement constitutes a special deal for the Company under Rule 25 of the Takeovers

Code and requires consent of the Executive. Such consent, if granted, will be subject to (i) an

independent financial adviser publicly stating that in its opinions, the terms of the Service Agreement

are fair and reasonable; and (ii) the approval of the Service Agreement by the SD Independent

Shareholders by way of poll at the EGM. Shareholders including (i) the Vendors, their associates and

parties acting in concert with any of them; (ii) the Offeror, Mr. Yan and the parties acting in concert

with any of them; and (iii) any Shareholders who are involved in or interested in the Service Agreement

or any transactions contemplated therein (including Mr. Chow) shall abstain from voting on the

proposed resolution approving the Service Agreement at the EGM.

The Company has applied to the Executive for a consent under Rule 25 of the Takeovers Code in

relation to the Service Agreement. Should any of the approval of the Service Agreement by the SD

Independent Shareholders or the consent of the Executive to the Service Agreement be not forthcoming,

the Company and Mr. Chow will not enter into the Service Agreement, but the Offers will still proceed.

Given Mr. Chow is an executive Director, he is a Connected Person of the Company and therefore

the Service Agreement constitutes a continuing connected transaction of the Company under Chapter 20

of the GEM Listing Rules. As the applicable percentage ratios as defined in Chapter 20 of the GEM

Listing Rules are less than 5% on an annual basis, the Service Agreement is only subject to the

reporting and announcement requirements.


– 14 –

BASIS AND ASSUMPTIONS OF OUR OPINION

In formulating our opinion, we have relied on the information and facts supplied to us by the

Company, the Board and/or the management of the Group. We have assumed that all the information,

facts, opinions, intention and representations supplied to us or referred to in the Joint Announcements,

the Composite Document and the Circular are true, complete and accurate in all material respects at the

time they were supplied to us and continue to be true and accurate as at the date of the Circular and we

have relied on the same in formulating our advice and recommendation. We have also assumed that all

statements of belief, opinions, intention and representations made by the Directors in the Joint

Announcements, the Composite Document and the Circular were reasonably made after due enquiries

and consideration. We note that the Directors have confirmed that they accept full responsibility for the

contents of the Joint Announcements, the Composite Document and the Circular (other than information

relating to the Offeror) and have made all reasonable enquiries that no material facts have been omitted

from the information supplied to us.

We have no reason to suspect that any material facts or information have been withheld or to

doubt the truth, accuracy or completeness of the facts and information as set out in the Joint

Announcements, the Composite Document and the Circular and of the information and representations

supplied to us by the Company, the Board and/or the management of the Group. Furthermore, we have

no reason to doubt the reasonableness of the opinions and representations expressed by the Company,

the Board and/or the management of the Company which have been supplied to us. In line with normal

practice, we have not, however, conducted any independent verification of the facts and information

supplied to us, nor have we conducted any independent investigation into the business and affairs,

financial conditions and future prospects of the Group. We nevertheless consider that we have reviewed

sufficient information to enable us to reach an informed view and to provide a reasonable basis for our

opinion regarding the Service Agreement.

The SD Independent Board Committee comprising five non-executive Directors, namely Mr. Lee

Jor Hung, Dannis, Mr. Goh Pek Yang, Michael, Mr. Lee Kang Bor, Thomas, Dr. Wong Tin Yau, Kelvin

and Mr. Fan Chun Wah, Andrew, has been established to advise the SD Independent Shareholders in

respect of the Service Agreement, in particular, as to whether the terms of the Service Agreement are, or

are not, fair and reasonable and as to the voting on the Service Agreement. Mr. Wong Yuet Leung,

Frankie, the remaining non-executive Director, is a director of Harbour Master, one of the Vendors in

the S&P Agreement, and he will not serve as a member of the SD Independent Board Committee as his

significant connection with Harbour Master and the Company within the two years prior to the

commencement of the offer period for the Offers may reasonably likely affect the objectivity of his

advice.


– 15 –

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion with regard to the Service Agreement, we have taken into consideration

the following principal factors and reasons:

1. Terms of the Existing Service Agreement

Duties

Pursuant to the existing service agreement between the Company and Mr. Chow dated 2

September 2005 (the ‘‘Existing Service Agreement’’), Mr. Chow, as an executive Director,

shall use his best endeavours to carry out his duties during the term of his appointment as

follows:

(i) to protect, promote and act in the best interests of the Group;

(ii) to devote his time and efforts diligently to the interests and affairs of the

Company in the discharge of his duties in relation to the Company and the Group

generally;

(iii) to comply with all lawful directions and instructions from time to time made by

the Board according to the best of his skills and ability and comply with all

resolutions and regulations from time to time passed or made by the Board;

(iv) in pursuance of his duties hereunder, to perform such services for the Group and

(without further remuneration unless otherwise agreed) accept such offices in the

Group as the Board may from time to time reasonably require and act as a

Director of the Group and of each of its subsidiaries;

(v) to perform such duties and exercise such powers faithfully and diligently as are

consistent with his office in relation to the Company and the Group;

(vi) to give promptly to the Board (in writing if so requested) all such information as

the Board may reasonably require in relation to his duties and the Business in so

far as such information is or ought to be within his knowledge and provide such

explanations as the Board may require in connection therewith;

(vii) to carry out his duties and exercise his powers jointly with any other director or

executive as shall from time to time be appointed by the Board to act jointly with

him and the Board may at any time require Mr. Chow to cease performing or

exercising any of his duties or powers under this Agreement without assigning any

reason therefor;

(viii) to comply with the minimum standard of good practice concerning the general

management responsibilities of the Board as set out in the GEM Listing Rules;

(ix) to work on the normal office hours of the Group (9:00 a.m. to 5:00 p.m., Monday

through Friday and 9:00 a.m. to 12:30 p.m. on Saturday) and may be required to

work outside these normal hours without additional pay; and


– 16 –

(x) to carry out his duties in Hong Kong or in such other parts of the world as the

Board may reasonably request or as the interests, needs, business and

opportunities of the Group may reasonably require or be deemed advisable by the

Board.

Remuneration

Pursuant to the Existing Service Agreement, Mr. Chow shall receive, during the term of

the appointment:

(i) For the first twelve months during the term of the appointment, an aggregate

salary at the annual rate of HK$1,200,000 (including any sum payable to Mr.

Chow as director’s fees and remuneration from any company in the Group)

payable by 12 equal monthly installments of HK$100,000 (or a pro rata amount

for an incomplete month) each such installment being payable on the last day of

each calendar month. Such salary shall be reviewed and determined from time to

time by the audit committee of the Company;

(ii) for the twelve months thereafter during the term of the appointment, an aggregate

salary at the annual rate of HK$1,800,000 (including any sum payable to Mr.

Chow as director’s fees and remuneration from any company in the Group)

payable by 12 equal monthly installments of HK$150,000 (or a pro rata amount

for an incomplete month) each such installment being payable on the last day of

each calendar month. Such salary shall be reviewed and determined from time to

time by the audit committee of the Company; and

(iii) A discretionary year-end bonus, (the upper limit of which is not capped), in such

amount (if any) as may be determined by the audit committee of the Company;

such bonus (if any) being parable as soon as practicable after publication of the

audited consolidated or combined accounts of the Group for the relevant financial

year.

Termination

Termination of the Existing Service Agreement by either the Company or Mr. Chow

shall require the other party giving not less than six calendar months’ prior notice in writing

at any time during the term of Mr. Chow’s appointment as an executive Director.

2. Mr. Chow new role in the Company and his duties under the Service Agreement

The Board proposes to engage Mr. Chow as a consultant to provide active assistance and

advice to the Board and cooperate fully with the Board with regard to all business activities and

the development, expansion and diversification of its business as the Board may undertake from

time to time, for the purpose of ensuring continuity of the Group’s business.


– 17 –

For the duration of the Service Agreement, Mr. Chow shall, as a consultant to the Company:

(i) to provide active assistance and advice to the Board and cooperate fully with the Board

with regard to all business activities and the development, expansion and diversification

of its business as the Board may from time to time require;

(ii) to provide strategic and other advice and active assistance with employee and

independent contractor relations and issues surrounding the retention and/or termination

of employees or independent contractors, which may include but not limited to making

appropriate contact with such employees or independent contractors as the Board may

from time to time require;

(iii) to provide strategic and other advice and active assistance with the Group’s relations

with the relevant authorities and officers and issues surrounding renewal of applicable

permits, licenses, approvals and authorisations and operations of the Group, which may

include but not limited to making appropriate contact with such relevant authorities and

officers as the Board may from time to time require;

(iv) to perform to the best of his skill and ability such duties in connection with the Group

as the Board may from time to time require;

(v) to discharge of his duties and in the exercise of his powers observing and complying

with all resolutions, regulations and lawful directions and instructions from time to time

made or given by the Board and faithfully and diligently serve the Group and use his

best endeavours to promote and protect the business and interests thereof;

(vi) to devote his efforts, attention, abilities and time to the business of the Group and use

his best endeavours to assist in the maintenance and development of the business of the

Group;

(vii) not to be engaged or interested in or concerned with any business which is in any

respect in competition with the business of the Group;

(viii) to comply with, and exercise his best endeavours to procure the Company’s compliance

with, the GEM Listing Rules, the Takeovers Code and the Code on Share Repurchases,

the memorandum and the articles of association of the Company, and all other

applicable laws, rules, regulations, guidelines and practice notes which are binding on

or applicable to the Group or Mr. Chow;

(ix) to co-operate in any investigation conducted by the listing division and/or listing

committee of the Stock Exchange or other regulatory authorities in connection with the

Group’s business and affairs, including but not limited to answering promptly and

openly all questions addressed to him, providing promptly to the Stock Exchange and

other regulatory authorities (in writing if so requested) all such information as the Stock

Exchange and other regulatory authorities may require in relation thereto and attending

before any meeting or hearing at which he is requested to appear; and


– 18 –

(x) to forthwith notify the Board upon occurrence of any circumstances which may render

Mr. Chow unsuitable to act as a consultant of the Company.

It is proposed that Mr. Chow shall perform his duties in any place in Hong Kong, the PRC or

any part of the world which the Board may reasonably require for the proper performance and

exercise of his duties under the Service Agreement. It is also proposed that Mr. Chow shall, if and

so long as he is so required by the Company, carry out the duties of his office on behalf of any

subsidiary for the time being of the Company.

Mr. Chow shall at all times keep the Board promptly and fully informed (in writing if so

requested) of his conduct of the business or affairs of the Company or the Group and provide such

information and explanations as the Board may require in connection therewith.

Furthermore, both the Existing Service Agreement and the Service Agreement contain similar

restrictive covenant clauses that Mr. Chow shall not (except with the prior sanction of a resolution

of the Board) be directly or indirectly engaged in or concerned with or interested in any other

business which is in any respect in competition with or in opposition to any business for the time

being carried on by any company in the Group, subject to certain de minimis threshold.

We note from the Service Agreement that Mr. Chow’s role is a consultant and can therefore

be reactive to the requests of the Board from time to time, as compared with the role as an

executive Director where he might have to play an active management role in the Company.

3. Background of Mr. Chow

The following is an extract from the annual report of the Company for the year ended 31

December 2010 in relation to the background of Mr. Chow:

‘‘Mr. Chow Kwong Fai, Edward (周光暉), JP, BA, FCA, FCPA, FHKIoD, aged 58, is the founder

of the Group, the Chairman of the Company and a chartered accountant. Mr. Chow has extensive

knowledge and experience in infrastructure development in China and Thailand, including the

planning and managing of a mass transit system project in Bangkok. He is a past president of the

Hong Kong Institute of Certified Public Accountants, a past chairman of the Professional

Accountants in Business Committee of the International Federation of Accountants and a past

deputy chairman of the Hong Kong Institute of Directors. Currently, he serves as an expert

advisor of the Accounting Standards Committee of the Ministry of Finance, the PRC, a core

member of the OECD/World Bank Asian Corporate Governance Roundtable, a council member of

the Institute of Chartered Accountants in England and Wales and a vice chairman of the Business

and Professionals Federation of Hong Kong. He is also a member of The Ninth Chinese People’s

Political Consultative Conference of Zhejiang Province and an Election Committee member of

Hong Kong. In business, Mr. Chow serves as an independent director and chairman of the audit

committee of COSCO Pacific Limited, a Hang Seng Index company and an independent director

and chairman of the connected transactions committee of China Merchants Bank Co., Ltd., which

is listed on the stock exchanges of Hong Kong and Shanghai. On 1 July 2008, Mr. Chow was

appointed a Justice of Peace by the Chief Executive of Hong Kong. Mr. Chow was also an

awardee of the Directors of the Year Award 2010 in the non-executive director of listed companies

(SEHK — Hang Seng Index Constituents) category, awarded by the Hong Kong Institute of

Directors.’’


– 19 –

Having considered the background, knowledge and expertise of Mr. Chow, and in particular,

as the founder of the Group who has been managing the business since 1997, and to ensure

continuity, we concur with the view of the Board that the retention of Mr. Chow as a consultant of

the Company under the Service Agreement is reasonable, and is in the interests of the Company

and the Shareholders as a whole. We have been informed by the Board and the Offeror that in

view of Mr. Chow’s continuing involvement in the Company since its listing and the background,

knowledge and expertise of Mr. Chow, there is no other suitable candidate available.

4. Performance of the Group under Mr. Chow’s management for the past three years

Pursuant to published information, financial performance of the Group for the three years

ended 31 December 2010 vis-a-vis Mr. Chow’s remuneration is as follows:

2010 2009 2008HK$’000 HK$’000 HK$’000

Loss attributable to the Shareholders (2,930) (6,004) (10,516)

Remuneration of Mr. Chow* 1,350 1,450 2,091

* During the period, share based payment and pension contribution to Mr. Chow were insignificant.

We consider that the same monthly remuneration as a consultant is generous compared to his

pre-existing role as an executive Director. However, we note that Mr. Chow had been remunerated

at a reducing rate over the recent years due to the subdue financial performance of the Group. We

have been informed by the Board that due to subdue financial performance of the Group, Mr.

Chow’s remunerations in 2009 and 2010 had in fact reduced despite the reducing magnitude of the

losses recorded by the Group in recent years as shown in the table above and the fact that Mr.

Chow should have received HK$1,800,000 in accordance with the terms of the Existing Service

Agreement. We note that in view of the improvement of the Group’s financial performance since

2009, Mr. Chow’s remuneration has been restored to HK$150,000 per month since January 2011 in

accordance with the terms of the Existing Service Agreement. Furthermore, we note that such

annual remuneration provided under the Existing Service Agreement has not been adjusted since

2006.

5. Remuneration and benefits of Mr. Chow under the Service Agreement

Pursuant to the Service Agreement, Mr. Chow shall receive a monthly fee of HK$150,000

payable in arrears at the end of each calendar month and an additional payment of HK$150,000 at

the end of the first and the second anniversary of his appointment hereunder. The monthly fee of

HK$150,000 is the same as the current monthly salary received by Mr. Chow since 1 January 2011

which is also the same as the monthly fee provided in the Existing Service Agreement and as

noted above, such remuneration provided under the Existing Service Agreement has not been

adjusted since 2006. No variable remuneration is payable under the Service Agreement and Mr.

Chow will no longer entitle to any mandatory pension fund contribution by the Company.


– 20 –

Mr. Chow shall also be entitled to use an office car provided by the Company during the

term of his engagement under the Service Agreement. In addition, a personal assistant or secretary

shall be hired by the Company to assist Mr. Chow. Save as above, as compared with the Existing

Service Agreement, there are no other additional remuneration and benefits to be provided by the

Company to Mr. Chow as a consultant pursuant to the Service Agreement.

We understand that the monthly fee under the Service Agreement has been negotiated

between the Offeror, the Company and Mr. Chow on an arm’s length basis and similar benefits

have been provided to Mr. Chow under the Existing Service Agreement as an executive Director.

Accordingly, although Mr. Chow will no longer have an executive role in the Group, we

consider the aforesaid remuneration and benefits for a senior executive with the background,

knowledge and expertise of Mr. Chow who is the founder of the Group are consistent with market

norm and are not excessive.

6. Termination of the Service Agreement

Termination of the Service Agreement by either the Company or Mr. Chow shall require the

other party giving not less than three calendar months’ prior notice in writing expiring at the first

anniversary of the initial term or at any time thereafter.

7. Background and intention of the Offeror and the new Directors

The Offeror is an investment holding company incorporated in the BVI on 5 July 2011 with

limited liability. The Offeror is wholly and ultimately beneficially owned by Mr. Yan. Mr. Yan is

the sole director of the Offeror. Before the date of the S&P Agreement, the Offeror had not

conducted any business since its incorporation, and save for the cash to be used for the settlement

of the consideration for the Offers and 640,776,141 Shares held by it, did not have any material

assets as at 19 October 2011, the latest practicable date of the Composite Document.

Save for the change in the Board composition as disclosed in the Composite Document, it is

the intention of the Offeror to continue the existing management of the Group. As disclosed in the

Composite Document, the Offeror has no intention or plan for any material changes to the

continued employment of the employees of the Group other than in ordinary course of business.

The Offeror will conduct a more detailed review on the operations of the Group with a view

to formulate a suitable business strategy for the Group and will explore other business

opportunities. Subject to the result of the review, the Offeror may explore other business

opportunities and hence may result in a change in management of the Group. However, there is no

plan for any material changes in the management of the Group.

Mr. Yan, aged 39, is the controlling shareholder and an executive director of Zall

Development (Cayman) Holding Co. Ltd. (Stock Code: 2098.HK), a company listed on the Main

Board of the Stock Exchange. Mr. Yan has extensive experience in logistics, project planning,

business and operation management. He has approximately six years of experience in the

commercial property and wholesale shopping mall industries, as well as approximately 15 years of

experience in the advertising and media industry and business management.


– 21 –

The Offeror has nominated Mr. Yan as a non-executive Director, and Mr. Duan Yan (‘‘Mr.

Duan’’) as an executive Director to the Board with effect from the day which is no earlier than the

posting of the Composite Document.

Mr. Duan, aged 32, is an executive Director of 卓爾大新華物流有限公司 (Wuhan Zall Grand

China logistics Co., Ltd*) and the chairman of 卓爾寶沃勤(武漢)物流有限公司(Zall Power Chain

(Wuhan) logistics Co., Ltd*). Mr. Duan is also the vice president of 漢南港實業集團有限公司

(Hubei Hannan Port Industrial Co., Ltd*). In addition, Mr. Duan is the assistant to the chairman of

Zall Holdings Company Limited. Mr. Duan holds a Master Degree of E-Commerce from Middlesex

University in London and has extensive experience in logistics as well as business and operation

management.

We note that although Mr. Yan and Mr. Duan have logistics related experience, both of them

do not have direct experience in port management and container handling service and related

businesses. As such, the retention of Mr. Chow would be beneficial to the Company.

8. Other factors

We note that, pursuant to the S&P Agreement, at Completion the Offeror shall require, inter

alia, an undated resignation letter from Mr. Chow (the ‘‘Undated Resignation Letter’’) resigning as

a Director and all members of the Group in which he serves as a director, together with

confirmation from him that he has no claims against the Company and all other members of the

Group regarding the termination of their offices (such resignation to take effect from the earliest

time permitted under the Takeovers Code or by the SFC).

We note the Offeror has waived Mr. Chow’s Undated Resignation Letter to be provided upon

Completion. Mr. Chow has stated his intention to give six months’ notice to resign in accordance

with the terms of the Existing service Agreement if the Service Agreement is not entered into. The

effects to the Company for Mr. Chow serving his notice period would be a minimum of 6 months’

salaries, or HK$900,000, which is a cost that the Company will have to bear if the Service

Agreement is not entered into. Yet after having entered into the Service Agreement, and in the

event that the Company would like to terminate the Service Agreement prior to its expiry, the

minimum tenure of the Service Agreement is 12 months including the three months’ notice or

payment in lieu, or in aggregate total cost of HK$1,950,000 (inclusive of the additional payment of

HK$150,000 at the end of the first anniversary) would be required. This represents an additional

cost of HK$1,050,000. We note that the Directors will closely monitor Mr. Chow’s performance

after the Service Agreement has been entered into to optimize his contributions to the Group.

Accordingly, we concur with the Directors that it is desirable to retain the service of Mr. Chow,

albeit only as a consultant under the Service Agreement for the purpose of continuity.

RECOMMENDATION

Having considered that:

(i) the duties and the remuneration of Mr. Chow as a consultant of the Company under the

Service Agreement compared to his pre-existing role as an executive Director under the

Existing Service Agreement;


– 22 –

(ii) the background, knowledge and expertise of Mr. Chow, and in particular, as the founder of

the Group who has been managing the business since 1997;

(iii) the financial performance of the Group under the management of Mr. Chow for the three

years ended 31 December 2010; and

(iv) both Mr. Yan and Mr. Duan do not have direct experience in port management and container

handling service and related business,

we are of the opinion that a continuation of involvement of Mr. Chow in the Company is in the interests

of the Company and the Shareholders as a whole. Accordingly, we consider that the terms of the Service

Agreement are on normal commercial terms and are fair and reasonable so far as the Company and the

SD Independent Shareholders are concerned.

Accordingly, we advise the SD Independent Board Committee to recommend the SD Independent

Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve the

Service Agreement.

Yours faithfully,


Asian Capital (Corporate Finance) LimitedLarry Chan

Executive Director


– 23 –

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Takeovers Code and the GEM

Listing Rules for the purpose of giving information with regard to the Group.

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

includes particulars given in compliance with the GEM 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 (other than

information relating to the Offeror and parties acting in concert with it) 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 in this circular (other than information relating to the Offeror and parties

acting in concert with it) or this circular misleading.

The Directors jointly and severally accept full responsibility for the accuracy of the information

contained in this circular (other than information relating to the Offeror and parties acting in concert

with it) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions

expressed in this circular have been arrived at after due and careful consideration and there are no other

facts not contained in this circular, the omission of which would make any statement in this circular

misleading.

The sole director of the Offeror accepts full responsibility for the accuracy of the information

relating to the Offeror contained in this circular and confirms, having made all reasonable enquiries, that

to the best of his knowledge, opinions expressed in this circular by the director of the Offeror have been

arrived at after due and careful consideration and there are no other facts not contained in this circular

the omission of which would make any statement contained in this circular misleading.

SHARE CAPITAL

Authorised and issued share capital of the Company

The authorised and issued share capital of the Company as at the Latest Practicable Date were as

follows:

Number of Shares Nominal ValueHK$

Authorised:Ordinary shares of HK$0.10 each

— As at the Latest Practicable Date 2,000,000,000 200,000,000.00

Issued and fully paid:— As at the Latest Practicable Date 1,177,056,180 117,705,618

APPENDIX I GENERAL INFORMATION

– 24 –

As at the Latest Practicable Date, there were 1,326,651 Share Options outstanding which were all

granted to eligible employees of the Company under the Share Option Scheme, entitling them to

subscribe for a total of 1,326,651 new Shares.

All existing issued Shares are fully paid up and rank pari passu in all respects with each other,

including in particular as to dividend, voting rights and capital. No part of the share capital of the

Company is listed or dealt in on any other stock exchange other than the GEM and no application has

been made or is currently proposed or sought for the Shares to be listed or dealt in on any other stock

exchange.

Save as disclosed above, there were no other Shares or outstanding derivatives, options, warrants,

conversion rights or other similar rights or securities of the Company which were convertible or

exchangeable into Shares as at the Latest Practicable Date.

DISCLOSURE OF INTERESTS

(a) Directors’ and chief executive’s interests and short positions in Shares, underlying Shares anddebentures

As at the Latest Practicable Date, none of the Directors and chief executive of the Company had

any interest or short position in the Shares or underlying Shares in, or debentures of, the Company or its

associated corporations, which, (a) are required to be notified to the Company and the Stock Exchange

pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/

she is taken or deemed to have under such provisions of the SFO); (b) are required to be recorded in the

register required to be kept by the Company under Section 352 of the SFO, or (c) as otherwise required

to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM

Listing Rules relating to securities transactions by directors of listed issuers.


– 25 –

(b) Substantial shareholders’ interests and short positions in Shares, underlying Shares anddebentures

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the

Company, other than a Director or chief executive of the Company, who has an interests or short

position in the Shares and underlying Shares of the Company which would fall to be disclosed to the

Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or

indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to

vote in all circumstances at general meetings of any other member of the Group and the amount of each

of such person’s interest in such securities were as follows:

Name of Shareholders Type of interest No. of Shares

Approximatepercentage ofexisting issued

share capital ofthe Company

Zall Infrastructure

Investments Company

Limited

Beneficial 760,830,357(L) 64.64%

Zall Holdings Company

Limited

Interests in controlled

corporation

760,830,357(L) 64.64%

Yan Zhi Interests in controlled

corporation

760,830,357(L) 64.64%

The letter ‘‘L’’ denotes a long position

Save as disclosed above, as at the Latest Practicable Date, so far as is known to any Director or

chief executive of the Company, there were no other persons who had an interest or short position in the

Shares and the underlying Shares which would fall to be disclosed to the issuer under the provisions of

Divisions 2 and 3 of Part XV of the SFO, or, is, directly or indirectly, interested in 10% or more of the

nominal value of any class of share capital carrying rights to vote in any circumstances at general

meeting of any other member of the Group or any options in respect of such capital.

DIRECTORS’ INTERESTS IN CONTRACTS

As at the Latest Practicable Date, there was no contract or arrangement subsisting as at the Latest

Practicable Date in which a Director is materially interested and which is significant in relation to the

business of the Group.


– 26 –

DIRECTORS’ INTERESTS IN ASSETS

The Directors confirm that as at the Latest Practicable Date, none of them had any interest, direct

or indirect, in any assets which have been, since 31 December 2010 (being the date to which the latest

published audited financial statements of the Group were made up), acquired or disposed of by or leased

to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member

of the Group.

COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or the controlling Shareholders or their

respective associates had any interest in a business which competes or may compete with the business of

the Group, or any other conflict of interest with the Group.

DIRECTORS’ SERVICE AGREEMENTS

As at the Latest Practicable Date, none of the Directors have and/or had any service contracts and

agreements with the Company or any of its subsidiaries or associated companies in force which could

not be determinable by the employer within one year without payment of compensation (other than

statutory compensation).

MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in

the financial or trading position of the Group since 31 December 2010, being the date to which the

latest published audited financial statements of the Group were made up.

LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged

in any litigation or arbitration of material importance and no litigation or claim of material importance

was known to the Directors to be pending or threatened by or against the Company or any member of

the Group.

MATERIAL CONTRACTS

Save for the entering into of the letter of intent dated 8 April 2011 (the ‘‘LOI’’) between the

Company and Ningbo Port Co., Ltd., which was a third party independent of and not connected with the

Company and its connected persons, no material contracts (not being contracts in the ordinary course of

business) have been entered into by the members of the Group within the two years preceding 30

September 2011, being the date of the joint announcement issued by the Offeror and the Company and

up to and including the Latest Practicable Date and are or may be material. Pursuant to the LOI, Ningbo

Port Co., Ltd. may acquire the entire equity interests in CIG Port Holdings Limited, a wholly-owned

subsidiary of the Company incorporated in BVI, and Ningbo Port Co., Ltd. was granted an exclusive

due diligence and negotiation period of 90 days from the date of LOI. If no definitive sale and purchase

agreement was signed on or before 6 July 2011 or such later date as may be agreed by the parties, the

LOI shall lapse. Accordingly, the LOI was lapsed on 5 August 2011 (for further details in relation to the

terms of the LOI, please refer to the announcement of the Company dated 8 April 2011).


– 27 –

EXPERT AND CONSENT

The following are the qualifications of the expert who has given opinion or advice as contained in

this circular:

Name Qualification

Asian Capital a corporation licensed to carry on Type 1 (dealing in securities), Type 4

(advising on securities), Type 6 (advising on corporate finance) and Type 9

(asset management) regulated activities under the SFO

Asian Capital has given and has not withdrawn its written consent to the issue of this circular, with

the inclusion herein of its opinion or letter (as the case may be) and references to its name, in the form

and context in which it respectively appears.

As at the Latest Practicable Date, Asian Capital did not have any shareholding in any member of

the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to

subscribe for securities in any member of the Group, and Asian Capital did not have any interest, direct

or indirect, in any assets which have been, since 31 December 2010 (being the date to which the latest

published audited financial statements of the Group were made up), acquired or disposed of by or leased

to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member

of the Group.

MISCELLANEOUS

(a) The registered office of the Company is located at P.O. Box 309, GT Ugland House, South

Church Street, George Town, Grand Cayman, Cayman Islands. The head office and principal

place of business of the Company in Hong Kong is located at 2909A Bank of America

Tower, 12 Harcourt Road, Central, Hong Kong.

(b) Asian Capital is the independent financial adviser to the SD Independent Board Committee in

respect of the Service Agreement. The address of Asian Capital is at Suite 1006, Bank of

America Tower, 12 Harcourt Road, Central, Hong Kong.

(c) The principal bankers of the Group are (i) Shanghai Pudong Development Bank, Wuhan

Branch, PRC; (ii) Bank of Communications, Wuhan Branch, PRC; (iii) China Merchants

Bank, Wuhan Branch, PRC; (iv) Agricultural Bank of China, Wuhan Branch, PRC; (v) CITIC

Bank International Limited, Hong Kong; and (vi) DBS Bank (Hong Kong) Limited, Hong

Kong.

(d) The legal advisers to the Company are:

(i) Michael Li & Co, whose address is at 14/F, Printing House, 6 Duddell Street, Central,

Hong Kong;

(ii) Maples and Calder, whose address is at 53rd Floor, The Center, 99 Queen’s Road

Central, Hong Kong;


– 28 –

(iii) Dewell & Partners, whose address is at 15th Floor, Commercial Bank Plaza, 933

Jianshe Da Dao, Wuhan 430015, the PRC.

(e) The auditors of the Company are Grant Thorton Jingdu Tianhua, Certified Public

Accountants, whose address is situated at 20/F, Sunning Plaza, 10 Hysan Avenue, Causeway

Bay, Hong Kong.

(f) The principal share transfer and transfer office of the Company is Butterfield Fund Services

(Cayman) Ltd. at P.O. Box 705, Butterfield House, 68 Fort Street, George Town, Grand

Cayman, Cayman Islands.

(g) The Hong Kong branch share registrar and transfer office of the Company is Computershare

Hong Kong Investor Services Limited, whose address is situated at Shops 1712–1716, 17/F,

Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

(h) The company secretary of the Company is Mr. Cheung Chi Leung, Ivan, who is a member of

the Certified General Accountants Association of Canada.

(i) The authorised representatives of the Company are Mr. Chow and Mr. Cheung Chi Leung,

Ivan.

(j) The compliance officer of the Company is Mr. Chow, an executive Director, who is a fellow

member of the Institute of Chartered Accountants in England and Wales, the Hong Kong

Institute of Certified Public Accountants and the Hong Kong Institute of Directors.

(k) All time references contained in this circular refer to Hong Kong times.

(l) In case of inconsistency, the English text of this circular shall prevail over the Chinese text.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection from 9:00 a.m. to 5:00 p.m. from

Mondays to Fridays (public holidays excepted) at the office of the Company at 2909A Bank of America

Tower, 12 Harcourt Road, Central, Hong Kong from the date of this circular up to and including the

date of the EGM:

(a) the memorandum and articles of association of the Company;

(b) the annual reports of the Company for each of the three years ended 31 December 2010;

(c) the first quarterly report of the Company for the three months ended 31 March 2011;

(d) the interim report of the Company for the six months ended 30 June 2011;

(e) the letter from the SD Independent Board Committee, the text of which is set out on page 12

of this circular;

(f) the letter from Asian Capital, the text of which is set out on pages 13 to 23 of this circular;


– 29 –

(g) the letter of consent from Asian Capital as referred to in the section headed ‘‘Expert and

consent’’ in this Appendix;

(h) the material contract as mentioned in the section headed ‘‘Material contracts’’ in this

Appendix; and

(i) the unsigned draft of the Service Agreement.


– 30 –


(Stock Code: 8233)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the ‘‘EGM’’) of the

shareholders of CIG Yangtze Ports PLC (the ‘‘Company’’) will be held at Unit A, 29/F, Admiralty

Centre I, 18 Harcourt Road, Admiralty, Hong Kong on Tuesday, 15 November 2011 at 10:30 a.m. for

the purpose of considering and, if thought fit, passing with or without amendments, the following

resolution of the Company:

ORDINARY RESOLUTION

1. ‘‘THAT, subject to the consent of the Executive Director of Corporate Finance Division of

the Securities and Futures Commission of Hong Kong (or any delegate of the Executive

Director) pursuant to Rule 25 of the Takeovers Code with respect to special deal and any

conditions that may be imposed thereon,

(a) the entering into of a service agreement (the ‘‘Service Agreement’’, substantially in the

form as produced to the EGM marked ‘‘A’’ and initialed by the Chairman of the EGM

for the purpose of identification) between the Company and an existing sole executive

director, Mr. Chow Kwong Fai, Edward, in relation to his appointment as a consultant

of the Company for a term of two years commencing from the date of the Service

Agreement with a monthly fee of HK$150,000 and an additional payment of

HK$150,000 on each anniversary of his commencement of service as consultant be and

are hereby confirmed and approved;

(b) any one or more of the directors of the Company be and is/are hereby authorised to do

all such acts and things and execute all such documents as he/they consider necessary,

desirable or expedient for the purpose of, or in connection with, the implementation of

and giving effect to any of the matters relating to, or incidental to, the Service

Agreement.’’

By order of the Board of

CIG Yangtze Ports PLCIvan Cheung

Company Secretary

Hong Kong, 31 October 2011

As at the date hereof, the Board comprises an executive director namely Mr. Chow Kwong Fai,

Edward, three non-executive directors namely Mr. Wong Yuet Leung, Frankie, Mr. Lee Jor Hung,

Dannis and Mr. Goh Pek Yang, Michael and three independent non-executive directors namely Mr. Lee

Kang Bor, Thomas, Dr. Wong Tin Yau, Kelvin and Mr. Fan Chun Wah, Andrew.


NOTICE OF EXTRAORDINARY GENERAL MEETING

– EGM-1 –

Notes:

1. Any member of the Company entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend andvote on his/her/its behalf. A proxy needs not be a member of the Company.

2. Where there are joint registered holders of any share, any one of such persons may vote at the EGM, either personally or byproxy, in respect of such share as if he/she/it were solely entitled thereto; but if more than one of such holders be present at

the EGM, personally or by proxy, that one of the said persons so present whose name stands first on the register in respectof such share shall alone be entitled to vote in respect thereto.

3. A form of proxy for the EGM is enclosed herewith.

4. In order to be valid, a form of proxy must be deposited by hand or by post at Computershare Hong Kong Investor Services

Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, together with thepower of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power orattorney, not less than 48 hours before the time appointed for holding the EGM.

5. Shareholders or their proxies shall produce their identity documents when attending the EGM.

6. Shareholders or proxies attending the EGM should state clearly, in respect of each resolution requiring a vote, whether theyare voting for or against the resolution. Abstention votes will not be regarded by the Company as having voting rights forthe purpose of vote counts.

7. Voting on the ordinary resolution at the EGM will be conducted by way of poll.

NOTICE OF EXTRAORDINARY GENERAL MEETING

– EGM-2 –

Documents

SPECIAL DEAL AND NOTICE OF EGM - CIG Yangtze Ports · If you are in any doubtas to any aspect of this circular or as to the action to be taken, you should consult your stockbroker