irasia.com - Sinolink Worldwide Holdings Limited

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SINOLINK WORLDWIDE HOLDINGS LIMITED
(Incorporated in Bermuda with limited liability)

CONNECTED AND DISCLOSEABLE TRANSACTIONS

SUMMARY
The board of directors of Sinolink Worldwide Holdings Limited announce that Changsha JV, the Company's indirect non wholly-owned subsidiary, had on 19th October, 2000 entered into the Changsha LPG Agreement with CPC and Yue Yang whereby CPC and Yue Yang agreed that a stable supply of high quality LPG will be produced and supplied to Changsha JV at a price determinable by a pre-set formula as set out in the Changsha LPG Agreement. Changsha JV was owned (i) as to 60% by Singkong Investments Limited, an indirect wholly-owned subsidiary of CPR which in turn is a wholly owned subsidiary of the Company and (ii) as to 40% by the PRC Party. By holding more than 10% interest in Changsha JV, the PRC Party is regarded as a substantial shareholder (as defined in the Listing Rules) of Changsha JV. As CPC is an associate (within the meaning of the Listing Rules) of the PRC Party by virtue of the fact that the PRC Party and CPC are fellow subsidiaries of the same holding company, the entering into of the Changsha LPG Agreement between Changsha JV and CPC constitutes connected transaction under the Listing Rules. Yue Yang is independent third party unconnected with the Company, its director, chief executive, substantial shareholder or any of their respective associates. Yue Yang is held as to 27.52% by the PRC Party and is not a connected person of the Company under the Listing Rules.
As the entering into of the Changsha LPG Agreement and the Transactions constitute connected transactions of the Company, a circular containing, inter alia, details about the Changsha LPG Agreement and the Transactions together with an opinion of an independent financial adviser will be despatched to the shareholders of the Company as soon as practicable in accordance with the Listing Rules. As the Directors expect that the Transactions shall continue in future, the Company has made an application to the Stock Exchange for waiver from strict compliance with the disclosure and shareholders' approval requirement under the Listing Rules for the period from 1st September, 2000 to 31st December, 2001.
As the Controlling Shareholder of the Company which holds approximately 66.23% of the Company and which is not interested in the Transactions has indicated that it approves the entering into of the Changsha LPG Agreement and the Transactions, the Company has also applied to the Stock Exchange for waiver from convening the shareholder meeting of the Company by way of a written certificate of approval by the Controlling Shareholder.

PARTICULARS OF THE CHANGSHA LPG AGREEMENT

Date: 19th October, 2000

Term: 16 months from 1st September, 2000 to 31st December, 2001 renewable for such terms as agreed by Changsha JV and the Suppliers. Yue Yang began to supply LPG to Changsha JV on 1st September, 2000 at market price because the terms of the Changsha LPG Agreement, including but not limited to the formula for the calculation of the unit price of the LPG to be supplied under the Changsha LPG Agreement and the commencement date of the Changsha LPG Agreement, had not yet been settled and the parties were still in the negotiation stage. Such market price is higher than the purchase price that Changsha JV has to pay to the Suppliers pursuant to the terms of the Changsha LPG Agreement. During the period between 1st September, 2000 to 19th October, 2000, the date of the signing of the Changsha LPG Agreement, Yue Yang had supplied 21, 165. 154 tons of LPG to Changsha JV.

Details: Pursuant to the Changsha LPG Agreement, the Suppliers have agreed to produce and supply all the LPG that they produce (after deducting the Suppliers' own production consumption, employee consumption, government consumption, etc.) to Changsha JV and Changsha JV shall purchase all such quantities of LPG from the Suppliers at a price determinable by a pre-set formula as set out in the Changsha LPG Agreement. According to the said formula, the purchase price of LPG in each of the calendar month during the term of the Changsha LPG Agreement shall be determined by adopting the average wholesale price of LPG charged by Changsha JV to its customers for the preceding three months and discounting the figure by, inter alia, (i) a certain bulk purchase discount percentage and (ii) the shortfall of economic benefit resulting from such quantity shortfall of the prescribed quantity being supplied by the Suppliers to Changsha JV as stated in the purchase order of Changsha JV after allowing for a 10% differential in quantity. Annual estimated production of LPG will be agreed by both parties before the commencement of each year. Such estimated production will assist the Suppliers in determining the estimated monthly production and supply of LPG to Changsha JV. The Suppliers will ensure that high quality LPG will be produced and supplied to Changsha JV. The Suppliers supply LPG to the Changsha JV on the same terms.
The turnover of the Changsha JV in respect of the LPG for the year ended 1998, 1999 and the period between January 2000 to June 2000 are 107,685 tons, 149,356 tons and 69,858 tons respectively. It is anticipated that the aggregate value of the Transactions is approximately RMB629.35 million (equivalent to approximately HK$588,200,000) for the period from 1st September, 2000 to 31st December 2001 (based on the estimate of the supply of 230,000 tons by the Suppliers for the 16 months at the approximate price of RMB2,606 per ton which is the average purchase price per ton incurred by the Company during the first six months of the current year plus a 5% margin to allow for price fluctuation) which is more than the higher of HK$10 million or 3 per cent. of the book value of the consolidated net tangible asset of the Company of HK$1,178,137,000.00 as at 31st December, 1999. As the estimated aggregate value of the Transactions is more than 15% of the consolidated net tangible assets of the Company as at 31st December, 1999, the Transactions is a discloseable transaction under the Listing Rules.

CHINA PETROCHEMICAL COMPANY LIMITED'S RELATIONSHIP WITH THE COMPANY

The Company was incorporated on 15th December, 1997 in Bermuda with limited liabilities. Changsha JV is held (i) as to 60% by Singkong Investments Limited, an indirect wholly-owned subsidiary of CPR which in turn is a wholly owned subsidiary of the Company and (ii) as to 40% by the PRC Party. Since the Company's listing on the Stock Exchange in 1998, the Group has actively engaged in real estate, LPG business and power generation business in the PRC. CPR is principally engaged in wholesale, retail and distribution of LPG in 14 cities in PRC through 14 joint venture companies with various local PRC enterprises. CPC is a PRC incorporated state-owned enterprise and an associate (within the meaning of the Listing Rules) of the PRC Party by virtue of the fact that the PRC Party and CPC are fellow subsidiaries of the same holding company.

REASONS FOR ENTERING INTO THE CHANGSHA LPG AGREEMENT

As Changsha JV is principally engaged in purchasing, transportation, storage, sale and distribution of LPG in Changsha, the PRC. The Directors consider that the entering into the Changsha LPG Agreement between Changsha JV and the Suppliers will ensure stable, high quality and economical supply of LPG to the Group.

The Directors also believe that the entering into the Changsha LPG Agreement will reduce the risk of price fluctuation of LPG which in turn will reduce the business risk in the operation of Changsha JV. By taking advantage of the proximity of the location of the refineries of the Suppliers to Changsha Municipality, the place of operation of Changsha JV, it is considered that a stable supply of high quality LPG could be provided at relatively low and stable prices. The Directors are of the view that the terms of the Changsha LPG Agreement are more favourable to the Company than those offered by other suppliers after taking into consideration such factors such as quality of LPG, consistent uninterrupted supply and pricing. The Directors are also of a view that the Transactions are fair and reasonable so far as the shareholders of the Company are concerned.

Hence, it is believed that the Changsha LPG Agreement will enhance the competitive edge of Changsha JV in its geographical market.

CONNECTED TRANSACTIONS

Since the PRC Party holds 40% in Changsha JV, it is regarded as a substantial shareholder (as defined in the Listing Rules) of Changsha JV and is thus a connected person (within the meaning of the Listing Rules) of the Company. As CPC is an associate of the PRC Party, the entering into of the Changsha LPG Agreement between Changsha JV and CPC constitutes connected transactions under the Listing Rules. Yue Yang, which is held as to 27.52% by the PRC Party and which is not connected with the Company, any of its directors, chief executive or substantial shareholder or any of their respective associates, is not a connected person of the Company.

DISCLOSEABLE TRANSACTIONS

As the estimated aggregate value of the Transactions is likely to exceed 15% but less than 50% of the consolidated net tangible assets of the Company as at 31st December, 1999, the Transactions is a discloseable transaction under the Listing Rules.

WAIVER FROM COMPLIANCE WITH THE LISTING RULES

Under the Listing Rules, the Transactions would normally require full disclosure and/or prior independent shareholders' approval. However, as such Transactions have been, and will continue to be carried out in the ordinary and usual course of business of the Group and on terms that are fair and reasonable so far as the shareholders of the Company are concerned. The Directors consider that it would not be practical to make disclosure or, if necessary, obtain shareholders' approval for each of the Transactions as it arises. Accordingly, the Directors has applied to the Stock Exchange for the grant of a waiver for the period commencing from 1st September 2000 and expiring on 31st December 2001 from strict compliance of the relevant requirements of the Listing Rules and on the following conditions that: -

1. Such Transactions are: -

(a) in the ordinary and usual course of business of the Company;

(b) on normal commercial terms;

(d) entered into in accordance with the terms and conditions of the Changsha LPG Agreement.

2. Details of such Transactions in any financial year will be disclosed in the annual report of the Company of that relevant financial year as set out in Rule 14.25(1) (A) to (D) of the Listing Rules.

3. For each of the financial years within the period in respect of the waiver applies, the aggregate quantity of such Transactions does not exceed HK$441,150,000.

4. The independent Directors shall review such Transactions on annual basis and confirm in the Company's annual report that such Transactions are conducted in the manner as stated in point 1 above.

5. Each year the auditors of the Company shall provide a letter to the board of Directors (with a copy to the Stock Exchange) confirming that the relevant continuing Transactions: -

(i) has received the approval of the board of Directors;

(ii) has been entered into in accordance with the terms of the relevant agreement governing such transaction;

(iii) has not exceeded the relevant cap amount set out in paragraph (3) above; and

(iv) has been entered into in accordance with the Company's pricing policies.

The Stock Exchange has indicated that if any terms of the Transactions referred to above are altered (unless as provided for under the terms of the agreement of each of the Transactions) or if the Group enters into any new agreement with any connected persons (within the meaning of the Listing Rules and subject to the requirements set out in the Listing Rules) in the future or if the limits referred to above are exceeded, the Company must comply with the provisions of Chapter 14 of the Listing Rules dealing with connected transactions unless it applies for and obtains a separate waiver from the Stock Exchange.

Asia Pacific Promotion Limited, the controlling shareholder of the Company, which holds approximately 66.23% of the entire issued share capital of the Company has agreed to give a written certificate confirming that they are not interested in the Transactions other than being a shareholder of the Company and that they approve the entering into of the Changsha LPG Agreement, the Transactions and the waiver for ongoing connected transactions mentioned above. The Company has therefore also applied to the Stock Exchange for a waiver from the requirement to hold a shareholders meeting by way of a written certificate of approval by the Controlling Shareholder.

As a result, the Stock Exchange has agreed that the requirement on convening a general meeting of the Company to approve the entering into of the Changsha LPG Agreement and the Transactions be waived and the waiver for ongoing connected transactions mentioned above be granted .

A circular containing, inter alia, details about the Changsha LPG Agreement and the Transactions together with an opinion of the independent financial adviser will be despatched to the shareholders of the Company as soon as practicable in accordance with the Listing Rules.

DEFINITIONS:-

"Associates" As defined in the Listing Rules;

"Changsha
LPG Agreement" the purchase agreement of LPG entered into between CPC and Yue Yang as suppliers and Changsha JV as purchaser on 19th October, 2000;

"Changsha JV" * Pan River Enterprises (Changsha) Company Limited (), an equity joint venture company established under the laws of the PRC which the Company has an attributable interest of 60%;

"Company" Sinolink Worldwide Holdings Limited, a company listed on the main board of the Stock Exchange;

"Controlling Shareholder" Asia Pacitic Promotion Limited, a company incorporated in the British Virgin Islands and beneficially owned by Mr. Ou Yaping.

"CPC" * China Petrochemical Company Limited (), a stated-owned enterprise incorporated under the laws of the PRC;

"CPR" China Pan River Group Limited, a company incorporated in the British Virgin Islands with limited liability;

"Directors" the directors of the Company including the independent non executive directors of the Company;

"Group" the Company and its subsidiaries or any of them;

"HK$" Hong Kong dollars, the lawful currency of Hong Kong;

"LPG" liquefied petroleum gas. A generic name for propane and butane or their mixture which has changed into liquid form under moderate pressure. Propane and butane are hydrocarbon created as a by-product of oil refining or from natural gas production. LPG is commonly used as a fuel for air and water heating in rural homes, as a fuel for cooking, barbecues and recreational vehicles, and as a transportation fuel;

"Listing Rules" The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

"PRC" the People's Republic of China;

"PRC Party" , the PRC Party holding 40% interest in Changsha JV;

"RMB" Reminbi, the lawful currency of the PRC;

"Stock Exchange" The Stock Exchange of Hong Kong Limited;

"Subsidiaries" as defined under section 2 of the Companies Ordinance, Cap.32, Laws of Hong Kong;

"Suppliers" CPC and Yue Yang collectively;

"Transactions" The transactions as contemplated by the Changsha LPG Agreement;

"Yue Yang" * Yue Yang Hing Chang Petrochemical Company Limited (), a company incorporated under the Laws of the PRC and is independent third party unconnected with any of the companies within the Group, the director, chief executive or substantial shareholder of the Company or any of their respective associates (within the meaning of the Listing Rules).

By order of the Board
SINOLINK WORLDWIDE HOLDINGS LIMITED
Ou Yaping
Chairman

* not an official English name

Hong Kong, 25th October, 2000

Note: In this announcement, Reminbi has been converted into Hong Kong dollars at the rate of HK$1=RMB1.07.
Website: http://www.irasia.com/listco/hk/sinolink

Source: Sinolink Worldwide Holdings Limited

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Date:	19th October, 2000
Term:	16 months from 1st September, 2000 to 31st December, 2001 renewable for such terms as agreed by Changsha JV and the Suppliers. Yue Yang began to supply LPG to Changsha JV on 1st September, 2000 at market price because the terms of the Changsha LPG Agreement, including but not limited to the formula for the calculation of the unit price of the LPG to be supplied under the Changsha LPG Agreement and the commencement date of the Changsha LPG Agreement, had not yet been settled and the parties were still in the negotiation stage. Such market price is higher than the purchase price that Changsha JV has to pay to the Suppliers pursuant to the terms of the Changsha LPG Agreement. During the period between 1st September, 2000 to 19th October, 2000, the date of the signing of the Changsha LPG Agreement, Yue Yang had supplied 21, 165. 154 tons of LPG to Changsha JV.
Details:	Pursuant to the Changsha LPG Agreement, the Suppliers have agreed to produce and supply all the LPG that they produce (after deducting the Suppliers' own production consumption, employee consumption, government consumption, etc.) to Changsha JV and Changsha JV shall purchase all such quantities of LPG from the Suppliers at a price determinable by a pre-set formula as set out in the Changsha LPG Agreement. According to the said formula, the purchase price of LPG in each of the calendar month during the term of the Changsha LPG Agreement shall be determined by adopting the average wholesale price of LPG charged by Changsha JV to its customers for the preceding three months and discounting the figure by, inter alia, (i) a certain bulk purchase discount percentage and (ii) the shortfall of economic benefit resulting from such quantity shortfall of the prescribed quantity being supplied by the Suppliers to Changsha JV as stated in the purchase order of Changsha JV after allowing for a 10% differential in quantity. Annual estimated production of LPG will be agreed by both parties before the commencement of each year. Such estimated production will assist the Suppliers in determining the estimated monthly production and supply of LPG to Changsha JV. The Suppliers will ensure that high quality LPG will be produced and supplied to Changsha JV. The Suppliers supply LPG to the Changsha JV on the same terms. The turnover of the Changsha JV in respect of the LPG for the year ended 1998, 1999 and the period between January 2000 to June 2000 are 107,685 tons, 149,356 tons and 69,858 tons respectively. It is anticipated that the aggregate value of the Transactions is approximately RMB629.35 million (equivalent to approximately HK$588,200,000) for the period from 1st September, 2000 to 31st December 2001 (based on the estimate of the supply of 230,000 tons by the Suppliers for the 16 months at the approximate price of RMB2,606 per ton which is the average purchase price per ton incurred by the Company during the first six months of the current year plus a 5% margin to allow for price fluctuation) which is more than the higher of HK$10 million or 3 per cent. of the book value of the consolidated net tangible asset of the Company of HK$1,178,137,000.00 as at 31st December, 1999. As the estimated aggregate value of the Transactions is more than 15% of the consolidated net tangible assets of the Company as at 31st December, 1999, the Transactions is a discloseable transaction under the Listing Rules.

"Associates"	As defined in the Listing Rules;
"Changsha LPG Agreement"	the purchase agreement of LPG entered into between CPC and Yue Yang as suppliers and Changsha JV as purchaser on 19th October, 2000;
"Changsha JV"	* Pan River Enterprises (Changsha) Company Limited (), an equity joint venture company established under the laws of the PRC which the Company has an attributable interest of 60%;
"Company"	Sinolink Worldwide Holdings Limited, a company listed on the main board of the Stock Exchange;
"Controlling Shareholder"	Asia Pacitic Promotion Limited, a company incorporated in the British Virgin Islands and beneficially owned by Mr. Ou Yaping.
"CPC"	* China Petrochemical Company Limited (), a stated-owned enterprise incorporated under the laws of the PRC;
"CPR"	China Pan River Group Limited, a company incorporated in the British Virgin Islands with limited liability;
"Directors"	the directors of the Company including the independent non executive directors of the Company;
"Group"	the Company and its subsidiaries or any of them;
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong;
"LPG"	liquefied petroleum gas. A generic name for propane and butane or their mixture which has changed into liquid form under moderate pressure. Propane and butane are hydrocarbon created as a by-product of oil refining or from natural gas production. LPG is commonly used as a fuel for air and water heating in rural homes, as a fuel for cooking, barbecues and recreational vehicles, and as a transportation fuel;
"Listing Rules"	The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
"PRC"	the People's Republic of China;
"PRC Party"	, the PRC Party holding 40% interest in Changsha JV;
"RMB"	Reminbi, the lawful currency of the PRC;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Subsidiaries"	as defined under section 2 of the Companies Ordinance, Cap.32, Laws of Hong Kong;
"Suppliers"	CPC and Yue Yang collectively;
"Transactions"	The transactions as contemplated by the Changsha LPG Agreement;
"Yue Yang"	* Yue Yang Hing Chang Petrochemical Company Limited (), a company incorporated under the Laws of the PRC and is independent third party unconnected with any of the companies within the Group, the director, chief executive or substantial shareholder of the Company or any of their respective associates (within the meaning of the Listing Rules).