JOINT ANNOUNCEMENT PROPOSED ASSET TRANSACTION

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1 The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of Chinese Estates Holdings Limited or Chi Cheung Investment Company, Limited. CHINESE ESTATES HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) (Stock Code:127) CHI CHEUNG INVESTMENT COMPANY, LIMITED 至祥置業有限公司 (Incorporated in Hong Kong with limited liability) (Stock Code:112) JOINT ANNOUNCEMENT PROPOSED ASSET TRANSACTION MAJOR TRANSACTION VERY SUBSTANTIAL ACQUISITION, VERY SUBSTANTIAL DISPOSAL AND CONNECTED TRANSACTION RESUMPTION OF TRADING OF SHARES OF CHINESE ESTATES HOLDINGS LIMITED AND CHI CHEUNG INVESTMENT COMPANY, LIMITED Financial Adviser to Chi Cheung Investment Company, Limited Reference is made to the joint announcement made by Chinese Estates and Chi Cheung dated 8 August The negotiations between Chinese Estates and Chi Cheung in relation to the Asset Transaction had already reached an advanced stage by 30 August Chinese Estates and Chi Cheung therefore decided to request for suspension of trading of their respective shares on the Stock Exchange on 30 August ASSET TRANSACTION On 11 September, 2007, Chinese Estates entered into the S&P Agreement with Chi Cheung, under which: (i) Chinese Estates has agreed to procure the sale of, and the CC Purchaser has agreed to purchase or procure the purchase of all the issued shares of each of Evergo China and Honest Right, the CE Sale Loan and the Permitted Additional CE Sale Loan; and - 1 -

2 (ii) Chi Cheung has agreed to sell or procure the sale of, and the CE Subsidiary has agreed to purchase or procure the purchase of all the issued shares of each of the CC Sale Companies, the CC Sale Loan and the Permitted Additional CC Sale Loan. The CE Consideration is determined on the basis of the valuation of Chi Cheung s interests in the CC Sale Companies. The main components comprised in such valuation include:- (i) the total combined net tangible asset value (excluding the book value attributable to the Excluded CC Properties) of the Chi Cheung Companies (excluding the Excluded CC Companies) as shown in the CC Completion Accounts and adjusted for the revaluation surplus or deficit (net of tax effects) of the Chi Cheung Properties (excluding the Excluded CC Properties) as at 31 July 2007; (ii) the Fair Value of the CC Sale Loan and the Fair Value of the Permitted Additional CC Sale Loan (less the Fair Value of the CE Assumed Debt); and (iii) the CC Received Sale Proceeds. The CC Consideration is determined on the basis of 85% of the valuation of Chinese Estates s interests in Evergo China and Honest Right. The main components comprised in such valuation include:- (i) the total combined net tangible asset value of Evergo China and Honest Right (but excluding the book value attributable to the Excluded CE Properties) as shown in the CE Completion Accounts and adjusted for the revaluation surplus or deficit (net of tax effects) of the Chinese Estates Properties (excluding the Chongqing Property and the Excluded CE Properties) as at 31 July 2007; (ii) the Fair Value of the CE Sale Loan and the Fair Value of the Permitted Additional CE Sale Loan (less the Fair Value of the CC Assumed Debt); and (iii) the CE Received Sale Proceeds. Both the CE Consideration and the CC Consideration have been determined after arm s length negotiations among Chinese Estates and Chi Cheung. On the basis of the unaudited combined accounts of (a) the Chi Cheung Companies and (b) Evergo China and Honest Right as at 30 June 2007, the Provisional CE Consideration is estimated to be approximately HK$689.5 million (assuming Canaria Acquisition does not take place before completion of the Asset Transaction) or approximately HK$706.1 million (assuming Canaria Acquisition takes place before completion of the Asset Transaction) whilst the Provisional CC Consideration is estimated to be approximately HK$10,450.2 million (on the basis of the Macao Property First Valuation). Under the S&P Agreement, which was entered into on normal commercial terms, the parties thereto have agreed that upon completion of the Asset Transaction, the Provisional CE Consideration payable by the CE Subsidiary to Chi Cheung and the cash portion of the Provisional CC Consideration payable by the CC Purchaser to Chinese Estates shall set-off against each other and the CC Purchaser will pay the balance by way of:- (i) firstly, the issue and allotment by Chi Cheung of the Consideration Shares at an issue price of HK$2.66 per Chi Cheung Share to Chinese Estates or its nominee(s). However, the maximum number of the Consideration Shares to be issued shall not exceed 176,573,217 Consideration Shares;(ii) secondly, the issue of the CE Bonds with principal amount not exceeding HK$18.5 billion to Chinese Estates or its nominee(s); and (iii) as to the remaining balance, by cash. On the basis of the estimated Provisional CE Consideration of approximately HK$689.5 million (assuming Canaria Acquisition does not take place before completion of the Asset Transaction) and the estimated Provisional CC Consideration of approximately HK$10,450.2 million (on the basis of the Macao Property First Valuation), Chi Cheung will issue an estimated number of 176,573,217 Consideration Shares and CE Bonds with estimated principal amount of HK$9,291.0 million, and make cash payment of approximately HK$1,097, to Chinese Estates or its nominee(s)

3 After the Asset Transaction, Chi Cheung s public float will decrease from approximately 38.03% to 25.00%. Chinese Estates will procure and ensure that the public float of the shares of Chi Cheung will be at least 25% at all times. The Asset Transaction constitutes a very substantial acquisition and a very substantial disposal transaction for Chi Cheung and a major transaction for Chinese Estates under the Listing Rules. As Chinese Estates is the controlling shareholder of Chi Cheung, the Asset Transaction also constitutes a connected transaction for Chi Cheung under the Listing Rules. The Asset Transaction is subject to the approval of the independent shareholders of Chi Cheung. As at the date of this announcement, Chinese Estates is interested in 209,931,186 Chi Cheung Shares, representing approximately 61.96% of the existing issued share capital of Chi Cheung. In view of Chinese Estates s interest in the Asset Transaction, Chinese Estates will abstain from voting on the resolution in respect of the Asset Transaction at the EGM. An independent committee of the board of directors of Chi Cheung will be established to consider the Asset Transaction. Independent financial adviser will be appointed to advise the independent committee of the board of directors of Chi Cheung regarding the Asset Transaction. No change in board composition for Chinese Estates is expected after completion of the Asset Transaction whilst an additional executive director is proposed to be appointed for Chi Cheung. WAIVER APPLICATION Pursuant to the Undertaking, Chinese Estates has undertaken to the Stock Exchange that it will not enter into a Specified Transaction with a Related Party which is for a consideration or in respect of a principal amount which, when aggregated with the consideration or principal amount of any Specified Transaction(s) between Chinese Estates or any of its subsidiaries and any Related Party carried into effect during the previous twelve months, exceeds HK$200 million, unless the approval of the shareholders of Chinese Estates at a general meeting at which the Related Party will abstain from voting is obtained. As Chi Cheung is owned as to approximately 61.96% by Chinese Estates and is hence a Related Party for the purpose of the Undertaking, the Asset Transaction and the Financial Assistance will therefore constitute a Specified Transaction for Chinese Estates and will be subject to the approval by the shareholders of Chinese Estates at which any shareholder of Chinese Estates who is a Related Party will abstain from voting. Mr. Joseph Lau, Luen-hung, who is interested in 1,080,245,897 shares in Chinese Estates, representing approximately 47.29% of the issued share capital of Chinese Estates, and his brother, Mr. Thomas Lau, Luen-hung, who is interested in 150,036,697 shares in Chinese Estates, representing approximately 6.57% of the issued share capital of Chinese Estates, are a closely allied group of shareholders of Chinese Estates who hold in aggregate approximately 53.86% of the voting rights of Chinese Estates as at the date of this announcement. Mr. Joseph Lau, Luen-hung and Mr. Thomas Lau, Luen-hung are not interested in any shares of Chi Cheung and are not interested in the Asset Transaction except for their equity interests in the Chinese Estates, and to the best knowledge of the directors of Chinese Estates, having made all reasonable enquiry, no other shareholder is a Related Party or is interested in the Asset Transaction or the Financial Assistance save for his equity interest in Chinese Estates. Since no Chinese Estates shareholders will, as a result of the Asset transaction and the Financial Assistance, gain a benefit which is otherwise not available to the other Chinese Estates shareholders. No Chinese Estates shareholder is materially interested in the Asset transaction and the Financial Assistance and no shareholder of Chinese Estates would be required to abstain from voting if Chinese Estates were to convene a general meeting for the approval of the Asset Transaction or the Financial Assistance. Pursuant to the Undertaking, the Asset Transaction and the Financial Assistance are required to be approved by the shareholders of Chinese Estates where any Related Party which is interested in the transactions would need to abstain from voting. Given that Mr. Joseph Lau, Luen-hung and his - 3 -

4 associates have already confirmed that they will provide a written approval for the Asset Transaction pursuant to Rule of the Listing Rules in lieu of a resolution to be passed at a general meeting if the waiver is granted, Chinese Estates considers that it may rely on the written approval from Mr. Joseph Lau, Luen-hung and his associates to approve the transactions rather than convening a general meeting to approve the transactions. Accordingly, an application will be made by Chinese Estates to the Stock Exchange for a waiver from strict compliance with the requirement of approval by its shareholders pursuant to the Undertaking in respect of the Asset Transaction and the Financial Assistance. The Stock Exchange may or may not grant such waiver. In the event the waiver is not granted by the Stock Exchange, the Asset Transaction and the Financial Assistance would still need to be approved by the independent shareholders of Chinese Estates (that is excluding Related Party which includes Thomas Lau, Luen-hung and Joseph Lau, Luen-hung). Chinese Estates will publish further announcement in relation to the waiver application in due course. GENERAL A joint circular containing, inter alia, details of the Asset Transaction, the advice of the independent committee of the board of directors of Chi Cheung, the advice of the independent financial adviser, the respective valuation reports of the Chinese Estates Properties and the Chi Cheung Properties and the notice of the EGM to the shareholders of Chi Cheung will be despatched to the shareholders of Chinese Estates and the shareholders of Chi Cheung as soon as practicable. Trading in the securities of Chinese Estates and Chi Cheung on the Stock Exchange were suspended at the requests of Chinese Estates and Chi Cheung with effect from 9:34 a.m. on 30 August, 2007 pending release of this announcement. Applications have been made for the resumption of trading in the securities of Chinese Estates and Chi Cheung with effect from 9:30 a.m. on 12 September Reference is made to the joint announcement made by Chinese Estates and Chi Cheung dated 8 August The negotiations between Chinese Estates and Chi Cheung in relation to the Asset Transaction had already reached an advanced stage by 30 August Chinese Estates and Chi Cheung therefore decided to request for suspension of trading of their respective shares on the Stock Exchange on 30 August THE S&P AGREEMENT Date 11 September, 2007 Parties involved In respect of Evergo China and Honest Right Vendor: Purchaser: Chinese Estates CC Purchaser In respect of the CC Sale Companies Vendor: Purchaser: Chi Cheung CE Subsidiary Subject matter Chinese Estates has agreed to procure the sale of, and the CC Purchaser has agreed to purchase or procure - 4 -

5 the purchase of the entire issued share capital in each of Evergo China and Honest Right and the benefits of the CE Sale Loan and the Permitted Additional CE Sale Loan. The entire issued shares in each of Evergo China and Honest Right to be acquired by the CC Purchaser shall be free from any mortgages, charges, liens, pledges, options and third party claims or other encumbrances (if any) at completion of the Asset Transaction and with all rights attached thereto as from completion of the Asset Transaction including all rights to dividends and other distributions declared, paid or made in respect thereof after completion of the Asset Transaction. The CC Purchaser further agreed to assume the CC Assumed Debt by way of novation upon completion of the Asset Transaction. Chi Cheung has agreed to sell or procure the sale of, and the CE Subsidiary has agreed to purchase or procure the purchase of the entire issued share capital of each of the CC Sale Companies and the benefits of the CC Sale Loan and the Permitted Additional CC Sale Loan. The entire issued shares in each of the CC Sale Companies to be acquired by the CE Subsidiary shall be free from any mortgages, charges, liens, pledges, options and third party claims or other encumbrances (if any) at completion of the Asset Transaction and with all rights attached thereto as from completion of the Asset Transaction including all rights to dividends and other distributions declared, paid or made in respect thereof after completion of the Asset Transaction. The CE Subsidiary further agreed to assume the CE Assumed Debt by way of novation upon completion of the Asset Transaction. Chinese Estates has agreed to guarantee the performance of CE Subsidiary and Chi Cheung has agreed to guarantee the performance of CC Purchaser under the S&P Agreement. Structure before/after the Asset Transaction The following diagrams illustrate the group structure of each of Chinese Estates and Chi Cheung before and after the Asset Transaction: - 5 -

6 (a) Before the Asset Transaction Chinese Estates Chi Cheung Other assets 100% 100% Other assets Evergo China Honest Right Chinese Estates Properties 100% 100% 100% Jumbo Pinball New Hong Legend International Kong Inc. Limited Limited 100% 100% 100% Moregift Paperkit Star Glory Investments International Limited Limited Limited Chi Cheung Properties Asset Transaction (b) Immediately after completion of the Asset Transaction Chinese Estates Chi Cheung Other assets Other assets 100% 100% 100% Jumbo Pinball New Hong Legend International Kong Inc. Limited Limited 100% 100% 100% Moregift Paperkit Star Glory Investments International Limited Limited Limited Chi Cheung Properties 100% 100% Evergo China Honest Right Chinese Estates Properties - 6 -

7 The consideration The CE Consideration has been determined after arm s length negotiations among Chinese Estates and Chi Cheung and shall equal to:- (a) (b) the total combined net tangible asset value (excluding the book value attributable to the Excluded CC Properties) of each of the Chi Cheung Companies (excluding the Excluded CC Companies) as set out in the CC Completion Accounts and adjusted for the CC Relevant Proportion of the revaluation surplus or deficit (net of tax effects) of the Chi Cheung Properties (excluding the Excluded CC Properties), which is determined by reference to a revaluation of such properties at its open market value as at 31 July 2007 valued by Norton Appraisals Limited, an independent professional property valuer, and the book value of such properties as at 31 July 2007; and plus the Fair Value of the CC Sale Loan and the Fair Value of the Permitted Additional CC Sale Loan (less the Fair Value of the CE Assumed Debt) and the CC Received Sale Proceeds. The Provisional CE Consideration is estimated to be approximately HK$689.5 million (assuming Canaria Acquisition does not take place before completion of the Asset Transaction). Such estimated Provisional CE Consideration is calculated on the basis of the unaudited combined net tangible asset value of the Chi Cheung Companies at 30 June 2007 of approximately HK$168.0 million, the Fair Value of the CC Sale Loan as at 30 June 2007 of approximately HK$422.6 million, the estimated net adjustment to the unaudited combined net tangible asset value of the Chi Cheung Companies of approximately of HK$98.9 million (assuming that the Canaria Acquisition is not completed before completion of the Asset Transaction), and the CC Relevant Proportion of the valuation on the Chi Cheung Properties of approximately HK$759.4 million as at 31 July 2007 valued by Norton Appraisals Limited, an independent professional property valuer. The Provisional CE Consideration is estimated to be approximately HK$706.1 million (assuming Canaria Acquisition takes place before completion of the Asset Transaction). The CC Consideration has been determined after arm s length negotiations among Chinese Estates and Chi Cheung and shall be calculated after 15% discount on the aggregate of:- (a) (b) the total combined net tangible asset value of each of Evergo China and Honest Right (but excluding the book value attributable to the Excluded CE Properties) as set out in the CE Completion Accounts and adjusted for the CE Relevant Proportion of the revaluation surplus or deficit (net of tax effects) of the Chinese Estates Properties (excluding the Chongqing Property and the Excluded CE Properties), which is determined by reference to a revaluation of such properties at its open market value as at 31 July 2007 valued by BMI Appraisals Limited, an independent professional property valuer, and the book value of such properties as at 31 July 2007; and plus the Fair Value of the CE Sale Loan and the Fair Value of the Permitted Additional CE Sale Loan (less the Fair Value of the CC Assumed Debt) and the CE Received Sale Proceeds and less (if applicable) all outstanding land premiums or fees payable for the approved increase of the MP GFA unless such land premiums or fees have already been recognized as liabilities in the CE Completion Accounts. For the purpose of deriving the above revaluation surplus or deficit (net of tax effects) for the Chinese Estates Properties (excluding the Chongqing Property and the Excluded CE Properties) under the S&P Agreement, the following should be noted:- (i) Chinese Estates, through its subsidiary, is currently applying to the relevant authorities in Macao for an increase of the gross floor area of the development of the Macao Property from 4,230,306 square feet to 6,160,603 square feet. Therefore, for the purpose of valuing the Macao Property as at 31 July 2007 to take into account the potential increase of the MP GFA, two valuations shall be made by BMI Appraisals Limited, namely the Macao Property First Valuation and the Macao Property Second Valuation. The - 7 -

8 valuation of the Macao Property shall then be decided by reference to the approvals obtained so far in relation to the MP GFA by the time of completion of the Asset Transaction. If the MP GFA by the time of completion of the Asset Transaction is:- (a) 4,230,306 square feet, the valuation of the Macao Property will be the Macao Property First Valuation ; (b) 6,160,603 square feet, the valuation of the Macao Property will be the Macao Property Second Valuation; and (c) not the one specified in either (a) or (b) above, the valuation of the Macao Property will be equal to (aa) the Macao Property Second Valuation minus (bb) HK$3,201 times the amount of square feet by which 6,160,603 square feet exceeds the MP GFA prevailing at the time of completion of the Asset Transaction; and (ii) as the Deferred Shareholder has agreed to defer its rights to share in the accumulated distributable profits of Moon Ocean up to the sum of HK$1,000,333,445 (the EC Preference Entitlement ) and to receive a return of assets on winding-up of Moon Ocean in the first part of the assets amounting to the EC Preference Entitlement or such lesser amount after deduction of any accumulated distributable profits of Moon Ocean which have already been distributed to holders of the ordinary shares of Moon Ocean, 100% of the revaluation adjustment (net of tax effects) arising from the revaluation of the Macao Property will be attributable to Evergo China for determining the CC Consideration, unless the aggregate of (aa) the consolidated accumulated distributable profits or accumulated deficits of the Moon Ocean Group as at 31 July 2007 (the Moon Ocean Distributable Profits ) and (bb) the entire amount of such revaluation adjustment (net of tax effects)(such aggregate figure referred to as the Adjusted Moon Ocean Distributable Profits ) exceeds the EC Preference Entitlement. In this case, the revaluation adjustment (net of tax effects) arising from the revaluation of the Macao Property attributable to Evergo China to derive the CC Consideration will comprise two components:- (a) 100% of a sum equal to the excess of the EC Preference Entitlement over the Moon Ocean Distributable Profits; and (b) 70.01% of a sum equal to the excess of the Adjusted Moon Ocean Distributable Profits over the EC Preference Entitlement. In relation to the preparation of the CE Completion Accounts, for the same reason that the Deferred Shareholder has agreed to defer its rights to share in the accumulated distributable profits of Moon Ocean and to receive a return of assets on winding up of Moon Ocean as described above, only the share of the equity interest of the Deferred Shareholder (i.e %) in the share capital of Moon Ocean will be recognized as minority interest of Moon Ocean in the CE Completion Accounts unless the consolidated accumulated distributable profits of the Moon Ocean Group on the Completion Date exceeds the EC Preference Entitlement. In such case, the minority interest of Moon Ocean in the CE Completion Accounts will be the aggregate of the share portion of the equity interest of the Deferred Shareholder (i.e %) in the share capital of Moon Ocean and its share of the excess of the consolidated accumulated distributable profits of the Moon Ocean Group over the EC Preference Entitlement. The Provisional CC Consideration is estimated to be approximately HK$10,450.2 million (on the basis of the Macao Property First Valuation). Such estimated Provisional CC Consideration is calculated after 15% discount on the aggregate of the unaudited combined net tangible asset value of Evergo China and Honest Right as at 30 June 2007 of approximately HK$1,893.7 million, the Fair Value of the CE Sale Loan as at 30 June 2007 of approximately HK$2,485.6 million, the estimated net adjustment to the unaudited combined net tangible asset value of Evergo China and Honest Right of approximately HK$7,915.0 million, and the - 8 -

9 CE Relevant Proportion of the valuation on the Chinese Estates Properties (excluding the Chongqing Property) of approximately HK$14,006.7 million (with the Macao Property First Valuation) as at 31 July 2007 valued by BMI Appraisals Limited, an independent professional property valuer. Under the S&P Agreement, which was entered into on normal commercial terms, the parties thereto have agreed that upon completion of the Asset Transaction, the Provisional CE Consideration payable by the CE Subsidiary to Chi Cheung and the cash portion of the Provisional CC Consideration payable by the CC Purchaser to Chinese Estates (such cash portion being equal to the amount of the Provisional CE Consideration which is estimated to be approximately HK$689.5 million as mentioned above) shall set-off each other and the CC Purchaser will pay the balance of approximately HK$9,760.7 million (which balance is equal to the Provisional CC Consideration of approximately HK$10,450.2 million (on the basis of the Macao Property First Valuation) less the Provisional CE Consideration of approximately HK$689.5 million (assuming Canaria Acquisition does not take place before completion of the Asset Transaction) ), by way of:- (i) the issue and allotment by Chi Cheung of the Consideration Shares at an issue price of HK$2.66 per Chi Cheung Share to Chinese Estates or its nominee(s) for the amount of approximately HK$469.7 million; (ii) the issue of the CE Bonds in the estimated principal amount of approximately HK$9,291.0 million, being an amount equivalent to the nearest rounded-down multiple of HK$500,000 of a sum equal to the Provisional CC Consideration of approximately HK$10,450.2 million less the aggregate of (aa) the Provisional CE Consideration of approximately HK$689.5 million and (bb) the amount satisfied by the issue and allotment of the Consideration Shares under (i) above to Chinese Estates or its nominee(s); and (iii) as to the remaining balance of approximately HK$1,097, by cash. Under the Asset Transaction, the maximum number of the Consideration Shares to be issued shall not exceed 176,573,217 Consideration Shares. Chi Cheung will issue an estimated number of 176,573,217 Consideration Shares and thereby its public float will decrease from approximately 38.03% to 25.00%. Chinese Estates will procure and ensure that the public float of Chi Cheung will be at least 25% at all times. Based on the CE Completion Accounts and the CC Completion Accounts, the difference between the Provisional CE Consideration and the CE Consideration and the difference between the Provisional CC Consideration and the CC Consideration will be settled by the CC Purchaser and the CE Subsidiary in accordance with the terms of the S&P Agreement. Such differences will be settled principally by further issue or cancellation of the CE Bonds (subject to the maximum principal amount of all the CE Bonds issued under the Asset Transaction being not more than HK$18.5 billion) with the remaining balance being settled by cash. Under the S&P Agreement, Chinese Estates and the CE Subsidiary acknowledge that the transfer of the CC Sale Shares in respect of some of the CC Sale Companies, and the benefits of certain portion of the CC Sale Loan and the Permitted Additional CC Sale Loan due from Chi Cheung Companies may require consents or approvals from certain third parties. If Chi Cheung fails to obtain all the necessary approvals or consents on or before 31 March, 2008, the parties will proceed to completion of the Asset Transaction for the remaining CC Sale Companies and the assignment of the benefits of the related CC Sale Loan and the Permitted Additional CC Sale Loan in respect of which necessary consents have been obtained and/or are not required, and a further announcement will be made by Chi Cheung and Chinese Estates. In that event, the calculation of the CE Consideration will exclude the combined net tangible asset value of the relevant Chi Cheung Companies which would not be transferred to Chinese Estates, the Fair Value of the related CC Sale Loan, the Fair - 9 -

10 Value of the related Permitted Additional CC Sale Loan, the related CC Received Sale Proceeds and the Fair Value of the related CE Assumed Debt. The approvals required to be obtained by Chi Cheung as mentioned above may include bank consents or approvals and approvals from other joint venture parties in relation to the replacement of Chi Cheung by Chinese Estates as the guarantor or party to certain shareholders agreements entered into by Chi Cheung in relation to certain Chi Cheung Companies. It is the intention of the parties that if Chinese Estates fails to obtain all the necessary approvals or consents from banks or joint venture parties in relation to the replacement of Chinese Estates by Chi Cheung as the guarantor or party to certain agreements in relation to the Chinese Estates Companies on or before 31 March, 2008, the parties will proceed to completion of the Asset Transaction and the guarantees or securities provided by the Chinese Estates to third parties in respect of certain of the Chinese Estates Companies for construction projects and operations in the PRC and Macao will continue after completion of the Asset Transaction. The guarantees or securities so provided will constitute financial assistance by Chinese Estates for the benefits of Chi Cheung and pursuant to the Undertaking will constitute a Specified Transaction. Assuming that the guarantees and funding undertaking provided by Chinese Estates for bank loans of Honest Right, Loyal Power Investments Limited and Moon Ocean, and the guarantee for capital contribution to a PRC joint venture cannot be released, the Financial Assistance is expected to be in the sum of approximately HK$3,255.4 million. Pursuant to the Undertaking, the Asset Transaction and the Financial Assistance are required to be approved by the shareholders of Chinese Estates where any Related Party which is interested in the transactions would need to abstain from voting. As Chi Cheung is not a connected person of Chinese Estates for the purposes of the Listing Rules and that the applicable ratios under Chapter 14 of the Listing Rules for the Financial Assistance are over 5% but less than 25%, the Financial Assistance would not require approvals from the shareholders of Chinese Estates under the Listing Rules but for the Undertaking. As no shareholder of Chinese Estates is interested in the Financial Assistance, an application will be made to the Stock Exchange by Chinese Estates for a waiver from strict compliance with the requirement of approval by its shareholders pursuant to the Undertaking in respect of the Financial Assistance. The Stock Exchange may or may not grant such waiver. In the event the waiver is not granted by the Stock Exchange, the Asset Transaction and the Financial Assistance would still need to be approved by the independent shareholders of Chinese Estates (that is excluding Related Party which includes Thomas Lau, Luen-hung and Joseph Lau, Luen-hung). Chinese Estates will publish further announcement in relation to the waiver application in due course. The issue price per Consideration Shares of HK$2.66 and the Conversion Price of HK$2.66 of the CE Bonds have been determined on the basis of the adjusted unaudited consolidated net asset value per Chi Cheung Share of approximately HK$2.66 as at 30 June, The issue price and Conversion Price of HK$2.66 per Consideration Shares or Conversion Share, as the case may be, represents a discount of approximately 10.1% to the closing price of HK$2.96 per Chi Cheung Shares as quoted on the Stock Exchange on 29 August, 2007 (the last trading day prior to suspension of trading in the Chi Cheung Shares pending the issue of this announcement), a discount of approximately 12.8% to the average closing price of approximately HK$3.05 per Chi Cheung Share for the 5 trading days up to and including 29 August, 2007, a discount of approximately 9.5% to the average closing price of approximately HK$2.94 per Chi Cheung Share for the 10 trading days up to and including 29 August, 2007, and a premium of approximately 0.4% over the average closing price of approximately HK$2.65 per Chi Cheung Share over the 60 trading days up to and including 29 August, In considering the issue price of the Consideration Shares and the Conversion Price of the CE Bonds, the directors of Chinese Estates and the directors of Chi Cheung have taken into account, inter alia, the following matters: the adjusted unaudited consolidated net asset value per Chi Cheung Share, which is estimated to amount to approximately HK$2.66 as at 30 June, 2007 after having adjusted for the CC Relevant Proportion of the revaluation surplus (net of tax effects) of the Chi Cheung Properties which is determined by reference to a valuation of such properties at its open market value as at 31 July

11 2007. The CC Relevant Proportion of the valuation of such properties was approximately HK$759.4 million; the fact that the CE Consideration should be an amount equal to the combined net tangible asset value (excluding the book value attributable to the Excluded CC Properties) of the Chi Cheung Companies (excluding the Excluded CC Companies) plus the Fair Value of the CC Sale Loan and the Fair Value of the Permitted Additional CC Sale Loan (less the Fair Value of the CE Assumed Debt), the CC Received Sale Proceeds and the CC Relevant Proportion of the revaluation surplus / deficit (net of tax effects) of the Chi Cheung Properties (excluding the Excluded CC Properties) whereas the CC Consideration should be calculated after 15% discount on the aggregate of (aa) the combined net tangible asset value (excluding the book value attributable to the Excluded CE Properties) of Evergo China and Honest Right and (bb) the Fair Value of the CE Sale Loan and the Fair Value of the Permitted Additional CE Sale Loan (less the Fair Value of the CC Assumed Debt), the CE Received Sale Proceeds, the CE Relevant Proportion of the revaluation surplus / deficit (net of tax effects) of the Chinese Estates Properties (excluding the Chongqing Property and the Excluded CE Properties) and less (if applicable) all outstanding land premiums or fees payable for the increase of the MP GFA approved by the relevant authorities in Macao; and the prevailing market price of Chi Cheung Shares. Both the directors of Chinese Estates and of Chi Cheung (excluding the independent committee of the board of directors of Chi Cheung who will seek the advice from the independent financial adviser before forming their own views on the Asset Transaction) consider that the terms of the S&P Agreement are fair and reasonable and in the interests of the shareholders of Chinese Estates and the shareholders of Chi Cheung. Principal terms of the CE Bonds The principal terms of the CE Bonds were determined after arm s length negotiations between Chi Cheung and Chinese Estates and are summarised below: (1) Principal amount : Up to the maximum amount of HK$18,500,000,000 with each CE Bond being issued in the denomination of HK$500,000 each. The final principal amount of the CE Bonds to be issued depends on the finally determined amounts of the CC Consideration and the CE Consideration. (2) Interest : 0.5% per annum payable quarterly in arrears on 31 March, 30 June, 30 September, 31 December each year (3) Maturity date : the 3 rd anniversary of the date of completion of the Asset Transaction (4) Conversion period : The CE Bonds are convertible into the Conversion Shares by the Bondholders at any time from the issue date of the CE Bonds up to 4:00 p.m. on the maturity date at the Conversion Price. Chinese Estates has agreed in the S&P Agreement that it will procure no Conversion Rights attaching to the CE Bonds issued to it or its nominees will be exercised until after the difference between the Provisional CE Consideration and the CE Consideration and the difference between the Provisional CC Consideration and the CC Consideration have been settled between the parties in accordance with the provisions of the S&P Agreement. Any conversion shall be made in amounts of not less than a whole multiple of

12 HK$500,000 and no fraction of a Conversion Share shall be issued on conversion. Notwithstanding any conditions attaching to the CE Bonds, each Bondholder shall only exercise the Conversion Rights attaching to the CE Bonds if it is confirmed by Chi Cheung in writing that the allotment and issue of the Conversion Shares to such Bondholder pursuant to an exercise of the Conversion Rights attaching to the CE Bonds will not cause Chi Cheung to be in breach of the minimum public float requirement stipulated under Rule 8.08 of the Listing Rules. (5) Conversion Price : HK$2.66 per Conversion Share, subject to adjustment for subdivision or consolidation of Chi Cheung Shares, bonus issues, capital reduction, rights issue and other events which have dilution effects on the issued share capital of Chi Cheung. (6) Conversion Shares : The Conversion Shares will be issued free from any encumbrances or third party rights of any kind and will rank pari passu in all respects with the existing issued Chi Cheung Shares together with all rights to dividends and other distributions declared, made or paid on or after the date on which the name of the Bondholder is entered into Chi Cheung s register of shareholders as holders of the relevant Conversion Shares. (7) Redemption : Chi Cheung has no rights to redeem the CE Bonds prior to the maturity date. (8) Final redemption and : Unless the Conversion Rights attaching to the CE Bonds have mandatory redemption by been exercised in full during the conversion period in Chi Cheung accordance with the terms of the CE Bonds, Chi Cheung is obliged to redeem any CE Bonds which remains outstanding on the maturity date. Upon the occurrence of an event of default, the Bondholder may, unless such event of default has been waived in writing by it, by notice in writing require Chi Cheung to redeem the whole (but not part) of the outstanding principal amount of the CE Bonds. (9) Voting rights at general : The Bondholder shall not be entitled to attend or vote at any meeting general meeting of Chi Cheung by reason only of it being a Bondholder. (10) Transferability : The CE Bonds may be assigned or transferred in whole multiples of HK$500,000 to any third party provided that any transfer of the CE Bonds to any Connected Persons of Chi Cheung shall be subject to the requirements (if any) that the Stock Exchange may impose from time to time. Chi Cheung has undertaken to the Stock Exchange that it will disclose to the Stock Exchange any dealings in the CE Bonds by any Connected Persons or their associates (as defined in the

13 Listing Rules). Conditions Completion of the Asset Transaction is conditional on the following conditions precedent being fulfilled (or waived) on or before 31 March, 2008, or such later date as may be agreed by Chinese Estates and Chi Cheung: (i) (ii) (iii) (iv) (v) (vi) (vii) all necessary approvals from regulatory authorities including approvals from the Stock Exchange, having been obtained in respect of the Asset Transaction; all necessary approvals in respect of the Asset Transaction as may be necessary or desirable under any contractual arrangements relating to any of the Chinese Estates Companies having been obtained; all necessary approvals in respect of the Asset Transaction as may be necessary or desirable under any contractual arrangements relating to any of the Chi Cheung Companies having been obtained; all necessary approvals by the shareholders of Chi Cheung in general meeting in respect of the Asset Transaction (including approvals for issue and allotment of Consideration Shares and CE Bonds) in a manner as required by the Stock Exchange or under the Listing Rules, its articles of association and the applicable legislation having been obtained; all necessary approvals by the shareholders of Chinese Estates in general meeting or written approval from the controlling shareholders of Chinese Estates who together hold more than 50% of voting rights at general meetings of Chinese Estates in respect of the Asset Transaction in a manner as required by the Stock Exchange or under the Listing Rules, its bye-laws and the applicable legislation having been obtained; listing of and permission to deal in the Consideration Shares and the Conversion Shares having been granted (either unconditionally or subject only to conditions acceptable to Chinese Estates) by the Listing Committee of the Stock Exchange (and such listing and permission not subsequently being revoked prior to completion of the Asset Transaction); CC Purchaser and Chi Cheung being satisfied with the results of a financial, legal and operational due diligence review of the Chinese Estates Companies, the CE Sale Loan and the Permitted Additional CE Sale Loan to be carried out on the CC Purchaser s and Chi Cheung s behalf and the contents of the disclosure letter to be given by Chinese Estates and the CE Subsidiary in relation to warranties given by Chinese Estates and the CE Subsidiary under the S&P Agreement; (viii) Chinese Estates and the CE Subsidiary being satisfied with the results of a financial, legal and operational due diligence review of the Chi Cheung Companies, the CC Sale Loan and the Permitted Additional CC Sale Loan to be carried out on Chinese Estates and the CE Subsidiary s behalf and the contents of the disclosure letter to be given by Chi Cheung and the CC Purchaser in relation to warranties given by Chi Cheung and the CC Purchaser under the S&P Agreement; (ix) the delivery by Chi Cheung to Chinese Estates of the unaudited combined income statement of each of the Chi Cheung Companies (other than the Excluded CC Companies) for the 6 months ended 30 June, 2007 and the unaudited combined balance sheet of each of the Chi Cheung

14 Companies (other than the Excluded CC Companies) as at 30 June, 2007; (x) (xi) the delivery by Chinese Estates to Chi Cheung of the unaudited combined income statement of Evergo China and Honest Right for the 6 months ended 30 June, 2007 and the unaudited combined balance sheet of Evergo China and Honest Right as at 30 June, 2007; the obtaining of written confirmation to (aa) release and discharge all guarantees, securities and indemnities given by the members of the Chinese Estates Group (other than the Chinese Estates Companies) in respect of the obligations or liabilities of the Chinese Estates Companies (including without limitation any guarantees or indemnities given under any shareholders agreement relating to any of the Chinese Estates Companies) and (bb) accept Chi Cheung s guarantees or indemnities in their place from such party or parties in whose favour such guarantees and indemnities have been given; (xii) the obtaining of written confirmation to (aa) release and discharge all guarantees, securities and indemnities given by the members of the Chi Cheung Group (other than the Chi Cheung Companies but including the Excluded CC Companies) in respect of the obligations or liabilities of the Chi Cheung Companies (other than the Excluded CC Companies) (including without limitation any guarantees or indemnities given under any shareholders agreement relating to any of the Chi Cheung Companies (other than the Excluded CC Companies)) and (bb) accept Chinese Estates s guarantees or indemnities in their place from such party or parties in whose favour such guarantees and indemnities have been given; (xiii) the obtaining of written confirmation to release and discharge all guarantees, securities and indemnities given by Chinese Estates Companies in respect of the obligations or liabilities of members of the Chinese Estates Group (other than the Chinese Estates Companies); and (xiv) the obtaining of written confirmation to release and discharge all guarantees, securities and indemnities given by Chi Cheung Companies (excluding the Excluded CC Companies) in respect of the obligations or liabilities of members of the Chi Cheung Group (other than the Chi Cheung Companies but including the Excluded CC Companies). The sale of Evergo China and Honest Right by Chinese Estates and the sale of the CC Sale Companies (other than the Excluded CC Companies) by Chi Cheung are inter-conditional and all such sales shall be completed simultaneously upon completion of the S&P Agreement. A further announcement will be made by Chi Cheung and Chinese Estates upon completion of the Asset Transaction. INFORMATION ON THE CHI CHEUNG PROPERTIES AND THE CHINESE ESTATES PROPERTIES The Chi Cheung Properties The CC Sale Companies are wholly-owned subsidiaries of Chi Cheung, the principal assets of which are their direct or indirect interests in the Chi Cheung Properties. Save as stated in the S&P Agreement, the Chi Cheung Properties are free from any mortgages, charges, liens, pledges, options and third party claims or other encumbrances. Particulars of the Chi Cheung Properties are as follows:

15 Property In Hong Kong Property interests held for investment 1. Unit C (including the store room thereof) on 13 th Floor together with 50 Car Parking Spaces on 1 st, 2 nd and lower part of 3 rd Floors, Gemstar Tower, No. 23 Man Lok Street, Hung Hom, Kowloon 2. Unit 301 on 3 rd Floor, Sim City of Chung Kiu Commercial Building, Nos Shantung Street, Kowloon Usage Godown and Carparking Shop and non-domestic Attributable interests 100% 100% 3. The whole of the 3 rd Floor of Unit B, No.1 South Lane, Western District, Hong Kong Residential 51% 4. Various portions of No. 1 Hung To Road, Kwun Tong, Kowloon Industrial 33.33% 5. The whole of 3 rd Floor and the adjacent Flat Roof and the whole of 8 th Floor, Inter-Continental Plaza, No. 94 Granville Road, Tsim Sha Tsui, Kowloon Commercial 50% 6. Shop Nos. 14 and 16 on Ground Floor and Cinema (All that portion of the flat roof over the Cinema and all those the external walls above the canopy level of the Cinema and all those external walls beneath the canopy level of the Cinema not being the external walls of any shop or transformer room of the Tuen Mun Centre and all those three water tanks), Tuen Mun Centre, Nos. 2-8 Wo Ping Path, Nos Yan Ching Street, Tuen Mun, New Territories Cinema and non-domestic 50% (Note 1) 7. 9/24 parts or shares of and in Lot Nos.2, 4, 7, 8 and 9 in Demarcation District No. 464, So Shi Tau, Clear Water Bay, New Territories, Hong Kong 8. The Remaining Portion of Lot No. 453 in Demarcation District No.401, Po Lam Road, Ma Yau Tong, Sai Kung, New Territories, Hong Kong Agricultural 100% Agricultural 100% Property interests held for owner occupancy 9. Unit 5, 10/F, Hing Wai Centre, No.7 Tin Wan Praya Road, Hong Kong Non-domestic 100% Property interests held for sale 10. The whole of 16 th Floor (including the store room thereof), 17 th Floor (including the roof terrace thereof) and 18 th Floor, Gemstar Tower, No. 23 Man Lok Street, Hung Hom, Kowloon (excluding units A and B of 16 th Floor). Godown 100% Property interests held for development

16 Property Usage Attributable interests 11. No. 34 Hill Road, Western District, Hong Kong Non-domestic (G/F) Domestic (upper floors) 51% Note 1: If the Canaria Acquisition takes place before completion of the Asset Transaction, the Chi Cheung Companies will have an attributable 100% interest in this property. The Provisional CE Consideration is estimated to be approximately HK$706.1 million (assuming completion of the Canaria Acquisition before completion of the Asset Transaction) and approximately HK$689.5 million (assuming Canaria Acquisition is not completed before completion of the Asset Transaction). A summary of the unaudited combined results of the Chi Cheung Companies for each of the three years ended 31 December, 2004, 2005 and 2006 and for the six months ended 30 June, 2007 is set out below. For the year ended 31 December, Six months ended 30 June, HK$ 000 HK$ 000 HK$ 000 HK$ 000 Turnover 18,870 3,370 2,916 13,720 Profit/(loss) before taxation (10,394) 101,839 81,368 40,982 Profit/(loss) after taxation (10,938) 101,441 79,339 39,734 Profit/(loss) attributable to equity holders (10,886) 101,496 79,397 39,765 As at 30 June, 2007, the unaudited combined net assets attributable to equity holders of the Chi Cheung Companies were approximately HK$168.0 million. The Chinese Estates Properties Evergo China and Honest Right are indirect wholly-owned subsidiaries of Chinese Estates. The principal assets of Evergo China are its indirect interests in the Chinese Estates Properties (excluding the Chongqing Property), through its shareholdings in its subsidiaries and associated companies. Honest Right is a loan financier of its fellow subsidiaries. Pursuant to the Chongqing JV Memorandum, the SPV will be established for holding the Chongqing Property. Chinese Estates will, through a wholly-owned subsidiary of Evergo China, have a 25% equity interest in all the SPV. Save as stated in the S&P Agreement, the Chinese Estates Properties (excluding the Chongqing Property) are free from any mortgages, charges, liens, pledges, options and third party claims or other encumbrances. Particulars of the Chinese Estates Properties are as follows: Property In the PRC Property interests held for investment 1. Oriental Arts Building, North Dongsanhuan Road, Chaoyang District, Beijing Hilton Beijing, 1 Dongfang Road, North Dongsanhuan Road, Beijing Executive Tower of Hilton Beijing (formerly known as The Usage Hotel / Commercial Attributable interests 50%

17 Property Auditorium), 1 Dongfang Road, North Dongsanhuan Road, Beijing Oriental Place, 9 East Dongfang Road, North Dongsanhuan Road, Beijing Usage Attributable interests retail shops on 1 st Floor of Lowu Commercial Plaza, Jianshe Road, Luohu District, Shenzhen, Guangdong Province 3. Unsold portions of Evergo Tower, 1325 Central Huaihai Road and 1 Baoqing Road, Xuhui District, Shanghai Commercial 100% Commercial 100% Property interests held for development 4. Dongda Street Development, East of Yixue Lane, South of Hongbu Street and North of Tangba Street, Jinjiang District, Chengdu, Sichuan Province 5. Yingbin Road Development, Group 1, 2, 6 Lang Jia Village and Group 1, 2, 3, 4, 7 Yue Jin Village, Jinniu District, Chengdu, Sichuan Province 6. South Taisheng Road Development, east of Sanguiqian Street, south of East Daqiang Street, west of South Taisheng Road and north of Tidu Street, Qingyang District, Chengdu, Sichuan Province 7. Huaxinjie Street Development, No.1 Zhongxin Section and Qiao Bei Village, Huaxinjie Street, Jiangbei District, Chongqing In Macao Property interest held for development 8. Avenida Wai Long Development, Lot 1c, Lot 2, Lot 3, Lot 4 and Residential/ (Note 2) Lot 5, Estrada da Ponta da Cabrita, Taipa, Macao Residential/ Commercial Residential/ Commercial Residential/ Commercial Residential/ School Commercial 100% 100% 100% 25% 70.01% Note 2: The Provisional CC Consideration is estimated to be approximately HK$10,450.2 million (on the basis of the Macao Property First Valuation) or approximately HK$14,240.5 million (on the basis of the Macao Property Second Valuation)