-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MlcrZfJ5vzWny0l/HoKvHKb3JRmvyOx03h3FT5hiYfWaMqwmjYNi8kLxD1qbz55T XZc7lBfm1emwm6o+s7KuNA== 0001193125-07-076965.txt : 20070409 0001193125-07-076965.hdr.sgml : 20070409 20070409145156 ACCESSION NUMBER: 0001193125-07-076965 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 20070409 DATE AS OF CHANGE: 20070409 GROUP MEMBERS: GE CAPITAL CFE, INC. GROUP MEMBERS: GE CAPITAL EQUITY HOLDINGS, INC. GROUP MEMBERS: GE CFE LUXEMBOURG HOLDINGS L.L.C. GROUP MEMBERS: GE CFE LUXEMBOURG S.A.R.L. GROUP MEMBERS: GE INTERNATIONAL HOLDINGS INC. GROUP MEMBERS: GE PACIFIC-1 HOLDINGS, INC. GROUP MEMBERS: GE PACIFIC-2 HOLDINGS, INC. GROUP MEMBERS: GE PACIFIC-3 HOLDINGS, INC. GROUP MEMBERS: GENERAL ELECTRIC CAPITAL CORPORATION GROUP MEMBERS: GENERAL ELECTRIC CAPITAL SERVICES, INC. GROUP MEMBERS: GENERAL ELECTRIC COMPANY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LTD CENTRAL INDEX KEY: 0001015276 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-50088 FILM NUMBER: 07756045 BUSINESS ADDRESS: STREET 1: 17TH FLOOR, THE LEE GARDENS STREET 2: 33 HYSAN AVENUE, CAUSEWAY BAY CITY: HONG KONG STATE: K3 ZIP: 00000 BUSINESS PHONE: 852-25000888 MAIL ADDRESS: STREET 1: 17TH FLOOR, THE LEE GARDENS STREET 2: 33 HYSAN AVENUE, CAUSEWAY BAY CITY: HONG KONG STATE: K3 ZIP: 00000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CAPITAL CORP CENTRAL INDEX KEY: 0000040554 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 131500700 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 260 LONG RIDGE ROAD CITY: STAMFORD STATE: CT ZIP: 06927 BUSINESS PHONE: 203-357-4000 MAIL ADDRESS: STREET 1: 260 LONG RIDGE ROAD CITY: STAMFORD STATE: CT ZIP: 06927 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL ELECTRIC CREDIT CORP DATE OF NAME CHANGE: 19871216 SC 13D 1 dsc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ____) ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.10 PER SHARE - -------------------------------------------------------------------------------- (Title of class of securities) 763991-02-3 - -------------------------------------------------------------------------------- (CUSIP Number) JOHN W. CAMPO, JR. MANAGING DIRECTOR & GENERAL COUNSEL GE CAPITAL EQUITY HOLDINGS, INC. 201 MERRITT 7 NORWALK, CT 06851 (203) 229-5062 with a copy to: JOSEPH T. VERDESCA WEIL, GOTSHAL & MANGES LLP 767 FIFTH AVENUE NEW YORK, NEW YORK 10153 (212) 310-8000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) MARCH 29, 2007 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [_]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 2 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE Pacific-1 Holdings, Inc. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY): 20-8691969 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 3 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE Pacific-2 Holdings, Inc. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 20-8691766 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 4 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE Pacific-3 Holdings, Inc. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 20-8785927 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 5 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE International Holdings Inc. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 87-0792745 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 6 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE CFE Luxembourg S. a r.l. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 20022406249 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Luxembourg - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 7 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE CFE Luxembourg Holdings L.L.C. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 20-5665561 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 8 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE Capital CFE, Inc. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 06-1471032 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 9 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON GE Capital Equity Holdings, Inc. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 06-1448607 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 10 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON General Electric Capital Corporation I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 13-1500700 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER 0 SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER 268,905,000 OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 0 REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER 268,905,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON 268,905,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 68.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 11 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON General Electric Capital Services, Inc. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 06-1109503 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Disclaimed (See 11 below) SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER Disclaimed (See 11 below) OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER Disclaimed (See 11 below) REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER Disclaimed (See 11 below) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON Beneficial ownership of all shares is disclaimed by General Electric Capital Services, Inc. - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Not Applicable (See 11 above) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 12 of 40 Pages - ------------------------------------ --------------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON General Electric Company I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) 14-0689340 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (see instructions) (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (see instructions) N/A - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_] REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER Disclaimed (See 11 below) SHARES ---------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER Disclaimed (See 11 below) OWNED BY ---------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER Disclaimed (See 11 below) REPORTING ---------------------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER Disclaimed (See 11 below) - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON Beneficial ownership of all shares is disclaimed by General Electric Company - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_] EXCLUDES CERTAIN SHARES (see instructions) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Not Applicable (See 11 above) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (see CO instructions) - -------------------------------------------------------------------------------- - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 13 of 40 Pages - ------------------------------------ --------------------------------------- Item 1. Security and Issuer. ------------------- The title and class of equity security to which this statement on Schedule 13D relates is the common stock, par value HK$0.10 per share (the "Common Stock"), of Asia Satellite Telecommunications Holdings Limited, a Bermuda corporation (the "Issuer"). The address of the Issuer's principal executive offices is 17th Floor, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong K3 00000. Item 2. Identity and Background. ----------------------- (a)-(c), (f) This statement is filed jointly by the entities listed below (collectively, the "Reporting Persons"): (i) General Electric Capital Corporation, a Delaware corporation ("GECC"); (ii) GE Pacific-1 Holdings, Inc., a Delaware corporation ("Pacific 1"); (iii) GE Pacific-2 Holdings, Inc., a Delaware corporation ("Pacific 2"); (iv) GE Pacific-3 Holdings, Inc., a Delaware corporation ("Pacific 3" and, collectively with Pacific 1 and Pacific 2, the "GE Entities"); (v) GE International Holdings Inc., a Delaware corporation ("GE International"); (vi) GE CFE Luxembourg S.a r.l., a Luxembourg company ("GECFE"); (vii) GE CFE Luxembourg L.L.C, a Delaware corporation ("GECFE LLC"); (viii) GE Capital CFE, Inc., a Delaware corporation ("GECFE Inc."); (ix) GE Capital Equity Holdings, Inc., a Delaware corporation ("GECH"); (x) General Electric Capital Services, Inc., a Delaware corporation ("GECS"); and (xi) General Electric Company, a New York corporation ("GE"). GECS is a wholly owned subsidiary of GE, and GECC is a wholly owned subsidiary of GECS. GECH and GECFE Inc. are wholly owned subsidiaries of GECC. GECFE LLC is a wholly owned subsidiary of GECFE Inc., and GECFE is a wholly owned subsidiary of GECFE Inc. GE International is a subsidiary of GECFE and GECH. The GE Entities are wholly owned subsidiaries of GE International. GECC, together with its affiliates, operates primarily in the financial services industry and maintains its principal business address and principal executive offices at 901 Main Avenue Norwalk, CT 06851. GECS is a holding company which owns all of the common stock of GECC and other subsidiaries and maintains its principal business address and principal executive offices at 901 Main Avenue, Norwalk, CT 06851. GE is a diversified technology, media and financial services company focused on solving some of the world's toughest problems. GE serves customers in more than 100 countries and employs more than 300,000 people worldwide. GE is listed on the New York Stock Exchange and Boston Stock Exchange. The principal business address and principal office address of GE is 3135 Easton Turnpike, Fairfield, Connecticut 06828-0001. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 14 of 40 Pages - ------------------------------------ --------------------------------------- The principal business activities of GECH are the making, managing and disposing of investments in private and public companies. GECH maintains its principal executive offices at 201 Merritt 7, Norwalk, CT 06851. The GE Entities are newly formed corporations whose sole holdings are the Bowenvale Shares and other Transferred Assets (as defined in Item 3 below). GE International, GECFE, GECFE LLC and GECFE Inc. are investment holding companies. The GE Entities, GE International, GECFE LLC and GECFE Inc. maintain their principal executive offices at 201 Merritt 7, Norwalk, CT 06851. GECFE maintains its principal executive offices at 12 Rue Leon Thys, L-2636 Luxembourg. The name, citizenship, business address and present principal occupation or employment of each director and executive officer of the Reporting Persons is listed on Schedule A attached hereto. (d) None of the Reporting Persons or, to their knowledge, any person named on Schedule A attached hereto has been, during the last five years, convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Persons or, to their knowledge, any person named on Schedule A attached hereto has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. ------------------------------------------------- On February 13, 2007, SES, a societe anonyme organized and existing under the laws of the Grand Duchy of Luxembourg, entered into a Share Redemption Agreement (the "SRA") with GECFE, GECH and GECC. The SRA provides for a transaction (the "Exchange Transaction") in which SES will contribute certain assets (the "Transferred Assets") and cash to a newly formed subsidiary, SES International Holdings, Inc. ("SIH"), and, upon the terms and subject to the conditions set forth in the SRA, SES will redeem the GE parties' holding of 103,149,900 shares in SES (the "SES Shares") for consideration in kind consisting of all the outstanding shares of SIH. On March 29, 2007, the parties to the SRA entered into a Letter Agreement (the "SRA Amendment") pursuant to which the SRA was amended. This item is qualified in its entirety by reference to the SRA and the SRA Amendment, which are filed as Exhibits 99.2 and 99.3 hereto, respectively, and are incorporated herein by reference. On March 29, 2007, the parties to the SRA completed the Exchange Transaction, including the indirect transfer to the GE Entities of SES's indirect ownership of 133,107,975 Y Ordinary Shares (the "Bowenvale Shares") of Bowenvale Limited, a British Virgin Islands company ("Bowenvale"). The Bowenvale Shares represent 50% of the total outstanding voting shares of Bowenvale and 49.5% of the total equity interest in Bowenvale. The sole asset of Bowenvale is - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 15 of 40 Pages - ------------------------------------ --------------------------------------- 268,905,000 shares of the Common Stock. Upon the completion of the Exchange Transaction, SIH changed its name to GE International Holdings Inc. Item 4. Purpose of Transaction. ---------------------- The responses of the Reporting Persons under Items 3 and 6 hereof are incorporated herein by reference. The Reporting Persons acquired their shares of the Common Stock upon the completion of the Exchange Transaction on March 29, 2007, as a result of which, among other things, the GE Entities acquired SES's 49.5% economic interest and 50% voting interest in Bowenvale, which in turn currently owns 268,905,000 shares of the Common Stock or approximately 68.9% of the issued and outstanding Common Stock. CITIC Group, an enterprise established and existing under the laws of the People's Republic of China ("CITIC Group"), through its wholly owned subsidiary Able Star Associates Limited ("Able Star"), owns the remaining 50% voting interest in Bowenvale and 50.5% equity interest in Bowenvale. The Issuer and Asiaco Acquisition Ltd. (the "Offeror"), a company jointly owned by Able Star and GE Capital Equity Investments, Inc. ("GE Equity"), announced the proposed privatization of the Issuer through a scheme of arrangement under Section 99 of the Companies Act 1981 of Bermuda, as amended (the "Scheme"), to cancel all of the shares not already held by Bowenvale in exchange for HK$18.30 per share, resulting in a reduction of the issued share capital of the Issuer, and to issue new shares to the Offeror (the "Share Proposal"). Concurrently with the implementation of the Share Proposal, the Offeror has proposed to acquire outstanding options to purchase the Issuer's shares (the "Option Proposal" and, together with the Share Proposal, the "Proposals"). The description of the proposed privatization, the Proposals, the conditions thereto and related matters is set out in the Scheme Document, which is filed as Exhibit 99.4 hereto and is incorporated herein by reference. If the Scheme becomes effective, as soon as practicable thereafter, CITIC Group and GECC intend to cause the Issuer to apply to the Stock Exchange of Hong Kong Limited (the "SEHK") for the withdrawal of the listing of the Issuer's shares on the SEHK and to apply for the de-listing of the American Depositary Shares ("ADSs") from the New York Stock Exchange ("NYSE"). In addition, provided the relevant conditions are satisfied, CITIC Group and GECC intend to file a Form 15 with the Securities and Exchange Commission to request that the Issuer's reporting obligations under the Act, as amended, be terminated or suspended. CITIC Group and GECC also intend to seek to cause the Issuer to terminate the Amended and Restated Deposit Agreement, dated as of 28 September 2001, among the Issuer, the Bank of New York and holders of ADSs. It is the intention of CITIC Group and GECC to maintain the existing businesses of the Issuer upon successful privatization of the Issuer. CITIC Group and GECC do not intend to introduce any major changes to the existing operating and management structure of the Issuer, or to discontinue the employment of any employees of the Issuer. CITIC Group and GECC also expect that there will be no material change to the existing business (such as business focus and operating model) of the Issuer as a result of the completion of the Proposals. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 16 of 40 Pages - ------------------------------------ --------------------------------------- CITIC Group and GECC intend to retain the Issuer's existing senior management team to manage the Issuer after completion of the Scheme, except that the SES appointees to the Issuer's Board of Directors, namely Mr. Roman Bausch, Ms. Cynthia Dickins and Mr. Mark Rigolle have resigned as directors upon completion of the Exchange Transaction, and the Reporting Persons have appointed four directors to the Issuer's Board of Directors. The four directors appointed by the Reporting Persons are Mr. Ronald J. Herman, Jr., Ms. Nancy Ku and Mr. Mark Chen, each of whom is a GECH appointed director of the Offeror, and Mr. John Connelly. These changes to the Issuer's Board of Directors are not dependent on whether or not the Proposals are completed. CITIC Group and GECC have agreed that, with effect from the completion of the Exchange Transaction, the chairman of the Issuer is Mr. Mi Zeng Xin and the deputy chairman is Mr. Ronald J. Herman, Jr., both of whom will hold office until December 2008. No determination has yet been made as to whether, and if so, how, the composition of the Issuer's Board of Directors may be changed upon completion of the Proposals. CITIC Group, Able Star, Bowenvale, GE and the GE Entities executed a Shareholders' Agreement, dated March 29, 2007, in respect of Bowenvale (the "Bowenvale Shareholders' Agreement"), which contains a provision prohibiting CITIC Group or the GE Entities from transferring any Bowenvale shares for a period of three years. After the successful privatization of the Issuer, CITIG Group and the GE Entities may consider entering into a simpler shareholders' agreement in respect of Bowenvale to reflect the Issuer's status as a private company, as opposed to a publicly listed company, and CITIC Group and GECC contemplate that they will assess whether to revise the Issuer's By-Laws to reflect its change from a public to a private company. This item is qualified in its entirety by reference to the Bowenvale Shareholders' Agreement, which is filed as Exhibit 99.5 hereto and is incorporated herein by reference. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a) The responses of the Reporting Persons to Rows (11) through (13) of the cover pages of this Schedule 13D are incorporated herein by reference. The GE Entities hold a 49.5% equity interest and 50% voting interest in Bowenvale, which currently owns 268,905,000 shares of the Common Stock, representing approximately 68.9% of the issued and outstanding Common Stock. The Reporting Persons hereby disclaim beneficial ownership of 135,797,025 of the Common Stock that are held by Bowenvale, as being attributable to Able Star's beneficial ownership interest in Bowenvale. (b) The responses of the Reporting Persons to (i) Rows (7) through (10) of the cover pages of this statement on Schedule 13D and (ii) Item 5(a) hereof are incorporated herein by reference. (c) Other than the acquisition of a 49.5% equity interest and 50% voting interest in Bowenvale, which currently owns 268,905,000 shares of Common Stock, upon the closing of the Exchange Transaction, no Reporting Person has effected any other transaction in the Common Stock during the past 60 days. To the Reporting Persons' knowledge, none of their respective directors or officers has effected any transactions in the Common Stock during the past 60 days. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 17 of 40 Pages - ------------------------------------ --------------------------------------- (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect --------------------------------------------------------------------- to Securities of the Issuer. ------------------------- The responses of the Reporting Persons under Items 3 and 4 hereof are incorporated herein by reference. On February 13, 2007, GECC, CITIC Group, Able Star, SES, SES Global Holding AG and Bowenvale entered into a consent letter (the "Consent Letter") pursuant to which, among other things, (i) CITIC Group consented to the transfer of the Bowenvale Shares by SES to a newly incorporated company, subject to the completion of the Exchange Transaction and (ii) CITIC Group and GECC agreed, subject to the terms and conditions set forth in the Consent Letter, to a potential joint privatization of the Issuer to be implemented by way of a general offer or a scheme of arrangement, to be announced at or around the same time as the Exchange Transaction was announced. A copy of the Consent Letter is attached hereto as Exhibit 99.6. On February 13, 2007, CITIC Group, Able Star, GECC and GE Equity entered into a Co-operation Agreement (the "Co-operation Agreement") pursuant to which the parties agreed, among other things, on (i) how the conduct of the proposed privatization of the Issuer would be regulated, including but not limited to using reasonable endeavors to take all steps necessary or desirable in connection with the implementation of and obtaining all necessary clearances for the privatization and agreeing to discuss significant matters in respect of the privatization in good faith, (ii) using reasonable endeavors to amalgamate the Common Stock held by the Offeror and Bowenvale after the successful privatization in a manner to be discussed in good faith, (iii) the sharing of expenses in respect of the privatization, and (iv) the basis upon which the parties will enter into a new shareholders' agreement in respect of Bowenvale. A copy of the Co-operation Agreement is attached hereto as Exhibit 99.7. On February 13, 2007, CITIC Group, GE Equity, the Offeror, Able Star and GE entered into a Shareholders' Agreement (the "Offeror Shareholders' Agreement") regulating the parties' respective rights and obligations (whether direct or indirect) in respect of the Offeror and, upon completion of the Scheme, the Common Stock acquired by the Offeror as a result of the Privatization. The key provisions of the Offeror Shareholders' Agreement reflect those of the Bowenvale Shareholders' Agreement, and will become effective only upon the Offeror acquiring all of the issued and outstanding Common Stock not already owned by Bowenvale ("Completion") and include, among other things, (i) an agreement to transfer the Offerer's interest in the Issuer to Bowenvale as soon as reasonably practicable after Completion, (ii) the reorganization of the capital structure of the Offeror, (iii) provisions governing the composition of the Board of Directors of the Offeror, (iv) provisions governing the representation of the Offeror's directors on the Board of Directors of the Issuer, (v) rules governing the operation of meetings of the Offeror's board of directors and shareholders, (vi) the exercise of voting rights in the Offeror, and (vii) restrictions on disposals of shares in the Offeror for a period of three years subject to certain exceptions. A copy of the Offeror Shareholders' Agreement is attached hereto as Exhibit 99.8. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 18 of 40 Pages - ------------------------------------ --------------------------------------- Pursuant to the Bowenvale Shareholders' Agreement, the GE Entities and Able Star are entitled to instruct Bowenvale in the voting of the shares of the Common Stock held by Bowenvale. If the instructions of Able Star and the GE Entities are the same, Bowenvale will vote all of its shares of the Common Stock according to their common instruction. If their instructions are different, the Bowenvale Shareholders' Agreement provides for deadlock resolution mechanisms which, if unsuccessful, would allow either CITIC Group or GE to terminate the Bowenvale Shareholders' Agreement. Following a termination of the Bowenvale Shareholders' Agreement, the parties must cause the transfer or distribution of each shareholder's attributable share of the Common Stock held by Bowenvale. Until such transfer or distribution, Bowenvale must vote according to each shareholder's instructions the Common Stock held by Bowenvale attributable to such shareholder. Notwithstanding such arrangements, certain material corporate events may not occur unless each of the GE Entities and Able Star consents, and each of them agrees to vote, or cause Bowenvale to vote, its shares of the Common Stock accordingly. Pursuant to the Bowenvale Shareholders' Agreement, the rights of each of the GE Entities and Able Star to dispose of their Bowenvale shares, and to require Bowenvale to dispose of their attributable shares of the Common Stock, are subject to certain consent rights held by the other party. After the third anniversary of the date of the completion of the Exchange Transaction, each of the GE Entities and Able Star will be entitled to dispose of all or any part of their holding of Bowenvale shares subject to the prior written consent of the other party to the Bowenvale Shareholders' Agreement, which consent shall not be unreasonably withheld. Each of the GE Entities and Able Star have, under the Bowenvale Shareholders' Agreement, the right to receive and the power to direct the receipt of dividends received by Bowenvale in respect of, or the proceeds from the sale by Bowenvale of, the Common Stock held by Bowenvale that are attributable to the GE Entities and Able Star, as the case may be. Bowenvale may not dispose of any of its shares of the Common Stocks or enter into any agreement in respect of the votes attached to the Common Stock, except that after the completion of the Exchange Transaction, each of the GE Entities or Able Star may direct Bowenvale to dispose of all or a part of the Common Stock attributable to them, subject to the prior written consent of the other party, which consent shall not be unreasonably withheld. The Bowenvale Shareholders' Agreement provides that the Board of Directors of Bowenvale will consist of six to eight directors, with an equal number appointed by Able Star and the GE Entities. The quorum for meetings of the Board of Directors of Bowenvale will be two directors, one appointed by the GE Entities and one appointed by Able Star. Decisions of the Board of Directors of Bowenvale will be by unanimous vote of those directors present. The right to nominate a chairman and a deputy chairman of the Board of Directors of Bowenvale will rotate on a bi-annual basis between the GE Entities and Able Star, with each nominee to hold office for two years. Neither the chairman nor deputy chairman will have an additional vote at meetings of the Board of Directors of Bowenvale. The Board of Directors of the Issuer will consist of eight directors, and for so long as Issuer remains listed on the SEHK, two executive directors, being the Chief Executive Officer and the Deputy Chief Executive Officer, and three independent non-executive directors. The GE Entities and Able Star shall each be entitled to appoint four directors to the Board of Directors of the Issuer. It is the intention of the GE Entities and Able Star that the same individuals should be chairman and deputy chairman of the Boards of both - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 19 of 40 Pages - ------------------------------------ --------------------------------------- Bowenvale and the Issuer, subject to this being acceptable to the Board of Directors of the Issuer. Upon the successful privatization of the Issuer, Able Star and the GE Entities may consider entering into a simpler shareholders' agreement in respect of Bowenvale to reflect the Issuer's status as a private company, as opposed to a publicly listed company. In addition, under the Bowenvale Shareholders' Agreement, as soon as is reasonably practicable after the completion of the proposed privatization of the Issuer, the Offeror will be merged with Bowenvale and the Offeror's interest in the Issuer will be transferred to Bowenvale. This item is qualified in its entirety by reference to the agreements which are filed as Exhibits and incorporated herein by reference. Item 7. Materials to be Filed as Exhibits. --------------------------------- 1. Joint Filing Agreement among the Reporting Persons. 2. Share Redemption Agreement, by and among SES, GE CFE Luxembourg S. a r.l., GE Capital Equity Holdings Inc. and General Electric Capital Corporation, dated February 13, 2007. 3. Letter Agreement, dated March 29, 2007, between SES, GE CFE Luxembourg S. a r.l., GE Capital Equity Holdings Inc. and General Electric Capital Corporation. 4. Scheme Document, dated March 19, 2007. 5. Shareholders' Agreement, by and among, Able Star Associates Limited, GE Pacific-1 Holdings, Inc., GE Pacific-2 Holdings, Inc., GE Pacific-3 Holdings, Inc., Bowenvale Limited, CITIC Group and General Electric Company, dated March 29, 2007. 6. Letter Agreement, by and among SES, General Electric Capital Corporation, SES Global Holding AG, CITIC Group, Able Star Associates Limited and Bowenvale Limited, dated February 13, 2007. 7. Co-operation Agreement, by and among CITIC Group, Able Star Associates Limited, General Electric Capital Corporation and GE Capital Equity Investments, Inc, dated February 13, 2007. 8. Shareholders' Agreement, by and among, GE Capital Equity Investments, Inc., Able Star Associates Limited, CITIC Group, General Electric Company and AsiaCo Acquisition Ltd., dated 13 February 2007. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 20 of 40 Pages - ------------------------------------ --------------------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: April 5, 2007 GE PACIFIC-1 HOLDINGS, INC.. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE PACIFIC-2 HOLDINGS, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE PACIFIC-3 HOLDINGS, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE INTERNATIONAL HOLDINGS INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE CFE LUXEMBOURG, S. A R.L. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Attorney-in-fact - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 21 of 40 Pages - ------------------------------------ --------------------------------------- GE CFE LUXEMBOURG HOLDINGS L.L.C. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Vice President and Secretary GE CAPITAL CFE, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Attorney-in-fact GE CAPITAL EQUITY HOLDINGS, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Ronald J. Herman, Jr. ------------------------------------- Name: Ronald J. Herman, Jr. Title: Vice President GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ Ronald J. Herman, Jr. ------------------------------------- Name: Ronald J. Herman, Jr. Title: Attorney-in-fact GENERAL ELECTRIC COMPANY By: /s/ Ronald J. Herman, Jr. ------------------------------------- Name: Ronald J. Herman, Jr. Title: Attorney-in-fact - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 22 of 40 Pages - ------------------------------------ --------------------------------------- EXHIBIT INDEX ------------- Exhibit No. - ----------- 99.1 Joint Filing Agreement among the Reporting Persons. 99.2 Share Redemption Agreement, by and among SES, GE CFE Luxembourg S. a r.l., GE Capital Equity Holdings Inc. and General Electric Capital Corporation, dated February 13, 2007. 99.3 Letter Agreement, dated March 29, 2007, between SES, GE CFE Luxembourg S. a r.l., GE Capital Equity Holdings Inc. and General Electric Capital Corporation. 99.4 Scheme Document, dated March 19, 2007. 99.5 Shareholders' Agreement, by and among, Able Star Associates Limited, GE Pacific-1 Holdings, Inc., GE Pacific-2 Holdings, Inc., GE Pacific-3 Holdings, Inc., Bowenvale Limited, CITIC Group and General Electric Company, dated March 29, 2007. 99.6 Letter Agreement, by and among SES, General Electric Capital Corporation, SES Global Holding AG, CITIC Group, Able Star Associates Limited and Bowenvale Limited dated February 13, 2007. 99.7 Co-operation Agreement, by and among CITIC Group, Able Star Associates Limited, General Electric Capital Corporation and GE Capital Equity Investments, Inc, dated February 13, 2007. 99.8 Shareholders' Agreement, by and among, GE Capital Equity Investments Inc., Able Star Associates Limited, CITIC Group, General Electric Company and AsiaCo Acquisition Ltd., dated 13 February 2007. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 23 of 40 Pages - ------------------------------------ --------------------------------------- SCHEDULE A The name, citizenship, business address, and present principal occupation or employment of each of the directors and executive officers of the Reporting Persons are set forth below. GE PACIFIC-1 HOLDINGS, INC. DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, President & Chief 201 Merritt 7 U.S.A. Jr. Executive Officer Norwalk, CT 06851 of GE Commercial Finance - Equity EXECUTIVE OFFICERS OF GE PACIFIC-1 HOLDINGS, INC. PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. President 201 Merritt 7 U.S.A. Herman, Jr. Norwalk, CT 06851 Regina Borden Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 John W. Managing Director, 201 Merritt 7 U.S.A. Campo, Jr. General Counsel & Norwalk, CT 06851 Secretary Mark Chen Managing Director 33rd Floor, One Exchange U.S.A. Square, Central, Hong Kong Frank Ertl Managing Director, 201 Merritt 7 U.S.A. Chief Financial Norwalk, CT 06851 Officer & Treasurer Paul Managing Director Building B, Chateau Luxembourg Heinerscheid de Betzdorf L-6815 Luxembourg - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 24 of 40 Pages - ------------------------------------ --------------------------------------- GE PACIFIC-2 HOLDINGS, INC. DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, President & Chief 201 Merritt 7 U.S.A. Jr. Executive Officer Norwalk, CT 06851 of GE Commercial Finance - Equity EXECUTIVE OFFICERS OF GE PACIFIC-2 HOLDINGS, INC. PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, Jr. President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Regina Borden Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 John W. Campo, Jr. Managing Director, 201 Merritt 7 U.S.A. General Counsel & Norwalk, CT 06851 Secretary Mark Chen Managing Director 33rd Floor, One Exchange U.S.A. Square, Central, Hong Kong Frank Ertl Managing Director, 201 Merritt 7 U.S.A. Chief Financial Norwalk, CT 06851 Officer & Treasurer Paul Managing Director Building B, Chateau Luxembourg Heinerscheid de Betzdorf L-6815 Luxembourg - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 25 of 40 Pages - ------------------------------------ --------------------------------------- GE PACIFIC-3 HOLDINGS, INC. DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, President & Chief 201 Merritt 7 U.S.A. Jr. Executive Officer Norwalk, CT 06851 of GE Commercial Finance - Equity EXECUTIVE OFFICERS OF GE PACIFIC-3 HOLDINGS, INC. PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. President 201 Merritt 7 U.S.A. Herman, Jr. Norwalk, CT 06851 Regina Borden Senior Vice 201 Merritt 7 U.S.A. President Norwalk, CT 06851 John W. Managing Director, 201 Merritt 7 U.S.A. Campo, Jr. General Counsel & Norwalk, CT 06851 Secretary Mark Chen Managing Director 33rd Floor, One Exchange U.S.A. Square, Central, Hong Kong Frank Ertl Managing Director, 201 Merritt 7 U.S.A. Chief Financial Norwalk, CT 06851 Officer & Treasurer Paul Managing Director Building B, Chateau Luxembourg Heinerscheid de Betzdorf L-6815 Luxembourg - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 26 of 40 Pages - ------------------------------------ --------------------------------------- GE INTERNATIONAL HOLDINGS INC. DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, President & Chief 201 Merritt 7 U.S.A. Jr. Executive Officer Norwalk, CT 06851 of GE Commercial Finance - Equity EXECUTIVE OFFICERS OF GE INTERNATIONAL HOLDINGS INC. PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, Jr. President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Regina Borden Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 John W. Managing Director, 201 Merritt 7 U.S.A. Campo, Jr. General Counsel & Norwalk, CT 06851 Secretary Mark Chen Managing Director 33rd Floor, One Exchange U.S.A. Square, Central, Hong Kong Frank Ertl Managing Director, 201 Merritt U.S.A. Chief Financial Norwalk, CT 06851 Officer & Treasurer Paul Heinerscheid Managing Director Building B, Chateau Luxembourg de Betzdorf L-6815 Luxembourg - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 27 of 40 Pages - ------------------------------------ --------------------------------------- GE CFE LUXEMBOURG S. A R.L. MANAGERS ADDRESS: 12 RUE LEON THYES, L-2636 LUXEMBOURG PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, President & Chief 201 Merritt 7 U.S.A. Jr. Executive Officer Norwalk, CT 06851 (Manager A) of GE Commercial Finance - Equity Frank J. Ertl Chief Financial 201 Merritt 7 U.S.A. (Manager A) Officer of GE Norwalk, CT 06851 Commercial Finance - Equity Roeland P. Pels Managing Director 12-14, rue Leon Dutch (Manager B) of Benelux Trust Thyes, L-2636 (Luxembourg) S.a.r.l. Luxembourg GE CFE Luxembourg S. a r.l. does not have executive officers or directors. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 28 of 40 Pages - ------------------------------------ --------------------------------------- GE CFE LUXEMBOURG HOLDINGS LLC MANAGERS ADDRESS: 201 MERRITT 7, NORWALK, CT 06851 PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, President & Chief 201 Merritt 7 U.S.A. Jr. Executive Officer Norwalk, CT 06851 of GE Commercial Finance - Equity John W. Campo, Jr. Managing Director, 201 Merritt 7 U.S.A. General Norwalk, CT 06851 Counsel of GE Commercial Finance - Equity EXECUTIVE OFFICERS OF GE CFE LUXEMBOURG HOLDINGS LLC PRESENT NAME TITLE BUSINESS ADDRESS CITIZENSHIP - ---- ----- ---------------- ----------- Ronald J. Herman, President and Chief 201 Merritt 7 U.S.A. Jr. Executive Officer Norwalk, CT 06851 John W. Campo, Jr. Vice President and 201 Merritt 7 U.S.A. Secretary Norwalk, CT 06851 Frank J. Ertl Treasurer and Chief 201 Merritt 7 U.S.A. Financial Officer Norwalk, CT 06851 Bryant Cohen Vice President Taxes 201 Merritt 7 U.S.A. Norwalk, CT 06851 GE CFE Luxembourg Holdings LLC does not have directors. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 29 of 40 Pages - ------------------------------------ --------------------------------------- GE CAPITAL CFE, INC. DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Michael A. Gaudino President & Chief 201 Merritt 7 U.S.A. Executive Officer of Norwalk, CT 06851 GE Corporate Financial Services James C. Ungari Chief Risk Officer 201 Merritt 7 U.S.A. of GE Corporate Norwalk, CT 06851 Financial Services Greg Cameron Chief Financial 201 Merritt 7 U.S.A. Officer of GE Norwalk, CT 06851 Corporate Financial Services EXECUTIVE OFFICERS OF GE CAPITAL CFE, INC. PRESENT NAME TITLE BUSINESS ADDRESS CITIZENSHIP - ---- ----- ---------------- ----------- Michael A. Gaudino President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Michael Horton Senior Vice President 201 Merritt 7 U.S.A. and Treasurer Norwalk, CT 06851 Annie Bortolot Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Tom Quindlen Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Matt Susser Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Stuart Aronson Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Paul Santacaterina Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Robert J. Kennedy Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Scott Roberts Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Joseph Hanlon Senior Vice President 201 Merritt 7 U.S.A. Norwalk, CT 06851 - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 30 of 40 Pages - ------------------------------------ --------------------------------------- GE CAPITAL EQUITY HOLDINGS, INC. DIRECTOR(S) PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Ronald J. Herman, President & Chief 201 Merritt 7 U.S.A. Jr. Executive Officer norwalk, CT 06851 of GE Commercial Finance - Equity EXECUTIVE OFFICERS OF GE CAPITAL EQUITY HOLDINGS, INC. PRESENT NAME TITLE BUSINESS ADDRESS CITIZENSHIP - ---- ----- ---------------- ----------- Ronald J. Herman, Jr. President 201 Merritt 7 U.S.A. Norwalk, CT 06851 Andrea Assarat Managing Director 201 Merritt 7 U.S.A. Norwalk, CT 06851 Sherwood Dodge Managing Director 201 Merritt 7 U.S.A. Norwalk, CT 06851 Michael Fisher Managing Director 201 Merritt 7 U.S.A. Norwalk, CT 06851 Karen Rode Managing Director 500 West Monroe U.S.A. Chicago, IL 60661 John W. Campo, managing Director, 201 Merritt 7 U.S.A. Jr. General Counsel & Norwalk, CT 06851 Secretary Frank J. Ertl Managing Director, 201 Merritt 7 U.S.A. Chief Financial Officer Norwalk, CT 06851 & Treasurer - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 31 of 40 Pages - ------------------------------------ --------------------------------------- GENERAL ELECTRIC CAPITAL CORPORATION DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Charles E. Alexander President - GE GE Capital Europe U.K. Capital Europe 30 Berkeley Square London, England W1J 6EW Jeffrey S. Bornstein Chief Financial GE Commercial Finance U.S.A. Cfficer - GE Commercial 901 Main Avenue Finance Norwalk, CT 06851 Kathryn A. Cassidy Senior Vice President, General Electric U.S.A. Corporate Treasury and Capital Corporation Global Funding 201 High Ridge Road Operation - General Stamford, CT 06927 Electric Capital Corporation James A. Colica Senior Vice President, General Electric U.S.A. Global Risk Capital Corporation Management - GE 260 Long Ridge Road Corporate Stamford, CT 06927 Pamela Daley Senior Vice President, General Electric U.S.A. Corporate Business 3135 Easton Turnpike Development - General Fairfield, CT 06828 Electric Company Brackett B. Denniston Senior Vice President, General Electric U.S.A. and General Counsel Company General Electric 3135 Easton Turnpike Company Fairfield, CT 06828 Jeffrey R. Immelt Chairman and Chief General Electric U.S.A. Executive Officer, Company General Electric 3135 Easton Turnpike Company Fairfield, CT 06828 Michael A. Neal President and Chief GE Commercial Finance U.S.A. Executive Officer - GE 901 Main Avenue Commercial Finance Norwalk, CT 06851 David R. Nissen President and Chief GE Money U.S.A. Executive Officer - GE 777 Long Ridge Road Money Stamford, CT 06902 Ronald R. Pressman President and Chief GE Asset Management U.S.A. Executive Officer - GE 3003 Summer Street Asset Management Stamford, CT 06904 - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 32 of 40 Pages - ------------------------------------ --------------------------------------- PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Deborah M. Reif President and GE Commercial Finance U.S.A. Chief Executive 120 Long Ridge Road Officer, Equipment Stamford, CT 06927 Services - GE Commercial Finance John G. Rice President and Chief GE Infrastructure U.S.A. Executive Officer - 4200 Wildwood Parkway GE Infrastructure Atlanta, GA 30339 John M. Samuels Vice President and General Electric U.S.A. Senior Tax Counsel - Company General Electric 3135 Easton Turnpike Company Fairfield, CT 06828 Keith S. Sherin Senior Vice President, General Electric U.S.A. Finance and Chief Company Financial Officer 3135 Easton Turnpike - General Electric Fairfield, CT 06828 Company Lloyd G. Trotter President and Chief General Electric U.S.A. Executive Officer - Company GE Industrial 3135 Easton Turnpike Fairfield, CT 06828 Robert C. Wright Vice Chairman - General General Electric U.S.A. Electric Company Company 30 Rockefeller Plaza New York, NY 10112 GENERAL ELECTRIC CAPITAL CORPORATION EXECUTIVE OFFICERS PRESENT NAME TITLE BUSINESS ADDRESS CITIZENSHIP - ---- ----- ---------------- ----------- Jeffrey R. Immelt Chief Executive General Electric U.S.A. Officer Company 3135 Easton Turnpike Fairfield, CT 06828 Keith S. Sherin Chief Financial General Electric U.S.A. Officer Company 3135 Easton Turnpike Fairfield, CT 06828 Michael A. Neal Chairman & President GE Commercial Finance U.S.A. 901 Main Avenue Norwalk, CT 06851 David R. Nissen President GE Money U.S.A. 777 Long Ridge Road Stamford, CT 06902 Deborah M. Reif Executive Vice GE Commercial U.S.A. President Finance 120 Long Ridge Road Stamford, CT 06927 - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 33 of 40 Pages - ------------------------------------ --------------------------------------- Jeffrey S. Bornstein Senior Vice GE Commercial Finance U.S.A. President, Finance 901 Main Avenue Norwalk, CT 06851 Kathryn A. Cassidy Senior Vice General Electric U.S.A. President, Capital Corporate Corporation Treasury and 201 High Ridge Road Global Funding Stamford, CT 06927 Operation James A. Colica Senior Vice General Electric U.S.A. President, Global Capital Corporation Risk Management 260 Long Ridge Road Stamford, CT 06927 Richard D'Avino Senior Vice President, General Electric U.S.A. Taxes Capital Corporation 120 Long Ridge Road Stamford, CT 06927 Philip D. Ameen Senior Vice President General Electric U.S.A. and Controller Company 3135 Easton Turnpike Fairfield, CT 06828 Craig T. Beazer Vice President, General Electric U.S.A. General Counsel and Company Secretary 3135 Easton Turnpike Fairfield, CT 06828 - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 34 of 40 Pages - ------------------------------------ --------------------------------------- GENERAL ELECTRIC CAPITAL SERVICES, INC. DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- Charles E. Alexander President - GE GE Capital Europe U.K. Capital Europe 30 Berkeley Square London, England W1J 6EW Jeffrey S. Bornstein Chief Financial GE Commercial U.S.A. Officer - GE Finance Commercial Finance 901 Main Avenue Norwalk, CT 06851 Kathryn A. Cassidy Senior Vice President, General Electric U.S.A. Corporate Treasury and Capital Corporation Global Funding 201 High Ridge Road Operation - General Stamford, CT 06927 Electric Capital Corporation James A. Colica Senior Vice General Electric U.S.A. President, Global Capital Corporation Risk Management - 260 Long Ridge Road GE Corporate Stamford, CT 06927 Pamela Daley Senior Vice President General Electric U.S.A. - Corporate Business Company Development - General 3135 Easton Turnpike Electric Company Fairfield, CT 06828 Brackett B. Denniston Senior Vice President General Electric U.S.A. and General Counsel - Company General Electric 3135 Easton Turnpike Company Fairfield, CT 06828 Jeffrey R. Immelt Chairman and Chief General Electric U.S.A. Executive Cfficer, Company General Electric 3135 Easton Turnpike Company Fairfield, CT 06828 Michael A. Neal President and Chief GE Commercial U.S.A. Executive Officer - Finance GE Commercial Finance 901 Main Avenue Norwalk, CT 06851 David R. Nissen President and GE Money U.S.A. Chief Executive 777 Long Ridge Road Officer - GE Money Stamford, CT 06902 Ronald R. Pressman President and GE Asset Management U.S.A. Chief Executive 3003 Summer Street Officer - GE Stamford, CT 06904 Asset Management - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 35 of 40 Pages - ------------------------------------ --------------------------------------- Deborah M. Reif President and GE Commercial U.S.A. Chief Executive Finance Officer, Equipment 120 Long Ridge Road Services - GE Stamford, CT 06927 Commercial Finance John G. Rice President and GE Infrastructure U.S.A. Chief Executive 4200 Wildwood Parkway Officer - GE Atlanta, GA 30339 Infrastructure John M. Samuels Vice President General Electric U.S.A. and Senior Tax Company Counsel - General 3135 Easton Turnpike Electric Company Fairfield, CT 06828 Keith S. Sherin Senior Vice President, General Electric U.S.A. Finance and Chief Company Financial Officer 3135 Easton Turnpike - General Electric Fairfield, CT 06828 Company Lloyd G. Trotter President and General Electric U.S.A. Chief Executive Company Officer - GE 3135 Easton Turnpike Industrial Fairfield, CT 06828 Robert C. Wright Vice Chairman - General Electric U.S.A. General Electric Company Company 30 Rockefeller Plaza New York, NY 10112 GENERAL ELECTRIC CAPITAL SERVICES, INC. EXECUTIVE OFFICERS PRESENT NAME TITLE BUSINESS ADDRESS CITIZENSHIP - ---- ----- ---------------- ----------- Jeffrey R. Immelt Chief Executive General Electric U.S.A. Officer Company 3135 Easton Turnpike Fairfield, CT 06828 Keith S. Sherin Chief Financial General Electric U.S.A. Officer Company 3135 Easton Turnpike Fairfield, CT 06828 Michael A. Neal Chairman & GE Commercial Finance U.S.A. President 901 Main Avenue Norwalk, CT 06851 David R. Nissen President GE Money U.S.A. 777 Long Ridge Road Stamford, CT 06902 Deborah M. Reif Executive Vice GE Commercial Finance U.S.A. President 120 Long Ridge Road Stamford, CT 06927 - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 36 of 40 Pages - ------------------------------------ --------------------------------------- Jeffrey S. Bornstein Senior Vice GE Commercial Finance U.S.A. President, Finance 901 Main Avenue Norwalk, CT 06851 Dennis Murray Senior Vice GE Industrial - U.S.A. President, Finance Equipment Services 9201 State Line Kansas City, MO 64114 Maive F. Scully Senior Vice GE Money U.S.A. President, Finance 777 Main Avenue Stamford, CT 06902 Kathryn A. Cassidy Senior Vice General Electric U.S.A. President, Capital Corporation Corporate Treasury 201 High Ridge Road and Global Funding Stamford, CT 06927 Operation James A. Colica Senior Vice General Electric U.S.A. President, Global Capital Corporation Risk Management 260 Long Ridge Road Stamford, CT 06927 Richard D'Avino Senior Vice General Electric U.S.A. President, Taxes Capital Corporation 120 Long Ridge Road Stamford, CT 06927 Philip D. Ameen Senior Vice General Electric U.S.A. President and Company Controller 3135 Easton Turnpike Fairfield, CT 06828 Craig T. Beazer Vice President, General Electric U.S.A. General Counsel Company and Secretary 3135 Easton Turnpike Fairfield, CT 06828 - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 37 of 40 Pages - ------------------------------------ --------------------------------------- GENERAL ELECTRIC COMPANY DIRECTORS PRESENT PRINCIPAL PRESENT NAME OCCUPATION BUSINESS ADDRESS CITIZENSHIP - ---- ---------- ---------------- ----------- James I. Cash, Jr. Former Professor c/o Greylock Partners; U.S.A. of Business 880 Winters Street - Administration Suite 300; -Graduate School of Waltham, MA 02451-1465 Business Administration, Harvard University0 Sir William Castell Chairman of the Chairman U.K. Wellcome Trust The Wellcome Trust 215 Euston Road London NW1 2BE UK Ann M. Fudge Former Chairman Young & Rubicam Brands U.S.A. of the Board and 285 Madison Avenue Chief Executive New York, NY 10017 Officer, Young & Rubicam Brands Claudio X. Gonzalez Chairman of the Kimberly-Clark de Mexico Board and Chief Mexico S.A. de C.V. Executive Officer, Jose Luis Lagrange 103 Kimberly-Clark de Tercero Piso Mexico, S.A. de C.V. Colonia Los Morales Mexico, D.F. 11510, Mexico Susan Hockfield President Massachusetts U.S.A. Massachusetts Institute of Institute of Technology Technology 77 Massachusetts Avenue Building 3-208 Cambridge, MA 02139 Jeffrey R. Immelt Chairman of the General Electric U.S.A. Board and Chief Company Executive 3135 Easton Turnpike Officer, General Fairfield, CT 06828 Electric Company Andrea Jung Chairman of the Avon Products, Inc. Canada Board and Chief 1345 Avenue of Executive Officer, the Americas Avon Products, Inc. New York, NY 10105 Alan (G.) Lafley Chairman of the The Procter & Gamble U.S.A. Board, President Company and Chief Executive 1 Procter & Gamble Plaza Officer, The Cincinnati, OH 45202-3315 Procter & Gamble Company - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 38 of 40 Pages - ------------------------------------ --------------------------------------- Robert W. Lane Chairman of the Deere & Company U.S.A. Board and Chief One John Deere Executive Place Moline, IL 61265 Officer, Deere & Company Ralph S. Larsen Former Chairman Johnson & Johnson U.S.A. of the Board and 100 Albany Street Chief Executive Suite 200 Officer, Johnson New Brunswick, NJ & Johnson 08901 Rochelle B. Lazarus Chairman of the Ogilvy & Mather U.S.A. Board and Chief Worldwide Executive Officer, 309 West 49th Street Ogilvy & Mather New York, NY Worldwide 10019-7316 Sam Nunn Retired Partner, Sam Nunn School U.S.A. King & Spalding of International Affairs Georgia Institute of Technology 781 Marietta Street, NW Atlanta, Georgia 30318 Roger S. Penske Chairman of the Penske Corporation U.S.A. Board and President, 2555 Telegraph Road Penske Corporation Bloomfield Hills, MI 48302-0954 Robert J. Swieringa Anne and Elmer S.C. Johnson U.S.A. Lindseth Dean and Graduate School Professor of Cornell University Accounting, S.C. 207 Sage Hall Johnson Graduate Ithaca, NY 14853-6201 School, Cornell University Douglas A. Warner Former Chairman J.P. Morgan Chase & Co., U.S.A. III of the Board, The Chase Manhattan Bank J.P. Morgan Chase and Morgan Trust Co. & Co., The Chase of New York Manhattan Bank and 270 Park Avenue Morgan Guaranty Trust New York, NY 10154 Co. of New York Robert C. Wright Vice Chairman of NBC Universal, Inc. U.S.A. the Board and 30 Rockefeller Plaza Executive Officer, New York, NY 10112 General Electric Company; Chairman and Chief Executive Officer, NBC Universal, Inc. - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 39 of 40 Pages - ------------------------------------ --------------------------------------- EXECUTIVE OFFICERS OF GENERAL ELECTRIC COMPANY PRESENT NAME TITLE BUSINESS ADDRESS CITIZENSHIP - ---- ----- ---------------- ----------- Jeffrey R. Immelt Chairman of the General Electric U.S.A. Board and Chief Company Executive Officer 3135 Easton Turnpike Fairfield, CT 06828 Philip D. Ameen Vice President General Electric U.S.A. and Comptroller Company 3135 Easton Turnpike Fairfield, CT 06828 Kathryn A. Cassidy Vice President General Electric U.S.A. and GE Treasurer Company 201 High Ridge Road Stamford, CT 06905-3417 Pamela Daley Senior Vice General Electric U.S.A. President - Company Corporate 3135 Easton Turnpike Business Development Fairfield, CT 06828 Brackett B. Senior Vice General Electric U.S.A. Denniston III President and Company General Counsel 3135 Easton Turnpike Fairfield, CT 06828 Joseph M. Hogan Senior Vice President - General Electric U.S.A. GE Healthcare Company Pollards Wood Nightingales Lane Chalfont St. Giles HP8 4SP Great Britain John F. Lynch Senior Vice President- General Electric U.K. Human Resources Company 3135 Easton Turnpike Fairfield, CT 06828 Michael A. Neal Vice Chairman of General Electric U.S.A. General Electric Company Company; President 260 Long Ridge Road and Chief Executive Stamford, CT 06927 Officer, GE Capital Services David R. Nissen Senior Vice President - General Electric U.S.A. GE Consumer Finance Company 201 High Ridge Road Stamford, CT 06905-3417 John G. Rice Vice Chairman of General Electric U.S.A. General Electric Company Company; President and 4200 Wildwood Parkway Chief Executive Atlanta, GA 30339 Officer, GE Infrastructure Keith S. Sherin Senior Vice General Electric U.S.A. President - Finance Company and Chief Financial 3135 Easton Turnpike Officer Fairfield, CT 06828 - ------------------------------------ --------------------------------------- CUSIP No. 763991-02-3 13D Page 40 of 40 Pages - ------------------------------------ --------------------------------------- Lloyd G. Trotter Vice Chairman of General Electric U.S.A. General Electric Company Company; President 3135 Easton Turnpike and Chief Executive Fairfield, CT 06828 Officer, GE Industrial Robert C. Wright Vice Chairman of NBC Universal, Inc. U.S.A. the Board and Executive 30 Rockefeller Plaza Officer, General New York, NY 10112 Electric Company; Chairman and Chief Executive Officer, NBC Universal, Inc. Jeff A. Zucker President and CEO NBC Universal, Inc. U.S.A. NBC Universal, Inc. 30 Rockefeller Plaza New York, NY 10112 EX-99.1 2 dex991.txt JOINT FILING AGREEMENT EXHIBIT 99.1 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the undersigned agree that only one statement containing the information required by Schedule 13D and any further amendments thereto need to be filed with respect to the beneficial ownership by each of the undersigned of shares of common stock of Asia Satellite Telecommunications Holdings Limited, a Bermuda corporation, and further agrees that this Joint Filing Agreement be included as an exhibit to the Schedule 13D; provided that, as contemplated by Section 13d-1(k)(1)(ii), no person shall be responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate. This Joint Filing Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. Dated: April 5, 2007 GE PACIFIC-1 HOLDINGS, INC.. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE PACIFIC-2 HOLDINGS, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE PACIFIC-3 HOLDINGS, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE INTERNATIONAL HOLDINGS INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GE CFE LUXEMBOURG, S. A R.L. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Attorney-in-fact GE CFE LUXEMBOURG HOLDINGS L.L.C. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Vice President and Secretary GE CAPITAL CFE, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Attorney-in-fact GE CAPITAL EQUITY HOLDINGS, INC. By: /s/ John W. Campo, Jr. ------------------------------------- Name: John W. Campo, Jr. Title: Managing Director, General Counsel and Secretary GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Ronald J. Herman, Jr. ------------------------------------- Name: Ronald J. Herman, Jr. Title: Vice President GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ Ronald J. Herman, Jr. ------------------------------------- Name: Ronald J. Herman, Jr. Title: Attorney-in-fact GENERAL ELECTRIC COMPANY By: /s/ Ronald J. Herman, Jr. -------------------------------------- Name: Ronald J. Herman, Jr. Title: Attorney-in-fact 2 EX-99.2 3 dex992.htm SHARE REDEMPTION AGREEMENT Share Redemption Agreement

Exhibit 99.2

EXECUTION COPY

SHARE REDEMPTION AGREEMENT

by and among

SES,

GE CFE Luxembourg S. à r.l.,

GE Capital Equity Holdings Inc.,

and

General Electric Capital Corporation

 

As of February 13, 2007

EXECUTION COPY

TABLE OF CONTENTS

 

ARTICLE 1. CERTAIN DEFINITIONS AND OTHER MATTERS

    2

Section 1.1    Certain Definitions

    2

Section 1.2    Terms Defined in Other Sections

    12

Section 1.3    Interpretation.

    16

ARTICLE 2. REDEMPTION OF STOCK

    16

Section 2.1    Redemption of Stock

    16

Section 2.2    Closing

    16

Section 2.3    SES’s Deliveries at the Closing

    16

Section 2.4    GE Entities Deliveries at the Closing

    18

ARTICLE 3. REORGANIZATION

    19

Section 3.1    Transfer of Equity Interests and Cash Amount

    19

Section 3.2    Transfer of AMC-23 Assets

    19

Section 3.3    AMC-23 Excluded Assets

    20

Section 3.4    AMC-23 Assumed Liabilities

    22

Section 3.5    AMC-23 Excluded Liabilities

    22

Section 3.6    Consents to Certain AMC-23 Business Assignments

    23

Section 3.7    Methodology

    24

Section 3.8    Taxes

    24

Section 3.9    Insurance

    24

Section 3.10  Additional Non-Investment Assets

    25

Section 3.11  Merger Payment

    27

 

i

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SES

    29

Section 4.1    Organization and Standing; Books and Records

    29

Section 4.2    Corporate Power and Authority

    29

Section 4.3    Conflicts

    31

Section 4.4    Approvals

    31

Section 4.5    No Material Adverse Effect

    31

Section 4.6    Ownership of Equity Interests

    32

Section 4.7    Capitalization of Splitco

    34

Section 4.8    Title to Assets; Sufficiency

    34

Section 4.9    Compliance with Law

    35

Section 4.10  Litigation

    36

Section 4.11  Intercompany Services

    36

Section 4.12  Financial Statements

    36

Section 4.13  Assets Other than Real Property Interests

    37

Section 4.14  Real Property

    38

Section 4.15  Satellite Assets

    38

Section 4.16  Intellectual Property

    40

Section 4.17  Contracts

    42

Section 4.18  Permits

    44

Section 4.19  Insurance

    46

Section 4.20   Benefit Plans

    47

Section 4.21  Environmental Matters

    48

Section 4.22  Employee and Labor Matters

    49

Section 4.23  Customers and Suppliers

    50

Section 4.24  Government Contracts

    50

 

ii

Section 4.25   Brokers

    51

Section 4.26  AsiaSat

    51

Section 4.27  Disclaimer

    52

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE GE ENTITIES

    52

Section 5.1    Organization and Standing

    52

Section 5.2    Corporate Power and Authority

    53

Section 5.3    Conflicts; Consents and Approvals

    53

Section 5.4    Class C Shares

    54

Section 5.5    Brokers

    54

Section 5.6    Absence of Litigation; Compliance with Laws

    55

Section 5.7    Securities Matters

    55

Section 5.8    Disclaimer

    55

ARTICLE 6. COVENANTS AND AGREEMENTS

    56

Section 6.1    Agenda and Draft Resolutions

    56

Section 6.2    Shareholder Meeting

    56

Section 6.3    Access and Information

    56

Section 6.4    Conduct of Transferred Businesses

    58

Section 6.5    Closing Documents

    61

Section 6.6    Efforts to Consummate; Further Assurances

    61

Section 6.7    Government Approvals; Reasonable Best Efforts

    62

Section 6.8    Notification by the Parties

    64

Section 6.9    Intercompany Debt

    65

Section 6.10  2006 Annual Dividend Record Date

    65

Section 6.11  Insurance Policies

    65

Section 6.12  Confidentiality; Access to Records after Closing

    66

 

iii

Section 6.13  Valuation Results

    67

Section 6.14  Cooperation with Respect to Financial Reporting

    67

Section 6.15  Customer Introductions

    67

Section 6.16  Satlynx

    67

Section 6.17  Non-Solicitation of Certain Customers

    69

Section 6.18  Non-Solicitation of Employees

    69

Section 6.19  Leuk

    70

Section 6.20  103 Degree EL Orbital Position

    71

Section 6.21  [Reserved]

    71

Section 6.22  Employee Agreements; Employee Benefit Plans

    71

Section 6.23  Parent Covenant

    72

Section 6.24  Leuk Teleport Utilization

    72

Section 6.25  Amendment of Certain Satlynx Agreements

    72

Section 6.26  Dividends

    73

Section 6.27  Release of Guarantees; Intercompany Agreements

    73

Section 6.28  Corporate Name

    73

Section 6.29  Bulk Transfer Laws

    74

Section 6.30  Certain Actions

    74

Section 6.31  Star One

    75

ARTICLE 7. TAX MATTERS

    76

Section 7.1    Tax Matters

    76

ARTICLE 8. CONDITIONS TO CLOSING

    76

Section 8.1    Mutual Conditions

    76

Section 8.2    Conditions to Obligations of the GE Entities

    78

Section 8.3    Conditions to SES’s Obligations

    80

 

iv

Section 8.4    Frustration of Closing Conditions

    80

ARTICLE 9. TERMINATION

    81

Section 9.1    Termination

    81

Section 9.2    Effect of Termination

    82

ARTICLE 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

    82

Section 10.1    Survival of Representations and Warranties

    82

Section 10.2    Indemnification by SES

    82

Section 10.3    Indemnification by GE Entities

    84

Section 10.4    Calculation of Losses

    86

Section 10.5    Termination of Indemnification

    86

Section 10.6    Procedures

    86

Section 10.7    Assignment of Claims

    88

Section 10.8    Additional Limitations on Indemnification

    88

Section 10.9    Supplementation and Amendment of the Disclosure Schedules

    89

ARTICLE 11. MISCELLANEOUS

    89

Section 11.1    Assignment

    89

Section 11.2    No Third-Party Beneficiaries

    89

Section 11.3    [Reserved]

    89

Section 11.4    Notices

    89

Section 11.5    Interpretation; Exhibits and Schedules; Certain Definitions

    91

Section 11.6    Counterparts

    91

Section 11.7    Entire Agreement

    91

Section 11.8    Severability

    92

Section 11.9    Consent to Jurisdiction

    92

Section 11.10  Governing Law

    92

 

v

Section 11.11  Waiver of Jury Trial

    92

Section 11.12  Expenses

    93

Section 11.13  No Strict Construction

    93

Section 11.14  Publicity; Public Announcements

    93

Section 11.15  Amendment and Modification

    93

Section 11.16  Waiver

    93

Section 11.17  Disclosure Generally

    94

Section 11.18  Other Matters

    94

 

EXHIBITS

Exhibit A    SES Financial Advisor Letter

Exhibit B    Transponder Sale Terms

Exhibit C    Transition Services Agreement

Exhibit D    Opinion of counsel to SES

Exhibit E    SOS Agreement

 

vi

SHARE REDEMPTION AGREEMENT

This SHARE REDEMPTION AGREEMENT, dated as of February 13, 2007 (this “Agreement”), is entered into by and among SES, a société anonyme (SA) organized and existing under the laws of the Grand Duchy of Luxembourg (“SES”), GE CFE Luxembourg S. à r.l., a company with limited liability organized and existing under the laws of the Grand Duchy of Luxembourg (“CFE”), GE Capital Equity Holdings Inc., a Delaware corporation (“GCEH”) and for the purpose of Section 6.23, General Electric Capital Corporation, a Delaware corporation (“Parent”).

W I T N E S S E T H:

WHEREAS, SES and certain of its Subsidiaries, collectively, currently own the AMC-23 Business and the Equity Interests (as such terms are defined in Article 1);

WHEREAS, on or prior to the Closing (as defined in Section 2.2), SES shall complete the Reorganization (as defined in Section 3.7), pursuant to which the Equity Interests, the AMC-23 Transferred Assets (as defined in Section 3.2), the AMC-23 Assumed Liabilities (as defined in Section 3.4) and the Cash Amount (as defined in Article 1) will be transferred into Splitco (as defined in Article 1) in accordance with this Agreement, and immediately after the Closing the Equity Interests, the AMC-23 Transferred Assets, the AMC-23 Assumed Liabilities and the Cash Amount will be owned solely by Splitco;

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, (a) SES desires to redeem the Class C Shares (as defined in Article 1) for consideration in kind consisting of the Splitco Shares (as defined in Article 1), and (b) the GE Entities (as defined in Article 1) desire to have SES redeem the Class C Shares for consideration in kind consisting of the Splitco Shares;

WHEREAS, the parties hereto intend the Redemption (as defined in Section 2.1) to qualify as a tax-free exchange under Section 355(a) of the Code (as defined in Article 1);

WHEREAS, the Board of Directors of SES is motivated to effectuate the Redemption for the following business purposes of SES: (a) following the acquisition of New Skies Satellites Holdings Ltd. on March 30, 2006, (i) to restructure and optimize SES’s business assets and its portfolio of shareholdings in satellite system owners and operators, (ii) to refocus its satellite service activities to match its intended market positioning, and (iii) to accomplish the restructuring and optimization in a single transaction in such a manner that maximizes the value of the business assets and participation interests; and (b) to remove the market overhang (being the negative effect on the SES Shares trading price which SES believes resulted from the GE Entities’ announcement in 2005 that the GE Entities intended to divest from their participation in SES through periodic sales at a set price (and the GE Entities’ subsequent sales at or around that price) in order to meaningfully facilitate SES’s acquisition strategy during the overhang period (being the period which the market overhang would last beyond the anticipated date of the Redemption if the Redemption were not to occur); and, in consideration of the foregoing, a committee of SES duly appointed by the Board of Directors of SES and authorized to act on behalf of the Board of Directors of SES has approved this Agreement and the transactions contemplated by this Agreement; and

 

1

WHEREAS, the boards of directors of Parent and each of the GE Entities has, in each case, determined that it is in the best interests of their respective company to enter into this Agreement and have each approved this Agreement and the transactions contemplated by this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE 1.

CERTAIN DEFINITIONS AND OTHER MATTERS

Section 1.1 Certain Definitions.

As used in this Agreement and the schedules hereto, the following terms have the respective meanings set forth below.

“Actual Satellite Operational Capability” means, as measured from any date, the reasonable forecast of the total number of remaining 30-day periods until the end of expected life for each transponder on such satellite taking into account all known and reasonably likely Transponder Unit Failures.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the ability to elect the members of the board of directors or other governing body of a Person, and the terms “controlled” and “controlling” have correlative meanings. For purposes of this Agreement, (i) the GE Entities shall be deemed not to be an “Affiliate” of SES or any of its Subsidiaries and SES or any of its Subsidiaries shall be deemed not to be an “Affiliate” of the GE Entities; provided, however, that prior to the Closing, the Transferred Entities shall be an “Affiliate” of SES and not of the GE Entities and, following the Closing, the Transferred Entities shall be an “Affiliate” of the GE Entities and not of SES; and (ii) Star One, ORBCOMM Inc., Bowenvale and AsiaSat and their respective Subsidiaries shall not be deemed to be “Affiliates” of SES or any of its Subsidiaries.

“Aggregate Reference Amount” means (i) the product obtained by multiplying the number of Class C Shares to be redeemed in the Redemption by the Reference Amount, plus (ii) forty-five million Euros (€45,000,000); provided, however, that if the Closing Date occurs after the record date for SES’s 2006 annual dividend, the Aggregate Reference Amount shall be reduced by the lesser of forty-five million Euros (€45,000,000) or the gross amount of the 2006 dividend payable on the Class C Shares.

“AMC-23 Business” means the business presently engaged in by SES and its Subsidiaries of owning and operating the AMC-23 Satellite, including providing transponder capacity services through the AMC-23 Satellite and excluding the provision of telemetry, tracking and control of the satellite.

 

2

“AMC-23 Loss” means, for the AMC-23 Satellite, (i) the loss or complete destruction of such satellite or (ii) an occurrence as a result of which Actual Satellite Operational Capability is reduced to less than 80% of Stated Satellite Operational Capability as of the date hereof.

“AMC-23 Satellite” means the satellite licensed by the FCC with call sign S2610.

“Ancillary Agreements” means the Transition Services Agreement, the Tax Matters Agreement, the SOS Agreement, the TMA Officers’ Certificates, any Transponder Sale Agreement executed under Section 3.10 (if any), and the Escrow Agreement (if executed pursuant to Section 3.11), together with all agreements and instruments required to be delivered under the terms of this Agreement and the foregoing agreements.

“Antitrust Division” means the Antitrust Division of the United States Department of Justice.

“Antitrust Laws” means all U.S. and foreign laws issued by a Governmental Entity that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

“AsiaSat” means Asia Satellite Telecommunications Holdings Limited, a company formed and existing under the laws of Bermuda.

“AsiaSat Shares” means 268,905,000 shares of common stock, par value HK$ 0.10 per share, of AsiaSat.

“Backlog” means the aggregate unpaid amount owing to the AMC-23 Business and Satlynx and its Subsidiaries under all Contracts that represent obligations of third parties to make payments to the AMC-23 Business or Satlynx or any of its Subsidiaries in exchange for the sale, lease or provision of transponder capacity services or managed network services.

“Bowenvale” means Bowenvale Limited, a company formed and existing under the laws of The British Virgin Islands.

“Bowenvale Shareholders Agreement” means the Shareholders’ Agreement relating to Bowenvale Limited by and among SES, CITIC Group, Bowenvale, Able Star Associates Limited and SES Finance S.A., dated December 10, 1998, as amended by the Deed of Adherence and Amendment No. 1 to the Shareholders Agreement dated November 9, 2004.

“Bowenvale Shares” means the shares of Bowenvale held directly or indirectly by SES, being one hundred and thirty-three million, one hundred and seven thousand, nine hundred and seventy-five (133,107,975) Y shares.

“Business Day” means any day other than Saturday, Sunday and any day which is a legal holiday or a day on which banking institutions in Luxembourg, The British Virgin Islands, Sao Paulo, Brazil or New York, New York, are authorized or required by law or other action of a Governmental Entity to close.

 

3

“BRL” or “Brazil Real” means the unit of account of Brazil.

“Capital Reduction Amount” means the aggregate amount of cash actually received by SES do Brazil Satelites Ltda., a company organized under the laws of Brazil, from Star One, after January 1, 2006, as a result of any capital reductions effected by Star One.

“Cash Amount” means an amount in cash equal to (i) the Aggregate Reference Amount, plus (ii) except as provided in Section 6.31, an amount equal to any dividends and distributions (whether in cash or in-kind) received with respect to fiscal 2006 or any later period and paid after November 1, 2006 and prior to the Closing Date by SES or any Affiliate thereof as a result of ownership of an interest in Star One, ORBCOMM Inc., Bowenvale, or AsiaSat (other than those dividends listed on Schedule 1.1(a)), plus (iii) except as provided in Section 6.31, the Capital Reduction Amount, plus (iv) if the GE Entities or Splitco receive a Call Option with respect to the Satlynx Excluded Shares pursuant to Section E.1(h) of the Reorganization Plan, an amount equal to the Call Option Exercise Price (as such term is defined in the Reorganization Plan), less (v) six hundred and fifty million Euros (€650,000,000), less (vi) in the event additional Non-Investment Assets are transferred to Splitco pursuant to Section 3.10, the aggregate amount(s) provided in Section 3.10(b)(iii), 3.10(c)(ii) and/or 3.10(d)(v), less (vii) the pro rata portion of any premium payments made by SES and its Affiliates pre-Closing with respect to In-Orbit Insurance to the extent any such premium relates to post-Closing coverage, plus (viii) if at the Closing Date the ANATEL Condition has not been satisfied, an amount equal to ninety-five million Euros (€95,000,000) pursuant to Section 6.31.

“Claims” means any and all (i) claims, (ii) demands or (iii) causes of action (in the case of clause (iii), relating to or resulting from a Proceeding).

“Class A Shares” means the Class A Shares, without nominal value, of SES.

“Class C Shares” means the aggregate one hundred and three million, one hundred and forty-nine thousand, nine hundred (103,149,900) class C shares, without nominal value, of SES held by the GE Entities as of the date hereof (appropriately adjusted for any stock dividend, stock split, reverse stock split, share combination, reclassification, recapitalization or similar transaction).

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” means the Non-Disclosure Agreement, effective as of November 6, 2006, between SES and GE Capital Equity Capital Group, Inc.

“Confidential Business Information” means any information, including methods of operation, customers, customer lists, products, prices, fees, costs, technology, Intellectual Property, inventions, trade secrets, know-how, software, marketing methods, plans, personnel, suppliers, competitors, markets or other specialized information or proprietary matters.

 

4

“Contract” means any contract, agreement, indenture, deed of trust, license, note, bond, mortgage, lease, guarantee and any similar understanding or arrangement, whether written or oral.

“Disclosed Balance Sheets” means the Leuk Balance Sheets and the Satlynx Balance Sheets.

“Documents” means all files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers, journals, title policies, lists of past, present and/or prospective customers, supplier lists, regulatory filings, operating data and plans, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web pages, etc.), and other similar materials, or portions thereof, related exclusively to the AMC-23 Business, in each case whether or not in electronic form.

“EC Merger Regulation” means Council Regulation (EEC) No. 4064/89, as amended.

“Embratel” means Empresa Brasileira de Telecommunicacoes S.A., a company formed and existing under the laws of Brazil.

“Employment Agreement” means a written Contract or offer letter of SES or any of its Affiliates with or addressed to any Person pursuant to which Splitco shall, directly or indirectly, have any actual or contingent liability or obligation to provide compensation and/or benefits on or after the Closing Date in consideration for past, present or future services.

“Encumbrances” means security interests, liens, Claims, charges, title defects, deficiencies or exceptions (including, with respect to real property, defects, deficiencies or exceptions in, or relating to, marketability of title, or leases, subleases or the like affecting title), mortgages, pledges, easements, encroachments, restrictions on use, rights-of-way, rights of first refusal, conditional sales or other title retention agreements, covenants, conditions or other similar restrictions (including restrictions on transfer) or other encumbrances of any nature whatsoever.

“Environmental Costs and Liabilities” means all Liabilities, obligations, losses, damages, costs and expenses (including all reasonable attorneys’ fees and other defense costs and costs of investigation), fines and penalties, whether known or unknown, accrued or contingent, to the extent based upon, related to, or arising under or pursuant to any violation of Environmental Law, permits required under Environmental Law, or orders or agreements with any Governmental Entity under Environmental Laws.

“Equity Interests” means the Satlynx Shares, the Bowenvale Shares, the Star One Shares and the ORBCOMM Shares.

“Equity Interest Encumbrances” means, (i) with respect to Bowenvale, those Encumbrances imposed by the terms of the Bowenvale Shareholders Agreement and the organizational documents of Bowenvale made available by SES to the GE Entities, (ii) with respect to Star One, those imposed by the terms of the Star One Shareholders Agreement, and the

 

5

organizational documents of Star One made available by SES to the GE Entities, and (iii) with respect to ORBCOMM Inc., those imposed by the terms of the ORBCOMM Lockup Agreement and the organizational documents of ORBCOMM filed by ORBCOMM with the SEC via EDGAR.

“Euro” or “EUR” or “€” means the unit of account of the European Union.

“Excluded Satlynx Shares” shall have the meaning assigned thereto in the Reorganization Plan.

“Extraordinary Corporate Transaction” means a sale, merger, tender offer or other extraordinary business combination transaction, the result of which is that (i) 30% or more of the shares of the capital stock of SES become beneficially owned or controlled, directly or indirectly, by a Person (or a group of Persons acting in concert) that does not beneficially own or control at least such percentage of shares as of the date hereof, or (ii) a Person (or group of Persons acting in concert), other than holders of Class B shares, directly or indirectly elects, designates, nominates, or becomes entitled to elect, designate or nominate at least 30% of the members of the board of directors of SES.

“FCC” means the Federal Communications Commission.

“FCC Rules” means, collectively, the Communications Act of 1934, as amended, or any successor statute, and the rules, regulations, orders and policies of the FCC promulgated thereunder.

“FDRs” mean the Fiduciary Depositary Receipts issued from time to time by Banque et Caisse d’Epargne de l’Etat and representing each a Class A Share.

“GE Entities” means CFE and GCEH.

“Government Contracts” shall mean, collectively, (i) all Contracts between any Transferred Entity on the one hand, and any Governmental Entity on the other hand, and (ii) all AMC-23 Contracts with a Governmental Entity, including in each case any Contract for the use of government-owned facilities. Government Contracts include, as appropriate, all bids and proposals submitted to any Governmental Entity by any Transferred Entity or, with respect to the AMC-23 Business, SES or any of its Affiliates that if accepted or awarded would result in a binding Government Contract.

“Government Subcontracts” shall mean, collectively, (i) all Contracts that are a subcontract between any Transferred Entity on the one hand, and any third party on the other hand, that relates, to the knowledge of SES, to a Contract between such third party and (a) any Governmental Entity or (b) another party where the ultimate contracting party is a Governmental Entity and (ii) all AMC-23 Contracts that are a subcontract with a third party relating, to the knowledge of SES, to a Contract between such third party and (c) any Governmental Entity or (d) another party where the ultimate contracting party is a Governmental Entity. Government Subcontract includes all bids and proposals submitted by SES or its Affiliates to any party that if accepted or awarded would result in a binding Government Subcontract.

 

6

“Governmental Damages” shall mean (i) any civil or criminal penalties or fines paid or payable to a Governmental Entity, (ii) any restitution paid to a third party, in each case set forth in the foregoing clauses (i) and (ii), resulting from the (x) conviction (including as a result of the entry of a guilty plea, a consent judgment or a plea of nolo contendere) of SES or any of its Affiliates of a crime or (y) settlement with a Governmental Entity for the purpose of closing a Governmental Investigation, or (iii) any injunctive relief or requirement to alter business practices.

“Governmental Entity” means any supranational, national, federal, state or local government, foreign or domestic, or the government of any political subdivision of any of the foregoing, or any entity, authority, agency, ministry or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established by a Governmental Entity to perform any of such functions.

“Governmental Investigation” shall mean an investigation by a Governmental Entity for the purpose of imposing criminal sanctions or civil penalties, fines or injunctions on SES or any of its Affiliates.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Insurance Policies” means, collectively, (i) the In-Orbit Insurance (as such term is defined in Section 6.11) and (ii) each third party insurance policy (other than relating to Company Benefit Plans), which, as of the date hereof or hereinafter until the Closing, is maintained by or on behalf of or provides coverage to Satlynx and its Subsidiaries.

“Investment Asset” shall have the meaning ascribed to such term in the Tax Matters Agreement.

“IFRS” means International Financial Reporting Standards.

“IRS” means the Internal Revenue Service of the United States of America.

“ITU” means the International Telecommunication Union.

“Judgment” means any judgment, order, decree, written agreement, or memorandum of understanding of or with any Governmental Entity.

“knowledge of SES” or “known to SES” shall mean actual knowledge after due inquiry of the persons identified on Schedule 1.1(b)(i); provided, however, that with respect to any representation or warranty related to Star One and AsiaSat (i) “knowledge of SES” or “known to SES” shall mean actual knowledge of the persons identified on Schedule 1.1(b)(ii) without any implication of verification or investigation concerning such knowledge and (ii) no implications may be drawn from the extent of the representations and warranties concerning such entities that such persons actually have any knowledge as to the matters contained in such representations.

 

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“Laws” means all laws, constitutions, statutes, codes, rules, regulations, ordinances, executive orders, decrees or edicts by a Governmental Entity having the force of law.

“Leuk” means SES International Teleport (Switzerland) AG, a company formed and existing under the laws of Switzerland.

“Leuk Financial Statements” means (i) the balance sheet of Leuk as of December 31, 2004 and December 31, 2005 and the related statement of income of Leuk for the fiscal year ended on each such date (audited by Ernst & Young), together with the notes thereto and (ii) draft management accounts as of December 31, 2006 that include the balance sheet of Leuk as of December 31, 2006 and the related statement of income for the fiscal year ended on such date; and the balance sheets included in the Leuk Financial Statements shall be referred to in this Agreement as the “Leuk Balance Sheets”.

“Liabilities” means any and all debts, liabilities, commitments and obligations, whether or not fixed, contingent or absolute, matured or unmatured, direct or indirect, liquidated or unliquidated, accrued or unaccrued, known or unknown, whether or not required by applicable accounting standards to be reflected in financial statements or disclosed in the notes thereto.

“Non-Investment Asset” shall have the meaning ascribed to such term in the Tax Matters Agreement.

“Operating Transponder” means a transponder that has not experienced a Transponder Unit Failure.

“ORBCOMM Lockup Agreement” means the Lockup Agreement dated June 23, 2006 by and between UBS Securities LLC and SES Global Participations.

“ORBCOMM Shares” mean 2,000,001 shares of ORBCOMM Inc., a Delaware corporation.

“Ordinary Course of Business” means, with respect to any of the Transferred Businesses, actions that (a) are consistent with the past practices of such Transferred Business within the preceding twenty-four months or (b) are similar in nature, style and magnitude to actions customarily taken in the ordinary course of the normal day-to-day operations of such Transferred Business.

“Permit” means any permit, registration, certificate, franchise, approval, identification number, license or other authorization or filing.

“Permitted Encumbrances” means (a) Encumbrances for Taxes or other assessments or charges by Governmental Entities that arise by operation of Law and are not yet due and payable, or that are being contested in good faith by appropriate proceedings; (b) mechanics’, carriers’, workers’, materialmen’s, warehousemen’s and similar liens arising or incurred in the Ordinary Course of Business relating to obligations as to which there is no default on the part of SES or any of its Affiliates for a period greater than 30 days or the amount of which is being contested in good faith by appropriate proceedings; (c) Encumbrances not material to the utility or value of the property or asset so encumbered; and (d) Encumbrances disclosed in Schedule 1.1(c).

 

8

“Person” or “person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust or joint venture, or a Governmental Entity.

“Private Letter Ruling” shall have the meaning ascribed to such term in the Tax Matters Agreement.

“Reference Amount” means EUR 12.00 (the “Base Reference Amount”); provided, however, that if (i) prior to obtaining the Required Resolutions from SES shareholders, an Extraordinary Corporate Transaction is announced (the date of such announcement is referred to as the “Announcement Date”), and (ii) the average (arithmetic mean) of the closing trading prices of one FDR on the Euronext Paris Exchange for the five (5) consecutive trading days following such announcement, less a 6% discount (the “Modified Reference Amount”), is at least 10% higher than the average (arithmetic mean) of the closing trading prices of one FDR on the Euronext Paris Exchange for the five (5) consecutive trading days ending on the twentieth Business Day before the Announcement Date, less a 6% discount (the “Pre-Announcement Price”), the term “Reference Amount” shall mean an amount equal to (i) the Base Reference Amount plus (ii) the excess of the Modified Reference Amount over the Pre-Announcement Price.

“Satlynx” means SES Managed Services S.A., a société anonyme organized and existing under the laws of the Grand Duchy of Luxembourg.

“Satlynx Financial Statements” means (i) the consolidated balance sheet of Satlynx (or its predecessor entity) and its Subsidiaries as of December 31, 2004 and December 31, 2005 and the related consolidated statement of profit and loss account for the fiscal year ended on each such date (audited by Ernst & Young), together with notes thereto and (ii) draft management accounts as of December 31, 2006 that include the consolidated balance sheet of Satlynx and its Subsidiaries as of December 31, 2006 and the related consolidated statement of profit and loss account for the fiscal year ended on such date; and the balance sheets included in the Satlynx Financial Statements shall be referred to in this Agreement as the “Satlynx Balance Sheets”.

“Satlynx Shares” means the shares of Satlynx directly or indirectly held by SES as of the Closing Date.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended.

“SES Entities” means, collectively, (i) Satlynx and each of its Subsidiaries, (ii) each Affiliate of SES that owns of record any Equity Interest and (iii) each SES Affiliate (other than Splitco) which holds an AMC-23 Transferred Asset or AMC-23 Assumed Liability, in each case, as of the date hereof or any time prior to the Closing.

 

9

“SES Financial Advisor” shall mean Dresdner Kleinwort or another leading international investment bank or other financial advisor reasonably approved by GCEH.

“SES Financial Advisor Letter” shall mean the letter attached hereto as Exhibit A.

“SES Material Adverse Effect” means any change, effect, event or circumstance that is materially adverse to (i) the business, assets, properties, results of operations or condition (financial or otherwise) of Splitco, taken as a whole, assuming for purposes of this clause (i) that the transfer to Splitco of the AMC-23 Transferred Assets, AMC-23 Assumed Liabilities , any Non-Investment Asset to be transferred at Closing under Section 3.10 and Equity Interests has been completed as set forth in Article 3 of this Agreement, (ii) the ability of SES and its Affiliates to perform their respective obligations under this Agreement and the Ancillary Agreements substantially as contemplated hereby and thereby, or (iii) the ability of the parties to consummate the transactions contemplated hereby and thereby (including obtaining any necessary consents or authorizations), except with respect to clause (i) above for any change, effect, event or circumstance directly relating to (A) a general downturn in the economies of the countries of the European Union, in the aggregate, or the United States or securities markets in general, or in any region, in each case to the extent not disproportionately affecting any Transferred Business, AsiaSat or Star One, (B) the industries in which any of the Transferred Businesses, AsiaSat or Star One operate and not disproportionately affecting the Transferred Businesses, AsiaSat or Star One, (C) the public announcement of this Agreement or the transactions contemplated hereby or compliance by the parties with their obligations set forth herein (other than the obligations set forth in the first sentence of Section 6.4(a)), (D) any changes in applicable Law (except to the extent such change has a materially disproportionate effect on the Transferred Businesses, AsiaSat or Star One as compared to other Persons in the industry in which such Persons operate and which have comparable lines of business), (E) any changes in IFRS or other applicable accounting standards, or (F) acts of war (whether or not declared), sabotage, terrorism, military actions or the escalation thereof not disproportionately affecting the Transferred Businesses, AsiaSat or Star One; provided, however, that any Transponder Unit Failure that constitutes, individually or in the aggregate with other Transponder Unit Failures, an AMC-23 Loss, shall be deemed to be, in and of itself, an SES Material Adverse Effect.

“SES Shares” means, collectively, all shares of capital stock of SES.

“SOS Agreement” means the Satellite Operational Services for the AMC-23 Satellite agreement in substantially the form attached as Exhibit E hereto.

“Splitco” means SES International Holdings Inc., a Delaware corporation.

“Splitco Common Stock” means the common stock, par value $0.01 per share, of Splitco.

“Splitco Shares” means all of the issued and outstanding shares of Splitco Common Stock.

“Star One” means Star One S.A., a company incorporated in Brazil.

 

10

“Star One Financial Statements” means (i) the balance sheets of Star One as of December 31, 2004 and December 31, 2005, and the related statement of income, changes in shareholders’ equity and changes in financial position for the fiscal year ended on each such date (audited by Ernst & Young), together with footnotes thereto and (ii) the unaudited balance sheet of Star One as of December 31, 2006, and the related income statement for the fiscal year ended on such date; and the balance sheets included in the Star One Financial Statements shall be referred to in this Agreement as the “Star One Balance Sheets”.

“Star One Shareholders Agreement” means the Shareholders’ Agreement by and among Star One, SES and Embratel dated October 30, 2000, as amended by the First Amendment of the Shareholders’ Agreement dated December 28, 2001.

“Star One Shares” means the shares of Star One held directly or indirectly by SES, being 20,989,500 shares.

“Stated Satellite Operational Capability” means, for the AMC-23 Satellite, as measured from any date, the product of (i) the number of Operating Transponders on such satellite, and (ii) the number of remaining 30-day periods from such date until the end of the expected life of such satellite as at such date.

“Subsidiaries” of any entity means, at any date, any Person of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests or more than 50% of the profits or losses of which are, as of such date, owned, controlled or held by the applicable entity or one or more Subsidiaries of such entity.

“Tax” shall have the meaning ascribed to such term in the Tax Matters Agreement.

“Tax Matters Agreement” means the Tax Matters Agreement, by and among SES, Parent, CFE and GCEH dated as of the date hereof.

“Tax Opinions” shall have the meaning ascribed to such term in the Tax Matters Agreement.

“TMA Officers’ Certificates” shall mean the “SES Officer’s Certificate”, as such term is defined in the Tax Matters Agreement, and the Certificate delivered pursuant to Section 3.12 of the Tax Matters Agreement.

“Transferred Businesses” means (i) the AMC-23 Business and (ii) the business conducted by Satlynx and its Subsidiaries.

“Transferred Employees” means, collectively, (i) all current or former employees, directors and officers of Satlynx and its Subsidiaries and employees and officers hired in the ordinary course after the date hereof and (ii) with respect to the AMC-23 Business the individuals listed on Schedule 1.1(d).

“Transferred Entities” means, collectively, Splitco, Satlynx and any Subsidiary of Satlynx.

 

11

“Transition Services Agreement” means the Transition Services Agreement in substantially the form attached as Exhibit C hereto.

“Transponder Sale Agreement” means one or more Transponder Sale Agreements of any Non-Investment Assets to be transferred to Splitco in accordance with Section 3.10(d) having terms that shall be consistent with the terms set out in the Transponder Sale Terms attached hereto as Exhibit B.

“Transponder Unit Failure” means the failure of a transponder to meet applicable performance specifications such that, after use of all available redundancy and spare components, it is demonstrated that the transponder cannot be used for its intended commercial communications purposes.

“Valuation Firms” means Morgan Stanley and Near Earth LLC or another nationally recognized valuation firm engaged by the GE Entities and reasonably acceptable to SES.

Section 1.2 Terms Defined in Other Sections.

The following terms are defined elsewhere in this Agreement in the following Sections:

 

Defined Term

  

Reference

2007 Agreements

   Section 11.7

Acquired Business

   Section 6.16(b)

Agenda

   Section 6.1

Agreement

   Preamble

AMC-23 Assumed Liabilities

   Section 3.4

AMC-23 Balance Sheet

   Section 4.12(c)

AMC-23 Business Intellectual Property

   Section 3.2(d)

AMC-23 Business Permits

   Section 3.2(g)

AMC-23 Construction Contract

   Section 3.2(j)

AMC-23 Contracts

   Section 3.2(b)

AMC-23 Employees

   Section 6.22(a)

AMC-23 Insurance Policy

   Section 4.19

AMC-23 Leased Property

   Section 4.14

AMC-23 Major Supplier

   Section 4.23(c)

AMC-23 Material IP

   Section 4.16(b)

AMC-23 Owned Property

   Section 4.14

AMC-23 Property

   Section 4.14

AMC-23 Real Property

   Section 3.2(e)

AMC-23 Registered IP

   Section 4.16(a)

AMC-23 Transferred Assets

   Section 3.2

Americom

   Section 6.24

ANATEL

   Section 8.1(b)(vii)

ANATEL Condition

   Section 8.1(b)(vii)

Annual Fee

   Section 3.10(c)

AsiaSat Contracts

   Section 4.17(e)

 

12

AsiaSat Filings

   Section 4.26(a)

Astra

   Section 3.3(c)

Business Asset

   Section 3.9

Business Records

   Section 6.12(b)

Capital Expenditure Plan

   Section 6.4(b)(iv)

Capital Reduction Required Resolutions

   Section 4.2(c)

Capital Reduction Required Vote

   Section 4.2(c)

CFE

   Preamble

Closing

   Section 2.2

Closing Date

   Section 2.2

Communications Permits

   Section 4.18(a)

Companies’ Act

   Section 4.2(c)

Company Benefit Plans

   Section 4.20(a)

Company Contracts

   Section 4.17(c)

Company Guarantees

   Section 6.27(a)

Company Registered IP

   Section 4.16(a)

Conditions Satisfaction Date

   Section 2.2

Construction Contract

   Section 6.30(c)

Covered Business

   Section 6.16(b)

Credit

   Section 3.10(b)(ii)

Designated Contracts

   Section 4.17(g)

Designated Customers

   Section 6.17

Designated Satellites

   Section 6.17

Designated Satlynx Customers

   Section 6.16(a)

Designated Transponder

   Section 3.10(d)

Designated Transponder Agreement

   Section 3.19(b)

Disclosed X Financial Statements

   Section 4.12(a)

Disclosure Schedules

   Article 4

Discrete Paths

   Section 6.11(c)

Dividend Amount

   Section 6.31(b)

DOJ

   Section 6.7(a)

Draft Reports

   Section 6.13

Draft Resolutions

   Section 6.1

EGM

   Section 4.2(c)

Embratel Letter

   Section 3.11(e)

Encryption Agreement

   Section 6.30(d)

Environmental Laws

   Section 4.21

Escrow Agent

   Section 3.11(a)

Escrow Agreement

   Section 3.11(a)

Excess Amount

   Section 3.11(b)

Excluded Assets

   Section 3.3

Excluded Liabilities

   Section 3.5

Export Control Requirements

   Section 4.9(a)(i)

FCC Consent Application

   Section 6.7(a)

FCPA

   Section 4.9(a)(i)

Final Reports

   Section 6.13

 

13

FTC

   Section 6.7(a)

GCEH

   Preamble

GE Indemnified Party

   Section 10.7

GE Indemnitees

   Section 10.2(a)

GE Material Adverse Effect

   Section 5.1

Governmental Approvals

   Section 6.7(a)

Ground Stations

   Section 4.15(a)

Health Status Reports

   Section 4.15(b)

herein, hereto, hereof

   Section 1.3

HSR Filing

   Section 6.7(a)

Improper Payment Laws

   Section 4.9(a)(i)

including

   Section 1.3

including without limitation

   Section 1.3

indemnified party

   Section 10.6(a)

Initial Workforce Reduction

   Section 6.19(c)

In-Orbit Insurance

   Section 6.11(a)

Intellectual Property

   Section 4.16(c)

Intercompany Arrangement

   Section 4.11

Intercompany Netting

   Section 6.9(a)

ITAR

   Section 6.7(d)

ITAR Authority

   Section 6.7(d)

Leuk Workforce Reduction

   Section 6.19(a)

Losses

   Section 10.2(a)

Major Customer

   Section 4.23(a)

Major Supplier

   Section 4.23(b)

Material AsiaSat Permits

   Section 4.18(f)

Material Backlog Contracts

   Section 4.17(f)

Material Company Permits

   Section 4.18(a)

Material Star One Permits

   Section 4.18(e)

Names

   Section 6.28

ND Satcom

   Section 6.16(d)

New Skies

   Section 6.16(d)

New Skies Agreement

   Section 6.24(b)

New Transponder Service Agreements

   Section 3.10(b)

Non U.S. Governmental Approvals

   Section 6.7(a)

Nonassignable Assets

   Section 3.6(b)

Ordinary Course of Business

   Section 1.1

Parent

   Preamble

Permit

   Section 1.1

Permitted Encumbrances

   Section 1.1

Person or person

   Section 1.1

pollutant

   Section 4.21

POS

   Section 3.10(c)

Potential Contributor

   Section 10.7

Privitization

   Section 8.1(b)(iv)

Proceeding

   Section 4.18(a)

 

14

Projected EOL Date

   Section 3.10(c)

Proposed Headcount Number

   Section 6.19(a)

Records

   Section 6.12(b)

Redemption

   Section 2.1

Redemption Required Resolutions

   Section 4.2(c)

Redemption Required Vote

   Section 4.2(c)

Release

   Section 4.21

Reorganization

   Section 3.7

Reorganization Plan

   Section 3.7

Required Antitrust Filing

   Section 8.1(b)(iii)

Required Resolutions

   Section 4.2(c)

Required Vote

   Section 4.2(c)

Reserves Funding

   Section 6.9(b)

Satellite Data

   Section 4.15(b)

Satlynx Leased Property

   Section 4.14

Satlynx Material IP

   Section 4.16(a)

Satlynx Owned Property

   Section 4.14

Satlynx Property

   Section 4.14

Satlynx Registered IP

   Section 4.16(a)

Section 3.11 Escrow Amount

   Section 3.11(a)

Section 3.11 Escrow Fund

   Section 3.11(a)

Section 3.11 Payment Trigger

   Section 3.11(b)

Section 6.31 Escrow Amount

   Section 6.31(a)

Section 6.31 Escrow Fund

   Section 6.31(b)

Service

   Section 3.10(b)(ii)

SES

   Preamble

SES Indemnitees

   Section 10.3(a)

SOS

   Section 3.10(c)

SOS Acceleration Election

   Section 3.10(a)

Star One Closing

   Section 6.31(b)

Star One Closing Date

   Section 6.31(b)

Star One Contracts

   Section 4.17(d)

Star One Payment Amount

   Section 3.11(b)

Star One ROFR

   Section 4.6(e)

State

   Section 6.7(d)

Statuts

   Section 4.1(b)

Swiss Tax Ruling

   Section 6.19(b)

Target

   Section 6.16(b)

Target Covered Business

   Section 6.16(b)

Termination Date

   Section 9.1(b)

Third Party Claim

   Section 10.6(a)

Tranponder Assignment Agreement

   Section 3.10(b)(i)

Transfer

   Section 6.6(e)

Transponder Prepayment Election

   Section 3.10(a)

Transponder Sale Election

   Section 3.10(a)

Valuation Conclusions

   Section 8.2(g)

Voting Debt

   Section 4.6(e)

X Assets

   Section 6.4(b)(i)

 

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Section 1.3 Interpretation.

Unless otherwise indicated to the contrary in this Agreement by the context or use thereof, (a) the words, “herein”, “hereto”, “hereof” and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (b) references in this Agreement to Sections, Articles or paragraphs refer to section, articles or paragraphs of this Agreement, (c) words importing the masculine gender shall also include the feminine and neutral genders, and vice versa; (d) words importing the singular shall also include the plural, and vice versa; (e) the word “including” means “including without limitation”; (f) limitations stated in one currency apply also to the equivalent amount in another currency; and (g) the transactions contemplated by this Agreement include, for the avoidance of doubt, the Reorganization.

ARTICLE 2.

REDEMPTION OF STOCK

Section 2.1 Redemption of Stock.

Upon the terms and subject to the conditions of this Agreement, at the Closing, the parties shall effect the following transactions (collectively, the “Redemption”): (a) SES shall assign, transfer, convey and deliver to the GE Entities and the GE Entities shall accept and acquire from SES, each in proportion to their holdings of Class C Shares, all of the Splitco Shares (free and clear of all Encumbrances) as consideration in kind for the redemption by SES of the Class C Shares, and (b) each of the GE Entities shall assign, transfer, convey and deliver to SES, and SES shall accept and acquire by redemption from each of the GE Entities, the one hundred and three million, one hundred and forty-nine thousand, nine hundred (103,149,900) Class C Shares (free and clear of all Encumbrances) against transfer of the Splitco Shares as consideration in kind for such redemption.

Section 2.2 Closing.

The closing of the Redemption (the “Closing”) shall take place at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153 at 10:00 a.m. on the fifth Business Day following the Conditions Satisfaction Date (as defined below), or at such other time and place as is mutually agreed in writing by SES and the GE Entities. The date the Closing actually occurs is referred to herein as the “Closing Date”. For purposes of this Agreement, the “Conditions Satisfaction Date” shall be the date on which the last of the unsatisfied or unwaived conditions set forth in Article 8 has been satisfied or waived (other than those conditions contemplated to be satisfied at, or only capable of being satisfied at, the Closing, but subject to the satisfaction or waiver of those conditions).

Section 2.3 SES’s Deliveries at the Closing.

At the Closing, SES shall deliver or cause to be delivered to the GE Entities the following:

(a) stock certificates in denominations designated by the GE Entities in writing not less than three (3) Business Days prior to the Closing Date, together with stock powers executed in blank or other duly executed instruments of transfer, representing all of the issued and outstanding capital stock of Splitco;

 

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(b) stock certificates, together with stock powers or other duly executed instruments of transfer, evidencing the transfer of all of the Equity Interests (other than the Excluded Satlynx Shares) to Splitco;

(c) evidence reasonably satisfactory to the GE Entities of the possession by Splitco of the Cash Amount which is held in a reputable international financial institution (which has been reasonably approved by the GE Entities) in freely available Euros;

(d) the stock books, stock ledgers and minute books of Splitco and comparable documentation with respect to Satlynx;

(e) certified copies of resolutions, duly adopted by the board of directors (or a committee duly appointed thereby with full authority to act on behalf of SES with respect to such matter) of SES, Splitco and the Affiliates of SES who are to be parties to the Ancillary Agreements, respectively, which shall be in full force and effect at the time of the Closing authorizing the execution, delivery and performance by SES, Splitco and such SES Affiliates, respectively, of this Agreement and the applicable Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby;

(f) a certificate of the Chief Financial Officer or Treasurer of SES pursuant to Sections 8.2(a) and 8.2(b) hereof;

(g) each of the Ancillary Agreements, executed by SES and/or its respective Affiliates, as the case may be;

(h) letters of resignation, dated as of the Closing Date, from each of the directors and officers of Splitco resigning from any position held by such individual with Splitco and terminating any authorization such individual may have in respect of bank accounts, fiduciary accounts, lock-boxes, safe deposit boxes or other similar accounts of Splitco;

(i) a general release and discharge from SES, on behalf of itself and its Affiliates, in form and substance reasonably satisfactory to the GE Entities, releasing and discharging Splitco and the Transferred Entities from any and all Liabilities in connection with or arising out of any act or omission of Splitco or the Transferred Entities or any of their respective officers, directors, employees or agents, in such capacity, at or prior to the Closing, except (i) with respect to any Intercompany Arrangement that is set forth on Schedule 2.3(i) hereto and (ii) to the extent such Liabilities are expressly contemplated to be retained or assumed by Splitco pursuant to this Agreement or any of the Ancillary Agreements or arise out of this Agreement or any of the Ancillary Agreements;

(j) copies of letters of resignation, dated as of the Closing Date, from any nominee of SES or its Affiliates to the board of directors of Satlynx, Bowenvale, Star One, ORBCOMM and any of their Subsidiaries;

 

17

(k) an instrument in form and substance reasonably satisfactory to the GE Entities terminating the Intercompany Arrangements other than those set forth on Schedule 2.3 (i) hereto;

(l) all documents required pursuant to the Tax Matters Agreement;

(m) a document reasonably satisfactory to the GE Entities evidencing the assignment of the AMC-23 FCC license to Splitco;

(n) either the Forward Contract or the Call Option Contract, as the case may be, under Section E.1(h) of the Reorganization Plan; and

(o) such other documents as are reasonably required by either of the GE Entities to be delivered to effectuate the transactions contemplated hereby.

Section 2.4 GE Entities Deliveries at the Closing.

At the Closing, the GE Entities shall deliver or cause to be delivered to SES the following:

(a) the confirmation certificate originally issued by SES relating to the registration of the GE Entities as owners of the Class C Shares together with a mandate to the board of directors of SES to delete the GE Entities as owners of the Class C Shares in SES’s shareholders’ register and to inscribe SES as the owner of such shares;

(b) certified copies of resolutions, duly adopted by the board of directors of each of the GE Entities and Parent, which shall be in full force and effect at the time of the Closing, authorizing the execution and delivery and performance by each of the GE Entities and Parent of this Agreement and the applicable Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby;

(c) each of the Ancillary Agreements to which any of the GE Entities or their Affiliates is a party, executed by them;

(d) a certificate of the Chief Financial Officer, Manager or Treasurer of each of the GE Entities pursuant to Sections 8.3(a) and 8.3(b) hereof;

(e) letters of resignation, dated as of the Closing Date, from each of Charles Alexander and John Connelly, or any successor thereof, as a member of the board of directors of SES;

(f) lock-up agreement substantially in the form attached to Schedule 2.4(f);

(g) copies of all Transponder Assignment Agreements required under Section 3.10(b)(i)(z) and Section 3.10(d), in each case in form and substance reasonably acceptable to SES;

(h) such other documents as are reasonably required by SES to be delivered to effectuate the transactions contemplated hereby.

 

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Each document of transfer or assumption referred to in this Article 2 (or in any related definition set forth in Article 1) that is not attached as an Exhibit to this Agreement or is not otherwise an Ancillary Agreement shall be in customary form and shall be reasonably satisfactory in form and substance to the parties thereto, but shall contain no representations, warranties, covenants and agreements other than those specifically contemplated by this Agreement.

ARTICLE 3.

REORGANIZATION

Section 3.1 Transfer of Equity Interests and Cash Amount.

At or prior to the Closing, SES shall, or shall cause its Affiliates to, assign, transfer, convey and deliver to Splitco, and SES shall cause Splitco to acquire and accept, (i) all of SES’s or its appropriate Affiliates’ right, title and interest in, to and under the Equity Interests, other than the Excluded Satlynx Shares, free and clear of all Encumbrances, except for the Equity Interest Encumbrances, and (ii) the Cash Amount, free and clear of all Encumbrances.

Section 3.2 Transfer of AMC-23 Assets.

At or prior to the Closing, SES shall, or shall cause its Affiliates to, assign, transfer, convey and deliver to Splitco all of SES’s and any of its Affiliates’ right, title and interest as of the Closing Date in, to and under the AMC-23 Transferred Assets free and clear of all Encumbrances except for Permitted Encumbrances, and SES shall cause Splitco to acquire and accept the AMC-23 Transferred Assets and assume the AMC-23 Assumed Liabilities. “AMC-23 Transferred Assets” shall mean all of the business, assets, properties, contractual rights, goodwill, going concern value, rights and claims, wherever located and of whatever kind and nature, real or personal, tangible or intangible, used or held for use exclusively for the AMC-23 Business (in each case other than the Excluded Assets), including, without limitation, the assets, properties and rights referred to below:

(a) subject to Section 6.7(d), the AMC-23 Satellite;

(b) subject to Section 6.30(c), all Contracts (or portions thereof) to which SES or any of its Affiliates is a party or by which SES or any of its Affiliates is bound that arise exclusively out of the operation of the AMC-23 Business, being the In-Orbit Insurance and all contracts and agreements listed in Schedule 3.2(b) (collectively, the “AMC-23 Contracts”);

(c) all rights under non-disclosure or confidentiality, non-compete, or non-solicitation agreements with the individuals listed on Schedule 1.1(d);

(d) all Intellectual Property owned by SES or any of its Affiliates that is used or held for use exclusively in the AMC-23 Business and which is set forth in Schedule 3.2(d) (the “AMC-23 Business Intellectual Property”);

(e) the real property, leaseholds and other interests in real property owned or leased by SES or any of its Affiliates and used or held for use exclusively in the AMC-23 Business, as listed in Schedule 3.2(e), together in each case with SES’s and its Affiliates’ right, title and interest in and to all structures, facilities or improvements currently or as of the Closing Date located thereon and all easements, licenses, rights and appurtenances relating to the foregoing (the “AMC-23 Real Property”);

 

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(f) all machinery, equipment, furniture, furnishings, parts, spare parts, supplies, vehicles and other tangible personal property owned by SES or any of its Affiliates and used or held for use exclusively in the AMC-23 Business, being those listed on Schedule 3.2(f);

(g) the right to use the 172° East Longitude orbital position and, to the extent assignable, all other Permits used or held for use exclusively in the AMC-23 Business and listed on Schedule 3.2(g) (the “AMC-23 Business Permits”);

(h) all Documents, or portions thereof, owned by SES or any of its Affiliates that are related exclusively to the AMC-23 Business;

(i) all credits, letters of credit, advances, prepaid charges and expenses (including prepaid rent), customer deposits, prepaid royalties and security deposits to the extent relating exclusively to the AMC-23 Business;

(j) all rights to causes of action, lawsuits, judgments, claims and demands of any nature in favor of SES or any of its Affiliates to the extent arising from the Contract for the Construction of AMC-23 and Options, dated November 1, 2003, between WorldSat, LLC and SES Americom, Inc., on the one hand, and Alcatel Space, on the other hand (the “AMC-23 Construction Contract”), including all rights under or pursuant to all guarantees, representations, warranties, indemnities and similar rights thereunder in favor of SES or any of its Affiliates; and

(k) all goodwill and other intangible assets associated with the AMC-23 Business, including goodwill associated with the AMC-23 Business Intellectual Property.

Section 3.3 AMC-23 Excluded Assets.

Notwithstanding anything contained in Section 3.2 to the contrary, SES and its Affiliates shall not transfer to Splitco any assets other than the Equity Interests, the Cash Amount and those assets listed or described in Section 3.2, and without limiting the generality of the foregoing, the term “AMC-23 Transferred Assets” shall expressly exclude the following assets of SES and its Affiliates (other than the Transferred Entities), all of which shall not be transferred to Splitco and shall instead be retained by SES and its Affiliates (collectively, the “Excluded Assets”);

(a) all of SES’s and its Affiliates’ (other than the Transferred Entities’) cash and cash equivalents;

(b) SES’s and its Affiliates’ (other than the Transferred Entities’) corporate books and records of internal corporate proceedings, tax records, work papers and books and records that SES and its Affiliates are required by Law to retain; provided, however, that the GE Entities shall have the right to make copies of any portions of such retained books and records to the extent they relate to the AMC-23 Business or any of the AMC-23 Transferred Assets;

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(c) all Intellectual Property owned or licensed by SES or its Affiliates (other than the AMC-23 Business Intellectual Property and Intellectual Property owned by the Transferred Entities), including without limitation all rights in the following names and marks and any variation or derivation thereof: “SES”, “SES Global”, “Americom”, “Astra” and “New Skies”;

(d) all of SES’s and its Affiliates’ (other than the Transferred Entities’) bank accounts;

(e) all accounting records (including records relating to Taxes) and internal reports relating to the business activities of SES and its Affiliates (other than the Transferred Entities) that are not AMC-23 Transferred Assets;

(f) all rights to causes of action, lawsuits, judgments, claims and demands of any nature in favor of SES or any of its Affiliates (other than the Transferred Entities), except to the extent relating to or arising under the AMC-23 Construction Contract, with respect to pre-Closing periods, including all rights under or pursuant to all guarantees, representations, warranties, indemnities and similar rights in favor of SES or any of its Affiliates including those made by suppliers, manufacturers and contractors with respect to pre-Closing periods;

(g) all accounts receivable, notes receivable and other receivables due to SES or any of its Affiliates (other than the Transferred Entities) as of the Closing Date to the extent that they relate to the operation of the AMC-23 Business prior the Closing Date, together with any unpaid interest or fees accrued thereon or other amounts due with respect thereto;

(h) any insurance policies and rights, claims or causes of action thereunder, other than the In-Orbit Insurance (except as provided in Section 3.9 hereof);

(i) any assets relating to any Company Benefit Plan (other than those of Satlynx and its Subsidiaries);

(j) all real property, leaseholds and other interests in real property owned or leased by SES or any of its Affiliates (other than the Transferred Entities), except as listed in Schedule 3.2(e), together in each case with SES’s and its Affiliates’ right, title and interest in and to all structures, facilities or improvements currently or as of the Closing Date located thereon and all easements, licenses, rights and appurtenances relating to the foregoing;

(k) (i) all machinery, equipment, furniture, furnishings, parts, spare parts, supplies, vehicles and other tangible personal property owned by SES or any of its Affiliates (other than the Transferred Entities), except for those listed on Schedule 3.2(f) and (ii) the assets set forth in Schedule 3.3(k);

(l) all rights, claims and causes of action relating to any Excluded Asset or any Excluded Liability; and

(m) all rights of SES under this Agreement and the Ancillary Agreements.

 

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Section 3.4 AMC-23 Assumed Liabilities.

In connection with the Reorganization pursuant to this Agreement, at or prior to the Closing Date Splitco shall assume and thereafter pay, discharge, perform or otherwise satisfy the following liabilities and obligations of SES and its Affiliates (other than Satlynx and its Subsidiaries) relating to the AMC-23 Business (the “AMC-23 Assumed Liabilities”):

(a) all Liabilities accruing, arising out of or relating to the conduct or operation of the AMC-23 Business or the ownership or use of the AMC-23 Transferred Assets from and after the Closing Date;

(b) all Liabilities of SES and its Affiliates under any Contracts and Permits that are AMC-23 Transferred Assets, in each case to the extent they are to be performed after, or to the extent in respect of periods following, the Closing Date; and

(c) all Liabilities assumed by the GE Entities pursuant to Section 6.22.

Section 3.5 AMC-23 Excluded Liabilities.

Notwithstanding any other provision of this Agreement to the contrary, Splitco shall not assume or be liable for and SES and/or its Affiliates (other than any Transferred Entity) shall pay, perform or otherwise satisfy, all Liabilities of SES and any of its Affiliates arising out of, relating to or otherwise in respect of the AMC-23 Business on or before the Closing Date and all Liabilities of the AMC-23 Business other than the AMC-23 Assumed Liabilities (the “Excluded Liabilities”), including the following:

(a) any indebtedness for borrowed money or guarantees thereof outstanding as of the Closing Date;

(b) any current accounts payable or accrued expenses with respect to the AMC-23 Business incurred or accrued, in each case to the extent, and only to the extent, that they relate to periods prior to the Closing;

(c) all Liabilities in respect of any services performed by SES or any of its Affiliates in respect of the AMC-23 Business on or before the Closing Date;

(d) all Environmental Costs and Liabilities or other Liabilities, to the extent arising out of or otherwise related to the construction or launch of the AMC-23 Satellite;

(e) except to the extent specifically provided in Section 6.22, all Liabilities arising out of, relating to or with respect to (i) the employment or performance of services, or termination of employment or services by SES or any of its Affiliates of any individual on or before the Closing Date, (ii) workers’ compensation claims against SES or any of its Affiliates that relate to the period on or before the Closing Date, irrespective of whether such claims are made prior to or after the Closing or (iii) any Company Benefit Plan;

(f) Liabilities in respect of a breach by or default of SES or any of its Affiliates accruing under AMC-23 Contracts with respect to any period prior to Closing;

 

22

(g) all Liabilities in respect of any pending or threatened Proceeding, or any Liability arising out of, relating to or otherwise in respect of (i) the operation of the AMC-23 Business to the extent such Proceeding or Liability relates to such operation on or prior to the Closing Date, or (ii) any Excluded Asset;

(h) all Liabilities relating to any dispute with any client or customer of the AMC-23 Business existing as of the Closing or based upon, relating to or arising out of events, actions, or failures to act prior to the Closing; and

(i) all Liabilities relating to amounts required to be paid by SES or any of its Affiliates under this Agreement or any Ancillary Agreement.

Section 3.6 Consents to Certain AMC-23 Business Assignments.

(a) From time to time following the Closing, SES and the GE Entities shall, and shall cause their respective Affiliates to, execute, acknowledge and deliver all such further conveyances, notices, assumptions, releases and aquittances and such other instruments, and shall take such further actions, as may be necessary or appropriate to convey fully to the GE Entities and its respective successors or assigns, all of the properties, rights, titles, interests, estates, remedies, powers and privileges intended to be conveyed to Splitco under this Agreement and the Ancillary Agreements and to assure fully to SES and its Affiliates and their successors and assigns, the assumption of the liabilities and obligations intended to be assumed by Splitco under this Agreement and the Ancillary Agreements, and to otherwise make effective the transactions contemplated hereby and thereby.

(b) Notwithstanding anything in this Agreement or any Ancillary Agreement to the contrary, this Agreement and the Ancillary Agreements shall not constitute an agreement to transfer or assign any asset, Contract, Permit, claim or right or any benefit arising thereunder or resulting therefrom which by its terms or by Law is nonassignable without the consent of a third party or a Governmental Entity or is cancelable by a third party in the event of an assignment (“Nonassignable Assets”) unless and until such consent shall have been obtained. SES shall, and shall cause its Affiliates to, use its reasonable best efforts promptly to obtain any consents or waivers required to assign to Splitco any AMC-23 Transferred Asset that requires the consent of a third party, without any conditions to such transfer or changes or modifications of terms thereunder. Subject to compliance with the other terms of this Section 3.6, SES, on the one hand, and the GE Entities, on the other hand, agree that the other party shall not have any liability to such party arising out of or relating to the failure to obtain any such consent that may be required in connection with the transactions contemplated by this Agreement or the Ancillary Agreements or because of any circumstances resulting therefrom.

(c) To the extent permitted by applicable Law and such Contracts, in the event consents to the assignment thereof cannot be obtained prior to Closing and as a result thereof Splitco shall be prevented by such third party from receiving the rights and benefits with respect to such AMC-23 Transferred Asset intended to be transferred hereunder, such Nonassignable Assets shall be held, as of and from the Closing Date, by SES or the applicable Affiliate of SES in trust for Splitco and the covenants and obligations thereunder shall be performed by Splitco in SES’s or such Affiliate’s name and all benefits and Liabilities existing or arising thereunder and

 

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thereafter with respect thereto shall be for Splitco’s account. SES shall take or cause to be taken at the expense of Splitco such actions in its name or otherwise as Splitco may reasonably request so as to provide Splitco with the benefits of the Nonassignable Assets and to effect collection of money or other consideration that becomes due and payable under the Nonassignable Assets to the extent permitted by applicable Law and such Contracts. SES shall promptly pay, or cause to be paid, to Splitco when received all monies received by SES or its Affiliates under such AMC-23 Transferred Asset or any claim or right or any benefit arising thereunder and Splitco shall indemnify and promptly pay SES and/or its Affiliates for all liabilities of SES and its Affiliates associated with such AMC-23 Transferred Asset. As of and from the Closing Date, SES on behalf of itself and its Affiliates authorizes Splitco, to the extent permitted by applicable Law and the terms of the Nonassignable Assets, at Splitco’s expense, to perform all the obligations and receive all the benefits of SES or its Affiliates under the Nonassignable Assets and appoints Splitco its attorney-in-fact to act in its name on its behalf or in the name of the applicable Affiliate of SES and on such Affiliate’s behalf with respect thereto.

Section 3.7 Methodology.

The assignment, transfer, conveyance and delivery to Splitco of the Equity Interests, the Cash Amount, the AMC-23 Transferred Assets and any assets transferred pursuant to Section 3.10 and the assumption by Splitco of the AMC-23 Assumed Liabilities (collectively, the “Reorganization”) shall be effected in accordance with the reorganization plan set forth on Schedule 3.7 (the “Reorganization Plan”).

Section 3.8 Taxes.

For purposes of this Agreement, Taxes shall not be an AMC-23 Assumed Liability or Excluded Liability, and refunds or credits from Taxes shall not be an AMC-23 Transferred Asset or Excluded Asset. Liabilities, refunds and credits with respect to Taxes shall be governed by and allocated in accordance with the Tax Matters Agreement.

Section 3.9 Insurance.

(a) If any AMC-23 Transferred Asset or any asset owned by any Transferred Entity (a “Business Asset”) shall suffer any damage, destruction or loss after the date hereof, but before the Closing, and the AMC-23 Transferred Asset or Business Asset and the related casualty are covered by any third-party insurance policy maintained by SES or any of its Affiliates (but excluding, for the avoidance of doubt, those set forth on Schedule 3.9(a)) then SES shall inform the GE Entities and, if so requested by them, as soon as reasonably practicable repair, restore or replace such AMC-23 Transferred Asset or Business Asset, or if time does not permit such repairing, restoring or replacing, pay (in cash, if payment has been received, or, if not, assign the right to receive such payment) to Splitco at the Closing, the amount of the proceeds from such policy covering such damage, destruction or loss.

(b) If any AMC-23 Transferred Asset or Business Asset shall incur any Liability (other than an Excluded Liability) following the date hereof which arises out of or relates to actions or operations of the AMC-23 Transferred Asset or Business Asset prior to the Closing and for which SES or any of its Affiliates is entitled to receive reimbursement under any third-

 

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party insurance policy (but excluding, for the avoidance of doubt, those set forth on Schedule 3.9(a)), SES shall promptly notify the GE Entities, and at the request of either of the GE Entities use its reasonable best efforts to pursue such claim or, at SES’s discretion, assign and transfer all right of recovery under such claim to Splitco as of Closing, if such claim is assignable and transferable, and pay to Splitco as of Closing any recoveries or other payments received by SES or any of its Affiliates from insurance companies to the extent related to the Liability (other than an Excluded Liability).

(c) In the event that between date of this Agreement and the Closing Date the AMC-23 Business shall suffer a Loss as a result of a downgrade or failure of the AMC-23 Satellite’s operational capabilities, then, shall the Closing occur, SES shall assign to Splitco as of the Closing all its rights under all self-insurance policies maintained by SES or any of its Affiliates with respect to the AMC-23 Satellite (including, for the avoidance of doubt, those set forth on Schedule 3.9(a)) to proceeds thereof, to the extent, but only to the extent that they relate to the casualty that gave rise to such Loss with respect to the AMC-23 Satellite; provided, however, that the provisions of this paragraph (c) shall not apply in the event that (i) an AMC-23 Loss shall occur prior to the Closing Date and (ii) the Closing shall occur. The provisions of this paragraph (c) shall constitute the GE Entities’ sole remedy against SES, its Affiliates and their respective successors with respect to any Loss related to the casualty that is covered by the rights under any such insurance policy that is so assigned, assuming SES has otherwise complied with this Agreement.

Section 3.10 Additional Non-Investment Assets.

(a) If necessary to ensure that the Valuation Conclusions can be reached, SES and the GE Entities shall work together to (i) select one or more of the transponder service agreements set forth on Schedule 3.10(a) for transfer to Splitco at or prior to Closing and prepayment, together with entry into a prepaid service agreement for the related transponder through the end of the predicted life of the relevant satellite as shown in Schedule A to Exhibit B (or, in the case of AMC-1, through the existing projected contract end date, also as shown in Schedule A to Exhibit B), in each case pursuant to the terms and conditions of paragraph (b) below (a “Transponder Prepayment Election”), (ii) elect to cause the prepayment of certain services under the SOS Agreement at or prior to Closing pursuant to paragraph (c) below (an “SOS Acceleration Election”), and/or (iii) select one or more of the transponders set forth on Schedule A to Exhibit B for transfer to Splitco at or prior to Closing pursuant to the terms and conditions of paragraph (d) below (a “Transponder Sale Election”), in each case as needed to allow the Valuation Conclusions to be reached.

(b) If the parties make a Transponder Prepayment Election, then with respect to each transponder service agreement that is so selected from Schedule 3.10(a) (each, a “Designated Transponder Service Agreement”):

 

  (i)

at or prior to Closing (x) SES shall, or shall cause its appropriate Affiliate to, assign such Designated Transponder Service Agreement to Splitco, (y) SES shall cause Splitco to accept and assume all of SES’ or its appropriate Affiliate’s rights, title, interest, and obligations under such Designated Transponder Service Agreement and (z) the GE Entities shall use reasonable best efforts to cause the

 

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applicable “Customer” thereunder to consent, in form and substance reasonably acceptable to SES, to the assignment to and assumption by Splitco and release of SES and its Affiliates from all of their respective obligations from and after Closing (but not for any pre-Closing obligations) under such Designated Transponder Service Agreement as of the Closing (each, a “Transponder Assignment Agreement”), provided that no Designated Transponder Service Agreement shall be transferred under this paragraph (b) unless the GE Entities have obtained the corresponding Transponder Assignment Agreement;

 

  (ii) at or prior to Closing, SES shall cause one of its Affiliates and Splitco to enter into new transponder service agreements (each, a “New Transponder Service Agreement”), under which SES or such Affiliate shall be the “Service” provider and Splitco shall be the “Customer”, provided that such New Transponder Service Agreement shall be identical in all material respects to the corresponding Designated Transponder Service Agreement, except that (x) no monthly recurring charges shall be due to SES and its Affiliates under such New Transponder Agreement (all of which charges shall be deemed to have been prepaid at Closing), (y) the term thereof, except for the AMC-1 contracts, shall extend to the end of the predicted life of the relevant satellite as shown in Schedule A to Exhibit B and (z) in the event of the termination of such New Transponder Service Agreement prior to the end of the predicted life of the relevant satellite as shown in Schedule A to Exhibit B (or in the case of AMC-1, through the existing projected contract end date, also as shown in Schedule A to Exhibit B) or in any circumstance in which Splitco becomes entitled to a “Credit” under such New Transponder Service Agreement under the terms thereof, SES shall, or shall cause an Affiliate to, promptly refund to Splitco such amount as shall put SES or its appropriate Affiliate and Splitco in the same economic position applying a net present value rate at the applicable discount rate shown on Schedule A to Exhibit B in which they would have been had the monthly recurring charge not been prepaid at Closing, but rather had been paid in accordance with the payment provisions for monthly recurring charges that are set forth in the relevant New Transponder Service Agreement;

 

  (iii) the Cash Amount at Closing shall be reduced by the applicable amount set forth on Schedule A to Exhibit B as the “Present value total term”, subject to the adjustments shown in the footnotes to that Schedule, if applicable, with respect to the applicable Designated Transponder Service Agreements that are transferred to Splitco under this paragraph (b), with such amounts converted to Euros at the USD:EURO exchange rate prevailing at the time; and

 

  (iv) if the parties make a Transponder Prepayment Election as to one or more, but not all, of the transponders under a Designated Transponder Service Agreement, then the provisions set forth in clauses (i), (ii), and (iii) above shall be implemented by the parties on the basis of a partial assignment of the relevant Designated Transponder Service Agreement, with all associated rights and obligations stated above made applicable in context thereto.

 

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(c) If the parties make an SOS Acceleration Election, then (i) at or prior to Closing SES shall, or shall cause its Affiliates to, accelerate the payment for “Annual Fee” for satellite operation services (“SOS”), payload operations services (“POS”) and NMS (as such term is defined in the SOS Agreement) through January 31, 2022 (the “Projected EOL Date”), all of which charges shall be deemed to have been prepaid at Closing, such that immediately following Closing no Annual Fee payments for SOS, POS and NMS shall be due to SES and its Affiliates thereunder for SOS, POS or NMS through the Projected EOL Date and (ii) the Cash Amount shall be reduced at Closing by the amount resulting from the net present value of all monthly fee payments for SOS, POS and NMS (as per the SOS agreement) through January 31, 2022, applying a discount rate of 5% per annum for the net present value calculation, with such amounts converted to Euros at the USD:EURO exchange rate prevailing at the time (so, for example, if the Closing occurs on May 1, 2007, the Cash Amount would be reduced by Euros 12,030,923 using an exchange rate of 1.3 USD: 1.0 EUR); provided, however, that: (i) in the event the SOS Agreement is terminated in whole or in part under the terms thereof prior to the end-of-life of the AMC-23 Satellite, SES shall, or shall cause an Affiliate to, refund to Splitco such amount as shall put SES or its appropriate Affiliate and Splitco in the same economic position applying a net present value rate of 5% per annum in which they would have been had the SOS, POS and NMS charges not been prepaid at Closing, but rather had been paid in accordance with the payment provisions of the SOS Agreement; (ii) in the event that the Annual Fee for SOS would be increased under Section 4.2(a) of the SOS Agreement, Splitco shall make such additional Annual Fee payments; and (iii) if SOS, POS and NMS services are provided after the Projected EOL Date, Splitco shall pay for such services in accordance with the SOS Agreement.

(d) If the parties make a Transponder Sale Election, then with respect to each transponder that is so selected (each, a “Designated Transponder”), (i) the parties shall enter into good faith negotiations regarding the pricing terms under which such Designated Transponder would be sold to Splitco, (ii) the parties shall use reasonable best efforts to promptly obtain any consent or authorization from, or make any filings with, any Governmental Authority necessary to effect the sale to of such Designated Transponders by SES and the GE Entities, (iii) the parties shall effect the sale of such Designated Transponders to Splitco at Closing pursuant to the relevant forms of Transponder Sale Agreement(s), (iv) the GE Entities shall use their reasonable best efforts to cause the applicable “Customer” under the Designated Transponder Contract relating to such Designated Transponder to execute and deliver a Transponder Assignment Agreement relating to such Designated Transponder Contract, provided that SES shall not be required to sell any Designated Transponder under this paragraph (d) with respect to which the GE Entities have not obtained such Transponder Assignment Agreement, and (v) the Cash Amount shall be reduced at Closing by the price, as agreed to by the parties pursuant to this paragraph, for the sale of such Designated Transponder; provided, however, that SES shall have no obligation to effect the sale to Splitco of a Designated Transponder under this paragraph (d) unless the parties agree the pricing terms under which such sale shall occur.

Section 3.11 Merger Payment.

(a) If, on the Closing Date, (i) Splitco will not hold 20.00% of the outstanding shares of Star One as of Closing (including as a result of the ANATEL Condition not being satisfied at the Closing Date), (ii) Embratel is unwilling to enter into a shareholders agreement with Splitco

 

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as of Closing acceptable to the GE Entities or (iii) after giving effect to the transfer of the Star One Shares to Splitco (including any additional shares of Star One to be held by Splitco as of the Closing), the Star One Shares (and such additional shares) would be considered by the IRS to be an Investment Asset, SES shall pay at Closing to an escrow agent mutually agreed to by SES and the GE Entities (the “Escrow Agent”) an amount equal to fifteen million Euros (€15,000,000) in immediately available funds (the “Section 3.11 Escrow Amount”) to be held in escrow in accordance with the terms of this Agreement and an escrow agreement, by and among SES, Splitco and the Escrow Agent in a form to be agreed between the parties thereto and the GE Entities (the “Escrow Agreement”). The Section 3.11 Escrow Amount, together with any interest accrued thereon, is referred to as the “Section 3.11 Escrow Fund”. The Escrow Agreement shall also govern the disposition of the Section 6.31 Escrow Fund under Section 6.31.

(b) The Escrow Agreement shall provide that, in the event that within twelve months from the Closing Date, Star One is merged or consolidated with Embratel or all of the Shares (as such term is defined in the Embratel Letter) are purchased pursuant to paragraph eleven of the Embratel Letter (which commences with the words “If either Embratel or GE exercises the Merger option...”) (either event being referred to as a “Section 3.11 Payment Trigger”), (A) an amount (the “Star One Payment Amount”) equal to (i) the Section 3.11 Escrow Amount minus (ii) any Excess Amount (together with any interest accrued on the Section 3.11 Escrow Fund that relates to the Star One Payment Amount) shall be released to Splitco from the Section 3.11 Escrow Fund by the Escrow Agent free and clear of all Encumbrances (other than Encumbrances created by the recipient thereof) within three Business Days after the completion of such transaction and (B) any amounts remaining in the Section 3.11 Escrow Fund shall be released to SES by the Escrow Agent within three Business Days after the completion of such transaction. The “Excess Amount” shall be the excess, if any, of (x) €25,000,000 over (y) an amount equal to the quotient obtained by dividing (I) an amount equal to (A) €140,000,000 minus (B) an amount equal to the value of the Star One Shares based on the Embratel Valuation (as defined in the Embratel Letter), by (II) two; provided that the Excess Amount shall be no more than €15,000,000.

(c) If the ANATEL Condition has not been satisfied at the Closing and the Star One Closing has not occurred prior to the fourth Business Day after the date that is nine (9) months after the Closing Date, then any amounts in the Section 3.11 Escrow Fund shall be transferred to the Section 6.31 Escrow Fund (the “Escrow Transfer”) and released and delivered to Splitco pursuant to Section 6.31(c).

(d) If the Section 3.11 Payment Trigger has not occurred within twelve months from the Closing Date and an Escrow Transfer has not occurred under paragraph (c) above, the Escrow Agent shall release the Section 3.11 Escrow Fund to SES.

(e) “Embratel Letter” means the letter agreement, dated February 8, 2007, between Embratel, GE Capital Equity Investments, Inc., Telefonos de Mexico S.A.B de C.V., Star One and SES.

 

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ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF SES

Except as set forth in the disclosure schedules attached hereto (the “Disclosure Schedules”), which Disclosure Schedules identify the Section (or, if applicable, subsection) to which such exception relates, SES hereby represents and warrants to each of the GE Entities (i) as of the date hereof and (ii) as of the Closing Date (or, in case of the foregoing clauses (i) and (ii), if made as of a specified date, as of such specified date), as follows:

Section 4.1 Organization and Standing; Books and Records.

(a) (i) Each of SES, the SES Entities and Splitco is a corporation, limited liability company or other legal entity duly organized, validly existing and, if applicable, in good standing under the laws of the jurisdiction in which it is organized, and (ii) each of SES, the SES Entities and Splitco has full power and authority necessary to enable it to own, lease or otherwise hold and operate its properties and assets and to carry on its business as presently conducted. Each of SES, the SES Entities and Splitco is duly qualified and, to the extent applicable, is in good standing to do business as a foreign entity in each jurisdiction in which the conduct or nature of its business as presently conducted or the ownership, leasing, holding or operation of its properties makes such qualification necessary, except such jurisdictions where the failures to be so qualified or in good standing, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect.

(b) SES has made available to the GE Entities true and complete copies of its Statuts Coordonnés (the “Statuts”), as amended through the date of this Agreement, and the comparable governing instruments of Satlynx, Star One, Bowenvale and each of the Transferred Entities, in each case as amended through the date of this Agreement.

(c) Prior to the Reorganization, Splitco will have no assets and no liabilities other than those de minimis incidental to its formation and will not have undertaken any business or activities other than in connection with this Agreement and engaging in the transactions contemplated hereby. As of the Closing Date, the assets and Liabilities of Splitco shall consist solely of the AMC-23 Transferred Assets, the AMC-23 Assumed Liabilities, the Equity Interests, the Cash Amount, de minimis liabilities incidental to its formation and liabilities that shall be Splitco’s under the Tax Matters Agreement, and additional Non-Investment Assets transferred pursuant to Section 3.10.

Section 4.2 Corporate Power and Authority.

(a) SES has all requisite company power and authority to enter into and deliver this Agreement and to consummate the transactions contemplated hereby. SES and each of its Affiliates which will be a party to the Ancillary Agreements have all requisite corporate or other power, as the case may be, and authority to execute and deliver the Ancillary Agreements and the other agreements, documents and instruments to be executed and delivered to the GE Entities by it in connection with this Agreement or the Ancillary Agreements and, subject to the approval of the Required Resolutions by the Required Vote of SES shareholders, to consummate the transactions contemplated thereby. The execution, delivery and performance of this Agreement by SES and the consummation by SES of the transactions contemplated hereby, and the execution, delivery and performance of the Ancillary Agreements and the other agreements, documents and instruments to be executed and delivered to the GE Entities in connection with this Agreement or the Ancillary Agreements and, subject to the approval of the Required Resolutions by the Required Vote of SES shareholders, to consummate the transactions contemplated thereby. The execution, delivery and performance of this Agreement by SES and the consummation by SES of the transactions contemplated hereby, and the execution, delivery and performance of the Ancillary Agreements and the other agreements, documents and instruments to be executed and delivered to the GE Entities in connection with

 

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this Agreement or the Ancillary Agreements by SES and each of its Affiliates which is, or as of the Closing, will be, a party thereto and the consummation of the transactions contemplated thereby, have been, or, with respect to the Ancillary Agreements and any such other agreements, documents or instrument to be entered into after the date hereof and the transaction contemplated thereby, will, as of the Closing, be duly authorized by all necessary action on the part of each such Person and, except for approval of the Required Resolutions by the Required Vote of the SES shareholders, no additional corporate action or corporate proceeding on the part of SES is necessary to authorize the execution, delivery and performance by SES of this Agreement and the consummation by it of the transactions contemplated hereby. This Agreement has been duly executed and delivered by SES and constitutes the legal, valid and binding obligation of SES, enforceable against SES in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding at equity or at law). The Ancillary Agreements and the other agreements, documents and instruments to be executed and delivered to the GE Entities in connection with this Agreement or the Ancillary Agreements at the Closing will be duly executed and delivered by SES and its Affiliates which are, or are specified to be, a party thereto and will, as of the Closing, constitute the legal, valid and binding obligations of SES and such Affiliates which are a party thereto, enforceable against each such Person in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding at equity or at law).

(b) A committee of SES duly appointed by the Board of Directors of SES, at a meeting duly called and held, duly adopted resolutions approving this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby. Such committee has full power and authority to act on behalf of the Board of Directors of SES with respect to the approval of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby.

(c) No affirmative vote of any holder of shares of SES capital stock is necessary to approve this Agreement or any Ancillary Agreement or the consummation by SES of any of the transactions contemplated hereby or thereby, except for (i) the affirmative vote of the holders of a majority of the outstanding shares of SES present or duly represented (the “Redemption Required Vote”) at a duly convened and validly held extraordinary general meeting of SES shareholders (the “EGM”) to approve resolutions to authorize the SES Board of Directors to redeem the Class C Shares (the “Redemption Required Resolutions”) in accordance with the law of 10 August 1915, as amended, on commercial companies (the “Companies’ Act”) and (ii) the affirmative vote of the holders of two-thirds of the outstanding shares of SES present or duly represented (the “Capital Reduction Required Vote”, and together with the Redemption Required Vote, the “Required Vote”) at an EGM to approve resolutions to authorize the SES Board of Directors to reduce SES’s share capital as a result of the Redemption (the “Capital Reduction Required Resolutions”, and together with the Redemption Required Resolutions, the “Required Resolutions”).

 

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Section 4.3 Conflicts.

The execution and delivery by SES of this Agreement does not, the execution and delivery by SES and each of its Affiliates of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the performance by SES and each of its Affiliates of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party and the consummation of the transactions contemplated hereby and thereby and compliance by SES and such Affiliates with the terms of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party will not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Encumbrance upon the Splitco Shares, the Equity Interests, the AMC-23 Transferred Assets or the Business Assets (other than Permitted Encumbrances with respect to the AMC-23 Transferred Assets and the Business Assets) under any provision of (i) the Statuts or any comparable governing documents of SES, any SES Entity or any Affiliate of SES that is, or is specified to be, a party to any of the Ancillary Agreements or any other agreements or instruments to be executed and delivered in connection therewith, (ii) any Contract to which SES, any SES Entity or Splitco is a party or by which any of their respective properties or assets is subject or (iii) (assuming compliance with the matters set forth in Section 4.4) any material Judgment or Law applicable to SES, any SES Entity or Splitco or their respective properties or assets, other than, in the case of clause (ii) above, any such items that, individually or in the aggregate is not reasonably expected to have an SES Material Adverse Effect.

Section 4.4 Approvals.

No consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to SES, any SES Entity or Splitco in connection with the execution, delivery and performance of this Agreement or any Ancillary Agreement to which it is, or is specified to be, a party or the consummation of the transactions contemplated hereby and thereby, other than in connection with, to the extent required, (A) compliance with and filings under the HSR Act, (B) the written consent of the FCC under the FCC Rules, (C) such other consents, approvals, orders, authorizations, notifications, and permits as set forth on Schedule 4.4 or as described in Section 8.1(b)(iii), (D) notification and consents under, and compliance with, export and reexport control requirements and sanctions measures administered by the U.S. Department of Commerce, U.S. Department of State and U.S. Department of Treasury, including provisions and conditions of outstanding export licenses and other approvals, (E) governmental notifications and approvals required for transfer of Contracts with Governmental Entities, if any, (F) those, if any, that may be required solely by reason of the participation of the GE Entities (as opposed to any other domestic or foreign third person) in the transactions contemplated hereby and by the Ancillary Agreements, and (G) other consents, registrations, declarations or filings that the failure of which to obtain or make, individually or in the aggregate, is not reasonably expected to have an SES Material Adverse Effect.

Section 4.5 No Material Adverse Effect.

(a) Since December 31, 2005, SES and its Affiliates have (i) operated the Transferred Businesses in all material respects only in the Ordinary Course of Business (except as expressly contemplated by this Agreement), (ii) maintained their books and records with regard to the Transferred Businesses in accordance with past accounting practice consistently applied, and (iii)

 

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used all reasonable best efforts to preserve intact the assets and the business organization and operations of the Transferred Businesses, to keep available the services of the Transferred Businesses’ employees and to preserve the Transferred Businesses’ relationships with customers, suppliers, licensors, licensees, contractors and other persons with whom the Transferred Businesses have business relations.

(b) Since December 31, 2005, there has not been any event, change, occurrence or circumstance that, individually or in the aggregate, has had or could reasonably be expected to have an SES Material Adverse Effect.

(c) Without limiting the generality of the foregoing, since December 31, 2005, except as expressly contemplated by this Agreement (including with respect to the Reorganization), none of SES, the SES Entities or Splitco have taken any action that if taken on or after the date hereof, would constitute a breach of Sections 6.4(b)(ii), (iii), (iv), (v) or (viii).

(d) To the knowledge of SES, since December 31, 2005, there has not been any change, effect, or circumstance with respect to Star One and its Subsidiaries, taken as a whole, that has had, or could reasonably be expected to have, individually or in the aggregate, an SES Material Adverse Effect.

Section 4.6 Ownership of Equity Interests.

(a) As of the Closing, the Equity Interests will be owned by Splitco, free and clear of all Encumbrances (other than the Equity Interest Encumbrances), and will be duly authorized, validly issued, fully paid and, to the extent such concept is recognized by applicable Law, nonassessable and not subject to any preemptive or subscription rights (and not issued in violation of any preemptive or subscription rights). Splitco shall have good and valid title to the Equity Interests as of the Closing. As of the Closing, Splitco shall not own, directly or indirectly, except as a result of the transfer of the Equity Interests pursuant to Article 3 hereto to Splitco, or have entered into any agreement, arrangement or understanding to purchase or sell any capital stock or other ownership interests in any Person.

(b) As of the date hereof, the SES Entities have good and valid title to the Equity Interests set forth next to such SES Entities’ names on Schedule 4.6(b), free and clear of all Encumbrances (other than the Equity Interest Encumbrances). Bowenvale has good and valid title to the AsiaSat Shares, free and clear of all Encumbrances (other than Equity Interest Encumbrances). Satlynx or a Subsidiary thereof has good and valid title to the capital stock of Satlynx’s direct and indirect Subsidiaries, free and clear of all Encumbrances.

(c) Schedule 4.6(c) sets forth for each of Bowenvale, Star One, Satlynx and each Subsidiary of Satlynx the amount of its authorized capital stock, the amount of its outstanding capital stock and the record and beneficial owners of its outstanding capital stock, and there are no other shares of capital stock or other equity interests in, or any securities (including debt instruments) convertible or exercisable for or exchangeable into, any capital stock of or other equity interest in, any such entity issued, reserved for issuance or outstanding.

(d) All of the Equity Interests (other than the ORBCOMM Shares) have been duly authorized and validly issued, and are fully paid and non-assessable and not subject to or issued

 

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in violation of any purchase option, call option, voting or disposition restriction, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, the governing documents of the entity issuing such equity interests or any Contract to which the entity issuing such equity interests is a party or is otherwise bound and are free and clear of all Encumbrances (other than the Equity Interest Encumbrances).

(e) There are not any bonds, debentures, notes or other indebtedness of Bowenvale, Star One, Satlynx or any Subsidiary of Satlynx having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of the equity interests of such entities may vote (“Voting Debt”). There are not any options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, preemptive rights, options, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which any of Bowenvale, Star One, Satlynx or any Subsidiary of Satlynx is a party or by which any of them is bound (i) relating to the capital stock of any such entity, (ii) obligating any such entity to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, any such entity or any Voting Debt, (iii) obligating any such entity to issue, grant, extend or enter into any such option, warrant, right, security, commitment, Contract, arrangement or undertaking or (iv) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights of holders of capital stock of any such entity. There are not any outstanding contractual obligations of Bowenvale, Star One, Satlynx or any Subsidiary of Satlynx to repurchase, redeem or otherwise acquire any of the capital stock set forth in Schedule 4.6(c), other than the Star One right of first refusal under the Star One Shareholders Agreement (the “Star One ROFR”).

(f) Bowenvale acts, and has acted, solely as the holding company for the AsiaSat Shares, and does not conduct, and has not undertaken, any business or other activities. The Liabilities of Bowenvale consist solely of its obligations under the Bowenvale Shareholders Agreement and as set out in the financial statements of Bowenvale dated December 31, 2005. The assets of Bowenvale consist solely of the AsiaSat Shares and its rights under the Bowenvale Shareholders Agreement and as set out in the financial statements of Bowenvale dated December 31, 2005. To the knowledge of SES, the AsiaSat Shares represent no less than 68.9% of the issued and outstanding capital stock of AsiaSat as of the date hereof.

(g) To the knowledge of SES, (i) the amount of net debt of Star One as of December 31, 2006, after giving effect to all dividends paid with respect to 2006 (regardless of whether such dividend payments are made in 2006 or 2007) shall not be in excess of BRL 350 million (not taking into account any capital reduction of Star One) and (ii) the total amount of dividends paid by Star One with respect to fiscal 2006 (together with all other Star One distributions to SES and its Affiliates during fiscal 2006, but excluding any capital reduction of Star One) will not exceed 95% of Star One’s 2006 net income.

(h) Neither Satlynx nor any of its Subsidiaries meets the conditions for bankruptcy, insolvency, moratorium or reprieve from payment, controlled management, general settlement or composition with creditors, and no events have occurred which, under applicable Law, would be reasonably likely to justify any such proceedings.

 

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Section 4.7 Capitalization of Splitco.

(a) As of the Closing, the authorized capital stock of Splitco and the number of shares of such capital stock issued and outstanding is as set forth in Schedule 4.7(a). SES shall, immediately prior to the Closing, own all of the issued and outstanding shares of Splitco beneficially and of record, free and clear of any Encumbrances. There will, as of the Closing, be no shares of capital stock of Splitco issued or outstanding other than the Splitco Shares. As of the Closing, SES shall have the sole, absolute and unrestricted right, power and capacity to assign and transfer all of the Splitco Shares to the GE Entities. Upon delivery to the GE Entities of the certificates representing the Splitco Shares at the Closing, the GE Entities will acquire good and valid title to such shares, free and clear of any Encumbrances other than Encumbrances created by the GE Entities or any of their respective Subsidiaries.

(b) As of the Closing, all of the Splitco Shares shall be duly authorized, validly issued, fully paid and nonassessable, and not issued in violation of any preemptive or similar rights. As of the Closing, there shall be no outstanding subscriptions, options, warrants, puts, calls, agreements or other rights of any type or other securities of Splitco other than the Splitco Shares. As of the Closing, there shall be no issued or outstanding bonds, debentures, notes or other indebtedness for borrowed money of Splitco.

(c) As of the Closing, Splitco shall not be in default or violation (and no event shall have occurred which, with notice or the lapse of time or both, would constitute such a default or violation) of any term, condition or provision of its certificate of incorporation, bylaws or other organizational documents.

Section 4.8 Title to Assets; Sufficiency.

(a) As of the Closing, Splitco shall have good and valid title to (or, with respect to leased or licensed AMC-23 Transferred Assets, a valid and binding leasehold interest or license, or its reasonable equivalent outside of the United States (subject to the terms of the relevant lease or license)), in, (i) the Equity Interests, (ii) the AMC-23 Transferred Assets (subject to Section 3.6 and 6.7(d)) and (iii) the Cash Amount, in each case, free and clear of any Encumbrances, other than, with respect to the Equity Interests, the Equity Interest Encumbrances or, with respect to the AMC-23 Transferred Assets, Permitted Encumbrances. This Section 4.8(a) does not relate to matters with respect to Intellectual Property, which are the subject of Section 4.16 or to real property, which are the subject of Section 4.14.

(b) Upon consummation of the transactions contemplated hereby, the AMC-23 Transferred Assets, together with the GE Entities’ and Splitco’s rights under this Agreement and the Ancillary Agreements (including the services to be provided pursuant to, and any other rights granted to Splitco and its Affiliates under, the Ancillary Agreements), will comprise all of the rights, assets and properties that are necessary and sufficient to permit Splitco and its Affiliates to conduct immediately following the Closing, the AMC-23 Business in the manner as the operations of the AMC-23 Business have been conducted as of the date hereof and immediately prior to the Closing, in all material respects.

 

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(c) Upon consummation of the transactions contemplated hereby, the rights, assets and properties of Satlynx and its Subsidiaries, together with the GE Entities’ and Splitco’s rights under this Agreement and the Ancillary Agreements (including the services to be provided pursuant to, and any other rights granted to Splitco and its Affiliates under, the Ancillary Agreements), will comprise all of the rights, assets and properties that are necessary and sufficient to permit Satlynx and its Subsidiaries to conduct immediately following the Closing their respective businesses in the manner as they have been conducted as of the date hereof and immediately prior to the Closing, in all material respects.

Section 4.9 Compliance with Law.

(a) None of (i) the Transferred Entities, (ii) SES or any of its Affiliates with respect to the AMC-23 Business or the ownership of the Bowenvale Shares and Star One Shares, or (iii) to the knowledge of SES, Star One or AsiaSat, has:

(i) in the three (3) year period prior to the date of this Agreement been, and will not as of the Closing Date be (by virtue of any past or present action, omission to act, Contract to which it is a party or any occurrence or state of facts), (A) in material violation of any material applicable Law (including: (1) applicable Laws relating to the export of goods and services (“Export Control Requirements”), or (2) the U.S. Foreign Corrupt Practices Act (the “FCPA”), to the extent applicable, or any other applicable Law regarding illegal payments (collectively with the FCPA, “Improper Payment Laws”)) or (B) in violation of any material judgment, order or decree entered by any Governmental Entity;

(ii) committed any act, omission or other practice for which a Governmental Entity could have a reasonable basis for civil enforcement involving a material amount or criminal prosecution under applicable Law; or

(iii) received during the last three (3) years any written or other notice of, been charged with, or received any inquiry concerning the possible material violation of, any material applicable Law.

(b) To the knowledge of SES as of the date hereof, (i) except as set forth on Schedule 4.9(b), none of (A) the Transferred Entities, (B) SES or any of its Affiliates with respect to the AMC-23 Business or the ownership of the Bowenvale Shares and Star One Shares, (C) Star One or any of its Subsidiaries or (D) AsiaSat or any of its Subsidiaries, is under Governmental Investigation with respect to the violation of any applicable material Law, and (ii) there are no facts or circumstances that could form the basis for any such violation.

(c) Since December 31, 2005, none of (i) the Transferred Entities, (ii) SES or any of its Affiliates with respect to the AMC-23 Business or the ownership of the Bowenvale Shares and Star One Shares, or (iii) to the knowledge of SES, Star One or AsiaSat, has made, or has been ordered to make, any material payment in respect of any Governmental Damages.

(d) To the knowledge of SES, each of Satlynx and its Subsidiaries and their respective officers, directors, employees, agents or representatives, as well as individuals listed on Schedule 1.1(e), have complied with applicable Law in all material respects in connection

 

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with promoting such Persons’ position on issues before Governmental Entities. To the knowledge of SES, no officer, director, employee, agent or representative of Satlynx and its Subsidiaries or any individual listed on Schedule 1.1(e) has violated any Improper Payment Laws.

Section 4.10 Litigation.

(a) There is no pending or, to the knowledge of SES, threatened, legal, administrative, arbitral or other proceeding, claim, suit or action or, to the knowledge of SES, Governmental Investigation against (i) any Transferred Entity or (ii) SES or any of its Affiliates with respect to the AMC-23 Business or the ownership of the Bowenvale Shares and Star One Shares, that in each case would either reasonably be expected (A) to result in payments by SES and its Affiliates in excess of €200,000 if adversely resolved or (B) otherwise cause an SES Material Adverse Effect. There is no material injunction, order, judgment, ruling or decree imposed (or, to the knowledge of SES, threatened to be imposed) upon any Transferred Entity, SES or any of its Affiliates with respect to the AMC-23 Business or the ownership of the Bowenvale Shares and Star One Shares, or the assets of any of the Transferred Businesses, by or before any Governmental Entity, including, in each case, in connection with an alleged violation of Improper Payment Laws.

(b) To the knowledge of SES, (i) there is no pending or threatened, legal, administrative, arbitral or other proceeding, claim, suit or action or Governmental Investigation against Star One or AsiaSat or any of their respective Subsidiaries that would either reasonably be expected (A) to result in payments by Star One in excess of €200,000 if adversely resolved or (B) otherwise cause an SES Material Adverse Effect, (ii) nor is there any injunction, order, judgment, ruling or decree imposed (or threatened to be imposed) upon Star One or AsiaSat or any of their respective Subsidiaries or the assets of Star One or AsiaSat or any of their respective Subsidiaries by or before any Governmental Entity, including, in each case, in connection with an alleged violation of Improper Payment Laws.

Section 4.11 Intercompany Services.

Except for the Ancillary Agreements, there are no (i) Contracts pursuant to which any services (other than those related to human resources and accounting) are provided and (ii) material Contracts, in each case (A) by any of the Transferred Entities, Bowenvale, Star One, AsiaSat or any of their respective Subsidiaries or the AMC-23 Business, on the one hand, to SES or any of its Affiliates (other than any of the Transferred Entities), on the other hand, or (B) by SES or any of its Affiliates (other than any of the Transferred Entities), on the one hand, to any of the Transferred Entities, Bowenvale, Star One, AsiaSat or any of their respective Subsidiaries or the AMC-23 Business, on the other hand (each, an “Intercompany Arrangement”).

Section 4.12 Financial Statements.

(a) Schedule 4.12(a) sets forth the Leuk Financial Statements and the Satlynx Financial Statements (collectively, the “Disclosed X Financial Statements”). The Leuk Financial Statements and the Satlynx Financial Statements have been prepared in conformity with Swiss general accounting principles and Luxembourg general accounting principles, respectively,

 

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consistently applied (except in each case as described in the notes thereto). The Disclosed X Financial Statements give, in conformity with Luxembourg or Swiss legal and regulatory requirements, as the case may be, a true and fair view of the financial position of Leuk and Satlynx, as of the respective dates thereof and the results of their respective operations for the respective periods indicated, except as may otherwise be noted therein.

(b) Schedule 4.12(b) sets forth the Star One Financial Statements. To the knowledge of SES, the Star One Financial Statements fairly present the financial position of Star One as of the respective dates thereof and the results of operations for the respective periods indicated. To the knowledge of SES, there are no Liabilities of Star One of a nature required to be reflected on a balance sheet prepared in accordance with auditing standards generally accepted in Brazil, other than any such Liabilities (i) reflected or reserved against on the Star One Financial Statements or the notes thereto, (ii) incurred since December 31, 2005 in the ordinary course of business consistent with past practice, or (iii) that would not, individually or in the aggregate, reasonably be expected to have an SES Material Adverse Effect.

(c) Schedule 4.12(c) sets forth the pro forma balance sheet of the AMC-23 Business as of December 31, 2006 (the “AMC-23 Balance Sheet”). The AMC-23 Balance Sheet has been prepared in conformity with IFRS consistently applied (except in each case as described in the footnotes thereto). The AMC-23 Balance Sheet fairly presents the consolidated financial condition of the AMC-23 Business as of December 31, 2006.

(d) Neither Satlynx nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise, and whether due or to become due) required by IFRS to be reflected on a consolidated balance sheet of Satlynx or in the notes thereto that, individually or in the aggregate, have been or are reasonably expected to be material to the business of Satlynx, except (i) as disclosed, reflected or reserved against in the Disclosed Balance Sheets and the footnotes thereto, (ii) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since December 31, 2005 and (iii) for Taxes, which are dealt with exclusively in the Tax Matters Agreement.

Section 4.13 Assets Other than Real Property Interests.

(a) Satlynx has good and valid title to, a valid leasehold interest in, or a valid right of use for all the material assets reflected on the latest Satlynx Balance Sheet or thereafter acquired other than those disposed of since the date of the latest Satlynx Balance Sheet in the Ordinary Course of Business, in each case free and clear of all Encumbrances other than Permitted Encumbrances.

(b) Either SES or an SES Entity has good and valid title to (or, with respect to leased or licensed AMC-23 Transferred Assets, a valid leasehold interest in, or a valid right of use for) all the material AMC-23 Transferred Assets, in each case free and clear of all Encumbrances other than Permitted Encumbrances.

(c) This Section 4.13 does not relate to real property or interests in real property, such items being the subject of Section 4.14, or to Intellectual Property, such items being the subject of Section 4.16.

 

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Section 4.14 Real Property.

Schedule 4.14(a) sets forth, as of the date of this Agreement, a complete list of all material real property and interests in real property, foreign and domestic, owned in fee by Satlynx or any of its Subsidiaries (individually, a “Satlynx Owned Property”) or that is used exclusively in the AMC-23 Business (individually, an “AMC-23 Owned Property”). Schedule 4.14(b) sets forth, as of the date of this Agreement, a complete list of all material real property and interests in real property leased by Satlynx or any of its Subsidiaries (individually, a “Satlynx Leased Property”) or that is leased exclusively in connection with the AMC-23 Business (individually, an “AMC-23 Leased Property”). (i) Either Satlynx or one of its Subsidiaries has good and marketable fee title to all Satlynx Owned Property and valid leasehold estates in all Satlynx Leased Property (a Satlynx Owned Property or Satlynx Leased Property being sometimes referred to herein, individually, as a “Satlynx Property”), and (ii) either SES or one of the SES Entities has good and marketable fee title to all AMC-23 Owned Property and valid leasehold estates in all AMC-23 Leased Property (an AMC-23 Owned Property or AMC-23 Leased Property being sometimes referred to herein, individually, as an “AMC-23 Property”), in each case free and clear of all Encumbrances, except (a) Permitted Encumbrances, (b) leases, subleases and similar agreements set forth in Schedule 4.14(b), (c) easements, covenants, rights-of-way and other similar restrictions of record that do not materially interfere with the current use of the relevant Satlynx Property or AMC-23 Property, (d) (i) zoning, building and other similar restrictions, (ii) Encumbrances that have been placed by any developer, landlord or other third party on property over which either SES or one of the SES Entities has easement rights or on any Satlynx Leased Property or AMC-23 Leased Property and subordination or similar agreements relating thereto and (iii) unrecorded easements, covenants, rights-of-way and other similar restrictions that do not materially interfere with the current use of the relevant Satlynx Property or AMC-23 Property.

Section 4.15 Satellite Assets.

(a) Ground Stations. Each satellite ground station, including the related material transmission/reception facility assets (consisting of material land, building, fixtures, improvements (if any), and material satellite antennae and other equipment) that is owned, leased or otherwise operated by Satlynx or any of its Subsidiaries as of the date of this Agreement is listed in Schedule 4.15(a) (collectively, the “Ground Stations”). Each Ground Station and all components used in connection therewith are, and any other ground station (including related transmission/reception facility assets) that Satlynx or any of its Subsidiaries owns, leases or otherwise operates on the Closing Date, and all components used in connection therewith, will, on the Closing Date, be, (i) in good operating condition and repair (which takes into account ordinary wear and tear) and suitable for their intended purpose and (ii) supported by a backup fuel-powered electricity generator capable of generating power sufficient to meet the requirements of the operations conducted at the ground station, other than any Ground Station or component used in connection therewith or such other ground station or component used in connection therewith the loss of which, individually or in the aggregate, has not had and is not reasonably expected to have an SES Material Adverse Effect.

(b) AMC-23 Satellite and Transponders. Schedule 4.15(b) sets forth the following as of the date of this Agreement: (i) a complete and accurate list of the number and type of

 

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transponders located on the AMC-23 Satellite and the orbital location thereof, (ii) a list of all “Health Status Reports”, including those given to underwriters, since launch (if any), for the AMC-23 Satellite, summarizing material spacecraft related incidents and anomalies in connection with the AMC-23 Satellite known to SES, as well as the current status of the subsystems on the AMC-23 Satellite (power, fuel, traveling wave tube amplifiers, telemetry, and command, reaction control, communications and antenna), and (iii) a list of each Contract to which any of SES or its Affiliates is a party related to the construction or launch of the AMC-23 Satellite. As of the date of this Agreement, SES has made available to the GE Entities all relevant and material information relating to the operating condition and the fuel and design life expectancies of the AMC-23 Satellite (collectively, the “Satellite Data”). As of the date of this Agreement and to the knowledge of SES, the information contained in the Satellite Data is a materially accurate and complete record of the subject matters covered therein; provided, however, that, while SES has provided to the GE Entities relevant material projections with respect to fuel or design life expectancies developed in the ordinary course of the operation of the AMC-23 Satellite, no representation or warranty as to the accuracy of any conclusion expressed in the Satellite Data as to fuel or design life expectancies of the AMC-23 Satellite is made herein. To the knowledge of SES, as of the date hereof, the AMC-23 Satellite is, subject to disclosures made in the Health Status Reports and Satellite Data, in good operating condition (which takes into account ordinary wear and tear) in all material respects. As of the date of this Agreement, to the knowledge of SES, no material anomalies have occurred with respect to the AMC-23 Satellite since the date of the most recent Health Status Report for such AMC-23 Satellite. As of the date of this Agreement and to the knowledge of SES, no event relating to the AMC-23 Satellite has occurred that, individually or in the aggregate, is reasonably expected to materially reduce the expected life of such AMC-23 Satellite or otherwise be material to the AMC-23 Business. To the knowledge of SES, as of the date of this Agreement, neither SES nor any SES Entity has received any notice from any manufacturer of any material defect relating to the AMC-23 Satellite or from any insurer of its intention to exclude the AMC-23 Satellite or any component thereof from coverage under any third-party insurance policy listed on Schedule 4.19, except as, individually or in the aggregate, is not reasonably expected to be material to the AMC-23 Business.

(c) ITU Frequency Registration. Schedule 4.15(c) contains a summary as of the date of this Agreement of the status of frequency registration at the International Telecommunication Union by the sponsoring national administration for the AMC-23 Satellite, including the status with respect to the orbital position hosting the AMC-23 Satellite, the identity of the sponsoring administration and the frequency bands covered.

(d) Satellite Coordination. Except as set forth in Schedule 4.15(d), as of the date of this Agreement and to the knowledge of SES, during the 12 months preceding the date of this Agreement, no person or entity has asserted in writing to the International Telecommunication Union or the FCC that it has the right to operate a spacecraft in a manner that would result in harmful interference with respect to the AMC-23 Satellite. Schedule 4.15(d) also contains a list as of the date hereof of all satellite coordination agreements that relate to the AMC-23 Satellite to which SES or an Affiliate thereof is a party and to the knowledge of SES a summary of all coordination discussions (that did not result in coordination agreements set forth in Schedule 4.15(d)) with other persons or entities, domestic or foreign, in which SES or any SES Entity has been engaged during the 12 months preceding the date of this Agreement with regard to the AMC-23 Satellite.

 

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(e) Margin. With respect to the AMC-23 Satellite, (i) the power budget provided to the insurers under the AMC-23 Insurance Policies before Attachment of Risk demonstrated a minimum power margin (based on two solar array string failures and the payload operating at saturation) of at least 7.5% for the AMC-23 Satellite at all times during the Mission Life (with the exception of eclipse), relative to the amount of power required to fulfill such satellite’s requirements under the applicable Construction and Launch Contract or Construction Contract (provided that this margin shall be inclusive of any and all power margins in such satellite’s requirements under the applicable Construction and Launch Contract or Construction Contract); and (ii) the fuel budget provided to the insurers of the AMC-23 Satellite before Attachment of Risk demonstrated a margin of at least twelve (12) months for the AMC-23 Satellite at end of Mission Life (provided this margin shall be inclusive of any and all fuel margins in such satellite’s requirements under the applicable Construction and Launch Contract or Construction Contract). Capitalized terms used in this paragraph (e) and not otherwise defined in this Agreement shall have the meaning assigned thereto in Section 10 (Margin) of the Declarations of the AMC-23 Insurance Policies.

Section 4.16 Intellectual Property.

(a) Schedule 4.16(a)(i) sets forth a list of all Intellectual Property owned by SES or any of its Affiliates that (i) is registered or subject to an application for registration, including all registered trademarks or service marks, patents or patent applications and registered copyrights, including any pending applications to register any of the foregoing, and (ii) exclusively relates to, is used exclusively in, or exclusively arises out of the AMC-23 Business (collectively, “AMC-23 Registered IP”). Schedule 4.16(a)(ii) sets forth all Intellectual Property licensed to SES or any of its Affiliates that is exclusively related to, used exclusively in, or exclusively arises out of the AMC-23 Business, except for commercially available off-the-shelf software and any software relating to administrative, financial or human resources functions. Schedule 4.16(a)(iii) sets forth a list of all sales software packages licensed to SES or any of its Affiliates that are used by, and material to, the AMC-23 Business. Schedule 4.16(a)(iv) sets forth a list of all Intellectual Property owned by SES or any of its Affiliates that (i) is registered or subject to an application for registration, including all registered trademarks or service marks, patents or patent applications and registered copyrights, including any pending applications to register any of the foregoing, and (ii) is material to and used by Satlynx and its Subsidiaries (collectively, the “Satlynx Registered IP” and, together with the AMC-23 Registered IP, the “Company Registered IP”). Schedule 4.16(a)(v) sets forth all Intellectual Property licensed to SES or any of its Affiliates that is used by, and is material to, Satlynx and its Subsidiaries, except for commercially available off-the-shelf software and any software relating to administrative, financial or human resources functions. (i) Satlynx and each of its Subsidiaries owns, or is licensed to use (in each case, free and clear of any Encumbrances other than Permitted Encumbrances) and takes all reasonable actions to protect, all material Intellectual Property used in the conduct of its business as currently conducted by Satlynx and its Subsidiaries (the “Satlynx Material IP”) including commercially reasonable steps to maintain the confidentiality of all information related to the Satlynx Material IP that derives economic value from not being generally known to other person who can obtain economic value from its disclosure or use; (ii) to

 

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the knowledge of SES, the use of any Intellectual Property by Satlynx and its Subsidiaries does not infringe on, misappropriate or otherwise violate in any material respect the rights of any Person and is in accordance with any applicable license pursuant to which Satlynx or any of its Subsidiaries acquired the right to use such Intellectual Property; (iii) to the knowledge of SES, no Person is challenging or infringing on or otherwise violating in any material respect any right of Satlynx or any of its Subsidiaries with respect to any Intellectual Property owned by or licensed to Satlynx or any of its Subsidiaries; (iv) since December 31, 2005, neither Satlynx nor any Subsidiary of Satlynx has transferred ownership of, or granted any exclusive license with respect to any Intellectual Property that is or was at the time of transfer or license material to the business of Satlynx or any Subsidiary of Satlynx; and (v) neither Satlynx nor any Subsidiary of Satlynx has received any notice of any pending or, to the knowledge of SES, threatened claim with respect to any material Intellectual Property owned or used by Satlynx and its Subsidiaries.

(b) (i) Either SES or one of its Affiliates owns, or is licensed to use (in each case, free and clear of any Encumbrances other than Permitted Encumbrances), and takes all reasonable actions to protect, all material Intellectual Property used exclusively in the conduct of the AMC-23 Business as currently conducted by SES and its Affiliates (the “AMC-23 Material IP”), including commercially reasonable steps to maintain the confidentiality of all information related to the AMC-23 Material IP that derives economic value from not being generally known to other persons who can obtain economic value from its disclosure or use; (ii) to the knowledge of SES, the use of any Intellectual Property used exclusively in the AMC-23 Business by SES and its Affiliates does not infringe on, misappropriate or otherwise violate in any material respect the rights of any Person and is in accordance with any applicable license pursuant to which SES or any of its Affiliates acquired the right to use such Intellectual Property; (iii) to the knowledge of SES, no Person is challenging or infringing on or otherwise violating in any material respect any right of SES or any of its Affiliates with respect to any Intellectual Property owned by or licensed to SES or any of its Affiliates and used exclusively in connection with the AMC-23 Business; (iv) since December 31, 2005, neither SES nor any of its Affiliates has transferred ownership of, or granted any exclusive license with respect to any Intellectual Property that is or was at the time of transfer or license material to, and used exclusively in, the AMC-23 Business; and (v) neither SES nor any of its Affiliates has received any notice of any pending or, to the knowledge of SES, threatened claim with respect to any material Intellectual Property owned or used by SES and its Affiliates and used exclusively in the AMC-23 Business.

(c) “Intellectual Property” means all intellectual property rights arising from or associated with the following, whether protected, created or arising under the laws of the United States or any other jurisdiction: trademarks, tradenames, service marks, brand names, certification marks (registered and unregistered), domain names, trade dress and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications (including intent to use applications) in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application; patents, patent applications, inventions, discoveries and ideas, whether patentable or not, in any jurisdiction, and all continuations, continuations in part, divisionals, re-examinations, re-issues and similar rights relating thereto; know-how, trade secrets, improvements, concepts, methods, processes, designs, plans, schematics, drawings, formulae, technical data, specifications, technology and product roadmaps, and data bases and confidential information and rights in any jurisdiction to limit the use or disclosure thereof by any Person;

 

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copyrights, copyrightable works, writings and other works, whether registered or not, in any jurisdiction; registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof; and all other intellectual property or proprietary rights in any country or jurisdiction, including the right to register, patent or apply for other legal protection of same and the right to sue at law or in equity for any infringement or violation of the foregoing, and to collect all proceeds and damages with respect thereto.

Section 4.17 Contracts.

(a) Except as set forth in Schedule 4.17(a), as of the date of this Agreement, neither Satlynx nor any of its Subsidiaries is a party to or bound by any:

(i) written employment Contract with any employee or independent consultant that either (A) provides for annual payments in excess of €75,000 or (B) is with a director or officer of Satlynx or any of its Subsidiaries;

(ii) collective bargaining agreement or other contract with any labor organization, union or association;

(iii) Contract that materially restricts or limits the ability to conduct business in any market or with any customer;

(iv) lease for tangible personal property which has an aggregate future liability or receivable, as the case may be, in excess of €500,000, except as may be terminated by Satlynx or and of its Subsidiaries by notice of not more than 60 days for a cost of less than €25,000;

(v) Contract under which Satlynx of any of its Subsidiaries has borrowed any money from, or issued any note, bond, debenture or other evidence of indebtedness to, or guaranteed any payment from, or agreed to lend any money to, or agreed to indemnify any person in each case in an amount in excess of €1,000,000 other than Contracts evidencing indebtedness owed to Affiliates of SES to be retired at or prior to the Closing;

(vi) Contract granting a security interest or other Encumbrances (except for Permitted Encumbrances) in any asset of Satlynx or any of its Subsidiaries, which interest has a value of more than €500,000;

(vii) Contract for the sale of any material asset (other than inventory sales in the ordinary course of business consistent with past practice) or the grant of any preferential rights to purchase any such material asset or requiring the consent of any party to the transfer thereof;

(viii) Contract for any joint venture, partnership or similar arrangement; or

(ix) Contract that is material to Satlynx and its Subsidiaries taken as a whole.

 

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(b) Schedule 4.17(b) sets forth a list of all material Contracts to which SES or any of its Affiliates is a party or by which SES or its Affiliates is bound that arise exclusively out of the operation of the AMC-23 Business as of the date hereof.

(c) As of the date of this Agreement, to the knowledge of SES, all Contracts listed in Schedules 4.17(a), 4.17(b), 4.23(a), 4.23(b) and 4.23(c) (the “Company Contracts”) are valid, binding and in full force and effect and are enforceable by SES or any of its Affiliates in accordance with their respective terms, except for such failures to be valid, binding, in full force and effect or enforceable that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect. SES or its Affiliates that are a party thereto have performed all obligations required to be performed by it or them to date under the Company Contracts, and are not (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder and, to the knowledge of SES, as of the date of this Agreement, no other party to any Company Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder, in each case, except for such failure to perform, breaches and defaults that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect. Complete and correct copies of all Company Contracts, together with all modifications and amendments thereto, as in effect through the date of this Agreement have been made available to the GE Entities.

(d) As of the date of this Agreement, to the knowledge of SES, all “material contracts” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) of Star One and its Subsidiaries, taken as a whole (the “Star One Contracts”), (i) are valid, binding and in full force and effect and (ii) are enforceable by Star One or the Subsidiary party thereto in accordance with their respective terms, except for such failures to be valid, binding, in full force and effect or enforceable that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect. To the knowledge of SES, Star One or the Star One Subsidiary party thereto has performed all obligations required to be performed by it to date under the Star One Contracts, and are not (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder and, as of the date of this Agreement, no other party to any Star One Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder, in each case, except for such failure to perform, breaches and defaults that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect. To the knowledge of SES, the execution and delivery of this Agreement, and consummation of the transactions contemplated hereby, would not cause the breach of any Star One Contract, except for such breaches that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect.

(e) As of the date of this Agreement, to the knowledge of SES, all “material contracts” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) of AsiaSat and its Subsidiaries, taken as a whole (the “AsiaSat Contracts”), (i) are valid, binding and in full force and effect and (ii) are enforceable by AsiaSat or the Subsidiary party thereto in accordance with their respective terms, except for such failures to be valid, binding, in full force and effect or enforceable that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect. To the knowledge of SES, AsiaSat or the AsiaSat Subsidiary party thereto has performed all obligations required to be performed by it to

 

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date under the AsiaSat Contracts, and is not (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder and, as of the date of this Agreement, no other party to any AsiaSat Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder, in each case, except for such failure to perform, breaches and defaults that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect. To the knowledge of SES, the execution and delivery of this Agreement, and consummation of the transactions contemplated hereby, would not cause the breach of any AsiaSat Contract, except for such breaches that, individually or in the aggregate, have not had and are not reasonably expected to have an SES Material Adverse Effect.

(f) Schedule 4.17(f) sets forth the Backlog as of the date set forth in such Schedule 4.17(f) and the Contracts representing the 10 largest contributions to the Backlog (the “Material Backlog Contracts”). Except as have not had, and would not reasonably be expected to have, individually or in the aggregate, an SES Material Adverse Effect, to the knowledge of SES, as of the date hereof no event has occurred which would result in any breach or violation of, constitute a default, require consent or result in the loss of a benefit under, give rise to a right to permit or require the purchase or sale of assets or securities under, give rise to any right of termination, amendment, acceleration or cancellation of, or result in the creation of an Encumbrance (other than a Permitted Encumbrance) on the AMC-23 Transferred Assets or on the assets of Satlynx or any of its Subsidiaries (in each case, with or without notice or lapse of time or both) pursuant to, any Material Backlog Contract, except for any payment defaults under transponder sale or lease agreements which are not more than sixty (60) days past due.

(g) As of the date of this Agreement, each of the Contracts listed on Schedule 4.17(g) (the “Designated Contracts”), (i) is valid, binding and in full force and effect in all material respects and (ii) is enforceable in all material respects by the SES Affiliates party thereto in accordance with their respective terms. The SES Affiliate party thereto has performed all material obligations required to be performed by it to date under the Designated Contracts, and is not (with or without the lapse of time or the giving of notice, or both) in material breach or material default thereunder and, as of the date of this Agreement, to the knowledge of SES, no other party to any Designated Contract is (with or without the lapse of time or the giving of notice, or both) in material breach or default thereunder.

Section 4.18 Permits.

(a) As of the date of this Agreement, Schedule 4.18(a)(i) sets forth a list of: (i) all current material Permits issued by any Governmental Entity other than the FCC to SES or its Affiliates, relating to the operation of the AMC-23 Satellite, (ii) all Permits issued by the FCC in relation to the AMC-23 Business, excluding telemetry, tracking and control, (iii) all current material Permits relating to Ground Stations issued by any Governmental Entity to Satlynx or any of its Subsidiaries, and (iv) all current material Permits from the U.S. Department of State relating to technical assistance agreements or other appropriate export control authorizations involving any of the Transferred Businesses (collectively, the “Communications Permits”). Schedule 4.18(a)(ii) sets forth, as of the date of this Agreement, a list of (x) all material Permits (other than Communications Permits) held by SES or any its Affiliates that are necessary for the operation of the Transferred Businesses (“Material Company Permits”) and (y) for the AMC-23

 

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Satellite, all Governmental Entities which have issued landing rights with respect to transmissions from the AMC-23 Satellite. Except as set forth on Schedule 4.18(a)(iii), all Communications Permits and Material Company Permits are in full force and effect in all material respects and are validly held by SES or an Affiliate thereof, free and clear of all Encumbrances (other than Permitted Encumbrances), and SES and its Affiliates have complied in all material respects with all terms and conditions thereof. Except for any suit, action, arbitration or administrative, regulatory, judicial or other formal proceeding (a “Proceeding”) affecting the satellite industry generally or as set forth in Schedule 4.18(a)(iv), during the three (3) years preceding the date of this Agreement (A) none of the Transferred Businesses have received notice in writing of any Proceeding requesting the revocation or adverse modification of any Communications Permit or Material Company Permit and (B) to the knowledge of SES, no person or entity has asserted in writing to a Governmental Entity that a Communications Permit should be modified or revoked, or that the Transferred Businesses are not in compliance in any material respect with any Communications Permit. To the knowledge of SES, none of the Company Permits will be suspended, modified, revoked or not be renewed as a result of the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby, assuming receipt of the consents referred to in Section 4.3. Except as set forth in Schedule 4.18(a)(v), the Transferred Businesses do not engage in any business requiring security clearances from a U.S. Governmental Entity.

(b) As of the date of this Agreement, the Communications Permits, Material Company Permits and the Permits for the Ground Stations, and, as of the Closing Date, the Communications Permits and Material Company Permits and the other Permits issued to any Transferred Entity or, with respect to the AMC-23 Business, SES or any of its Affiliates, following the date of this Agreement, but prior to Closing Date, shall, constitute all of the Permits necessary for the Transferred Businesses to own or hold under lease and operate their respective assets and to conduct their respective businesses as presently conducted, including the operation of, and transmitting to and from, the AMC-23 Satellite and each of the Ground Stations and the provision of transmission/reception services, other than such Permits which, individually or in the aggregate, are not reasonably expected to be material to the business of the Transferred Businesses taken as a whole.

(c) As of the date of this Agreement, except as set forth in Schedule 4.18(c), neither SES, any of its Affiliates nor any of the Transferred Businesses has received any written complaint that is pending asserting the AMC-23 Satellite or any Ground Station is causing, or will cause, harmful interference to the transmissions or reception of any other radio communications facility, and to the knowledge of SES, as of the date of this Agreement no other radio communications facility is causing harmful interference to the transmissions from or the receipt of signals by the AMC-23 Satellite or any Ground Station.

(d) All information contained in any pending application by any of the Transferred Businesses, for a Communications Permit or Material Company Permit, or for modification, extension, or renewal of a Communications Permit or Material Company Permit, when read together, is true, correct and complete in all material respects. The Transferred Businesses have duly filed or caused to be filed with the FCC all required reports, statements, documents, registrations, filings or submissions with respect to (i) the operation of the business of the Transferred Businesses, (ii) the Communications Permits as of the date of this Agreement, (iii)

 

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the ownership by the Transferred Businesses of their respective assets and (iv) the pending applications by the Transferred Businesses for a Communications Permit or Material Company Permit, or for modification, extension or renewal of Communications Permits or Material Company Permits, in each case other than any failure to file which, individually or in the aggregate, is not reasonably expected to be material to the business of any of the Transferred Businesses, taken as a whole, and is not reasonably expected to give rise to a sanction or material fine or penalty.

(e) To the knowledge of SES, as of the date of this Agreement, (i) except for any Proceeding affecting the satellite industry generally, during the three (3) years preceding the date of this Agreement (A) none of Star One or any of its Subsidiaries have received notice in writing of any Proceeding requesting the revocation or adverse modification of any material Permits held by Star One and its Subsidiaries (“Material Star One Permits”), (B) none of the Material Star One Permits has been revoked, and (C) no person or entity has asserted in writing to a Governmental Entity that a Material Star One Permit should be modified or revoked, or that Star One and its Subsidiaries are not in compliance in any material respect with any Material Star One Permit, and (ii) none of the Material Star One Permits will be suspended, modified, revoked or not be renewed as a result of the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby.

(f) To the knowledge of SES, as of the date of this Agreement, (i) except for any Proceeding affecting the satellite industry generally, during the three (3) years preceding the date of this Agreement (A) none of AsiaSat or any of its Subsidiaries have received notice in writing of any Proceeding requesting the revocation or adverse modification of any material Permits held by AsiaSat and its Subsidiaries (“Material AsiaSat Permits”), (B) none of the Material AsiaSat Permits has been revoked, and (C) no person or entity has asserted in writing to a Governmental Entity that a Material AsiaSat Permit should be modified or revoked, or that AsiaSat and its Subsidiaries are not in compliance in any material respect with any Material AsiaSat Permit, and (ii) none of the Material AsiaSat Permits will be suspended, modified, revoked or not be renewed as a result of the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby.

(g) This Section 4.18 does not relate to any matters with respect to environmental matters, which are addressed solely in Section 4.21.

Section 4.19 Insurance.

(a) A list of all third-party in-orbit satellite insurance policies held by SES or any of its Affiliates applicable to the AMC-23 Satellite in effect as of the date hereof is set forth in Schedule 4.19(a). Copies of all provisions of such insurance policies relevant to the AMC-23 Satellite have been made available to GE. (i) All such policies are in full force and effect; (ii) none of SES or any of its Affiliates are in breach or default in any material respect (including any such breach or default in any material respect with respect to the payment of premiums or the giving of notice), with respect to such policies, and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification in any material respect, under any such insurance policy relevant to the AMC-23 Satellite to which SES or any of its Affiliates is either an insured or a beneficiary (an “AMC-23

 

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Insurance Policy”); (iii) all premiums due and payable in respect of each AMC-23 Insurance Policy have been paid and none of SES or any of its Affiliates has given or received written notice from any insurer or agent of any intent to cancel any such AMC-23 Insurance Policy; (iv) all appropriate insurers under such AMC-23 Insurance Policies have been notified of all events required to be disclosed in accordance with such policies, all claims since December 31, 2005 have been properly made for potentially insurable material losses known to SES in accordance with such AMC-23 Insurance Policies and no such insurer has informed SES or any of its Affiliates since December 31, 2005 of any denial of coverage or reservation of rights thereto; and (v) as of the date hereof, none of SES or any of its Affiliates have received written notice from any third-party insurance company or Governmental Authority of any defects or inadequacies that is reasonably likely adversely to affect the insurability of, or to cause a material increase in the premiums for, third-party insurance covering the AMC-23 Satellite that have not been cured or repaired to the satisfaction of the party issuing the notice.

(b) Schedule 4.19(b) sets forth all other material third-party insurance policies in effect as of the date hereof and owned, or held by SES or any of its Affiliates with respect to Satlynx and its Subsidiaries. Copies of all such insurance policies have been made available to GE. (i) All such policies are in full force and effect; (ii) none of SES or any of its Affiliates are in breach or default in any material respect (including any such breach or default in any material respect with respect to the payment of premiums or the giving of notice), with respect to such policies, and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification in any material respect, under any such insurance policy; (iii) all premiums due and payable in respect of each such insurance policy have been paid and none of SES or any of its Affiliates has given or received written notice from any insurer or agent of any intent to cancel any such insurance policy.

Section 4.20 Benefit Plans.

(a) Schedule 4.20(a)(i) contains, as of the date of this Agreement, a list of all material employee pension or welfare benefit plans, bonus, stock option, stock purchase, deferred compensation, severance, disability, vacation pay, sick pay, or other plans or arrangements and employee fringe benefit plans maintained, or contributed to, by SES or any of its Affiliates for the benefit of any Transferred Employee, or with respect to which any of the Transferred Businesses could reasonably be expected to incur any liability, but excluding (i) collective bargaining agreements, (ii) all agreements with individuals to which any of Satlynx or its Subsidiaries, or SES or its Affiliates with respect to the AMC-23 Business, is a party (including individual retention agreements, including any arising, or arising nominally, under a retention or other plan) and (iii) all plans, agreements and arrangements providing for cash compensation and bonuses (all the foregoing being hereinafter called “Company Benefit Plans”). SES has made available to the GE Entities true, complete and correct copies of (A) each Company Benefit Plan (or a summary of the Company Benefit Plan if it is not in written form), (B) any individual employment or consulting agreements or collective bargaining agreements set forth in Schedule 4.17(a)(i) and (ii), (C) the most recent annual report on Form 5500 filed with the Internal Revenue Service with respect to each Company Benefit Plan (if any such report was required), (D) the most recent summary plan description with respect to each Company Benefit Plan (if any such summary plan description is required) and (E) each trust agreement, group annuity contract or other funding and financing arrangement relating to any Company Benefit Plan. SES has also

 

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delivered to the GE Entities true, correct and complete information regarding the current base salary, 2005 bonuses, projections as of the date hereof of 2006 bonuses and employee benefits of the Transferred Employees. Schedule 4.20(a)(iii) contains a list of the Company Benefit Plans to be transferred by SES or any of its Affiliates (other than Satlynx or any of its Subsidiaries) to Splitco or any of its Subsidiaries at Closing.

(b) The consummation of the transactions contemplated by this Agreement will not (i) accelerate the time of the payment or vesting of, or increase the amount of, compensation due from SES or any of its Affiliates, to any Transferred Employee, (ii) result in any liability from SES or any of its Affiliates to any Transferred Employee, or (iii) entitle any Transferred Employee to severance pay, unemployment compensation or other similar payment from SES or any of its Affiliates.

(c) As of the date of this Agreement, except as contemplated by this Agreement, none of SES or any of its Affiliates have announced a plan or is party to a legally binding commitment (i) that would create any additional Company Benefit Plans or (ii) to amend or modify any existing Company Benefit Plan, in each case with respect to any Transferred Employee.

(d) None of the Transferred Businesses have any Liabilities under any Company Benefit Plan with respect to any misclassification of a person as an independent contractor rather than as an employee, except for any misclassification that does not or would not be expected to have, individually or in the aggregate, a material adverse effect on the Transferred Businesses, taken as a whole.

(e) As of the Closing, Splitco will not sponsor, maintain, contribute to, or have any Liability under, for or with respect to, any Company Benefit Plans or any Employment Agreements, except as provided under the Ancillary Agreements or that are set forth on Schedule 4.20(a)(iii). From and after the Closing, neither the GE Entities nor any of their Affiliates will directly or indirectly have or incur any Liabilities, whether by virtue of the transactions contemplated by this Agreement or otherwise, with respect to or in connection with (i) any Company Benefit Plans or any Employment Agreements, except as provided under the Ancillary Agreements; and (ii) the Transferred Employees or any other individuals who do or did at any time provide employment or employment-type services for or with respect to Splitco or any of the SES Entities, which arose or were incurred at any time prior to the Closing.

Section 4.21 Environmental Matters.

Except as would not, individually or in the aggregate, cause or reasonably be expected to cause a material adverse effect on the Transferred Businesses, taken as a whole (i) each of the Transferred Entities, and in respect of the AMC-23 Business, SES and its Affiliates is in compliance in all material respects with all Environmental Laws, (ii) except as set forth in Schedule 4.21, as of the date of this Agreement, none of the Transferred Entities, or in respect of the AMC-23 Business, SES or any of its Affiliates has received any written notice during the three (3) years preceding the date of this Agreement alleging that any of the Transferred Entities, or in respect of the AMC-23 Business, SES or any of its Affiliates is in material violation of any Environmental Law, (iii) there are no pending or, to the knowledge of SES, threatened, Proceedings alleging that any of the Transferred Entities, or in respect of the AMC-23 Business,

 

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SES or any of its Affiliates is in violation of Environmental Law, and (iv) Hazardous Materials have not been Released at any Satlynx Property or AMC-23 Property except in a manner or in a condition which would not reasonably be expected to result in liability in connection with compliance with Environmental Laws. The term “Environmental Laws” means any and all applicable Laws, Judgments and Permits issued, promulgated or entered into by or with any Governmental Entity on or prior to the Closing Date relating to pollution, the protection of the environment, health or safety matters (including with respect to orbital debris). The term “Hazardous Materials” means (A) any and all radioactive materials or wastes, petroleum (including crude oil) or petroleum distillates, asbestos and urea formaldehyde foam and (B) any other wastes, materials, chemicals or substances defined as a “pollutant”, “contaminant”, “hazardous waste”, “hazardous substance” or “hazardous material” under any Environmental Law. The term “Release” has the meaning set forth in 42 U.S.C. Section 9601(22).

Section 4.22 Employee and Labor Matters.

SES and its Affiliates have complied with respect to the Transferred Employees in all material respects with all applicable employment and labor laws, including those relating to wages, hours, collective bargaining, discrimination, facility closing notices and the payment of social security and similar contributions, and are not liable for any arrears of wages or any material penalties for failure to comply with any of the foregoing, except for instances of noncompliance that, individually or in the aggregate, have not been and are not reasonably expected to be material to the business of the Transferred Businesses taken as a whole. There is not pending any, and during the 12 months preceding the date of this Agreement there has not been any, labor strike, dispute, work stoppage or lockout pending, against SES or any of its Affiliates with respect to the Transferred Employees, other than as, individually or in the aggregate, is not reasonably expected to be material to the business of the Transferred Businesses, taken as a whole. None of SES or any of its Affiliates with respect to the Transferred Employees have engaged in any unfair labor practice, and, to the knowledge of SES, there are not any unfair labor practice or similar charges or complaints against any of the Transferred Businesses taken as a whole pending before any Governmental Entity, in each case that, individually or in the aggregate, is reasonably expected to be material to the business of the Transferred Businesses taken as a whole. To the knowledge of SES, as of the date of this Agreement, no labor organizational campaign is in progress with respect to Transferred Employees and no dispute concerning representation of such employees exists. With respect to the Transferred Employees, there are not any pending charges against any of the Transferred Businesses, or any of their current or former employees before the Equal Employment Opportunity Commission or any state or local agency responsible for the prevention of unlawful employment practices that, individually or in the aggregate, is reasonably expected to be material to the business of the Transferred Businesses taken as a whole. Neither SES nor any of its Affiliates has received written notice during the 12 months preceding the date of this Agreement of the intention of any Governmental Entity responsible for the enforcement of labor or employment laws to conduct an investigation of the Transferred Businesses that is reasonably expected, individually or in the aggregate, to be material to the business of the Transferred Businesses taken as a whole.

 

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Section 4.23 Customers and Suppliers.

(a) Customers. Schedule 4.23(a) sets forth as of the date of this Agreement (i) a list, true and correct in all material respects, of each Contract, between one or more Transferred Businesses and customers providing for (x) the sale of transponder services, or (y) services with aggregate remaining future payments in excess of €5,000,000 for the term of such Contract following the date of this Agreement (each customer party to a Contract described in clause (y), a “Major Customer”) and (ii) the dollar amount of payments made by each Major Customer during the 12-month period ending December 31, 2006. SES has made available to the GE Entities true and correct copies of all such Contracts. As of the date of this Agreement, no Major Customer has, since December 31, 2005, (i) given written notice that it intends to terminate any such Contract in whole or in part or (ii) threatened in writing to terminate any such Contract in whole or in part.

(b) Satlynx Suppliers. Schedule 4.23(b) sets forth as of the date of this Agreement, a list, true and correct in all material respects, of all suppliers of Satlynx and its Subsidiaries to whom Satlynx and its Subsidiaries made payments in excess of €1,000,000 during the 12 months ending December 31, 2006 (each, a “Major Supplier”) and the dollar amount of payments made to each Major Supplier in such 12-month period. As of the date of this Agreement, no Major Supplier has, since December 31, 2005, (i) given written notice to any of the Transferred Businesses that it intends to terminate its relationship with such relevant Transferred Business, or (ii) threatened in writing to terminate its relationship with any of the Transferred Businesses.

(c) AMC-23 Suppliers. Schedule 4.23(c) sets forth as of the date of this Agreement, a list, true and correct in all material respects, of all suppliers of the AMC-23 Business to whom SES and its Affiliates made payments in excess of €1,000,000 to the extent relating exclusively to the AMC-23 Business during the 12 months ending December 31, 2006 (each, an “AMC-23 Major Supplier”) and the dollar amount of payments made to each AMC-23 Major Supplier in such 12-month period. As of the date of this Agreement, no AMC-23 Major Supplier has, since December 31, 2005, (i) given written notice to SES or any of its Affiliates that it intends to terminate its relationship with SES or its Affiliates with respect to the AMC-23 Business, or (ii) threatened in writing to terminate its relationship with SES or any of its Affiliates with respect to the AMC-23 Business.

(d) As of the date of this Agreement, no party to a Broadband Satellite Internet Access Service Agreement with Satlynx or any of its Subsidiaries who has made payments in excess of €1 million in the year ending December 31, 2006 has, since January 1, 2006 (i) given written notice to Satlynx or its Subsidiaries that it intends to terminate its relationship therewith, or (ii) threatened in writing to terminate its relationship with Satlynx or its Subsidiaries.

Section 4.24 Government Contracts.

In connection with the Transferred Businesses:

(a) Since January 1, 2003, (i) neither any Transferred Entity nor, with respect to the AMC-23 Business, SES or any of its Affiliates, has been debarred or suspended from participation in the award of Contracts by a Governmental Entity; and (ii) to the knowledge of SES, there exist no facts or circumstances that would reasonably warrant the institution of suspension or debarment proceedings or the finding of nonresponsibility or ineligibility on the part of any Transferred Entity.

 

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(b) Neither any Transferred Entity nor, with respect to the AMC-23 Business, SES or any of its Affiliates or, to the knowledge of SES, any of the directors, officers, employees, consultants or agents of any Transferred Entity is, or since January 1, 2003 has been, under any Governmental Investigation, indictment or information by any Governmental Entity with respect to any alleged act or omission arising under or relating to any Government Contract or Government Subcontract.

(c) Since January 1, 2003, (i) to the knowledge of SES, all test and inspection results provided by any Transferred Entity or, with respect to the AMC-23 Business, SES or any of its Affiliates to any Governmental Entity pursuant to any Government Contract or Government Subcontract or to any other Person pursuant to a Government Contract or Government Subcontract were complete and correct in all material respects as of the date so provided and (ii) the Transferred Entities and SES and its Affiliates with respect to the AMC-23 Business, have complied in all material respects with respect to the provision of such test and inspection results to any Governmental Entity or to any other Person pursuant to a Government Contract or Government Subcontract as required by applicable Law and the terms of the applicable Government Contract or Government Subcontract.

Section 4.25 Brokers.

No Person has acted directly or indirectly as a broker, finder or financial advisor for SES or the SES Entities in connection with the negotiations relating to or the transactions contemplated by this Agreement, and no Person is entitled to any fee or commission or like payment in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of SES, except for any Person, the fees of which will be paid solely by SES and its Affiliates (other than Splitco).

Section 4.26 AsiaSat.

(a) To the knowledge of SES, neither AsiaSat’s Annual Report on Form 20-F filed with the SEC on June 19, 2006 nor the Current Report on Form 6-K filed with the SEC on August 25, 2006 (including in each case exhibits and all other information incorporated by reference therein) (collectively, the “AsiaSat Filings”), contained, when filed (and, if amended, superseded or supplemented by a filing made prior to the date hereof, then on the date of such filing), any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. To the knowledge of SES, there are no Liabilities of AsiaSat of a nature required to be reflected on a balance sheet prepared in accordance with accounting principles generally accepted in Hong Kong, other than any such Liabilities (i) reflected or reserved against on the financial statements contained in the AsiaSat Filings or the notes thereto, (ii) incurred since December 31, 2005 in the ordinary course of business consistent with past practice, or (iii) that would not, individually or in the aggregate, reasonably be expected to have an SES Material Adverse Effect.

 

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(b) To the knowledge of SES, since June 30, 2006, there has not been any change, effect, or circumstance with respect to AsiaSat and its Subsidiaries, taken as a whole, that has had, or could reasonably be expected to have, individually or in the aggregate, an SES Material Adverse Effect.

Section 4.27 Disclaimer.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 4, THE CERTIFICATES DELIVERED PURSUANT TO SECTION 8.2 OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS, AND THE CERTIFICATES DELIVERED IN CONNECTION WITH THE ANCILLARY AGREEMENTS, NEITHER SES NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO SES, ITS SUBSIDIARIES, ITS AFFILIATES, THE TRANSFERRED BUSINESSES OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND SES DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SES OR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 4, THE CERTIFICATES DELIVERED PURSUANT TO SECTION 8.2 OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS, AND THE CERTIFICATES DELIVERED IN CONNECTION WITH THE ANCILLARY AGREEMENTS, SES HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO THE GE ENTITIES OR ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED TO THE GE ENTITIES BY ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR REPRESENTATIVE OF SES OR ANY OF ITS AFFILIATES). SES MAKES NO REPRESENTATIONS OR WARRANTIES TO THE GE ENTITIES REGARDING THE PROBABLE SUCCESS OR PROFITABILITY OF THE TRANSFERRED BUSINESSES.

ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF THE GE ENTITIES

Each of the GE Entities hereby represents and warrants to SES as follows:

Section 5.1 Organization and Standing.

Each of the GE Entities and Parent is (a) a corporation duly organized, validly existing and duly qualified or licensed and in good standing under the Laws of the state or jurisdiction of its organization with full corporate power and authority to own, lease, use and operate its properties and to conduct its business, and (b) duly qualified or licensed to do business and is in good standing in any other jurisdiction in which the nature of the business conducted by it or the property it owns, leases or operates requires it to so qualify, be licensed or be in good standing, except where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, have a GE Material Adverse Effect. “GE Material Adverse Effect” means

 

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any change, effect, event or circumstance that is materially adverse to (i) the ability of the GE Entities to perform their obligations under this Agreement and the Ancillary Agreements substantially as contemplated hereby, or (ii) the ability of the parties to consummate the transactions contemplated hereby and thereby (including obtaining any necessary consents or authorizations).

Section 5.2 Corporate Power and Authority.

Each of the GE Entities and Parent has all requisite corporate power and authority to enter into and deliver this Agreement and to consummate the transactions contemplated hereby. Each of the GE Entities and Parent has all requisite corporate power and authority to execute and deliver the Ancillary Agreements and the other agreements, documents and instruments to be executed and delivered by it in connection with this Agreement or the Ancillary Agreements and to consummate the transactions contemplated thereby. The execution, delivery and performance of this Agreement by each of the GE Entities and Parent and the consummation by each of the GE Entities and Parent of the transactions contemplated hereby, including the redemption of the Class C Shares, and the execution, delivery and performance of the Ancillary Agreements and the other agreements, documents and instruments to be executed and delivered in connection with this Agreement or the Ancillary Agreements by each of the GE Entities and Parent and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary action on the part of each of the GE Entities and Parent, and no additional corporate action or corporate proceeding on the part of the GE Entities is necessary to authorize the execution, delivery and performance by the GE Entities of the Agreement and the consummation by it of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of the GE Entities and Parent and constitutes the legal, valid and binding obligation of each of the GE Entities and Parent, enforceable against each of the GE Entities and Parent in accordance with its terms. The Ancillary Agreements and the other agreements, documents and instruments to be executed and delivered by each of the GE Entities in connection with this Agreement or the Ancillary Agreements at the Closing will be duly executed and delivered by each of the GE Entities and will constitute the legal, valid and binding obligations of each of the GE Entities, enforceable against each of the GE Entities in accordance with their respective terms.

Section 5.3 Conflicts; Consents and Approvals.

The execution and delivery by the GE Entities and Parent of this Agreement does not, the execution and delivery by the GE Entities and Parent and each of their Affiliates of each Ancillary Agreement to which it is, or is specified to be, a party will not, and the performance by the GE Entities and Parent and each of their Affiliates of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party and the consummation of the transactions contemplated hereby and thereby and compliance by the GE Entities and Parent and such Affiliates with the terms of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Encumbrance upon the assets of any GE Entity or Parent under any provision of (i) the certificate of incorporation, bylaws or any comparable governing documents of any of the GE

 

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Entities, Parent or any Affiliate of the GE Entities or Parent that is, or is specified to be, a party to any of the Ancillary Agreements or any other agreements or instruments to be executed and delivered in connection therewith, (ii) any Contract or Permit to which any GE Entity or Parent is a party or by which any of their respective properties or assets is subject or (iii) (assuming compliance with the matters set forth in the next sentence of this Section 5.3) any material Judgment or applicable Law applicable to any GE Entity or Parent or their respective properties or assets, other than, in the case of clause (ii) above, any such items that, individually or in the aggregate is not reasonably expected to have a GE Material Adverse Effect. No consent of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to any GE Entity or Parent in connection with the execution, delivery and performance of this Agreement or any Ancillary Agreement to which it is, or is specified to be, a party or the consummation of the transactions contemplated hereby and thereby, other than in connection with (A) compliance with and filings under the HSR Act, (B) the written consent of the FCC under the FCC Rules, (C) such other consents, approvals, orders, authorizations, notifications and permits as are set forth on Schedule 4.4 or described in Section 8.1(b)(iii), (D) notification and consents under, and compliance with, export and reexport control requirements and sanctions measures administered by the U.S. Department of Commerce, U.S. Department of State and U.S. Department of Treasury, including provisions and conditions of outstanding export licenses and other approvals, (E) governmental notifications and approvals required for transfer of Contracts with Governmental Entities, if any, (F) those, if any, that may be required solely by reason of the participation of SES or the SES Entities (as opposed to any other domestic or foreign third person) in the transactions contemplated hereby and by the Ancillary Agreements, and (G) other consents, registrations, declarations or filings that the failure of which to obtain or make, individually or in the aggregate, is not reasonably expected to have a material adverse effect on GE’s ability to, in a timely manner, perform its obligations under this Agreement or the Ancillary Agreements or consummate the transactions contemplated hereby and thereby.

Section 5.4 Class C Shares.

As of the date hereof, CFE owns a total of 98,653,542 Class C Shares and GCEH owns a total of 4,496,358 Class C Shares. As of the Closing, each of the GE Entities will have good and valid title to such Class C Shares, free and clear of all Encumbrances (except for Encumbrances created by this Agreement and SES’s organizational documents). Upon delivery to SES of the GE Stock Deliverables, in accordance with the terms of this Agreement, and subject to the registration of the transfer of the Class C Shares in the register of SES, SES shall acquire good and valid title to such shares, free and clear of any Encumbrances, other than Encumbrances created by SES or any of its Subsidiaries.

Section 5.5 Brokers.

No Person has acted directly or indirectly as a broker, finder or financial advisor for the GE Entities or any of their respective Affiliates in connection with the negotiations relating to or the transactions contemplated by this Agreement, and no Person is entitled to any fee or commission or like payment in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of either of the GE Entities, except for any Person, the fees of which will be paid solely by the GE Entities or their Affiliates.

 

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Section 5.6 Absence of Litigation; Compliance with Laws.

(a) No Proceeding is pending or, to the knowledge of the GE Entities, threatened that seeks to, or would reasonably be expected to, materially impair or delay the ability of the GE Entities to consummate the transactions contemplated by, or to perform their respective obligations under, this Agreement and the Ancillary Agreements.

(b) None of the GE Entities is in violation of any Laws or Judgments applicable to it or by which any of its material assets is bound or affected, except for violations the existence of which would not reasonably be expected to materially impair or delay the ability of the GE Entities to consummate the transactions contemplated by, or to perform its obligations under, this Agreement or the Ancillary Agreements.

(c) The GE Entities are legally, financially and otherwise qualified to have an ownership interest in an FCC licensee, to control a company that acquires, owns and operates the AMC-23 Transferred Assets and to otherwise perform their obligations under this Agreement and the Ancillary Agreements.

Section 5.7 Securities Matters.

The Splitco Shares are being acquired by the GE Entities for their own account and without a view to the public distribution or sale of the Splitco Shares or any interest in them. The GE Entities have sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Splitco Shares, and are capable of bearing the economic risks of such investment, including a complete loss of their investment in the Splitco Shares. The GE Entities understand and agree that they may not sell or dispose of any of the Splitco Shares other than pursuant to a registered offering in compliance with, or in a transaction exempt from, the registration requirements of the applicable securities Laws.

Section 5.8 Disclaimer.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 5, THE CERTIFICATES DELIVERED PURSUANT TO SECTION 8.3 OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS, AND THE CERTIFICATES DELIVERED IN CONNECTION WITH THE ANCILLARY AGREEMENTS, NEITHER THE GE ENTITIES NOR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO THE GE ENTITIES, THEIR SUBSIDIARIES, AFFILIATES, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND THE GE ENTITIES DISCLAIM ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY THE GE ENTITIES OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 5, THE CERTIFICATES DELIVERED PURSUANT TO SECTION 8.3 OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS, AND THE CERTIFICATES DELIVERED IN CONNECTION WITH THE ANCILLARY AGREEMENTS, THE GE ENTITIES HEREBY DISCLAIM ALL LIABILITY AND RESPONSIBILITY FOR ANY

 

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REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO SES OR ITS AFFILIATES OR REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE PROVIDED TO SES BY ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR REPRESENTATIVE OF THE GE ENTITIES OR ANY OF THEIR AFFILIATES).

ARTICLE 6.

COVENANTS AND AGREEMENTS

Section 6.1 Agenda and Draft Resolutions.

SES shall use its reasonable best efforts to promptly prepare and distribute to its shareholders an agenda (the “Agenda”) for the EGM which shall contain a draft of the Required Resolutions to be considered by SES shareholders at the EGM (the “Draft Resolutions”). SES shall provide the GE Entities and their legal counsel with reasonable opportunity to comment upon the form and substance of the Agenda and the Draft Resolutions (including any amendments or supplements thereto) prior to distributing such document, amendment or supplement, and SES shall use its reasonable best efforts to incorporate the GE Entities’ reasonable comments into the Agenda and the Draft Resolutions (including any amendments or supplements thereto).

Section 6.2 Shareholder Meeting.

SES shall use its reasonable best efforts to convene the EGM at which shareholders shall consider approval of the Required Resolutions as promptly as reasonably practicable and in any event no later than March 15, 2007.

Section 6.3 Access and Information.

(a) Prior to the Closing, SES shall permit (and shall cause each of its Affiliates to permit) representatives of the GE Entities to have reasonable access during normal business hours and upon reasonable notice to all premises, properties, personnel, books, records, Contracts, commitments, reports of examination and documents in the possession or control of SES or any of its Affiliates or to which SES or any of its Affiliates otherwise has access to the extent, but only to the extent, pertaining to the Transferred Businesses, Splitco, the Equity Interests, Star One, AsiaSat and their respective Subsidiaries as may be necessary to permit the GE Entities, at their sole expense, and in a manner so as not unreasonably to interfere with the normal operations of SES and its Subsidiaries, to make, or cause to be made, such investigation thereof as the GE Entities reasonably deem necessary or advisable in connection with the consummation of the transactions contemplated by this Agreement, and SES shall (and shall cause the SES Entities to) reasonably cooperate with any such investigations; provided, however, that SES and its Affiliates may withhold (i) any document or information that is subject to the terms of a confidentiality agreement with a third party or to non-disclosure obligations under the company policies and business custom governing the conduct of directors and officers of AsiaSat and Star One and their respective Subsidiaries; (ii) any document or information, if such

 

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disclosure would violate applicable Law or (iii) such portions of documents or information which are subject to attorney-client privilege and the provision of which, as determined by SES’s counsel, may eliminate the privilege pertaining to such documents, in each case, only after SES and its Affiliates have used reasonable best efforts to enter into arrangements or obtain consents or waivers that would permit SES and its Affiliates to make such document or information available to the GE Entities, but has failed to enter into such arrangements or obtain such consents or waivers (but, subject to requirements of applicable Law, SES shall provide the GE Entities notice of the nature of the information that is so withheld); provided, further, that none of SES, SES’s or its Subsidiaries’ accountants, nor SES’s Subsidiaries or Affiliates shall be obliged to make any work papers available to any person unless and until such person has signed a customary agreement relating to such access to work papers or data in form and substance reasonably acceptable to such auditors or accountants. If so requested by SES, the GE Entities shall enter into a customary joint defense agreement with SES and/or its Subsidiaries with respect to any information to be provided to the GE Entities pursuant to this Section 6.3. No investigation by the GE Entities or their representatives or advisors prior to or after the date of this Agreement (including any information obtained by the GE Entities pursuant to this Section 6.3) shall diminish, obviate or cure any breach of any representation, warranty, covenant or agreement contained in this Agreement or any Ancillary Agreement nor shall the conduct or completion of any such investigation be a condition to any of the GE Entities’ obligations under this Agreement. The GE Entities agree to abide by any safety rules or rules of conduct reasonably imposed by SES, its Subsidiaries or the operator of such properties, as the case may be, with respect to the GE Entities’ access and any information furnished to the GE Entities or its representatives pursuant to this Section 6.3. Notwithstanding anything to the contrary contained herein, but subject to the provisions of Section 6.15, prior to the Closing, without the prior written consent of SES (i) the GE Entities shall not contact any suppliers to, or customers of, SES, its Subsidiaries or their respective Affiliates with respect to the Transferred Businesses (provided that the GE Entities may contact customers of the AMC-23 Business if any such contact is made in the presence of a representative of SES, or otherwise with SES’s consent in writing) and (ii) the GE Entities shall have no right to perform invasive or subsurface investigations of the properties or facilities of any of SES or the SES Entities; it being understood that the GE Entities may conduct or cause to be conducted Phase I reviews of the properties and facilities of Satlynx and its Subsidiaries.

(b) In order to facilitate the resolution of any claims made against or incurred by SES or any of its Affiliates (as they relate to Splitco, the Equity Interests or the Transferred Businesses), for a period of seven (7) years after the Closing or, if shorter, the applicable period specified in the GE Entities’ document retention policy, the GE Entities shall (i) retain the books and records relating to Splitco, the Equity Interests and the Transferred Businesses relating to periods prior to the Closing and (ii) afford the representatives of SES and its Affiliates reasonable access (including the right to make, at SES’s expense, photocopies), during normal business hours, to such books and records; provided, however, that the GE Entities shall notify SES in writing at least 30 days in advance of destroying any such books and records prior to the seventh anniversary of the Closing Date in order to provide SES the opportunity to copy such books and records in accordance with this Section 6.3(b).

 

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Section 6.4 Conduct of Transferred Businesses.

(a) SES covenants and agrees that, from and after the date hereof until the Closing, except as otherwise expressly contemplated by this Agreement or as consented to in writing by the GE Entities (which consent shall not be unreasonably withheld or delayed), it shall, and shall cause its Affiliates to, conduct the Transferred Businesses only in the Ordinary Course of Business. SES shall use its reasonable best efforts, and shall cause its Affiliates to use their reasonable best efforts, to (i) preserve the Transferred Businesses’ respective relationships with customers, suppliers and other persons with whom the Transferred Businesses have significant business relations to the end that their respective goodwill and ongoing business shall not be impaired in any material respect at the Closing Date, (ii) keep available the services of the Transferred Employees and (iii) maintain in all material respects (A) all of the AMC-23 Transferred Assets and the assets and properties of the Transferred Entities in their current condition, ordinary wear and tear excepted, and (B) insurance upon all of the assets and properties of Satlynx and its Subsidiaries in such amounts and of such kind comparable to that in effect on the date of this Agreement.

(b) Without limiting the generality of Section 6.4(a), SES agrees that, except as expressly permitted or required by the terms of this Agreement or as consented to in writing by the GE Entities (which consent shall not be unreasonably withheld or delayed (other than as to clauses (i), (ii), (iii), (vii), (viii) and (ix), as to which consent may be withheld in the sole discretion of the GE Entities)), and other than as provided herein or in the Ancillary Agreements, SES shall not, and shall not permit any of its Affiliates to, directly or indirectly do any of the following:

(i) permit or allow any of the AMC-23 Transferred Assets or the respective assets or properties of any Transferred Entity (collectively, “X Assets”) to become subjected to any Encumbrance other than Permitted Encumbrances;

(ii) (A) except as provided in Section 6.9(c), cause or permit Satlynx to declare or pay any dividend or distribution to its shareholder(s) or (B) cause or permit Satlynx or any of its Subsidiaries to incur any indebtedness for borrowed money or issue any debt securities;

(iii) permit or allow any Transferred Entity to acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof;

(iv) permit or allow Satlynx or its Subsidiaries to acquire any satellite capacity for a term in excess of one year or make or incur any commitment for capital expenditures that, in the aggregate on a cumulative basis, are in excess of the applicable cumulative totals set forth in the capital expenditure plan set forth in Schedule 6.4(b)(iv) (the “Capital Expenditure Plan”) for the periods shown therein;

 

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(v) (A) sell, lease, license or otherwise dispose of any material assets of the Transferred Businesses, except for (i) provisions of satellite transponder services to third-party customers in the Ordinary Course of Business (other than, with respect to the AMC-23 Business, any disposition of transponder services for a term of more than one year or any multi-transponder transaction) and (ii) other dispositions which do not exceed in the aggregate €500,000 and (B) enter into any Contract with respect to the Transferred Businesses with respect to services other than in the Ordinary Course of Business;

(vi) other than in the Ordinary Course of Business, enter into or modify or otherwise amend in any material respect, terminate or cancel any Company Contract or enter into any Contract that would be a Company Contract if in effect on the date hereof (provided that, for purposes of determining the Contracts that constitute “Company Contracts” under this paragraph (vi), the numerical threshold for purposes of paragraphs (iv) and (vi) of Section 4.17(a) shall be €1,000,000);

(vii) with respect to Satlynx and its Subsidiaries, in any material respect, accelerate the collection of any receivables or delay the payment of Liabilities outside of the ordinary course;

(viii) change any tax or accounting practices with respect to Satlynx and its Subsidiaries, except as may be required by changes in Law and applicable accounting standards;

(ix) (A) increase the compensation or benefits for any Transferred Employees whose annual compensation is in excess of €75,000, except for changes that may be required by Law or pursuant to Contracts currently in place with those Transferred Employees that have been disclosed as of the date hereof to the GE Entities, (B) hire any new Transferred Employee who will receive an annual compensation greater than €75,000 and who cannot be terminated with less than 12 months’ notice (without penalty) or (C) except as required by Law, introduce, amend or terminate a Company Benefit Plan of Satlynx and its Subsidiaries;

(x) amend the charter, bylaws or similar organizational documents of any of the Transferred Entities; or

(xi) authorize any of, or commit or agree to take, whether in writing or otherwise, any of, the foregoing actions.

(c) Except for Communications Permits and Material Company Permits which lapse or expire in the Ordinary Course of the Business, SES shall not, and shall cause its Affiliates not to, surrender, allow to expire or be terminated, modify adversely, forfeit, or fail to renew or extend under regular terms any of the Communications Permits and Material Company Permits or give the FCC or any other Governmental Entity any grounds to institute any Proceeding for the revocation, suspension, or adverse modification of any Communications Permits and

 

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Material Permits. If the FCC or any other Governmental Entity institutes any Proceedings for the suspension, revocation or adverse modification of any Communications Permits and Material Company Permits, then SES and its Affiliates shall use their respective reasonable best efforts to promptly contest such Proceedings and to seek to have such Proceedings terminated in a manner that is favorable to SES and its Affiliates.

(d) Notwithstanding the foregoing clause (c), neither SES nor its Affiliates shall have any obligations that would give rise to a breach of this Agreement insofar as (A) the loss of such Communications Permit and Material Company Permit or pending application is not reasonably expected to have an SES Material Adverse Effect or (B) maintaining such Permit would require an expenditure which would result in a violation of Section 6.4(b)(iv).

(e) SES shall cause its Affiliates to use their reasonable best efforts to enforce their respective rights to protect the transmissions to and from the AMC-23 Satellite and the Ground Stations from harmful interference from other radio communications facilities (existing or proposed), to the extent that such harmful interference is prohibited by FCC Rules or inconsistent with rights accorded the AMC-23 Satellite under the International Telecommunication Union’s radio regulations and shall promptly notify the GE Entities of such actual or threatened harmful interference.

(f) Except as expressly permitted or required by the terms of this Agreement or as consented to in writing by the GE Entities (which consent shall not be unreasonably withheld or delayed), SES shall not, and shall not permit any of its Affiliates to, do any of the following with respect to the Star One Shares and the Bowenvale Shares:

(i) Except as set forth on Schedule 6.4(f), take any action as a holder of the Star One Shares or as a party to the Star One Shareholders Agreement (including by (i) the exercise of voting rights and (ii) causing any SES designee on the board of directors of Star One to act in a manner consistent with this paragraph) with respect to actions by Star One which are not in the ordinary course of business and consistent with the past practices of Star One during the preceding twenty-four months;

(ii) take any action as a holder of the Bowenvale Shares or as a party to the Bowenvale Shareholders Agreement (including by (i) the exercise of voting rights and (ii) causing any SES designee on the board of directors of Bowenvale and AsiaSat to act in a manner consistent with this paragraph) with respect to actions by Bowenvale or AsiaSat which are not in the ordinary course of business and consistent with the past practices of Bowenvale or AsiaSat during the preceding twenty-four months;

(iii) amend or waive any term or condition of either (A) the Star One Agreement or (B) the Bowenvale Shareholders Agreement; or

(iv) permit or allow the transfer of any of the Bowenvale Shares or the Star One Shares (other than the purchase by Embratel of the Star One Shares pursuant its right of first refusal under the Star One Shareholders Agreement, if applicable) or the imposition or existence of any Encumbrance on any of those shares (other than the Equity Interest Encumbrances).

 

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(g) SES agrees that, except as expressly permitted or required by the terms of this Agreement or as consented to in writing by the GE Entities (which consent shall not be unreasonably withheld or delayed), SES shall not, and shall not permit any of its Affiliates to, permit or allow the transfer of any of the ORBCOMM Shares or the imposition of existence of any Encumbrance on any of the ORBCOMM Shares (other than the ORBCOMM Lockup Agreement).

(h) SES agrees that, except as expressly permitted or required by the terms of this Agreement or as consented to in writing by the GE Entities (which consent shall not be unreasonably withheld or delayed), SES shall not, and shall not permit any of its Subsidiaries to, amend the certificate of incorporation or bylaws of Splitco.

Section 6.5 Closing Documents.

SES shall, prior to or at the Closing, execute and deliver, or cause to be executed and delivered, to the GE Entities, the documents or instruments described in Sections 2.3 and 8.2 to be delivered by SES or its Affiliates prior to or at the Closing. The GE Entities shall, prior to or at the Closing, execute and deliver, or cause to be executed and delivered to SES, the documents or instruments described in Sections 2.4 and 8.3 to be delivered by the GE Entities prior to or at the Closing.

Section 6.6 Efforts to Consummate; Further Assurances.

(a) Subject to the terms and conditions of this Agreement, each party hereto shall use its reasonable best efforts to take, or to cause to be taken, all actions and to do, or to cause to be done, all things necessary, proper or advisable as promptly as practicable to satisfy the conditions set forth in Article 8 and to consummate the transactions contemplated hereby. The GE Entities agree that their failure to vote their Class C Shares in favor of the Required Resolutions at the EGM would be a breach of their obligations under this paragraph (a). Each party shall cooperate in all reasonable respects with the other party hereto in assisting such party to comply with this Section 6.6.

(b) Subject to the terms and conditions of this Agreement, each party hereto shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with each of the other parties to this Agreement in doing, all things necessary, proper or advisable under applicable Law to consummate and make effective the Redemption and the other transactions contemplated by this Agreement, as promptly as practicable, including (but in all events subject to the exceptions herein): (i) defending Proceedings challenging this Agreement or any of the transactions contemplated by this Agreement, including seeking to have any such stay or temporary restraining order or injunction vacated and reversed; (ii) taking all reasonable actions necessary to cause the conditions precedent in Article 8 to be satisfied; (iii) taking all reasonable actions necessary to obtain all necessary consents, approvals, written permissions, confirmations and waivers from third parties, including any Governmental Entity; and (iv) executing and delivering any additional instruments reasonably necessary to consummate the transactions contemplated by this Agreement.

 

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(c) In furtherance and without limitation to the foregoing, SES shall use its reasonable best efforts, and shall cause its Affiliates to use their reasonable best efforts, to cause the Permits to be transferred to Splitco, so that it may operate the Transferred Businesses and the Transferred Entities as of the Closing Date in compliance with all applicable Laws, including Environmental Laws.

(d) SES shall, and shall cause its Affiliates to use reasonable best efforts to cooperate with the GE Entities in connection with remedying any failure by any of the Transferred Businesses or any of the Transferred Entities to be in material compliance with any material Law applicable to any such Transferred Business and Transferred Entities.

(e) Each Stockholder hereby agrees, at any time prior to the Termination Date, and except as contemplated hereby, not to (i) tender any Class C Shares into any tender or exchange offer, (ii) sell (constructively or otherwise), transfer, pledge, hypothecate, grant, encumber, assign or otherwise dispose of (collectively “Transfer”), or enter into any contract, option, agreement or other arrangement or understanding with respect to the Transfer of any of the Class C Shares or Beneficial Ownership (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or voting power thereof or therein (including by operation of law), (iii) grant any proxies or powers of attorney, deposit the Class C Shares into a voting trust or enter into a voting agreement with respect to the Class C Shares. Any Transfer in violation of this provision shall be void.

Section 6.7 Government Approvals; Reasonable Best Efforts.

(a) As promptly as practicable following execution of this Agreement, each of SES and the GE Entities shall make all filings necessary to obtain the consents of, or provide notice to, Governmental Entities necessary or appropriate in connection with the consummation of the transactions contemplated hereby and by the Ancillary Agreements (the “Governmental Approvals”), including filing or causing to be filed, in substantial compliance with the applicable legal requirements: (i) with the U.S. Federal Trade Commission (the “FTC”) and the United States Department of Justice (the “DOJ”) the notification and report form, if any, required for the transactions contemplated hereby and any supplemental information requested in connection therewith pursuant to the HSR Act (the “HSR Filing”), (ii) with any other applicable Governmental Entity, all required notifications and any other filings under the Antitrust Laws, (iii) with the FCC the applications to obtain its written consent required to consummate the transactions contemplated by this Agreement and the Ancillary Agreements (collectively, the “FCC Consent Application”), (iv) with other Governmental Entities, all required requests for governmental approvals required for transfers of Contracts with Governmental Entities and under Environmental Laws, (v) with non-U.S. Government Entities, all required requests for governmental approvals required to consummate the transactions contemplated by this Agreement and the Ancillary Agreements (collectively, the “Non U.S. Governmental Approvals”), and (vi) with all applicable Governmental Entities, requests for confirmation that no consents, approvals, orders, authorizations, notifications and permits described in Section 8.1(b)(iv) are required or, if required, requests for such consents, approvals, orders,

 

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authorizations and permits and making of such notifications. In that regard, each of SES and the GE Entities agree to file the HSR Filing, the FCC Consent Application, and any applications necessary in connection with United States export control matters as promptly as practicable, but in no event shall such filings be made later than 15 business days after the date this Agreement is executed.

(b) Each of the GE Entities, on the one hand, and SES, on the other hand, shall cooperate and use its reasonable best efforts to furnish to the other such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of any filing or submission that is necessary or appropriate to obtain the Governmental Approvals. The GE Entities and SES shall coordinate with one another as far in advance as is reasonably practicable with respect to all written and oral communications with Governmental Entities in connection with the Governmental Approvals. The GE Entities and SES shall supply each other with copies of all correspondence, filings or communications with Governmental Entities in connection with the Governmental Approvals or memoranda setting forth the substance thereof, keep each other appraised of the status of any communications with, and any inquiries or requests for additional information from, the Governmental Entities in connection with the Governmental Approvals, and comply promptly with any such inquiry or request and shall promptly provide any supplemental information requested by any Governmental Entity in connection with the Governmental Approvals. Any such supplemental information shall be in substantial compliance with the requirements of the applicable Law.

(c) Each party will use its reasonable best efforts to resolve any objections raised by a Governmental Entity with respect to the transactions contemplated hereby (including the Privatization) and thereby under any applicable Law. In the event a Proceeding by a Governmental Entity is instituted challenging the transactions contemplated by this Agreement and the Ancillary Agreements, each party will use its reasonable best efforts to resist or resolve such Proceeding consistent with the terms of this Agreement. Each party will use its reasonable best efforts to take such action as may be required (i) by any Governmental Entity in order to resolve such objections as it may have to the transactions contemplated hereby and thereby or (ii) by any court in any Proceeding challenging the transactions contemplated hereby and thereby in order to avoid the entry of any order which has the effect of preventing the consummation of any of the transactions contemplated hereby or thereby on terms consistent with the terms of this Agreement or which, individually or in the aggregate, are reasonably expected to have an SES Material Adverse Effect. Notwithstanding anything to the contrary contained in this Agreement, in no event shall Parent or any of its Subsidiaries or Affiliates be obligated to propose or agree to accept any undertaking or condition, enter into any consent decree, make any divestiture, accept any operational restriction or take or commit to take any action that would reasonably be expected to limit: (i) the freedom of action of Parent or its Subsidiaries or Affiliates with respect to the operation of, or Parent’s ability to retain, Splitco, Bowenvale, Star One, Satlynx and any Subsidiary of Satlynx or any businesses, product lines or assets thereof, or (ii) Parent’s or its Subsidiaries’ or Affiliates’ ability to retain, own or operate any portion of the businesses, product lines or assets of Parent or any of its Subsidiaries or Affiliates, or alter or restrict in any way the business or commercial practices of Parent or its Subsidiaries or Affiliates or the Company or its Subsidiaries.

 

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(d) In the event that consents, approvals, orders, authorizations, notifications or permits of the U.S. Department of State (“State”) are required pursuant to the International Traffic in Arms Regulations (“ITAR”) in order for Splitco to hold title to the AMC-23 Satellite or otherwise comply with ITAR (“ITAR Authority”) with respect to the AMC-23 Satellite, and any such ITAR Authority has not been granted as of the Closing Date, SES shall cause SES Satellite Leasing Ltd. to hold the title to the AMC-23 Satellite in trust for the benefit of Splitco until such ITAR Authority is obtained, including, without limitation, by maintaining, at Splitco’s sole expense, insurance policies covering the AMC-23 Satellite such that if an AMC-23 Loss occurs after the Closing Date but before title to the AMC-23 Satellite is transferred to Splitco, then Splitco shall be entitled to the same insurance coverage rights with respect to the AMC-23 Satellite as if it held title to the AMC-23 Satellite at the time an AMC-23 Loss occurs or is ongoing. Within 10 days after subsequent issuance of the ITAR Authority, title to the AMC-23 Satellite shall be transferred to Splitco. From the Closing Date until the date that title to the AMC-23 Satellite is transferred to Splitco, Splitco shall: (i) bear the risk of loss of the AMC-23 Satellite; (ii) assume all of the AMC-23 Assumed Liabilities, including those related to the ownership of the AMC-23 Satellite; (iii) be entitled to all revenues generated by the AMC-23 Business and (iv) to the maximum extent permitted by Law in the absence of ITAR Authority, Splitco shall have full operational control over the AMC-23 Satellite, including, without limitation, the exclusive right to market and sell transponder capacity on the AMC-23 Satellite, and, except as qualified herein, all right, title, and interest to the AMC-23 Transferred Assets to be assigned, transferred, conveyed, and delivered to it under Section 3.2 hereof; provided, however, that, prior to the transfer of title to the AMC-23 Satellite to Splitco, SES and Splitco shall act consistently with any Technical Assistance Agreements or other requirements and limitations based on the ITAR required by State and, provided further, in the event that State requires limits to be placed on Splitco’s operational control of the AMC-23 Satellite following the Closing Date but pending ITAR Authority, SES and its Affiliates, including SES Satellite Leasing Ltd., shall exercise any operational control not permitted to be exercised by Splitco in a manner that at all times is in the best interest of, and for the account of, Splitco.

(e) The GE Entities will use their reasonable best efforts (i) to request AsiaSat to make all necessary filings with the Hong Kong Broadcasting Authority for a waiver of condition 10.1 of the broadcasting licenses held by Skywave TV Company and Auspicious Color Limited respectively on an expedited basis to accommodate the Closing prior to the Termination Date, and (ii) to support issuance of such waivers on an expedited basis, including providing relevant information to the Hong Kong Commerce, Industry and Technology Bureau regarding the transactions contemplated by this Agreement and the Ancillary Agreements.

Section 6.8 Notification by the Parties.

Each party hereto shall use its reasonable best efforts as promptly as practicable to inform the other parties hereto in writing if, prior to the consummation of the Closing, it obtains knowledge that any of the representations and warranties made by such party in this Agreement ceases to be accurate and complete in any material respect (except for any representation and warranty that is qualified hereunder as to materiality, SES Material Adverse Effect or GE Material Adverse Effect, as to which such notification shall be given if the notifying party obtains knowledge that such representation and warranty ceases to be accurate and complete in any respect) or that any of the conditions set forth in Article 8 are reasonably likely not to be

 

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satisfied prior to the Termination Date. Each party hereto shall also use its reasonable best efforts promptly to inform the other parties hereto in writing if, prior to the consummation of the Closing, it becomes aware of any fact or condition that constitutes, in its reasonable judgment, a breach of any covenant of such party as of the date of this Agreement or that would reasonably be expected to cause any of its covenants to be breached as of the Closing Date. No such notification shall be deemed to have cured any breach of any representation, warranty, covenant or agreement made in this Agreement for any purposes of this Agreement. Notwithstanding anything to the contrary contained in this Section 6.8, no failure to advise the other party of any change or event referred to in the first sentence of this Section 6.8, shall constitute the failure of any condition set forth in Article 8 to be satisfied unless the underlying breach or inaccuracy would independently result in the failure of a condition set forth in Article 8 to be satisfied.

Section 6.9 Intercompany Debt.

SES shall, and shall cause its Affiliates to, take such action as may be necessary so that prior to Closing:

(a) all accounts receivable by Satlynx and its Subsidiaries from SES and its Affiliates (other than Satlynx and its Subsidiaries) and all accounts payable by Satlynx and its Subsidiaries to SES and its Affiliates (other than Satlynx and its Subsidiaries) shall either be paid or netted against each other via the SES groupwide netting system (the “Intercompany Netting”);

(b) Satlynx shall fully fund in cash all Satlynx reserves set forth on Schedule 6.9 (the “Reserves Funding”); and

(c) Satlynx shall pay to SES or its designated Affiliates an amount equal to the aggregate amount of cash and cash equivalents held by Satlynx and its Subsidiaries after effecting the Intercompany Netting and Reserves Funding as set forth in paragraphs (a) and (b) above, which payment shall take the form of a dividend, reduction of Satlynx capital or similar process.

Section 6.10 2006 Annual Dividend Record Date.

SES shall use its reasonable best efforts to fix the record date for the payment of the 2006 annual dividend after the Closing Date; provided that SES shall not be obliged to fix such record date later than April 20, 2007.

Section 6.11 Insurance Policies.

(a) SES shall use its reasonable best efforts, and shall cause its Affiliates to use their reasonable best efforts, to maintain all Insurance Policies (or comparable policies providing substantially similar coverage with respect to the Transferred Businesses) in full force and effect at all times up to and including the Closing Date and shall pay all premiums, deductibles and retro-adjustment billings, if any, with respect thereto covering all periods, and ensuring coverage of the Transferred Businesses, up to and including the Closing Date; provided, however, that notwithstanding the foregoing neither SES nor any of its Affiliates shall be required to maintain any launch insurance policy with respect to the AMC-23 Satellite provided that it provides appropriate in-orbit insurance policy for such satellite (the “In-Orbit Insurance”).

 

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(b) From the date of the Agreement until the Closing Date, SES shall provide, or shall cause its Affiliates to provide, the GE Entities (i) all relevant and material information relating to the operating condition and the fuel and life expectancy of the AMC-23 Satellite and (ii) any notice from any manufacturer of any material defect relating to the AMC-23 Satellite or from any issuer of its intention to exclude the AMC-23 Satellite or any component thereof from coverage under any third-party insurance listed on Schedule 4.19.

(c) Prior to the Closing, SES shall use reasonable best efforts to procure that the In-Orbit Insurance is amended to (i) define the correct Construction and Launch Contract for the AMC-23 Satellite, and (ii) refer to the correct number of “Discrete Paths” for the AMC-23 Satellite in the definition of “Stated Satellite Operational Capability”.

Section 6.12 Confidentiality; Access to Records after Closing.

(a) The parties hereto agree that the provisions of the Confidentiality Agreement shall remain in full force and effect until the Closing Date; after which time the confidentiality obligations under the Confidentiality Agreement shall remain in full force and effect, provided, however, that the GE Entities’ confidentiality obligations shall terminate on the Closing Date in respect of that portion of the Confidential Information (as defined in the Confidentiality Agreement) exclusively relating to the Transferred Businesses, the Transferred Entities, Bowenvale, Star One, AsiaSat or their respective Subsidiaries. If for any reason the Closing does not occur, the Confidentiality Agreement shall nevertheless continue in full force and effect.

(b) SES recognizes that, after the Closing, it may have documents, books, records, work papers and information, whether in written, magnetic, electronic or optical form (collectively, “Records”) which relate to the Transferred Businesses, Transferred Entities, Bowenvale, Star One, AsiaSat or their respective Subsidiaries with respect to the period or matters arising prior to the Closing, including Records pertaining to the AMC-23 Transferred Assets, the AMC-23 Assumed Liabilities and Splitco’s employees, assets and liabilities (the “Business Records”) or other Records relating to the Transferred Businesses, Transferred Entities, Bowenvale, Star One, AsiaSat or their respective Subsidiaries. SES shall not, and shall cause its respective Affiliates not to, use (or take any action to use) Business Records and Confidential Business Information, or portion thereof, that relate exclusively to the Transferred Businesses, Transferred Entities, Bowenvale, Star One, AsiaSat or their respective Subsidiaries, except as provided for in this Agreement or the Ancillary Agreements, or, prior to the Closing, as required in the Ordinary Course of Business, and to preserve the confidentiality of any information contained in the Business Records and Confidential Business Information, or portions thereof, that relate exclusively to Transferred Businesses, the Transferred Entities, Bowenvale, Star One, or any of their respective Subsidiaries and (for so long as it remains nonpublic) to keep such information confidential, subject to any provisions of confidentiality in the Ancillary Agreements. SES further recognizes that the GE Entities or their Affiliates may need access to such Business Records and other Records after the Closing. Upon the GE Entities’ or Splitco’s reasonable request SES shall provide the GE Entities or Splitco and their respective employees, representatives and agents access to, and the right to photocopy (at the GE Entities’ or Splitco’s expense), during normal business hours on reasonable advance notice, such reasonably requested Records, provided that such access shall be subject to the provisions of

 

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Section 6.3. SES shall use its reasonable best efforts to maintain all such Records for the same length of time that SES maintains its own Records, or, at SES’s discretion (at SES’s expense) or (at any time) at the GE Entities’ or Splitco’s reasonable request (at the GE Entities’ or Splitco’s expense), transfer any such Records to the GE Entities or Splitco.

(c) Notwithstanding any provision herein to the contrary, from and after the Closing Records pertaining to Taxes shall be governed solely by the Tax Matters Agreement.

Section 6.13 Valuation Results.

GE shall direct the Valuation Firms to each prepare and deliver a report opining on the reasonable range of the fair market values for each of the AMC-23 Business, the Satlynx Shares, the Bowenvale Shares, the Star One Shares, and the ORBCOMM Shares as of the Closing Date. The GE Entities have provided copies of such reports in draft form (“Draft Reports”) to SES. The GE Entities shall direct the Valuation Firms to deliver their final reports (the “Final Reports”) opining on the reasonable range of the fair market values for each of such valued assets as of the Closing Date on or before the Closing Date.

Section 6.14 Cooperation with Respect to Financial Reporting.

Until the third anniversary of the Closing, SES shall, and shall cause the SES Entities to, reasonably cooperate with the GE Entities (at the GE Entities’ expense) in connection with the GE Entities’ preparation of historical financial statements of the Transferred Businesses following the Closing. Until the third anniversary of the Closing, the GE Entities shall, and shall cause Splitco to, reasonably cooperate with SES (at SES’s expense) in connection with SES’s preparation of pro forma and historical financial statements of the Transferred Businesses as may be required following the Closing.

Section 6.15 Customer Introductions.

After the Closing Date, to the extent permitted by applicable Law, SES shall, and shall cause each of the SES Entities, upon the request of the GE Entities at any time, to the extent reasonably practicable, to introduce the GE Entities, or arrange for a personal introduction of the representatives of the GE Entities, to customers and significant vendors to the Transferred Businesses for the purpose of ensuring good customer and vendor relationships following the Closing.

Section 6.16 Satlynx.

(a) For a period of 24 months from and after the Closing Date, SES shall not, and shall cause each of its Affiliates not to, directly or indirectly, cause, induce or encourage any of the customers of Satlynx and its Subsidiaries listed on Schedule 6.16(a) (the “Designated Satlynx Customers”) to which Satlynx and its Subsidiaries currently provide closed user network platform services and/or end-to-end managed enterprise services to terminate or modify any such relationship; provided, however, that this section shall not apply with respect to services for Designated Satlynx Customers as to which the parties negotiating in good faith agree that the quality of such service that could be provided by Satlynx and its Subsidiaries for such Designated Satlynx Customer is demonstrably inferior to that which could be provided by SES and its Affiliates.

 

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(b) Except as provided in Schedule 6.16(b), for a period of 24 months from and after the Closing Date, SES shall not, and shall cause each of its Affiliates not to, directly or indirectly, acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, any business or any corporation, partnership, association or other business organization or division thereof (an “Acquired Business”) that is engaged in the business of providing end-to-end managed enterprise services and/or closed user network platform services in Europe, Africa or the Middle East (the “Covered Business”); provided, however, that this paragraph (b) shall not preclude, prohibit or restrict SES or its Affiliates from completing any acquisition of an Acquired Business that is engaged in the Covered Business if at the time of such acquisition, the gross revenue derived from the Covered Business conducted by the Acquired Business constitutes less than 10% of the gross revenues of such Acquired Business; provided that upon completion of any such acquisition SES shall discuss with the GE Entities in good faith the sale to the GE Entities or an Affiliate thereof of the Covered Business conducted by the Acquired Business at fair market value; provided further that if the acquisition of the business (“Target”) referred to in Schedule 16.6(b) is completed, (i) the GE Entities and their Affiliates shall have the option (on an exclusive basis during the 4 months after such acquisition and on a non-exclusive basis until the 24-month anniversary of the Closing (but not after SES or its Affiliates cease to own the Target)), to purchase the Covered Business conducted by the Target (“Target Covered Business”) at fair market value (to be negotiated by SES and the GE Entities in good faith) and (ii) for a period ending on the earlier of one year after the acquisition of Target and the 24 month anniversary of the Closing, SES shall, and shall cause its Affiliates to, use reasonable best efforts to dispose of (or enter into a binding agreement to dispose of) the Target Covered Business to a third party (at fair market value but no lower price than that offered to the GE Entities and their Affiliates) if the GE Entities or their Affiliates do not elect to purchase the Target Covered Business during such period.

(c) For a period of 24 months from and after the Closing Date, SES shall cause Astra2connect goods and services to be marketed only as broadband equipment and services to wholesalers targeting the residential market or as retail services to the residential market and the home office market, SES not assuming responsibility for how wholesalers might use such equipment and services; provided, however, that the provisions of this paragraph (c) shall terminate at any such time as SES directly or indirectly transfers its interest in Astra2connect to a Person that is not an Affiliate of SES.

(d) For a period of 24 months from and after the Closing Date, (I) SES shall cause ND Satcom AG (“ND Satcom”) and New Skies Satellites B.V. (“New Skies”) to offer to sell to Satlynx equipment and services on a competitive pricing basis under such terms and conditions as Satlynx, ND Satcom and New Skies may agree, and (II) SES shall cause its appropriate Affiliate to offer to sell to Satlynx Astra2connect equipment and services on a competitive pricing basis under such terms and conditions as Satlynx and such Affiliate may agree; provided, however, that the provisions of this paragraph (d) (i) shall not require SES (with respect to Astra2connect), ND Satcom or New Skies to offer Satlynx most favored nation provisions with respect to such purchases of equipment or such services and (ii) shall terminate at any such time as SES directly or indirectly transfers its interest in Astra2connect, New Skies or ND Satcom to a

 

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Person that is not an Affiliate of SES. Following the date hereof and prior to the Closing, SES and the GE Entities shall negotiate in good faith the pricing schedule (which shall be on a competitive pricing basis) that shall apply for a period of two (2) years following the Closing Date to the Astra2connect, ND Satcom and New Skies equipment and services proposed to be sold hereunder; provided that the parties acknowledge that it may not be practicable to agree to such schedule prior to Closing with respect to Astra2connect equipment and services.

(e) The parties shall comply with the provisions of Schedule 6.16(e) hereto.

Section 6.17 Non-Solicitation of Certain Customers.

For a period of 24 months from and after the Closing Date, SES shall not, and shall cause each of its Affiliates not to, directly or indirectly, cause, induce, encourage or solicit any of the customers of the AMC-23 Business listed on Schedule 6.17 (the “Designated Customers”) to utilize transponder capacity under satellites that are directly or indirectly owned, leased or controlled by SES or an Affiliate of SES (“Designated Satellites”) in lieu of utilizing transponder capacity under the AMC-23 Satellite which such Designated Customer may at such time be utilizing under the Contracts listed on such Schedule 6.17 next to such Designated Customer’s name (as such Contracts may be amended or modified from time to time); provided, however, that this section shall not apply with respect to services for Designated Customers as to which the parties negotiating in good faith agree prior to any approach to the customers that the quality of such service that could be provided by the AMC-23 Satellite for such Designated Customer is demonstrably inferior to that which could be provided by the Designated Satellite. For the Designated Customers whose service contracts for the AMC-23 Satellite are through Americom Government Services, Inc. and are so designated on Schedule 6.17, SES will act in good faith and will reasonably cooperate with Splitco (provided that Splitco shall reimburse SES for any extraordinary costs and expenses incurred by SES in connection with such cooperation) to renew such Contracts so designated on such schedule each time they expire and to continue service thereunder on the AMC-23 Satellite (provided that the requirements under such Contract can be satisfied with the AMC-23 Satellite) until expiration of the useful life of the AMC-23 Satellite.

Section 6.18 Non-Solicitation of Employees.

For a period of two (2) years from and after the Closing Date, SES shall not, and shall cause each of its Affiliates not to, without the prior written consent of the GE Entities, directly or indirectly, cause, solicit, induce or encourage any employees of any of the Transferred Businesses to leave such employment or hire, employ or otherwise engage any such individual; provided, however, that SES and its Affiliates may employ or hire any such Person who is terminated or otherwise discharged by the Transferred Businesses; and provided, further, that nothing in this Section 6.18 shall prohibit SES or any of its Affiliates from employing or hiring any Person who contacts SES or any of its Affiliates on his or her own initiative without solicitation, other than a general solicitation to the public or general advertising. Nothing contained in this Section 6.18 shall restrain SES’s and its Affiliates’ ability to engage in a general solicitation to the public or a general advertising. This Section 6.18 shall constitute the only covenant in this Agreement regarding the non-solicitation of employees and no additional covenants regarding the non-solicitation of employees shall be implied in any other Section of this Agreement.

 

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Section 6.19 Leuk.

(a) As promptly as practicable after the date hereof, the GE Entities will propose a reduction in Leuk’s workforce (the “Leuk Workforce Reduction”) to a number of employees (being not less than twenty) to be agreed to by SES and the GE Entities (the “Proposed Headcount Number”). Should no such agreement be reached within 30 days following the date hereof, the Proposed Headcount Number shall be deemed to be twenty. The GE Entities will consider whether excess Leuk employees can be transferred to Satlynx or Affiliates of the GE Entities, but will have no obligation to accept any such transfers. In achieving the Proposed Headcount Number, however, the parties shall include any employees accepted by the GE Entities for such transfer who are in fact transferred.

(b) SES shall use reasonable best efforts to negotiate as promptly as practicable, prior to Closing, an agreement with the applicable Swiss Tax authorities to obtain a ruling (the “Swiss Tax Ruling”) terminating the current Swiss tax “holiday” with respect to Leuk, without cost to, or the imposition of limitations, conditions or continuing obligations on, Leuk or any Transferred Entity, and subject to such other terms and conditions as shall be reasonably acceptable to SES and the GE Entities.

(c) Prior to the Closing, SES and its Affiliates shall cause Leuk to initiate the steps to effect a reduction (the “Initial Workforce Reduction”) in Leuk’s workforce to the minimum number of employees consistent with the terms of the Swiss tax “holiday”.

(d) If the Swiss Tax Ruling is obtained prior to the Closing, SES shall cause Leuk to use reasonable best efforts to reduce the Leuk workforce to the Proposed Headcount Number prior to the Closing.

(e) If the Swiss Tax Ruling is not obtained prior to Closing, following Closing SES shall continue to use reasonable best efforts to obtain the Swiss Tax Ruling as promptly as reasonably practicable and subject to such terms and conditions as shall be reasonably acceptable to SES and the GE Entities, and the GE Entities shall cause Splitco and its Subsidiaries to cooperate with SES in connection therewith. The GE Entities agree that SES or its Affiliates shall negotiate the Swiss Tax Ruling after Closing if it has not been obtained prior to Closing. The GE Entities will not knowingly effect any portion of the Leuk Workforce Reduction that would breach the Swiss tax holiday until after the Swiss Tax Ruling is obtained, provided that (i) it is apparent that the Swiss Tax Ruling will ultimately be obtained and (ii) the delay need not extend more than 90 days after the Closing Date. Subject to the preceding sentence, the GE Entities may cause Splitco and its Subsidiaries to reduce employment at Leuk by any number and at any time.

(f) SES shall (i) reimburse the GE Entities for all salary, bonuses, deferred compensation, vacation pay, sick pay, severance or similar expenses incurred by Leuk or any Transferred Entity (A) in connection with the Leuk Workforce Reduction (including the Initial Workforce Reduction) or (B) if the Tax Ruling is not obtained or the Leuk Workforce Reduction is not completed prior to Closing, continuing the employment following the Closing Date of any Leuk employees in excess of the Proposed Headcount Number and (ii) without duplication of the foregoing, from and after the Closing Date, defend and indemnify the GE Indemnitees against,

 

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and hold each such GE Indemnitee harmless to the fullest extent permitted by law from, any Losses asserted against, imposed upon, or suffered or incurred by such GE Indemnitee resulting from or arising out of the Swiss tax “holiday” or the failure of SES to terminate it as required hereby; provided that (A) SES’s obligations under clause (i) of this paragraph shall not exceed in the aggregate an amount equal to €2,000,000 minus the amount of any Leuk funded reserves related to severance or similar payments, and (ii) SES shall not be required to reimburse the GE Entities under this paragraph for severance payments made to any Leuk employees who transfer to Satlynx or other Affiliates of the GE Entities, and (iii) any Taxes resulting from the Leuk Workforce Reduction shall be governed by the Tax Matters Agreement.

(g) Notwithstanding anything to the contrary contained in this Agreement (including Article 10 hereof), for a period of six years following the direct or indirect transfer of Leuk to Splitco, SES shall promptly reimburse the GE Entities for any reasonable expenses actually incurred by or on behalf of Leuk to complete the restoration of the real property listed on Schedule 6.19(g) to the extent such restoration is required by applicable Swiss Law or local business practice; provided that SES shall not be required to make aggregate payments under this paragraph (g) in excess of €4,500,000.

Section 6.20 103 Degree EL Orbital Position.

For a period of five (5) years after the Closing, SES (i) shall not and shall cause its Affiliates not to operate a satellite or authorize any third party to operate a satellite in either C or Ku band under the satellite network filed at the ITU as LUX-G4-24 at the 103° E L orbital location, and (ii) at the reasonable direction of (and in respect of third-party costs, for the account of) Splitco, shall use reasonable efforts and shall cause its Affiliates to use reasonable efforts to request the Luxembourg Administration (A) to maintain the LUX-G4-24 filing in C and Ku bands at the ITU for the benefit of the GE Entities or any other entity identified in writing to SES by the GE Entities, and (B) to withhold agreement (unless requested otherwise by GE) to any filing by a third party which could cause harmful interference in C and Ku bands to the LUX-G4-24 satellite network and which requires the agreement of the Luxembourg Administration.

Section 6.21 [Reserved]

Section 6.22 Employee Agreements; Employee Benefit Plans.

(a) As of the Closing, the GE Entities agree to, or to cause an Affiliate of the GE Entities to, continue to employ all of the Transferred Employees listed on Schedule 1.1(e) (the “AMC-23 Employees”) who accept a transfer of employment to the GE Entities. For a period of at least one year following the Closing (or for such longer period as required by applicable Law), each AMC-23 Employee shall be entitled to receive while in the employ of the GE Entities or their Affiliates at least substantially comparable salary, wages, incentive compensation and bonus opportunities, employee benefits and terms and conditions of employment, taken as a whole, as are provided to the GE Entities’ similarly situated employees.

(b) To the extent that service is relevant for purposes of eligibility and vesting (and, in order to calculate the amount of any vacation, sick days, severance, layoff and similar benefits, but not for purposes of pension benefit accruals) under any retirement plan, employee

 

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benefit plan, program or arrangement established or maintained by the GE Entities or any of their Affiliates for the benefit of the AMC-23 Employee, such plan, program or arrangement shall credit such AMC-23 Employee for their service with the SES Entities and their predecessors in addition to service earned with the GE Entities or any of their Affiliates after the Closing.

(c) The GE Entities shall, and shall cause their Affiliates to, waive limitations on benefits relating to any preexisting conditions of the AMC-23 Employee and their eligible dependents. The GE Entities shall also recognize, and cause their Affiliates to recognize, for purposes of annual deductible and out-of-pocket limits under its health and dental plans, deductible and out-of-pocket expenses paid by AMC-23 Employee and their respective dependents under SES’s or its Affiliates’ health and dental plans in the calendar year in which the Closing occurs.

Section 6.23 Parent Covenant.

Parent hereby agrees to cause the GE Entities and Splitco (following the Closing) and their permitted assigns and their respective successors to timely comply with and perform all of such GE Entities’ and Splitco’s obligations under this Agreement and the Ancillary Agreements. In the event that either GE Entity or Splitco (following the Closing) is for any reason incapable of complying with and performing its respective obligations under this Agreement in a timely manner, Parent will comply with and perform such obligation or cause another of its Subsidiaries as designated by Parent to comply with and perform such obligations.

Section 6.24 Leuk Teleport Utilization.

(a) From the Closing Date through December 31, 2008, SES shall cause SES Americom Inc. (“Americom”) and New Skies to provide activity to Leuk up to the level agreed in the Framework Services Agreement, dated as of December 1, 2006, by and between Americom and Satlynx (“Americom Agreement”). Prior to the Closing Date, SES shall procure that Satlynx and Americom amend the Americom Agreement to provide for termination by either party at the end of any “Term” (as such term is defined in the Americom Agreement) provided that notice is received no later than 30 days prior to the end of the applicable Term.

(b) Prior to the Closing Date SES shall procure that Satlynx and New Skies enter into an agreement (“New Skies Agreement”) pursuant to which New Skies shall provide teleport activity to Satlynx consistent with the terms set forth in the letter agreement, dated February 6, 2007 between Leuk and New Skies, and from the Closing Date through December 31, 2008, SES shall cause New Skies to provide activity to Leuk up to the level agreed in the New Skies Agreement.

Section 6.25 Amendment of Certain Satlynx Agreements.

On or prior to the Closing Date, SES shall cause its Affiliates to amend the agreement identified in Schedule 6.25 solely to provide Satlynx with the ability to terminate such agreement upon 6 months’ written notice without cause or penalty, provided that such notice shall be delivered no earlier than January 1, 2008.

 

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Section 6.26 Dividends.

(a) Prior to the Closing Date, SES shall, and shall cause its Affiliates to cooperate with any reasonable requests from the GE Entities to request AsiaSat to utilize its available cash in a manner that would allow the value thereof to be treated as a Non-Investment Asset.

(b) Following the Closing, the GE Entities shall, or shall cause their Affiliates (including Splitco), to pay to SES, any Subsidiary thereof, or its designee, the amount of any dividend listed on Schedule 1.1(a) that is received by Splitco or a Transferred Entity after the Closing Date, reduced by only such withholding taxes as would have been withheld by the payor of any such dividend absent the Redemption. Such payment shall be made to SES or its designee promptly, and in any event within five (5) Business Days after any such dividend has been received by Splitco or a Transferred Entity, by wire transfer of immediately available funds to an account designated in writing by SES.

Section 6.27 Release of Guarantees; Intercompany Agreements.

(a) At or prior to the Closing, the GE Entities shall arrange for substitute guarantees of the GE Entities to replace (i) the guarantees entered into by or on behalf of SES or any of its Affiliates in connection with the Transferred Businesses that are set forth on Schedule 6.27(a) (together, the “Company’s Guarantees”) that are outstanding as of the date of this Agreement. The GE Entities shall indemnify, defend and hold harmless SES and its Affiliates against, and reimburse SES and its Affiliates for, any and all amounts paid, including costs or expenses in connection with such Company Guarantees, whether or not any such Company Guarantee is required to be performed, and shall in any event promptly and fully reimburse SES to the extent any Company Guarantee is called upon and SES or its Affiliates make any payment under such Company Guarantee.

(b) Prior to Closing, SES shall, and shall cause each of its Affiliates, to terminate all arrangements or understandings between SES or any of its Affiliates (other than the Transferred Entities), on the one hand, and Satlynx or its Subsidiaries, or, with respect to the AMC-23 Business, SES or any of its Affiliates, on the other hand, other than those arrangements listed on Schedule 2.3(i); provided, however, that no cost will be incurred by Satlynx or its Subsidiaries or for the account of the AMC-23 Business in respect of such terminations.

Section 6.28 Corporate Name.

The GE Entities acknowledge that, from and after the Closing Date, SES shall have the absolute and exclusive proprietary right to all names, marks, trade names and trademarks (collectively “Names”) incorporating “SES”, “New Skies”, “Astra” or “Americom” by itself or in combination with any other Name, and that none of the rights thereto or goodwill represented thereby or pertaining thereto are being transferred hereby or in connection herewith. The GE Entities agree that from and after the Closing Date they will not, nor will they permit any of their Affiliates to, use any name, phrase or logo incorporating “SES”, “New Skies”, “Astra” or “Americom” in or on any of their literature, sales materials or products or otherwise in connection with the license, lease or sale of any products or services; provided, however, that the GE Entities and their Affiliates may continue to use any printed literature, sales materials,

 

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purchase orders and sales, maintenance or license agreements that bear a name, phrase or logo incorporating “SES”, “New Skies” or “Americom” (as limited by any existing agreements SES may have with third parties) until the supplies thereof existing on the Closing Date have been exhausted, but in any event for not longer than 90 days from the Closing Date. With respect to the printed purchase orders and sales, maintenance or license agreements referred to in the preceding sentence, from and after the Closing Date the GE Entities and their Affiliates shall sticker or otherwise mark such documents as necessary in order to indicate clearly that neither SES nor any of its Affiliates is a party to such documents. From and after the expiration of such 90-day period, the GE Entities and their Affiliates shall cease to use any such literature and sales materials, delete or cover (as by stickering) any such name, phrase or logo from any item that bears such name, phrase or logo and take such other actions as may be necessary or advisable clearly and prominently to indicate that neither the GE Entities nor any of their Affiliates is affiliated with SES or any of its Affiliates. Promptly following the Closing, the GE Entities shall cause to be changed the corporate names of the Transferred Entities to names that do not include the Names “SES”, “New Skies”, “Astra” or “Americom”, and shall cause the AMC-23 Satellite’s name and designation to be changed so as not to include the word “AMC”.

Section 6.29 Bulk Transfer Laws.

The GE Entities hereby waive compliance by SES with the provisions of any so-called “bulk transfer laws” of any jurisdiction in connection with the sale of the AMC-23 Transferred Assets to the GE Entities; provided, however, that SES agrees (i) to pay and discharge when due or to contest or litigate all claims of creditors which are asserted against the GE Entities, Splitco or any of their Affiliates by reason of such noncompliance, (ii) to indemnify, defend and hold harmless the GE Entities, Splitco and their Affiliates from and against any and all such claims in the manner provided in Article 10 and (iii) to take promptly all necessary action to remove any Encumbrance which is placed on Splitco or its assets by reason of such noncompliance.

Section 6.30 Certain Actions.

(a) SES shall, and shall cause its Affiliates to use, their reasonable best efforts to terminate, assign, subcontract or transfer prior to the Closing Date (i) the Contracts described in Schedule 6.30(a) and (ii) any other Contracts, the existence or performance of which would, in the sole discretion of the GE Entities, be unlawful following the Closing as a result of the ownership by the GE Entities of Splitco and thereby of the Equity Interests and AMC-23 Assets and AMC-23 Liabilities, in each case in accordance with applicable Laws and without breaching any of the obligations under such agreements.

(b) At or prior to Closing, SES shall, and shall cause its Affiliates, to use reasonable best efforts to execute in writing the coordination agreements described in Schedule 6.30(b).

(c) Notwithstanding anything to the contrary contained in this Agreement, the parties shall cooperate and use their reasonable best efforts to take such actions as shall be reasonably necessary such that SES and its Affiliates retain, following the Closing, such right under the Construction Agreement as SES and its Affiliates shall require in order to operate the AMC-23 Satellite under the SOS Agreement. “Construction Contract” means the Contract for the Construction of AMC-23 and Options between WorldSat, LLC, and SES Americom, Inc., on the one hand, and Alcatel Space, on the other hand, dated November 1, 2003.

 

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(d) (i) With effect from Closing, SES shall, or shall cause its Affiliates to transfer those rights under the Encryption Agreement pertaining to all portions of the Encryption system residing on the AMC-23 Satellite, if any; and (ii) at or following the Closing, SES shall, or shall cause its Affiliates, at the request of the GE Entities, to transfer those rights under the Encryption Agreement pertaining to those portions of the Encryption system resident on the ground units (which shall include the encryption units) for the AMC-23 Satellite under the Encryption Agreement to Splitco; provided, in the case of clauses (i) and (ii), that the GE Entities provide to SES documentation reasonably satisfactory to SES that the GE Entities have satisfied all required regulatory requirements to effect such assignment, if any. “Encryption Agreement” means the Contract Between SES Americom, Inc. and L-3 Communications Corporation, Telemetry-West for Caribou Decryptor Units and Associated Services for the AMC-23 Program, dated March 1, 2004.

Section 6.31 Star One.

(a) If at the Termination Date all conditions to Closing, other than the ANATEL Condition, have been satisfied or waived (other than those conditions contemplated to be satisfied at, or only capable of being satisfied at, the Closing, but subject to the satisfaction or waiver of those conditions), then the Closing shall occur in accordance with Section 2.1 hereof, except that (i) SES shall not transfer, or cause to be transferred, SES’ or its appropriate Affiliates’ right, title and interest in, to and under the Star One Shares to Splitco (and SES shall not be required to deliver any documents related to such transfer at the Closing), (ii) the Cash Amount shall not be increased by an amount equal to any dividends and distributions (whether in cash or in-kind) received with respect to fiscal 2006 or any later period and paid after November 1, 2006 and prior to the Closing Date by SES or any Affiliate thereof as a result of ownership of an interest in Star One; (iii) the Cash Amount shall be increased by Euro 95,000,000 (as provided for in clause (viii) of the definition of “Cash Amount”), (iv) the Cash Amount that is transferred to Splitco pursuant to Section 3.1 shall be reduced by Euro 95,000,000 (the “Section 6.31 Escrow Amount”) and that amount shall be deposited, or caused to be deposited, by SES in escrow for the benefit of Splitco with the Escrow Agent (as defined in Section 3.11) under the Escrow Agreement (as defined in Section 3.11) and (v) the Cash Amount shall not be increased by the Capital Reduction Amount. The Section 6.31 Escrow Amount, together with any interest accrued thereon, is referred to as the “Section 6.31 Escrow Fund”.

(b) If, within nine (9) months after the Closing Date (i) the ANATEL Condition has been satisfied (the date that is 3 Business Days after such ANATEL Condition has been satisfied is referred to as the “Star One Closing Date”) and (ii) the representations and warranties set forth in Article IV that relate to Star One and its Subsidiaries (but only to the extent that they relate to Star One and its Subsidiaries) are true and correct in all material respects, both when made and as of the Star One Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct in all material respects as of such specified date, then, on the Star One Closing Date: (x) SES shall, or shall cause its Affiliates to assign, transfer, convey and deliver to Splitco, and the GE Entities shall cause Splitco to acquire and accept all of SES’ or its appropriate Affiliates’ right, title and

 

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interest in, to and under the Star One Shares, free and clear of all Encumbrances, except for the Equity Interest Encumbrances (the closing of such transfer is referred to as the “Star One Closing”), (ii) SES and Splitco shall cause the Escrow Agent to promptly (A) release and deliver the Section 6.31 Escrow Fund minus the Dividend Amount, to SES and (B) release and deliver an amount equal to the Dividend Amount to Splitco, and (iii) SES shall pay, or cause to promptly be paid to Splitco in cash by wire transfer of immediately available funds to such account or accounts as shall be designated by Splitco, an amount equal to the Capital Reduction Amount. “Dividend Amount” means an amount equal to any dividends and distributions (whether in cash or in-kind) received with respect to fiscal 2006 or any later period and paid after November 1, 2006 and prior to the Closing Date by SES or any Affiliate thereof as a result of ownership of an interest in Star One (other than those dividends listed on Schedule 1.1(a)). If the Star One Closing shall occur, for purposes of all covenants and conditions contained in this Agreement, to the extent (but only to the extent) that any such covenant or condition relates to Star One and its Subsidiaries, (i) the term “Closing Date” shall mean the Star One Closing Date, and (ii) the term “Closing” shall mean the “Star One Closing”, provided that the provisions of this sentence shall not apply to Section 3.11 or the definition of “Cash Amount”.

(c) If the Star One Closing has not occurred prior to the fourth Business Day after the date that is nine (9) months after the Closing Date, then (i) Splitco and SES shall cause the Escrow Agent promptly to transfer any amounts in the Section 3.11 Escrow Fund to the Section 6.31 Escrow Fund pursuant to the Escrow Transfer and release and deliver the Section 6.31 Escrow Fund to Splitco free and clear of all Encumbrances (other than Encumbrances created by the recipient thereof) and (ii) after delivery of such Section 6.31 Escrow Fund to Splitco, neither SES, the GE Entities nor any of their respective Affiliates shall have any liability or obligation hereunder with respect to the Star One Shares.

ARTICLE 7.

TAX MATTERS

Section 7.1 Tax Matters.

In the case of any inconsistency with respect to matters relating to Taxes between this Agreement and the Tax Matters Agreement, the Tax Matters Agreement shall govern such matter.

ARTICLE 8.

CONDITIONS TO CLOSING

Section 8.1 Mutual Conditions.

The respective obligations of each party hereto to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or, if legally permitted, waiver at or prior to the Closing of the following conditions:

(a) The Required Resolutions shall have been approved at the EGM by the Required Vote;

(b) Governmental Approvals.

 

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(i) HSR. The waiting period (and any extensions thereof) under the HSR Act relating to the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, shall have expired or been terminated.

(ii) FCC. The FCC shall have issued orders granting the FCC Consent Application, without conditions, qualifications or other restrictions except those that are customarily imposed in the ordinary course and would not be materially adverse to Splitco and its Subsidiaries after the Closing, and as of the Closing Date such orders shall be in full force and effect and not have been reversed, stayed, enjoined, set aside or suspended.

(iii) Non U.S. Governmental Consents. (A) The Governmental Entities listed in Schedule 8.1(b)(iii) shall have approved, cleared or decided neither to initiate proceedings or otherwise intervene in respect of the transactions contemplated hereby and not to refer the transactions to any other competent Governmental Entity, and to the extent such Governmental Entities have issued Non U.S. Governmental Approvals, they shall have done so without conditions, qualifications or other restrictions, except those of the type that are customarily imposed in the ordinary course and would not be materially adverse to Splitco and its Subsidiaries following the Closing and as of the Closing Date such Non U.S. Governmental Approvals shall be in full force and effect and not have been reversed, stayed, enjoined, set aside or suspended; and (B) ) all Required Antitrust Filings shall have been made with each applicable Government Entity and each such Government Entity shall have, if applicable, approved, cleared or decided neither (x) to initiate proceedings or otherwise intervene in respect of the transactions contemplated hereby nor (y) to refer the transactions to any other competent Governmental Entity. “Required Antitrust Filing” means a filing required under any Antitrust Law that (A) is mandatory and suspensory and (B) becomes necessary either (1) due to a change in Law following the date hereof or (2) as a result of the correction or the addition of any inaccurate or incomplete information that was provided to the GE Entities prior to the date hereof.

(iv) The U.S. Department of State shall have issued such consents, approvals, orders, authorizations, notifications and permits as may be required pursuant to ITAR to (i) transfer the Bowenvale Shares to Splitco and complete the proposed privatization of AsiaSat by certain Affiliates of the GE Entities and CITIC Group (the “Privatization”) and (ii) transfer the AMC-23 Satellite to Splitco. This condition to closing may be invoked by any party hereto irrespective of Section 6.7(d) hereof.

(v) Hong Kong Telecommunications Authority. The Hong Kong Telecommunications Authority shall have provided formal consent or issued such other instrument in a form acceptable to the Securities and Futures Commission as necessary for the purposes of a waiver of compliance with note 4 of rule 26.2 of the Hong Kong Takeovers Code.

 

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(vi) Hong Kong Broadcasting Authority. The Hong Kong Broadcasting Authority shall have provided a waiver of condition 10.1 of the broadcasting licenses held by Skywave TV Company and Auspicious Color Limited respectively, provided that this condition shall apply only if GE shall have complied with its applicable obligations under Section 6.7(e).

(vii) Agencia Nacional de Telecomunicacoes of Brazil. Except as provided in Section 6.31, the Agencia Nacional de Telecomunicacoes of Brazil (“ANATEL”) shall have approved, cleared or decided neither to initiate proceedings nor otherwise intervene in respect of the transactions contemplated hereby and not to refer the transactions to any other competent Governmental Entity, and to the extent ANATEL shall have issued an approval, it shall have done so without conditions, qualifications or other restrictions, except those of the type that are customarily imposed in the ordinary course and would not be materially adverse to Splitco and its Subsidiaries following the Closing and as of the Closing Date such approval shall be in full force and effect and not have been reversed, stayed, enjoined, set aside or suspended (the “ANATEL Condition”).

(c) There shall not be any action, investigation, proceeding or litigation instituted, commenced, pending or threatened by or before any Governmental Entity, nor shall there be any Law or Judgment in effect, that would or is reasonably likely to (i) restrain, enjoin, prevent, prohibit or make illegal the transactions contemplated by this Agreement, (ii) impose limitations on the ability of Parent or its Affiliates effectively to exercise full rights of ownership of all shares of Splitco, (iii) result in a Governmental Investigation or in Governmental Damages being imposed on any Transferred Entity or on Parent or any of its Affiliates, or on Splitco, or on SES or any of its Affiliates, or (iv) restrain, enjoin, prevent, prohibit or make illegal, or impose material limitations on, Parent’s, SES’s or any of their respective Affiliates’ ownership or operation of all or any material portion of the businesses and assets of Splitco, or, as a result of the transactions contemplated by this Agreement and the Ancillary Agreements of either Parent and its Subsidiaries, taken as a whole, or SES and its Subsidiaries taken as a whole.

Section 8.2 Conditions to Obligations of the GE Entities.

The obligations of each of the GE Entities to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver by the GE Entities prior to or at the Closing of each of the following conditions:

(a) The representations and warranties of SES contained in this Agreement and any Ancillary Agreement shall be true and correct both when made and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, except where the failure to be so true and correct (without giving effect to any limitation or qualification as to “materiality” (including the word “material”) or “SES Material Adverse Effect” set forth therein) would not, individually or in the aggregate, reasonably be expected to have an SES Material Adverse Effect. The GE Entities shall have received certificates signed by authorized officers of SES to such effect.

 

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(b) SES and the SES Entities shall have performed or complied in all material respects with all obligations and covenants required by this Agreement and the Ancillary Agreements to be performed or complied with by SES and the SES Entities by the time of the Closing, and the GE Entities shall have received certificates signed by authorized officers of SES to such effect.

(c) SES shall have received (and they shall continue to be in full force and effect) the consents and waivers described in Schedule 8.2(c) in a form reasonably satisfactory to the GE Entities.

(d) There shall not have occurred since the date of this Agreement any event, change, occurrence or circumstance that, individually or in the aggregate with any such events, changes, occurrences or circumstances, has had or which could reasonably be expected to have an SES Material Adverse Effect.

(e) SES shall have delivered to the GE Entities the items to be delivered pursuant to Section 2.3.

(f) The Reorganization shall have been completed.

(g) The GE Entities shall have determined, pursuant to the following methodology, that, as of the Closing Date, the gross value of Splitco’s Investment Assets does not exceed (a) 70 percent (provided the Closing Date occurs on or before May 16, 2007), or 60 percent (if the Closing Date occurs on or after May 17, 2007), of the sum of (i) the gross value of Splitco’s Investment Assets and (ii) the gross value of Splitco’s assets that are Non-Investment Assets (the “Valuation Conclusions”). For purposes of making this determination, the GE Entities shall use a value for each Non-Investment Asset equal to the lowest point on the range of reasonable values and a value for each Investment Asset equal to the highest point on the range of reasonable values set forth in the Draft Reports, provided that there is no change in circumstances with respect to the assets of Splitco. For this purpose, a change in circumstances includes, but is not limited to, with respect to publicly traded assets, a change in the publicly traded price of such assets or a discovery that any document specifically identified by the GE Entities as a document upon which the GE Entities were relying in arriving at one or more Valuation Conclusions in the Draft Reports as provided on Schedule 3.14(b) of the Tax Matters Agreement was not true, accurate, and complete in all material respects. For purposes of the preceding sentence, “material” means relevant to the determination of asset value for purposes of determining that the Redemption qualifies under Section 355(a) with respect to which the GE Entities will recognize no gain or loss for U.S. federal income tax purposes. A change in circumstances does not include the discovery of information that is publicly available as of the date of the Draft Reports; furthermore, a change in circumstances does not include the discovery of information provided by SES to the GE Entities as of the date of the Draft Reports. In addition, for this purpose, (i) Star One Shares, (ii) any asset of Satlynx not owned by Satlynx as of the date hereof, and (iii) any asset transferred to Splitco pursuant to Section 3.8, will be treated as a Non-Investment Asset only if the Private Letter Ruling concludes that such asset is not an Investment Asset.

 

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(h) SES shall have received a letter from the SES Financial Advisor confirming that the facts and conclusions contained in the SES Financial Advisor Letter continue to be true and correct as of the Closing Date.

(i) SES shall have delivered, or caused to be delivered, to the GE Entities, an opinion of Arendt & Medernach, counsel to SES, in substantially the form of Exhibit D hereto.

(j) Parent or one or more of its Affiliates shall have received the Private Letter Ruling and such Private Letter Ruling shall continue to be in full force and effect.

(k) The GE Entities shall have received the GE Tax Opinions (as defined in the Tax Matters Agreement) and a copy of the SES Tax Opinion (as defined in the Tax Matters Agreement).

Section 8.3 Conditions to SES’s Obligations.

The obligations of SES to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver at or prior to the Closing of each of the following conditions:

(a) The representations and warranties of each of the GE Entities contained in this Agreement or any Ancillary Agreement shall be true and correct, both when made and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, except where the failure to be so true and correct (without giving effect to any limitation or qualification as to “materiality” (including the word “material”) or “GE Material Adverse Effect” set forth therein) would not, individually or in the aggregate, be material. SES shall have received certificates signed by authorized officers of the GE Entities to such effect;

(b) The GE Entities shall have performed or complied in all material respects with all obligations and covenants required by this Agreement and the Ancillary Agreements to be performed or complied with by the GE Entities by the time of the Closing, and SES shall have received certificates signed by authorized officers of the GE Entities to such effect;

(c) SES shall have received its required ruling from Luxembourg Tax authorities regarding the Luxembourg corporate income tax consequences of the Redemption;

(d) Receipt by SES of required waivers with respect to the bank facility and U.S. privately placed notes described in Schedule 8.3(d);

(e) The GE Entities shall have delivered to SES the items to be delivered pursuant to Section 2.4.

Section 8.4 Frustration of Closing Conditions.

None of SES or any of the GE Entities may rely on the failure of any condition set forth in this Article 8 to be satisfied if such failure was caused by such party’s failure to act in good faith or to use its reasonable best efforts to cause the Closing to occur as required by Section 6.6(a).

 

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ARTICLE 9.

TERMINATION

Section 9.1 Termination.

This Agreement may be terminated at any time prior to the consummation of the Closing under the following circumstances:

(a) by mutual written consent of SES and the GE Entities;

(b) by either the GE Entities (on one hand) or SES (on the other hand) upon written notice to the other if the Closing shall not have been consummated on or before May 15, 2007 (as may be extended pursuant to clauses (i) or (ii), the “Termination Date”); provided that (i) SES may, in its discretion, extend the Termination Date to any date no later than June 14, 2007 if (A) the condition set forth on Section 8.1(b)(iv) has not been satisfied with respect to the Privatization at or prior to May 15, 2007 and (B) prior to May 15, 2007, SES shall have identified additional Non-Investment Assets owned by SES or one or more of its subsidiaries (other than those listed on Schedule 3.10) acceptable to the GE Entities and negotiated in good faith with the GE Entities to attempt to agree to the amount by which the Cash Amount shall be reduced in respect of such Non-Investment Assets that, together with the assets to be transferred to Splitco pursuant to Section 2.1, would enable the Valuation Conclusions to be reached, (ii) the GE Entities may, in their discretion, extend the Termination Date to any date no later than June 14, 2007 if (A) the condition set forth on Section 8.1(b)(iv) has not been satisfied with respect to the Privatization at or prior to May 15, 2007 and (B) as of May 15, 2007, the GE Entities reasonably believe that Splitco will receive enough Non-Investment Assets to enable the Valuation Conclusions to be reached as of the Termination Date as so extended, and (iii) the right to terminate this Agreement under this Section 9.1(b) shall not be available to a party whose failure to perform in any material respect any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or prior to the Termination Date;

(c) by either SES or GE upon written notice to the other if the Required Resolutions shall not have been obtained by reason of the failure to obtain the Required Vote, upon the taking of such vote at a duly held meeting of the shareholders of SES or at any adjournment thereof; provided that the right of SES to terminate this Agreement under this Section 9.1(c) shall not be available to SES if its breach of Section 6.1 or 6.2 has been the cause of, or resulted in, such failure;

(d) by the GE Entities upon written notice to SES, if any of the conditions to the Closing set forth in Section 8.2 shall have become incapable of fulfillment by the Termination Date and shall not have been waived in writing by the GE Entities;

(e) by either SES or the GE Entities upon written notice to the other if any of the conditions set forth in Section 8.1 have become incapable of fulfillment by the Termination Date and shall not have been waived in writing by all parties;

 

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(f) by SES upon written notice to the GE Entities, if any of the conditions to the Closing set forth in Section 8.3 shall have become incapable of fulfillment by the Termination Date and shall not have been waived in writing by SES;

(g) by either the GE Entities or SES upon written notice to the other, if there shall be in effect a final, non-appealable order of a court or government administrative agency of competent jurisdiction permanently prohibiting the consummation of the transactions contemplated hereby; provided, that the party so requesting termination shall have complied with Section 6.7; and

(h) by the GE Entities if the IRS notifies Parent or one of its Affiliates that it will not issue the Private Letter Ruling;

provided, however, that the party seeking termination pursuant to clause (b), (d), (e) or (f) above is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement.

Section 9.2 Effect of Termination.

In the event of the termination of this Agreement pursuant to Section 9.1, this Agreement, except for the provisions of (i) Section 6.12(a) relating to the obligation of the parties to keep confidential certain information obtained by it, (ii) Article 11, and (iii) this Section 9.2, shall become void and have no effect, without any liability on the part of any party hereto or its directors, officers or stockholders. Nothing in this Section 9.2 shall be deemed to release any party from any liability for any willful and material breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement.

ARTICLE 10.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

Section 10.1 Survival of Representations and Warranties.

All of the representations and warranties provided for in this Agreement or in any agreement or certificate delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby (except as otherwise provided in the Ancillary Agreements) shall survive the Closing until eighteen (18) months after the Closing; provided that the representations and warranties set forth in Section 4.6, 4.7, 4.8(a) and 5.4 shall survive indefinitely, and the representations and warranties set forth in Section 4.21 (environment) shall survive until the sixth anniversary of the Closing; provided further that any representations and warranties shall survive with respect to, and to the extent of, any claim for indemnification made in accordance with this Article 10 prior to the applicable termination date.

Section 10.2 Indemnification by SES.

(a) From and after the Closing Date, SES shall defend and indemnify the GE Entities, their respective Affiliates (including Splitco and its Subsidiaries) and successors, and each of their respective officers, directors, employees, stockholders, agents and representatives

 

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(collectively, the “GE Indemnitees”) against, and hold the GE Indemnitees harmless to the fullest extent permitted by law from, any loss, liability, claim, damage or expense including reasonable legal fees and disbursements, and all other reasonable costs of investigation and defending third-party claims (collectively, “Losses”), asserted against, imposed upon, or suffered or incurred by such GE Indemnitee (other than any Loss relating to Taxes, for which indemnification provisions are set forth in the Tax Matters Agreement) resulting from or arising out of:

(i) any breach of any representation or warranty of SES, contained in this Agreement or in any Ancillary Agreement;

(ii) any breach of any covenant of SES or any SES Affiliate contained in this Agreement or in any Ancillary Agreement, or any failure by SES or any SES Affiliate to otherwise perform any of their respective covenants or agreements in this Agreement and the Ancillary Agreements;

(iii) any fees, expenses or other payments incurred or owed by SES, Splitco or the SES Entities or any Affiliate thereof (in the case of Splitco, to the extent incurred on or prior to the Closing Date), to any brokers, financial advisors or comparable other persons retained or employed by any of them or any of their Affiliates in connection with the transactions contemplated by this Agreement;

(iv) any Losses arising out of the matters described in Schedule 10.2(a)(iv);

(v) any payments due under the EIC Plan, the STAR Plan and the LTI Plan (“Satlynx Plans”) in respect of employees of Satlynx, to the extent that such payments result from the amendments to the Satlynx Plans made on February 1, 2007 and described in Schedule 4.20(b);

(vi) any actual or alleged noncompliance by Satlynx and its Subsidiaries prior to Closing with U.S. Export Control Requirements, including the Export Administration Regulations of the U.S. Commerce Department (15 C.F.R. §§ 730-774), the Sanctions Regulations of the Office of Foreign Assets Control of the U.S. Department of the Treasury (e.g., 31 CFR §§ 515, 528 and 560) and the International Traffic in Arms Regulations (22 C.F.R. §§ 120-130); or

(vii) any Losses arising out of or relating to the Excluded Liabilities or the Excluded Assets.

(b) Other than in respect of breaches of the representations and warranties set forth in Sections 4.6, 4.7 and 4.8(a), SES shall not be required to indemnify any GE Indemnitee for any Losses, and shall not have any liability for any Losses:

(i) under clause (i) of Section 10.2(a), unless the aggregate of all Losses for which SES would, but for this clause (i), be liable thereunder and under the indemnification provisions relating to breaches of representations and warranties in the Tax Matters Agreement exceeds on a cumulative basis an amount equal to €4,875,000, and then for the full amount of such Losses only to the extent of such excess;

 

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(ii) under clause (i) of Section 10.2(a), for any individual items where the Loss relating thereto is less than €20,000, and such items shall not be aggregated for purposes of clause (i) of this Section 10.2(b); and

(iii) under clause (i) of Section 10.2(a), if the aggregate of all Losses recovered under such clause (i) and under the indemnification provisions relating to breaches of representations and warranties in the Tax Matters Agreement on a cumulative basis would exceed €150,000,000.

Notwithstanding anything to the contrary contained in this Article 10, (i) with respect to Taxes, the provisions of this paragraph (b) shall only apply to Losses relating to breaches of representations and warranties pursuant to Sections 4.01(v) and (vi) of the Tax Matters Agreement, and (ii) no GE Indemnitee shall be entitled to indemnification for any Losses related to, or arising out of, any Action brought by any State of Brazil charging Star One or any of its Subsidiaries ICMS on communications services based on the same circumstances as the tax assessment by the State of Rio de Janeiro set forth on Schedule 10.2(b).

(c) Except in the case of fraud, and as otherwise specifically provided in this Agreement or in any Ancillary Agreement, the GE Entities acknowledge that their sole and exclusive remedy after the Closing Date with respect to any and all claims relating to this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby shall be pursuant to the indemnification provisions set forth in this Article 10; provided that all claims relating to Taxes shall be exclusively resolved as set forth in the Tax Matters Agreement. In furtherance of the foregoing, each of the GE Entities and Splitco hereby waives, from and after the Closing Date, to the fullest extent permitted under applicable Law, any and all rights, claims and causes of action (other than claims of, or causes of action arising from, fraud) it may have against SES arising under or based upon this Agreement, any Ancillary Agreement, any document or certificate delivered in connection herewith, any applicable Law, common law or otherwise (except pursuant to the indemnification provisions set forth in this Section 10.2).

Section 10.3 Indemnification by GE Entities.

(a) From and after the Closing Date, the GE Entities shall defend and indemnify SES, its Affiliates and successors, and each of their respective officers, directors, employees, stockholders, agents and representatives (collectively, the “SES Indemnitees”) against and hold the SES Indemnitees harmless to the fullest extent permitted by law from, any Losses asserted against, imposed upon, or suffered or incurred by such SES Indemnitee (other than any Loss relating to Taxes, for which indemnification provisions are set forth in the Tax Matters Agreement) resulting from or arising out of:

(i) any breach of any representation or warranty of the GE Entities contained in this Agreement or in any Ancillary Agreement;

(ii) any breach of any covenant of the GE Entities contained in this Agreement or in any Ancillary Agreement, or any failure by the GE Entities to otherwise perform any of their respective covenants or agreements in this Agreement and the Ancillary Agreements;

 

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(iii) any fees, expenses or other payments incurred or owed by the GE Entities or any Affiliate thereof to any brokers, financial advisors or comparable other persons retained or employed by either of them or any of their Affiliates in connection with the transactions contemplated by this Agreement;

(iv) any Losses arising out of or relating to the AMC-23 Assumed Liabilities; and

(v) any Losses arising out of or relating to the Transferred Businesses with respect to periods from and after the Closing Date.

(b) Except in the case of fraud, and as otherwise specifically provided in this Agreement or in any Ancillary Agreement, SES acknowledges that the sole and exclusive remedy after the Closing Date with respect to any and all claims relating to this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby shall be pursuant to the indemnification provisions set forth in this Article 10; provided that all claims relating to Taxes shall be resolved as set forth in the Tax Matters Agreement. In furtherance of the foregoing, SES hereby waives, from and after the Closing Date, to the fullest extent permitted under applicable Law, any and all rights, claims and causes of action (other than claims of, or causes of action arising from, fraud) it may have against Parent, the GE Entities, Splitco and the Transferred Entities arising under or based upon this Agreement, any Ancillary Agreement, any document or certificate delivered in connection herewith, any applicable Law, common law or otherwise (except pursuant to the indemnification provisions set forth in this Section 10.3).

(c) Any payments made pursuant to this Section 10.2 shall be made, without duplication (i) to Splitco or its Subsidiaries in respect of Losses asserted against, imposed upon, suffered or incurred by them, and (ii) to the GE Entities in respect of Losses asserted against, imposed upon, suffered or incurred by them or any of their respective Affiliates (other than Splitco and its Subsidiaries).

(d) Any payments made pursuant to this Section 10.3 shall be made, without duplication, to the appropriate SES Indemnitee.

(e) To the extent permitted by applicable Law, the GE Entities, SES, and their respective Affiliates shall treat any payments made by SES or any of its Affiliates to Splitco or any of its Affiliates under Section 10.2 as a contribution to Splitco occurring immediately prior to the Closing, and any payments made by the GE Entities or any of its Affiliates to SES or any of its Affiliates pursuant to Section 10.3 as a reduction of the Cash Amount until such Cash Amount is reduced to zero, and then as a distribution from Splitco occurring immediately prior to the Closing for all U.S. federal and state income and franchise Tax purposes.

 

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Section 10.4 Calculation of Losses.

The amount of any Loss for which indemnification is provided under this Article 10 shall be net of any amounts actually recovered, whether before or after payment of any amounts in respect of such Loss, by the indemnified party under third-party insurance policies with respect to such Loss (and the indemnified party shall notify the indemnifying party of any such recovery) and shall be (i) increased to take account of any net Tax cost incurred by the indemnified party resulting from the accrual or receipt of indemnity payments hereunder (grossed up for such increase) and (ii) reduced to take account of any net Tax benefit actually realized by the indemnified party resulting from the incurrence or payment of any such Loss, in each case so that the indemnified party is put in the same net after-Tax economic position as if it had not incurred such Loss. Any such Tax cost shall be taken into account whether it is incurred before or after the receipt or accrual of such indemnity payments, and any such Tax benefit shall be taken into account whether it is actually realized before or after the incurrence or payment of such Loss. In computing the amount of any such Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all other items of income, gain, loss deduction or credit before recognizing any item arising from the accrual or receipt of any indemnity payment hereunder or from the incurrence or payment of any indemnified Loss. Any indemnity payment under this Agreement shall be treated as set forth in the Tax Matters Agreement.

Section 10.5 Termination of Indemnification.

The obligations to indemnify and hold harmless any party, (i) pursuant to Sections 10.2(a)(i) and 10.3(a)(i), shall terminate when the applicable representation or warranty terminates pursuant to Section 10.1 and (ii) pursuant to the other clauses of Sections 10.2 and 10.3 shall not terminate; provided, however, that such obligations to indemnify and hold harmless shall not terminate with respect to any item as to which the person to be indemnified shall have, before the expiration of the applicable period, previously made a claim by delivering a notice of such claim (stating in reasonable detail the basis of such claim) pursuant to Section 10.6 to the party to be providing the indemnification.

Section 10.6 Procedures.

(a) Third Party Claims. In order for a person (the “indemnified party”) to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim made by any person (other than any party hereto or any of its Affiliates) against the indemnified party (a “Third Party Claim”), such indemnified party must notify the indemnifying party in writing (and in reasonable detail, to the extent practicable) of the Third Party Claim within 10 Business Days after receipt by such indemnified party of notice of the Third Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party demonstrates that it has been materially prejudiced as a result of such failure (except that the indemnifying party shall not be liable for any expenses incurred during the period in which the indemnified party failed to give such notice). Thereafter, the indemnified party shall deliver to the indemnifying party, within five (5) Business Days’ time after the indemnified party’s receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim.

 

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(b) Assumption. If a Third Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate, at its own expense, in the defense thereof and, if it so chooses, to assume the defense thereof, at its own expense, with counsel selected by the indemnifying party; provided, however, that such counsel is not reasonably objected to by the indemnified party. Should the indemnifying party so elect to assume the defense of a Third Party Claim, the indemnifying party shall not be liable to the indemnified party for any legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel (not reasonably objected to by the indemnifying party), at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense. The indemnifying party shall be liable for the fees and expenses of one counsel and one local counsel employed by the indemnified party for any period during which the indemnifying party has not assumed the defense thereof (other than during any period in which the indemnified party shall have failed to give notice of the Third Party Claim as provided above). If the indemnifying party chooses to defend or prosecute a Third Party Claim, all the indemnified parties shall cooperate in the defense or prosecution thereof and the indemnifying party shall reimburse the indemnified party for its reasonable out-of-pocket expenses therefor (other than the fees and expenses of counsel employed by the indemnified party, which are governed by the second preceding sentence in this Section 10.6(b)). Such cooperation shall include the retention, and (upon the indemnifying party’s request) the provision to the indemnifying party, of records and information that are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Whether or not the indemnifying party assumes the defense of a Third Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge or consent to the entry of any judgment for, such Third Party Claim without the indemnifying party’s prior written consent (which consent shall not be unreasonably withheld or delayed). If the indemnifying party assumes the defense of a Third Party Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third Party Claim, which releases the indemnified party completely in connection with such Third Party Claim and that would not otherwise adversely affect the indemnified party. Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume the defense of any Third Party Claim (and shall be liable for the reasonable fees and expenses of one counsel and one local counsel incurred by the indemnified party in defending such Third Party Claim) if the Third Party Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the indemnified party that the indemnified party reasonably determines, after conferring with its outside counsel, cannot be separated from any related claim for money damages. If in the reasonable opinion of counsel for the indemnified party, there is a conflict of interest between the indemnified party and the indemnifying party, then the indemnifying party shall not be entitled to assume the defense of any Third Party Claim until it executes a joint defense agreement with the indemnified party in form reasonably satisfactory to both parties. If such equitable relief or other relief portion of the Third Party Claim can be so separated from that for money damages, the indemnifying party shall be entitled to assume the defense of the portion relating to money damages.

 

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(c) Other Claims. In the event any indemnified party should have a claim against any indemnifying party under Section 10.2 or 10.3 that does not involve a Third Party Claim being asserted against or sought to be collected from such indemnified party, the indemnified party shall deliver notice of such claim, describing in reasonable detail the facts giving rise to such claim, with reasonable promptness to the indemnifying party after obtaining actual knowledge thereof. Subject to Sections 10.5 and 10.1, the failure by any indemnified party so to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to such indemnified party under Section 10.2 or 10.3, except to the extent that the indemnifying party demonstrates that it has been materially prejudiced by such failure. The indemnified party shall reasonably cooperate and assist the indemnifying party in determining the validity of any claim for indemnity by the indemnified party and in otherwise resolving such matters.

(d) Mitigation. SES and the GE Entities shall cooperate with each other with respect to resolving any claim or liability with respect to which one party is obligated to indemnify another party hereunder, including by making reasonable best efforts to mitigate or resolve any such claim or liability. In the event that SES, on the one hand, or the GE Entities, on the other hand, shall have failed to make such reasonable best efforts to mitigate or resolve any claim or liability, then notwithstanding anything else to the contrary contained herein, the other party shall not be required to indemnify any person for any loss, liability, claim, damage or expense that is reasonably expected to have been avoided if such first party had made such efforts.

Section 10.7 Assignment of Claims.

If any indemnified party of the GE Entities (a “GE Indemnified Party”) receives any payment from SES in respect of any Losses pursuant to Section 10.2 and the GE Indemnified Party could have recovered all or a part of such Losses from a third party (a “Potential Contributor”) based on the underlying claim asserted against SES, the GE Indemnified Party shall assign, on a non-recourse basis and without any representation or warranty, such of its rights to proceed against the Potential Contributor as are necessary to permit SES to recover from the Potential Contributor the amount of such payment. If any such assignment would afford the Potential Contributor any defense to the payment of the same, such assignment shall not take place and the GE Indemnified Party will, at SES’s direction and expense, take all reasonable actions to seek to recover such claim from such Potential Contributor. Any payment received in respect of such claim against the Potential Contributor (whether by SES or the relevant GE Indemnified Party as provided in the immediately preceding sentence) shall be distributed, (i) first, to the GE Indemnified Party in the amount of any deductible or similar amount required to be paid by the GE Indemnified Party prior to SES being required to make any payment to the GE Indemnified Party plus, in the case of any claim by a GE Indemnified Party as provided in the immediately preceding sentence, the costs and expenses incurred in investigating, prosecuting, defending or otherwise addressing such claim, (ii) second, to SES in an amount equal to the aggregate payments made by SES to the GE Indemnified Party in respect of such claim, plus the costs and expenses incurred in investigating, prosecuting, defending or otherwise addressing such claim and (iii) the balance, if any, to the GE Indemnified Party.

Section 10.8 Additional Limitations on Indemnification.

Notwithstanding anything to the contrary contained in this Agreement:

(a) SES shall not be obligated to indemnify any indemnified party with respect to any Losses to the extent that a specific accrual or reserve for the amount of such Loss was reflected on the AMC-23 Balance Sheet, the Leuk Balance Sheet or the Satlynx Balance Sheet;

 

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(b) no party hereto shall have any liability under any provision of this Agreement for any punitive, incidental, consequential, special or indirect damages, including business interruption, loss of future revenue, profits or income, or loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, in each case other than any such damages paid or payable to a third party in connection with a Third Party Claim.

Section 10.9 Supplementation and Amendment of the Disclosure Schedules.

From time to time prior to the Closing, SES shall have the right to supplement or amend the Disclosure Schedules with respect to any matter related to Star One, AsiaSat or their respective Subsidiaries hereafter arising or discovered after the delivery of the Disclosure Schedules pursuant to this Agreement. No such supplement or amendment shall have any effect on the satisfaction of the condition to Closing set forth in Section 8.2(a) and Section 8.2(d); provided, however, if the Closing shall occur, then the GE Entities shall be deemed to have waived any right or claim pursuant to the terms of Section 10.2(a)(i) of this Agreement with respect to any and all matters disclosed pursuant to any such supplement or amendment at or prior to the Closing.

ARTICLE 11.

MISCELLANEOUS

Section 11.1 Assignment.

This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any party (including by operation of law in connection with a merger or consolidation of such party) without the prior written consent of the other parties hereto. Any attempted assignment in violation of this Section 11.1 shall be void.

Section 11.2 No Third-Party Beneficiaries.

Except as provided in Article 10, this Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such assigns, any legal or equitable rights hereunder. Nothing contained in this Agreement shall be deemed or construed by the parties or by any third party to create the relationship of principal and agent, partnership or joint venture or any other fiduciary relationship or association between the parties.

Section 11.3 [Reserved].

Section 11.4 Notices.

All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail, reputable overnight courier service or e-mail (with receipt acknowledged) and shall be deemed given when delivered personally or when so received by facsimile or courier or e-mail, or, if mailed, three (3) calendar days after the date of mailing received, as follows:

 

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(i) if to SES:
  

Château de Betzdorf

  

L-6815 Betzdorf

  

Grand Duchy of Luxembourg

  

Attention: General Counsel

  

Facsimile: 352-710-725-532

with a copy to:
  

Gibson, Dunn & Crutcher LLP

  

200 Park Avenue, 47th Floor

  

New York, NY 10166

  

Attention: David M. Wilf

  

Facsimile: 212-351-6277

  

E-mail: dwilf@gibsondunn.com

(ii) if to the GE Entities or Parent:
  

201 Merritt 7

  

Norwalk, CT 06851

  

Attention: John W. Campo, Jr.

  

Facsimile: 203-229-5097

  

Email: generalcounsel.equity@ge.com

with a copy to:
  

General Electric Capital Corporation

  

901 Main Ave

  

Suite 800

  

Norwalk, CT 06851

  

Attention: General Counsel

  

Facsimile: 203-840-6494

with a copy to:
  

Weil, Gotshal & Manges LLP

  

767 Fifth Avenue

  

New York, NY 10153

  

Attention: Howard Chatzinoff

                                             Joseph T. Verdesca, Jr.
  

Facsimile: 212-310-8007

  

E-mail: joseph.verdesca@weil.com

                                      howard.chatzinoff@weil.com

 

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Section 11.5 Interpretation; Exhibits and Schedules; Certain Definitions.

(a) The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein, are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Inclusion of information in the Schedules shall not be construed as an admission or used as evidence that such information is material to the business, financial condition or results of operations of the Transferred Businesses. Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein, shall have the meaning as defined in this Agreement. When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The phrase “reasonable best efforts” shall not be construed to require any party to pay or commit to pay any amount to, or incur any obligation in favor of, any person (other than filing or application fees or expenses or obligations imposed by Governmental Entities) or incur out-of-pocket expenses or make any other payments to a third party, release any third party from any rights, incur a Liability, make or commit to make any disposition of assets or otherwise agree to modify its business practices in connection with the transactions contemplated by this Agreement and the Ancillary Agreements; provided, however, that the foregoing shall not limit the obligation of a party to incur expenses or pay fees to advisors, counsel, consultants and the like otherwise consistent with reasonable best efforts. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns.

Section 11.6 Counterparts.

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties.

Section 11.7 Entire Agreement.

This Agreement, the Ancillary Agreements and the Confidentiality Agreement, along with the Schedules and Exhibits hereto and thereto (the “2007 Agreements”), contain the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter; provided, however, that nothing in the 2007 Agreements shall have any effect on any rights or obligations of the parties under the Tax Matters Agreement by and among SES, CFE, Inc., GE Subsidiary, Inc. 22 and SES Global dated March 27, 2001. None of the parties shall be liable or bound to any other party in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein or in the Ancillary Agreements or certificates delivered pursuant to this Agreement or the Ancillary Agreements, or the Confidentiality Agreement.

 

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Section 11.8 Severability.

If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances. Upon such determination that any such provision is invalid, illegal or unenforceable, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

Section 11.9 Consent to Jurisdiction.

Each party irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, any Ancillary Agreement or any transaction contemplated hereby or thereby, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as described herein. Each party agrees to commence any such action, suit or proceeding in the United States District Court for the Southern District of New York or if such suit, action or proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, New York County. Each party further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 11.9. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement, any Ancillary Agreement or the transactions contemplated hereby and thereby in (i) the Supreme Court of the State of New York, New York County, or (ii) the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 11.10 Governing Law.

This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such State, provided, however that the Redemption shall be governed by the laws of Luxembourg.

Section 11.11 Waiver of Jury Trial.

Each party hereby waives and agrees not to assert to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement, any Ancillary Agreement or any transaction contemplated hereby or thereby. Each party (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 11.11.

 

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Section 11.12 Expenses.

Except as otherwise expressly provided herein or in the Tax Matters Agreement, each of the parties hereto shall pay its own expenses incident to this Agreement and the transactions contemplated herein (including legal fees, accounting fees, investment banking fees and filing fees).

Section 11.13 No Strict Construction.

SES and the GE Entities each acknowledge that this Agreement has been prepared jointly by the parties hereto and shall not be strictly construed against any party hereto.

Section 11.14 Publicity; Public Announcements.

Unless otherwise required by applicable Laws or the requirements of any national securities exchange (and, in that event, only if time does not permit), at all times prior to the earlier of the consummation of the Closing or termination of this Agreement pursuant to Article 9, SES and the GE Entities shall consult with each other before issuing, and give each other a reasonable opportunity to review and comment upon, any press release with respect to the transactions contemplated hereby and shall not issue any such press release without each other’s consent, which consent shall not be unreasonably withheld or delayed. The parties agree that the initial press release to be issued with respect to this Agreement and the transactions contemplated by this Agreement shall be in the form heretofore agreed to by the parties.

Section 11.15 Amendment and Modification.

This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed on behalf of each party and otherwise as expressly set forth herein.

Section 11.16 Waiver.

No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of either party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party.

 

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Section 11.17 Disclosure Generally.

Notwithstanding anything to the contrary contained in the Disclosure Schedules or in this Agreement, the information and disclosures contained in any Disclosure Schedule (including a disclosure schedule of the Tax Matters Agreement) shall be deemed to be disclosed and incorporated by reference in any other Disclosure Schedule as though fully set forth in such Disclosure Schedule for which applicability of such information and disclosure is reasonably apparent on its face. The fact that any item of information is disclosed in any Disclosure Schedule shall not be construed to mean that such information is required to be disclosed by this Agreement. Such information and the dollar thresholds set forth herein shall not be used as a basis for interpreting the terms “material” or “SES Material Adverse Effect” or other similar terms in this Agreement.

Section 11.18 Other Matters.

(a) Notwithstanding anything to the contrary contained in this Agreement, in the event that prior to Closing, with the prior written consent of the GE Entities to the form of the relevant transaction documents, Satlynx directly or indirectly completes the acquisition of any entity described in Schedule 11.18, the GE Entities agree and acknowledge that none of the representations or warranties contained in this Agreement, or any indemnification obligation in connection therewith contained in Article 10 hereof, shall be deemed to cover, directly or indirectly, any such entity.

(b) The GE Entities agree and acknowledge that neither SES nor any of its Affiliates shall have any Liability whatsoever under the terms of this Agreement or any Ancillary Agreement in connection with the proposed privatization of AsiaSat by certain Affiliates of the GE Entities and CITIC Group, and the completion of such transaction, or the failure to complete such transaction (subject to Section 8.1(b)(iv)), shall not be deemed to affect the obligation of the GE Entities to complete the transactions contemplated by this Agreement on the Closing Date.

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

SES

By:

  

/S/ Mark Rigolle

Name:

   Mark Rigolle

Title:

   Chief Financial Officer

By:

  

/S/ Romain Bausch

Name:

   Romain Bausch

Title:

   President & CEO

GE-CFE LUXEMBOURG S. À R.L.

By:

  

/S/ Ronald J. Herman

Name:

   Ronald J. Herman

Title:

   Attorney In fact

By:

  

/S/ James M. Waterbury

Name:

   James M. Waterbury

Title:

   Attorney In Fact

GE CAPITAL EQUITY HOLDINGS INC.

By:

  

/S/ Ronald J. Herman

Name:

   Ronald J. Herman

Title:

   President & CEO

Solely for the purpose of Section 6.23

GENERAL ELECTRIC CAPITAL CORPORATION

By:

  

/S/ James M. Waterbury

Name:

   James M. Waterbury

Title:

   Vice President

 

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EX-99.3 4 dex993.txt LETTER AGREEMENT Exhibit 99.3 SES Chateau de Betzdorf L-6815 Betzdorf Grand Duchy of Luxembourg March 29, 2007 GE-CFE Luxembourg S. a r.l. GE Capital Equity Holdings Inc. General Electric Capital Corporation 207 Merritt 7 Norwalk, CT 06851 Attention: John W. Campo, Jr. Ladies and Gentlemen: Reference is made to (i) the Share Redemption Agreement by and among SES, GE CFE Luxembourg S. a r.l., GE Capital Equity Holdings Inc., and General Electric Capital Corporation, dated as of February 13, 2007 (the "Redemption Agreement") and (ii) the escrow agreement, dated as of March 23, 2007, between SES, the GE Entities and UBS AG, New York Branch, a U.S. branch of a Swiss banking corporation ("UBS") (the "Escrow Agreement"). The parties to this letter agreement (this "Letter Agreement") desire to amend the Redemption Agreement, pursuant to Section 11.15 thereof, in the manner set forth in this Letter Agreement. Capitalized terms not otherwise defined in this Letter Agreement shall have the meaning assigned thereto in the Redemption Agreement. The parties hereby amend the Redemption Agreement as follows: 1. Item 3 of Schedule 8.1(b)(iii) to the Redemption Agreement ("Japan: telecom authority approval, including AMC-23 landing rights"), together with the related footnote (the "Japan Telecom Approval"), shall be, and hereby is, deleted from such Schedule 8.1(b)(iii), such that the Japan Telecom Approval shall not be a condition to closing under Section 8.1 of the Redemption Agreement; provided, however, that such deletion shall not affect the parties' obligations with respect to the Japan Telecom Approval under Section 6.6 of the Redemption Agreement; provided, further, that SES shall cause Americom to maintain in full force and effect the Japanese registration, authorization and permit referred to in Items 4, 5 and 6 of Schedule 3.2(g) to the Redemption Agreement (the "Japanese Landing Rights") until such time as Americom Government Services, Inc. ("AGS") holds the Japanese Landing Rights, from which time SES shall cause AGS to maintain in full force and effect the Japanese Landing Rights until such time as (i) the parties agree in good faith that they are no longer required for AGS' service in Japan or (ii) the GE Entities notify SES that Americom or AGS may surrender or otherwise cause such Japanese Landing Rights no longer to be in full force and effect. At Closing those services under the Americom/AGS Master Agreement (as defined in Schedule 2.3(i) of the Schedules to the Redemption Agreement) which relate to the provision of the satellite transponder capacity on the AMC-23 Satellite in Japan shall be provided through SES Americom. The Americom/AGS Master Agreement shall provide that Americom is permitted to re-sell such satellite transponder capacity to AGS and that GE acts solely as provider of such satellite transponder capacity to Americom and performs no other function with respect thereto. SES shall and shall cause AGS to use reasonable best efforts to ensure that AGS is granted a type I license by the appropriate Japanese regulatory Authorities. At such time as AGS is granted a type I license by the appropriate Japanese regulatory authorities, SES shall cause the AGS Contracts to be assigned by Americom to Splitco and shall cause Americom to agree to terminate the AMC Contract. 2. Section 8.1(b)(v) (Hong Kong Telecommunication Authority) of the Redemption Agreement shall be, and hereby is, deleted in its entirety; provided, however, that such deletion shall not affect the parties' obligations under Section 6.6 of the Redemption Agreement with respect to any formal consent or other instrument required to be provided or issued by the Hong Kong Telecommunications Authority for the purposes of a waiver of compliance with note 4 of rule 26.2 of the Hong Kong Takeover Code. 3. Section 8.1(b)(vi) of the Redemption Agreement shall be, and hereby is, deleted in its entirety; provided, however, that such deletion shall not affect the parties' obligations under Section 6.6 of the Redemption Agreement with respect to such matters. 4. Section 8.1(b)(iv) of the Redemption Agreement shall be, and hereby is, deleted in its entirety; provided, however, that such deletion shall not affect the parties' obligations under Section 6.6 of the Redemption Agreement with respect to such matters. 5. Notwithstanding anything to the contrary contained in the Redemption Agreement, if the Closing occurs prior to April 5, 2007, then (i) at the Closing, legal title to the one hundred and three million, one hundred and forty-nine thousand, nine hundred (103,149,900) Class C Shares shall be held by UBS for SES as the beneficial owner pursuant to the terms of the Escrow Agreement in lieu of legal title to such Class C Shares being assigned, transferred, conveyed and delivered directly to SES by the GE Entities and (ii) for purposes of the Redemption Agreement, the "Closing Date" shall be the date on 2 which SES shall assign, transfer, convey and deliver to the GE Entities and the GE Entities shall accept and acquire from SES, each in proportion to their holdings of Class C Shares, all of the Splitco Shares as consideration in kind for the redemption by SES of the Class C Shares. 6. SES hereby designates Splitco as a third party beneficiary of the provisions of Section 6.31(b) of the Redemption Agreement. As a result, Splitco shall have the right and ability to enforce the provisions of Section 6.31(b) as if it were a party to the Redemption Agreement. 7. Section 2.4(a) of the Redemption Agreement shall be, and hereby is, deleted in its entirety. 8. Section 5.4 of the Redemption Agreement is amended and restated in its entirety to read as follows: "As of the date hereof, CFE owns a total of 98,653,542 Class C Shares and GCEH owns a total of 4,496,358 Class C Shares. As of the Closing, UBS will have good and valid legal title to such Class C Shares for SES as beneficial owner, free and clear of all Encumbrances (except for Encumbrances created by this Agreement, the Escrow Agreement and SES's organizational documents). Upon transfer to SES of the Class C Shares in accordance with the terms of the Escrow Agreement, and subject to the registration of the transfer of the Class C Shares in the register of SES, SES shall acquire good and valid legal title to such shares, free and clear of any Encumbrances, other than Encumbrances created by SES or any of its Subsidiaries." 9. The GE Entities hereby agree and acknowledge that SES has satisfied its obligations under Section 6.30(b) of the Redemption Agreement. 10. Schedule 2.3(i) is amended and restated in its entirety as set forth in Exhibit A attached hereto. 11. Item 3 of Schedule 6.27(a) is hereby amended and restated to read in its entirety as follows: "Corporate Guarantee by SES Global Europe S.A. in favor of Gilat, dated February 24, 2006." A new paragraph (c) is hereby added to Section 6.27 of the Redemption Agreement to read as follows: "(c) In the event that prior to Closing the GE Entities shall not have delivered substitute guarantees of the GE Entities to replace the Master Performance Guarantee by SES Astra S.A. dated July, 6, 2004, then the GE Entities shall use reasonable best efforts to deliver such substitute guarantee as promptly as practicable (any documentation related to such substitute guarantee is referred to as the "Alpine Agreements")." Notwithstanding any provision in (i) the Deed of Novation and Amendment dated as of March 29, 2007 between Gilat Satellite Networks Ltd, Gilat Satellite Networks (Holland) B.V., Satlynx, SES Global Europe SA and Splitco and (ii) the Alpine Agreements (together, the "Novations"), the parties hereto agree that nothing in the 3 Novations shall limit or in any manner affect the terms and conditions set forth in the Redemption Agreement (including the representations and warranties made thereunder by SES to the GE Entities). If there shall be any conflict between (i) the Novations, on the one hand, and (ii) the provisions of the Redemption Agreement on the other hand, the provisions of the Redemption Agreement shall govern. 12. A new Section 6.30(e) is hereby added to the Redemption Agreement to read as follows: "For a period of six months following the Closing Date, the GE Entities shall cause Splitco and its Affiliates (including Satlynx) to retain and use reasonable best efforts to keep safe any and all records that relate to SES Digital Distribution Services S. a r.l.. and SES Digital Distribution Services GmbH and which are kept at the Satlynx facilities located at the Backnang site (the "SDDS Records"). The GE Entities (i) shall cause Splitco and its Affiliates to cooperate with SES to complete the retrieval of such SDDS Records and their return to SES following the Closing and (ii) hereby acknowledges on behalf of themselves and their Affiliates that such SDDS Records shall remain at all times the property of SES and its Affiliates." 13. The term "Ancillary Agreements" shall include the Forward Sale Contract, dated as of the date hereof, between SES and SES Digital Distribution Services S.a r.l. ("SDDS") related to the Excluded Satlynx Shares (the "FSC"). A new paragraph (i) shall be, and hereby is, added to Section 4.6 of the Redemption Agreement to read in its entirety as follows: "Immediately following the closing of the transfer of the Excluded Satlynx Shares to Luxco under the FSC, Luxco shall have good and valid title to the Excluded Satlynx Shares, free and clear of all Encumbrances (other than those imposed by the organizational documents of Satlynx)." 14. A new paragraph (d) is added to Section 4.7 of the Redemption Agreement to read in its entirety as follows: "As of the Closing (i) (A) Splitco shall own all of the issued and outstanding shares of Pacific-1 Holdings, Inc., a Delaware corporation ("S1") and Pacific-2 Holdings, Inc, a Delaware corporation ("S2") and SES International Holdings (Singapore) Pte. Ltd ("SingCo") beneficially and of record, free and clear of any Encumbrances and (B) S1 and S2 shall own all of the issued and outstanding shares of Pacific-3 Holdings, Inc., a Delaware corporation ("S3") and International Holdings S. a r.l. ("Luxco" and, together with Singco, S1, S2 and S3, the "Splitco Subsidiaries"), in each case beneficially and of record, free and clear of any Encumbrances, (ii) all of the outstanding shares of capital stock of the Splitco Subsidiaries shall be duly authorized, validly issued, fully paid and nonassessable, and not issued in violation of any preemptive or similar rights, (iii) there shall be no outstanding subscriptions, options, warrants, puts, calls, agreements or other rights of any type or other securities of any of the Splitco Subsidiaries other than those owned 4 directly or indirectly by Splitco, and (iv) there shall be no issued or outstanding bonds, debentures, notes or other indebtedness for borrowed money of any of the Splitco Subsidiaries." 15. Section 4.6(a) of the Redemption Agreement is amended and restated in its entirety as follows: "As of the Closing, the Equity Interests will be owned by the Splitco Subsidiaries in a manner consistent with the Reorganization Plan, free and clear of all Encumbrances (other than the Equity Interest Encumbrances), and will be duly authorized, validly issued, fully paid and, to the extent such concept is recognized by applicable Law, nonassessable and not subject to any preemptive or subscription rights (and not issued in violation of any preemptive or subscription rights). The Splitco Subsidiaries shall have good and valid title to the Equity Interests as of the Closing in a manner consistent with the Reorganization Plan. As of the Closing, other than as provided in the Reorganization Plan, neither Splitco nor any Splitco Subsidiary shall own, directly or indirectly (except (i) as a result of the transfer of the Equity Interests pursuant to the Reorganization Plan and (ii) for the direct or indirect ownership of interest in other Splitco Subsidiaries), or have entered into any agreement, arrangement or understanding to purchase or sell any capital stock or other ownership interests in any Person." 16. A new Section 6.30(f) is hereby added to the Redemption Agreement to read as follows: "SES hereby agrees that following the Closing and until April 29, 2007, it shall, and shall cause its Affiliates to, use reasonable best efforts to cause the Facilities to continue to be covered by the Foyer Assurances property damage insurance policy that covers such facilities as of the date hereof (the "Policy"); provided that such coverage may be extended by the GE Entities for a period ending on December 31, 2007 by providing written notice to SES no later than April 15, 2007. The GE Entities hereby agree to pay, or cause to be paid, to SES or its designated Affiliate (i) promptly following the Closing the pro rata portion payments made by SES and its Affiliates pre-Closing with respect to the Policy to the extent any such premium relates to post-Closing coverage of the Facilities, (ii) any additional premium, costs and any other charges that become payable by SES or any of its Affiliates with respect to the Policy to the extent any such payments relate to post-Closing coverage of the Facilities (provided that any such additional charges shall be billed by SES to Splitco on a monthly basis and the GE Entities shall cause Splitco to pay or cause to be paid to SES any such charges so billed within 10 Business Days after receipt of an invoice therefor). "Facilities" means, collectively, the facilities currently occupied by Satlynx at (i) Chateau de Betzdorf, Building B,L- 6815 Betzdorf, Luxembourg and (ii) Illerstrasse 15, 71522 Backnang, Germany. The GE Entities and Splitco hereby agree to cause its Affiliates to comply with the terms and conditions of the Policy." 5 17. Section 4.15(c) is hereby amended and extended to read as follows: "Schedule 4.15(c) contains a summary as of the date of this Agreement of the status of frequency registration at the International Telecommunication Union ("ITU") by the sponsoring national administration for the AMC-23 Satellite, including the status with respect to the orbital position hosting the AMC-23 Satellite, the identity of the sponsoring administration and the frequency bands covered. The USASAT-60A advance publication information and coordination request filed with the International Telecommunications Union includes all of the frequencies and other relevant technical parameters to permit the AMC-23 Satellite to be operated under the USASAT-60A filing in the same manner as it is currently operated. The Inter-System Coordination Agreement listed as item 7 in Schedule 4.15(d) relating to the Endeavor-1 filing with the ITU by Australia provides the same protection to the operations of the AMC-23 Satellite at 172(0) E.L. whether the AMC-23 Satellite is operated under the USASAT-60A or USASAT-14K filing. To the knowledge of SES, (i) the only material satellite networks submitted to the ITU within four degrees longitude from 172(0) WL and that have complete or partial overlap with the USASAT-60A network are USASAT-14G at 169(0) EL filed by the United States and licensed to Intelsat; USASAT-60J at 169(0) EL filed by the United States and licensed to Intelsat; Endeavor-1 at 170(0) EL filed by Australia on behalf of Intelsat (PanAmSat); AM-SAT 172E at 172(0) EL filed by the United Kingdom (Gibraltar) on behalf of SES; USASAT-14K at 172(0) EL filed by the United States and licensed to SES, and the United States filings at 174.0(0) and 176.0(0) made on behalf of Intelsat, (ii) SES has provided information regarding coordination of AMC-23 Satellite with these satellite networks as identified in Schedule 4.15(d), (iii) coordination of the AMC-23 Satellite with the Intelsat filings takes place under the auspices of the FCC and subject to its rules regarding two-degree spacing and related matters, and (iv) coordination with non-US systems occurs pursuant to the ITU rules. 18. A new Section 6.32 is hereby added to the Redemption Agreement to read as follows: "SES shall support, using reasonable best efforts, commercially reasonable actions by Splitco to (i) cause the ITU to publish ("Publication") in the Master International Frequency Register ("MIFR") the frequencies specified in the USASAT-14K filing (together with any modifications thereto filed as of the date hereof, the "USASAT-14K filing"), including as necessary correction of findings made in the telefax dated March 23, 2007 from the ITU to the FCC (the "March 23 ITU Notice"), and (ii) cause the FCC to maintain the priority of the USASAT-60A filing (together with any modifications thereto filed as of the date hereof, the "USASAT-60A filing") until the earlier of Publication of the frequencies specified in the USASAT-14K filing or the date on which the frequencies specified in the USASAT-14K filing are no longer capable of Publication. SES shall support, using reasonable best efforts, commercially reasonable actions by Splitco to cause the ITU to publish in the MIFR as soon as 6 reasonably practicable the frequencies specified in the USASAT-60A filing. In any event, SES shall support, using reasonable best efforts, commercially reasonable actions by Splitco to cause the FCC to make the frequencies specified in the USASAT-14K and USASAT-60A filings available for use solely by the AMC-23 Satellite at the 172(0) E.L. orbital position. SES shall bear all its own costs and expenses associated with the actions described in this paragraph, as well as pay as directed by Splitco the reasonable incremental costs incurred by or on behalf of SplitCo in connection with the correction of the March 23 ITU Notice." 19. A new Section 6.33 is hereby added to the Redemption Agreement to read as follows: ""With respect to the FSS satellite network filed at the ITU as the AM-SAT 172E network under Article 9 of the ITU Radio Regulations (the "AM-SAT 172E Filing") submitted by the Administration of the United Kingdom on behalf of its Overseas Territory of Gibraltar (collectively, the "UK Administration"), and for the period through the expiry of the AM-SAT 172E Filing as defined under the ITU Radio Regulations, SES (i) shall not and shall cause its Affiliates not to operate a satellite or authorize any third party to operate a satellite at the 172(degree) E L orbital location under the AM-SAT 172E Filing using the FSS frequencies thereunder, (ii) at the direction of (and in respect of third-party costs, for the account of) Splitco, shall take (and shall cause its Affiliates to take) any reasonable action with respect to the AM-SAT 172E Filing, including without limitation using reasonable best efforts and causing its Affiliates to use reasonable best efforts to request the UK Administration (A) to maintain the AM-SAT 172E filing at the ITU through its expiry with respect to the FSS frequencies at 172(0) E.L. for the benefit of Splitco or any other entity identified in writing to SES by Splitco, and (B) to withhold agreement (unless requested otherwise by Splitco) to any filing by a third party which could cause harmful interference to the FSS frequencies at 172(0) E.L. and which requires the agreement of the UK Administration; and (iii) to the extent permitted by applicable law, and as requested by Splitco, seek to transfer such rights, if any, as SES may have in the AM-SAT 172E Filing insofar as they relate to the use of the FSS frequencies at 172(0) EL." 20. Section 4.1(c) of the Redemption Agreement is amended and restated in its entirety to read as follows: "Prior to the Reorganization, Splitco and the Splitco Subsidiaries will have no assets and no liabilities other than those de minimis incidental to their formation and will not have undertaken any business or activities other than in connection with this Agreement and engaging in the transactions contemplated hereby. As of the Closing Date, the assets and Liabilities of Splitco and the Splitco Subsidiaries shall consist solely of the AMC-23 Transferred Assets, the AMC-23 Assumed Liabilities, the Equity Interests, the Cash Amount, de minimis liabilities incidental to its formation and liabilities that shall be Splitco's or any of the Splitco Subsidiaries' under the Tax 7 Matters Agreement, and additional Non-Investment Assets transferred pursuant to Section 3.10." 21. Item 3 of Schedule 1.1(d) is hereby amended and restated to read in its entirety as follows: "The following two employees will be transferred to Satlynx on or prior to Closing: a. Siew Ken Loke b. Tong Kian Tan" 22. Notwithstanding anything to the contrary contained in the Redemption Agreement or the Escrow Agreement dated as of March 29, 2007, by and between SES, the GE Entities, Splitco and Deutsche Bank AG (the "Cash Escrow Agreement"), the parties agree that SES shall on the date hereof contemporaneously with the Closing give irrevocable instructions to Deutsche Bank AG to have the Escrow Amount (as defined in the Escrow Agreement) be delivered to the Escrow Agent (as defined in the Cash Escrow Agreement) for value on the date hereof. 23. All references to "nine (9) months" in Section 6.31 and 3.11(c) of the Redemption Agreement shall be, and hereby are, changed to "ten (10) months". Other than as set forth herein, the Redemption Agreement shall remain in full force and effect. 8 This Letter Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made to be performed entirely within such State. This Letter Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. Sincerely, SES By: /S/ Romain Bausch ------------------------------ Name: Romain Bausch Title: CEO By: /S/ Mark Rigolle ------------------------------ Name: Mark Rigolle Title: CFO Agreed and acknowledged: GE-CFE LUXEMBOURG S. A R.L. By: /S/ Ronald J. Herman ------------------------------------ Name: Ronald J. Herman Title: Attorney-in-fact By: /S/ James M. Waterbury ------------------------------------ Name: James M. Waterbury Title: Attorney-in-fact GE CAPITAL EQUITY HOLDINGS INC. By: /S/ Ronald J. Herman ------------------------------------ Name: Ronald J. Herman Title: Attorney-in-fact 9 GENERAL ELECTRIC CAPITAL CORPORATION By: /S/ James M. Waterbury ------------------------------------ Name: James M. Waterbury Title: Vice President cc: General Electric Capital Corporation General Counsel Weil, Gotshal & Manges LLP Howard Chatzinoff Joseph T. Verdesca, Jr. Gibson, Dunn & Crutcher LLP David M. Wilf 10 EX-99.4 5 dex994.htm SCHEME DOCUMENT Scheme Document

Exhibit 99.4

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

If you are in doubt as to any aspect of this document, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant, or other professional adviser.

If you have sold or otherwise transferred all your shares in the Company, you should at once hand this document and the accompanying Forms of Proxy to the purchaser or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. Such documents should not, however, be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws in such jurisdiction.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION OR BY ANY US STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY US STATE SECURITIES COMMISSION PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION NOR UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

To the extent the offers referred to in this document are being made into the United States, they are being made solely by the Offeror. References in this document to offers being made by Morgan Stanley on behalf of the Offeror should be construed accordingly.

LOGO

 

ASIA SATELLITE TELECOMMUNICATIONS

HOLDINGS LIMITED

 

LOGO

 

(incorporated in Bermuda with limited liability)

(Stock Code: 1135)

PROPOSED PRIVATISATION OF

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

BY ASIACO ACQUISITION LTD.*

(*formerly named Modernday Limited)

BY WAY OF A SCHEME OF ARRANGEMENT

UNDER SECTION 99 OF THE COMPANIES ACT OF BERMUDA

INVOLVING THE CANCELLATION OF THE

SCHEME SHARES, ISSUE OF THE NEW ASIASAT SHARES

AND WITHDRAWAL OF LISTING

AND

POSSIBLE MANDATORY GENERAL OFFER

FOR ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

BY ASIACO ACQUISITION LTD.*

 

Financial adviser to AsiaCo Acquisition Ltd.*

 

LOGO

 

Independent financial adviser to the Independent Board Committee of

Asia Satellite Telecommunications Holdings Limited

 

LOGO

 

CLSA Equity Capital Markets Limited

 

This document is issued jointly by Asia Satellite Telecommunications Holdings Limited and AsiaCo Acquisition Ltd. A letter from the Board of Directors of the Company is set out in Part IV of this document. An explanatory statement regarding the Proposals is set out in Part VIII of this document. A letter from the Independent Board Committee containing its advice to the Scheme Shareholders in relation to the Proposals is set out in Part V of this document. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee in relation to the Proposals is set out in Part VI of this document.

The action to be taken by Scheme Shareholders and ADS Holders is set out on the inside front cover of this document.

Notices convening the Court Meeting and the Special General Meeting to be held on 24 April 2007 are set out in Part XIII and Part XIV of this document. Whether or not you are able to attend any of the Meetings in person, you are strongly urged to complete and sign the enclosed pink Form of Proxy in respect of the Court Meeting and also the white Form of Proxy in respect of the Special General Meeting in accordance with the instructions printed respectively on them and to lodge them with the Hong Kong branch share registrar of the Company (Computershare Hong Kong Investor Services Limited at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong) as soon as possible but in any case no later than the times stated under the paragraph headed “Action to be taken by Scheme Shareholders” on the inside front cover of this document. The pink Form of Proxy in respect of the Court Meeting may also be handed to the Chairman of the Court Meeting at the Court Meeting if it is not so lodged.

If you are an ADS Holder, you are urged to execute and return the ADS Voting Instruction Card to instruct the ADS Depositary, in accordance with the terms of the ADS Deposit Agreement, to vote the AsiaSat Shares underlying your ADSs. Alternatively, you may exchange your ADSs for AsiaSat Shares in accordance with the terms of the ADS Deposit Agreement (for which you will incur cancellation fees, taxes and other charges). If you become an AsiaSat Shareholder prior to 20 April 2007, you may attend the Meetings and/or complete the Forms of Proxy described above, and you are urged to read carefully the information addressed to the Scheme Shareholders set out in this document.

The English language text of this document shall prevail over the Chinese language text.

19 March 2007

ACTION TO BE TAKEN

 

ACTION TO BE TAKEN BY SCHEME SHAREHOLDERS

 

If you are an AsiaSat Shareholder, whether or not you intend to attend either or both of the Court Meeting and the Special General Meeting, please complete and sign the enclosed Forms of Proxy and return them in accordance with the instructions printed on them as soon as possible, but in any event so as to be received by Computershare Hong Kong Investor Services Limited at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong at least 48 hours before the time fixed for the relevant Meeting or any adjournment of the relevant Meeting. Forms of Proxy returned by facsimile will not be accepted.

 

If the pink Form of Proxy for use at the Court Meeting is not lodged prior to the Court Meeting in accordance with the instructions set out above, it may be handed to the Chairman of the Court Meeting at that Meeting. In the case of the Special General Meeting, however, unless the white Form of Proxy is lodged at least 48 hours before the time fixed for the Special General Meeting, it will be invalid. In accordance with the Bye-laws of the Company the white Form of Proxy may not be handed to the Chairman of the Special General Meeting. Completion and return of a Form of Proxy will not prevent you from attending and voting in person either at the Court Meeting or at the Special General Meeting, or any adjournment thereof, if you wish to do so.

 

ACTION TO BE TAKEN BY ADS HOLDERS

 

If you are an ADS Holder, you cannot vote at the Court Meeting or the Special General Meeting directly but you may use the enclosed ADS Voting Instruction Card to instruct the ADS Depositary (as the registered holder of the AsiaSat Shares underlying the ADSs) on how to vote the AsiaSat Shares underlying your ADSs. If you are a registered ADS Holder, please complete and sign the enclosed ADS Voting Instruction Card and return it in accordance with the instructions printed on it as soon as possible but, in any event, so as to be received by the ADS Depositary no later than 5:00 p.m. (New York time) on 17 April 2007. ADS Voting Instruction Cards returned by facsimile will not be accepted. If you hold your ADSs through a financial intermediary, you must rely on the procedures of the financial intermediary through which you hold your ADSs if you wish to vote.

 

You may also elect to become an AsiaSat Shareholder of record, and thereby have the right to vote at the Meetings, by surrendering your ADSs for the purpose of withdrawal of the AsiaSat Shares underlying such ADSs in accordance with the terms of the ADS Deposit Agreement no later than 4:30 p.m. (New York time), on 13 April 2007. You will incur taxes and other charges in connection with such exchange and withdrawal. In order to exchange your ADSs and withdraw the underlying AsiaSat Shares, you should contact the ADS Depositary at The Bank of New York, 101 Barclay Street, 22nd Floor West, New York, NY 10286, United States.

 

Upon the Scheme becoming effective, the ADS Depositary (as the registered holder of the AsiaSat Shares underlying the ADSs) will receive an amount in Hong Kong dollars equal to the amount payable in respect of all AsiaSat Shares held by the ADS Depositary. Upon receipt, the ADS Depositary will convert such funds into US dollars at the then prevailing spot market rate. Upon exchange of your ADSs, in accordance with the terms of the ADS Deposit Agreement, you will receive your pro-rata portion of the consideration from the ADS Depositary, less any other fees or expenses of the ADS Depositary in connection with the currency conversion and withholding taxes (if applicable). You may also incur related taxes and other charges.

 

i

ACTION TO BE TAKEN

 

ACTIONS TO BE TAKEN BY HOLDERS THROUGH TRUST OR CCASS

 

The Company will not recognise a person holding any AsiaSat Shares on trust. If you are the Beneficial Owner of AsiaSat Shares registered in the name of a Registered Owner, you should contact the Registered Owner to give instructions to and/or to make arrangements with the Registered Owner as to the manner in which your AsiaSat Shares should be voted at the Court Meeting and/or the Special General Meeting. If you wish to attend the Meetings personally, you should contact the Registered Owner directly to make the appropriate arrangements with the Registered Owner to enable you to attend and vote at the Meetings, and for such purpose the Registered Owner may appoint you as its proxy. In the case of the appointment of a proxy by the Registered Owner, the relevant Forms of Proxy should be completed and signed by the Registered Owner and should be lodged in the manner and before the latest time for lodging the Forms of Proxy described above.

 

If you are a Beneficial Owner whose AsiaSat Shares are deposited in CCASS and registered under the name of HKSCC Nominees Limited, you must, unless you are an Investor Participant, contact an Other CCASS Participant regarding voting instructions to be given to such persons if you wish to vote at the Court Meeting or at the Special General Meeting.

 

EXERCISE YOUR RIGHT TO VOTE

 

IF YOU ARE AN ASIASAT SHAREHOLDER, WE STRONGLY ENCOURAGE YOU TO EXERCISE YOUR RIGHT TO VOTE OR GIVE INSTRUCTIONS TO THE RELEVANT REGISTERED OWNER TO VOTE AT THE COURT MEETING AND AT THE SPECIAL GENERAL MEETING. IF YOU KEEP OR THINK YOU MAY KEEP ANY ASIASAT SHARES IN A SHARE LENDING PROGRAMME, WE URGE YOU TO RECALL ANY OUTSTANDING ASIASAT SHARES ON BORROW TO AVOID MARKET PARTICIPANTS USING BORROWED STOCK TO VOTE AGAINST THE SHARE PROPOSAL, WHICH POTENTIALLY COULD HAVE A NEGATIVE IMPACT ON THE VALUE OF YOUR ASIASAT SHARES.

 

IF YOU ARE ACTING AS A REGISTERED OWNER, WE WOULD BE GRATEFUL IF YOU COULD INFORM ANY ULTIMATE BENEFICIAL ASIASAT SHAREHOLDERS ABOUT THE IMPORTANCE OF EXERCISING THEIR VOTE.

 

IF YOU ARE AN ADS HOLDER, YOU CANNOT VOTE AT THE COURT MEETING OR THE SPECIAL GENERAL MEETING DIRECTLY BUT YOU MAY INSTRUCT THE ADS DEPOSITARY (AS THE REGISTERED ASIASAT SHAREHOLDER) TO EXERCISE YOUR RIGHT TO VOTE ACCORDING TO THE TERMS OF THE ADS DEPOSIT AGREEMENT. PLEASE COMPLETE AND RETURN THE ADS VOTING INSTRUCTION CARD TO THE ADS DEPOSITARY IN A TIMELY MANNER. IF YOU HOLD YOUR ADSs THROUGH A FINANCIAL INTERMEDIARY, PLEASE FOLLOW THE INSTRUCTIONS THAT THE FINANCIAL INTERMEDIARY PROVIDES TO YOU.

 

IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU ARE ENCOURAGED TO CONSULT YOUR LICENSED SECURITIES DEALER, BANK MANAGER, SOLICITOR, PROFESSIONAL ACCOUNTANT OR OTHER PROFESSIONAL ADVISER.

 

ii

IMPORTANT NOTICES

 

Capitalised terms used in this Scheme Document are defined under “Definitions” in Appendix 2 to this Scheme Document.

 

The distribution of this Scheme Document in jurisdictions other than Hong Kong may be restricted by law, and therefore persons into whose possession this Scheme Document comes should inform themselves about and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction. This Scheme Document and the conditions and further terms set out in this Scheme Document are governed by Hong Kong law and are subject to the jurisdiction of the Hong Kong courts.

 

The Scheme is subject to the laws of Bermuda.

 

This Scheme Document does not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe, shares in any jurisdiction in which such offer or solicitation is unlawful.

 

No person has been authorised to give any information or to make any representation not contained in this Scheme Document and, if given or made, such information or representation should not be relied on as having been authorised by AsiaSat, the Offeror or any of their respective affiliates. The delivery of this Scheme Document shall not imply that there has been no change in the information set forth herein or in the affairs of AsiaSat since the Latest Practicable Date or that the information contained herein is correct as of any time after its date.

 

INFORMATION FOR US ASIASAT SHAREHOLDERS AND ADS HOLDERS

 

The Proposals are being made in relation to securities of AsiaSat, an exempted company incorporated in Bermuda, the ordinary shares and ADSs of which are listed on the Stock Exchange and on the NYSE respectively and, while the Proposals are subject to Bermuda, Hong Kong and US disclosure requirements, US investors should be aware that this Scheme Document has been prepared in accordance with a Hong Kong format and style, which differs from the US format and style. The financial information relating to AsiaSat has been extracted from the relevant audited consolidated financial statements of AsiaSat for the financial years ended 31 December 2004, 31 December 2005 and 31 December 2006, which have been prepared in accordance with HKFRS. Even though such financial statements may contain a reconciliation of certain line items to US GAAP, the financial information or statements may not be wholly comparable to financial information or statements of US companies or companies whose financial statements are solely prepared in accordance with US GAAP. In addition, the settlement procedure with respect to the Proposals will comply with the rules of the Takeovers Code and the Companies Act, which differ from US domestic settlement procedures in certain material respects, particularly with regard to the date of payment of consideration.

 

AsiaSat is incorporated under the laws of Bermuda, and the Offeror is incorporated under the laws of the British Virgin Islands, and some or all of the officers and directors of the Offeror and AsiaSat, respectively, are residents of countries other than the United States. In addition, all of the assets of the Offeror and all major assets of AsiaSat are located outside the United States. As a result, it may be difficult for US shareholders of AsiaSat to effect service of process within the United States upon the Offeror or AsiaSat or their respective officers or directors or to enforce against them a judgement of a US court predicated upon the federal or state securities laws of the United States.

 

In addition, pursuant to exemptive relief granted by the SEC from Rule 14e-5, the Offeror, CITIC Group, GECC, and any adviser, broker or other financial institution acting as one of their respective agents may make certain purchases of, or arrangements to purchase, AsiaSat Shares outside the United States during the period in which the Share Proposal and the Possible MGO Offers, if implemented, remain open (subject to certain conditions and limitations). In accordance with the requirements of Rule 14e-5 and with the exemptive relief granted by the SEC, such purchases, or arrangements to purchase, must comply with applicable Hong Kong and Bermuda rules, including the Companies Act, the Takeovers Code and the Listing Rules. This information will be disclosed in the United States through amendments to the Schedule 13E-3 on file with the SEC to the extent that such information is made public in Bermuda pursuant to the Companies Act or in Hong Kong pursuant to the Takeovers Code or the Listing Rules. Free copies of the Scheme Document are available on the SEC’s website at http://www.sec.gov. The Scheme Document will also be available on AsiaSat’s website at http://www.asiasat.com.

 

iii

IMPORTANT NOTICES

 

This Scheme Document (including the documents incorporated by reference in this Scheme Document) jointly issued by AsiaSat and the Offeror includes certain “forward-looking statements”. These statements are based on the current expectations of the management of AsiaSat or the Offeror and are naturally subject to uncertainty and changes in circumstances. The forward-looking statements contained herein include statements about the financial condition, results of operations, plans, objective, future performance and business as well as forward-looking statements relating to the expected effects on AsiaSat of the Proposals and the Possible MGO Offers, the expected timing, conditions and scope of the Proposals and the Possible MGO Offers, and all other statements in this Scheme Document other than historical facts. Forward-looking statements include, without limitation, statements typically containing words such as “intends”, “expects”, “anticipates”, “targets”, “estimates”, “envisages” and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There may be events in the future that cannot be accurately predicted or over which AsiaSat and the Offeror have no control. The risk factors listed in AsiaSat’s Annual Report on Form 20-F filed with the SEC for the year ended 31 December 2005 and information subsequently submitted by AsiaSat to the SEC under cover of Forms 6-K as well as any other cautionary language in this Scheme Document, provide examples of risks, uncertainties and events that may cause the actual results of AsiaSat or the timing or success of matters related to the Scheme or the Proposals to differ materially from the expectations described in forward-looking statements. The occurrence of the events described in those risk factors and the risk factors described below could have a material adverse effect on the business, operating results or financial condition of AsiaSat or the timing or success of the Scheme or Proposals. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Scheme, the Proposals and the Possible MGO Offers, the outcome of any legal proceedings that may be instituted against AsiaSat and others relating to the Scheme or the Proposals, the effect of the announcement of the Scheme on AsiaSat’s customer relationships, operating results and business generally, the risks that the proposed transaction disrupts current plans and operations and the amount of the costs, fees, expenses and charges related to the Scheme and the Proposals that AsiaSat must bear as well as additional factors, such as changes in demand for satellite services, changes in economic conditions, operations of existing in orbit satellites and success in the planned construction and launch of new satellites, changes in the level of capital investment, success of business and operating initiatives and restructuring objectives, changes in the regulatory environment, fluctuations in interest and exchange rates, the outcome of litigation, government actions and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. For further discussion of factors that could cause actual results to differ from expectations, you should read AsiaSat’s filings and submissions to the SEC, including AsiaSat’s most recent Annual Report on Form 20-F and other materials submitted to the SEC under Form 6-K.

 

The factors identified above and the risks reflected in AsiaSat’s most recent Annual Report on Form 20-F and information subsequently submitted by AsiaSat to the SEC under cover of Forms 6-K should not be construed as exhaustive. AsiaSat and the Offeror believe the forward-looking statements in this Scheme Document are reasonable; however, there is no assurance that the actions, events or results of the forward-looking statements will occur or, if any of them do, what impact they will have on AsiaSat’s results or operations or financial condition or on the Scheme or the Proposals. In addition, actual results or matters related to the privatisation could differ materially from the forward-looking statements contained in this Scheme Document as a result of the timing of the completion of the Scheme and the Proposals. In view of these uncertainties, the readers should not place undue reliance on any forward-looking statements, which are based on AsiaSat’s current expectations.

 

All subsequent written and oral forward-looking statements attributable to the Offeror or AsiaSat or persons acting on behalf of either of them are expressly qualified in their entirety by the cautionary statements above. The forward-looking statements included herein are made only as of the date of this Scheme Document.

 

Solely for the convenience of the reader, this Scheme Document includes convenience translations of the consideration to be paid by the Offeror from Hong Kong dollars into US dollars. These translations should not be construed as representations that the Hong Kong dollar amounts actually represent such US dollar amounts or could be converted into US dollars at the rates indicated or at all. Unless otherwise stated, all such amounts have been translated at the exchange rate of US$1.00 : HK$7.8108, the noon buying rate for Hong Kong dollars in New York in US$ for cable transfers payable in HK$ as certified by the New York Federal Reserve Bank for customs purposes on the Latest Practicable Date. Any US dollar amounts actually to be paid to holders of the ADSs will be determined by the ADS Depositary.

 

iv

IMPORTANT NOTICES

 

RULE 13E-3 NOTICE

 

This Scheme Document contains disclosures complying with the requirements of Rule 13e-3 under the Exchange Act and Schedule 13E-3, which Rule governs so-called “going private” transactions by certain issuers or their affiliates. The Company and the Offeror will file a Schedule 13E-3 with the SEC that incorporates the Scheme Document by reference. The disclosures mandated by Rule 13e-3 contain important information and the AsiaSat Shareholders and ADS Holders are urged to read this Scheme Document and Schedule 13E-3 carefully before casting any vote at (or providing any proxy in respect of) the Court Meeting or the Special General Meeting.

 

This Scheme Document will be despatched to Scheme Shareholders and the ADS Depositary will arrange for the despatch of copies of the Scheme Document to ADS Holders, at no cost to them. In addition, AsiaSat Shareholders and ADS Holders may obtain free copies of the Scheme Document and the Schedule 13E-3 at the website maintained by the SEC (http://www.sec.gov).

 

FINANCIAL INFORMATION

 

Certain financial information referred to in this Scheme Document in “Part VII – US Special Factors” is required to be disclosed pursuant to the Exchange Act, and this financial information is not strictly in compliance with the disclosure requirements of Rule 10 of the Takeovers Code. Please refer to section “1.3.4 Certain Projections” of “Part VII – US Special Factors” for more details.

 

AsiaSat Shareholders, ADS Holders, Optionholders and potential investors are advised to exercise caution when dealing in AsiaSat Shares, ADSs and Options in reliance on the information set out in this Scheme Document.

 

v

CONTENTS

 

             Page

IMPORTANT NOTICES

    iii

PART I

 

–

  

SUMMARY TERM SHEET

    1

PART II

 

–

  

QUESTIONS AND ANSWERS

    5

PART III

 

–

  

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

    14

PART IV

  

–

  

LETTER FROM THE BOARD

    16

PART V

  

–

  

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

    25

PART VI

  

–

   LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT BOARD COMMITTEE    26

PART VII

  

–

  

US SPECIAL FACTORS

    43

PART VIII

  

–

  

EXPLANATORY STATEMENT

    70

PART IX

  

–

  

THE POSSIBLE MGO OFFERS

    102

PART X

  

–

  

FINANCIAL INFORMATION RELATING TO THE GROUP

    107

PART XI

  

–

  

GENERAL INFORMATION

    146

PART XII

  

–

  

SCHEME OF ARRANGEMENT

    154

PART XIII

  

–

  

NOTICE OF COURT MEETING

    159

PART XIV

  

–

  

NOTICE OF SPECIAL GENERAL MEETING

    160

APPENDIX 1

  

–

  

SAMPLE LETTER TO OPTIONHOLDERS

    I-1

APPENDIX 2

  

–

  

DEFINITIONS

    II-1

 

vi

PART I – SUMMARY TERM SHEET

 

A Court Meeting of the Scheme Shareholders is being convened at the direction of the Supreme Court and a Special General Meeting of AsiaSat Shareholders is scheduled to be held immediately following the Court Meeting. At the Court Meeting and the Special General Meeting, you will be asked to consider and vote upon a proposal put forward by the Offeror to privatise the Company by way of a scheme of arrangement under Section 99 of the Companies Act, to cancel all of the Company’s outstanding ordinary shares not already held by Bowenvale, which will result in a reduction of the issued share capital of the Company, and to issue the New AsiaSat Shares to the Offeror. The Offeror has also proposed to acquire for cancellation, concurrently with the Offeror’s proposal to privatise the Company, all of the Outstanding Options in the Company.

 

This summary term sheet highlights selected information contained in this Scheme Document and is intended to be an overview only. You are urged to read this entire document carefully, including the appendices. We have included references to direct you to other parts of this Scheme Document which contain a more complete description of the topics contained in this summary. Capitalised terms used in this Scheme Document are defined under “Definitions” in Appendix 2.

 

  •  

Share Proposal: The Share Proposal is a proposal to privatise the Company by way of the Scheme, to cancel all of the Scheme Shares (including without limitation the Scheme Shares underlying the ADSs), resulting in a reduction of the issued share capital of the Company under the Companies Act, and to issue the New AsiaSat Shares to the Offeror. The effect will be that the Offeror will hold all AsiaSat Shares not held by Bowenvale. See “Part IV – Letter from the Board; 5. Summary of the Share Proposal” and “Part VIII – Explanatory Statement; 2.1. The Share Proposal”.

 

  •  

Shareholder Votes:  The implementation of the Scheme will require, among other things, the approval of the Scheme Shareholders at the Court Meeting and the approval of AsiaSat Shareholders at the Special General Meeting. Further details of the voting thresholds are set out in “Conditions to the Scheme” below.

 

  •  

Payment:  Pursuant to the Share Proposal, Scheme Shareholders will receive HK$18.30 in cash for each Scheme Share held. ADS Holders would be paid under the terms of the ADS Deposit Agreement (based on the same per share price multiplied by ten, reflecting the number of AsiaSat Shares underlying each ADS) upon surrender of the ADSs (less any fees and expenses of the ADS Depositary in connection with currency conversions under the ADS Deposit Agreement and withholding taxes, if applicable). See “Part VIII – Explanatory Statement; 18. Registration and Payment”.

 

  •  

Premium Prices:  The Share Offer Price and the equivalent offer price per ADS offered under the Proposals represents a premium of approximately 30.7 per cent over the closing price of HK$14.00 per AsiaSat Share on the Pre-Suspension Date, a premium of 29.8 per cent over the closing price of HK$14.10 per AsiaSat Share on the Suspension Date, a premium of 32.2 per cent over the 30-day Average Pre-Announcement Price, and a discount of approximately 0.5 per cent to the closing price of US$23.55 per ADS as quoted on the NYSE on the Latest Practicable Date. See “Part VIII – Explanatory Statement; 7.1 Comparables”.

 

  •  

Option Proposal:  The Option Proposal is an offer by the Offeror to purchase for cancellation all Options not exercised as of the Scheme Record Time. The Option Proposal is subject to and conditional upon the Scheme becoming effective and binding. The Offeror is offering HK$0.82 in cash for each Outstanding B Option and HK$3.95 in cash for each Outstanding C Option. An Optionholder may exercise B Option(s) at HK$17.48 per AsiaSat Share and C Option(s) at HK$14.35 per AsiaSat Share in accordance with the Rules of the Share Option Scheme. Upon notice from the Company (to be given on the same day as the notices to AsiaSat Shareholders of the Meetings), the Optionholders shall be entitled to give notice to the Company to exercise their Options in full or in part from the date of such notice until the earlier of (i) two calendar months after the date of the notice, and (ii) the date on which the Scheme is sanctioned by the Supreme Court, but the exercise of the Options as described above shall be conditional upon the Scheme becoming effective. AsiaSat Shares issued upon exercise of the Options prior to the Scheme Record Time will form part of the Scheme Shares. See “Part IV – Letter from the Board; 6. Summary of the Option Proposal” and “Part VIII – Explanatory Statement; 2.2 The Option Proposal”.

 

  •  

Fairness of the Proposals:  The Independent Board Committee, having considered the terms of the Proposals and having taken into account the advice and recommendations of the Independent Financial Adviser, considers that the terms of the Share Proposal and the Option Proposal are fair and reasonable

 

1

PART I – SUMMARY TERM SHEET

 

 

so far as the Scheme Shareholders, the ADS Holders and Optionholders, respectively, are concerned. See “Part V – Letter from the Independent Board Committee”, “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee” and “Part VII – US Special Factors; 1.3 Fairness”.

 

  •  

Exchange Transaction:  The Exchange Transaction is a transaction pursuant to which GECC and SES have agreed that SES shall redeem GECC’s entire indirect holding of SES shares (of approximately 19 per cent of the issued share capital of SES) in exchange for shares of a new company holding a number of assets and cash, including SES’s entire shareholding in Bowenvale. Upon completion of the Transfer, Bowenvale will be jointly and indirectly owned by CITIC Group (through Able Star) and the GE Entities. The completion of the Exchange Transaction is one of the conditions to the Share Proposal, and is itself subject to satisfaction of certain conditions. The Exchange Transaction is not subject to the approval of Scheme Shareholders and AsiaSat Shareholders. See “Part VIII – Explanatory Statement; 9. The Exchange Transaction”.

 

  •  

Tax Consequences for US holders:  The receipt of cash for Scheme Shares in the transaction will be a taxable transaction for US federal income tax purposes and may also be taxable under applicable state, local, foreign or other tax laws. Generally, US holders of Scheme Shares will recognise a gain or loss for these purposes equal to the difference between the amount of cash received and their adjusted tax basis for the Scheme Shares that were owned immediately before completion of the Scheme. For US federal income tax purposes, this gain or loss generally would be a capital gain or loss if the Scheme Shares are held as a capital asset. A US Optionholder who receives cash in cancellation of such Options pursuant to the Options Proposal will generally recognise, as ordinary income for US federal income tax purposes, the cash payment received. See “Part VII – US Special Factors; 2. Tax Consequences”.

 

TAX MATTERS ARE VERY COMPLEX, AND THE TAX CONSEQUENCES OF THE SCHEME TO YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. IT IS RECOMMENDED THAT YOU CONSULT YOUR TAX ADVISER FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE SCHEME TO YOU.

 

  •  

Conditions to the Scheme: The Scheme will become effective and binding on all Scheme Shareholders if the following conditions, as well as those described in “Conditions to the Share Proposal” below, among others, are satisfied:

 

  (a) the approval by way of poll of the Scheme by a majority in number of the Scheme Shareholders representing not less than three-fourths in value of the Scheme Shares, present and voting either in person or by proxy at the Court Meeting, provided that:

 

  (i) the Scheme is approved by at least 75 per cent of the votes attaching to Scheme Shares held by Scheme Shareholders that are cast either in person or by proxy at the Court Meeting; and

 

  (ii) the number of votes cast against the resolution to approve the Scheme at the Court Meeting is not more than 10 per cent of the votes attaching to all Scheme Shares held by Scheme Shareholders;

 

  (b) the passing by AsiaSat Shareholders of a special resolution to approve and give effect to the Scheme (including the cancellation of the Scheme Shares and the reduction of the relevant portion of the issued share capital of the Company and the issue of the New AsiaSat Shares) by a majority of not less than three-fourths of the votes cast by the AsiaSat Shareholders present and voting in person or by proxy, at the Special General Meeting; and

 

  (c) the sanction of the Scheme (with or without modifications) by the Supreme Court and the delivery to the Registrar of Companies in Bermuda of a copy of the order of the Supreme Court for registration.

 

For further detail regarding these and other conditions, please see “Part VIII – Explanatory Statement; 3. Conditions of the Proposals”.

 

  •  

Conditions to the Share Proposal:  The Share Proposal is subject to the following conditions, among others:

 

  –  

the approval of the Scheme, as described above at “Conditions to the Scheme” above;

 

2

PART I – SUMMARY TERM SHEET

 

  –  

the Authorisation Condition;

 

  –  

the Further Authorisation Condition;

 

  –  

the Consent Condition;

 

  –  

completion of the Exchange Transaction; and

 

  –  

the MAE Condition.

 

The Offeror reserves the right to waive the Consent Condition, either in whole or in part, in respect of any particular matter. In the event that the Authorisation Condition and the Further Authorisation Condition are not fulfilled by reason of an Authorisation not having been obtained or maintained, the Offeror reserves the right to assess the materiality of such non-fulfilment and to waive the fulfilment of such condition(s) to such extent where it considers appropriate. The Offeror may only invoke the MAE Condition as a basis for not proceeding with the Share Proposal if the provisions of Note 2 to Rule 30.1 of the Takeovers Code are satisfied. Note 2 to Rule 30.1 of the Takeovers Code provides that an offeror should not invoke any condition (other than the acceptance condition) so as to cause the offer to lapse unless the circumstances which give rise to the right to invoke the condition are of material significance to the offeror in the context of the offer. The waiver or invoking by the Offeror of any condition in accordance with the terms of this paragraph shall not be subject to the Company’s agreement, approval or consent. The Offeror may not waive any other Conditions in any event, and AsiaSat has no right to waive any of the Conditions.

 

All of the Conditions will have to be fulfilled or waived, as applicable, on or before 30 June 2007 (or such later date as the Offeror and AsiaSat may agree or (to the extent applicable) as the Supreme Court may direct and as may be permitted by the Takeovers Code), failing which the Scheme will lapse. Any extension to such later date shall not be beyond 31 October 2007.

 

For further detail regarding these and other conditions, please see “Part VIII – Explanatory Statement; 3. Conditions of the Proposals”.

 

  •  

Conditions to the Option Proposal: The Option Proposal is subject to and conditional upon the Scheme becoming effective and binding.

 

  •  

Effect of Completion: Upon completion of the Scheme, CITIC Group and GECC will own indirectly through the jointly owned companies, Bowenvale and the Offeror (each of which will hold AsiaSat Shares directly), 100 per cent of AsiaSat’s issued share capital. On the Effective Date, the Scheme Shareholders will immediately cease to have any ownership interests in the Company or rights as the Company’s shareholders, and, as a result, will not participate in any of AsiaSat’s future earnings, losses, growth or decline. In addition, AsiaSat intends to have the listing of the AsiaSat Shares on the Stock Exchange and the listing of the ADSs on the NYSE terminated. If the Scheme becomes effective and binding, the Offeror intends to cause AsiaSat to file a Form 15 with the SEC to request that the Company’s reporting obligations under the Exchange Act be terminated or suspended, provided that the relevant rules and regulations of the SEC are satisfied. As a result, public trading of the AsiaSat Shares and the ADSs will cease. See “Part VII – US Special Factors; 1.4 Effects of Proposals; 1.4.2 Market for AsiaSat Securities”.

 

  •  

No Appraisal Rights: AsiaSat Shareholders do not have express appraisal rights in connection with the Scheme under the Companies Act. See “Part VII – US Special Factors; 1.4 Effects of the Proposals; 1.4.5 No Appraisal Rights”.

 

  •  

Possible MGO Offers: The Possible MGO Share Offer and the Possible MGO Option Offer are potential obligations on the part of Able Star and the GE Entities to make a mandatory general offer for AsiaSat Shares not owned by Bowenvale or parties acting in concert with it. The Executive has taken the view that the acquisition by the GE Entities of SES’s entire shareholding in Bowenvale pursuant to the Exchange Transaction would, on completion, result in the formation of a new concert group that has statutory control over Bowenvale, which would trigger an obligation under the Takeovers Code to make a mandatory general offer for AsiaSat. Whilst the view taken by Able Star and GE Equity is different from that of the Executive, the Offeror has indicated it is prepared to make the Possible MGO Offers in the event the Transfer is completed. Thus, if for any reason the Scheme fails (for example because the requisite vote is not obtained) and the Transfer completes, the Possible MGO Offers will proceed and Scheme Shareholders will have the opportunity to sell their Scheme Shares (including

 

3

PART I – SUMMARY TERM SHEET

 

 

shares underlying ADSs) or Options, but for consideration that is less than that available if the Scheme were to be effective. See “Part VIII – Explanatory Statement; 10. The Possible MGO Offers” and “Part IX – The Possible MGO Offers”.

 

  •  

Material Accounting Treatment: Upon cancellation of the Scheme Shares, AsiaSat’s issued share capital will be reduced by HK$12,136,050, the par value of the AsiaSat Shares cancelled. There will then be an immediate issue of New AsiaSat Shares, so that the net effect on the share capital will be nil. See “Part VII – US Special Factors; 1.4 Effects of Proposals; 1.4.6 Material Accounting Treatment”.

 

4

PART II – QUESTIONS AND ANSWERS

 

The following are some of the questions you, as an AsiaSat Shareholder and/or ADS Holder, may have and the answers to those questions. You are advised to read carefully the remainder of this Scheme Document. Capitalised terms used herein are defined under “Appendix 2 – Definitions” to this Scheme Document.

 

What is the purpose of this Scheme Document?

 

The purpose of this Scheme Document is to give you further information regarding the Share Proposal and the Option Proposal and the expected timetable and to give you notice of the Court Meeting and the Special General Meeting. This Scheme Document does not constitute an offer to purchase AsiaSat Shares in the Possible MGO Offers.

 

Who is making the proposals that we are to vote on?

 

The Offeror is AsiaCo Acquisition Ltd. (formerly known as Modernday Limited), a company incorporated in the British Virgin Islands with limited liability and owned jointly by Able Star and GE Equity. The Offeror has been established for the purpose of effecting the Proposals and implementation of the Possible MGO Offers (if and when made) and has no other business activities.

 

Bowenvale is a company incorporated under the laws of the British Virgin Islands with limited liability that currently owns approximately 68.9 per cent of the AsiaSat Shares in issue. Currently (prior to the completion of the Exchange Transaction), Bowenvale is jointly indirectly owned by CITIC Group (which holds a 50.5 per cent economic interest and 50 per cent voting interest in Bowenvale) and SES (which holds a 49.5 per cent economic interest and 50 per cent voting interest in Bowenvale). CITIC Group is a conglomerate owned by the government of the PRC, the original purpose of which was to attract foreign capital and technology to the PRC for the modernisation of the PRC’s various industries. SES is a satellite services provider, owning and operating through subsidiaries, the ASTRA satellite system covering Europe, the AMERICOM satellite system covering North America and the New Skies satellite system covering Africa, South America and Asia. SES has securities listed on the Luxembourg Stock Exchange and Euronext Paris.

 

Following completion of the Exchange Transaction (as described below), the shares of Bowenvale currently held by SES will be transferred to SIH and its subsidiaries, and the shares of SIH will then be transferred to the GE Entities, affiliates of GECC, a wholly owned subsidiary of General Electric Capital Services, Inc., a corporation incorporated in the State of Delaware, which itself is wholly owned by GEC, a corporation incorporated in the State of New York. On completion of the Exchange Transaction, the GE Entities will hold a 49.5 per cent economic interest and 50 per cent voting interest in Bowenvale and, as a result, a 34.1 per cent indirect economic interest in AsiaSat. The remainder of Bowenvale will continue to be owned indirectly by CITIC Group.

 

What are the Proposals and the Scheme?

 

The Share Proposal is a proposal to privatise the Company by way of the Scheme to cancel all of the Scheme Shares (including without limitation the Scheme Shares underlying the ADSs), which will result in a reduction of the issued share capital of the Company under Section 46 of the Companies Act, and to issue the New AsiaSat Shares to the Offeror.

 

The Option Proposal is an offer by the Offeror to purchase for cancellation all Outstanding Options not exercised as of the Scheme Record Time. The Option Proposal is subject to and conditional upon the Scheme becoming effective and binding.

 

The Scheme is a scheme of arrangement under Section 99 of the Companies Act. Upon taking effect, the Scheme will be binding on all AsiaSat Shareholders, regardless of whether such AsiaSat Shareholders attended or voted at the Court Meeting or the Special General Meeting.

 

The purpose of the Proposals and the Scheme is for AsiaSat to become a private company, wholly owned indirectly by CITIC Group and GECC through the Offeror and Bowenvale.

 

5

PART II – QUESTIONS AND ANSWERS

 

The Scheme and the Share Proposal are not considered to be tender offers under US law. The Option Proposal, however, will be implemented by way of a tender offer which will be executed in reliance on, and compliance with, the exemptions afforded by Rule 13e-3(g)(6) and Rule 14d-1(c) or Rule 13e-4(h)(8) under the Exchange Act.

 

What are the classes and amounts of AsiaSat Shares sought in the Share Proposal?

 

The Offeror is seeking to acquire all of the issued and to be issued AsiaSat Shares (including those AsiaSat Shares issued upon exercise of Outstanding Options in accordance with the Rules of the Share Option Scheme) other than AsiaSat Shares already held by Bowenvale, comprising AsiaSat Shares listed on the Stock Exchange (and the AsiaSat Shares underlying the ADSs listed on the NYSE).

 

What will I receive in exchange for my AsiaSat Securities?

 

The Offeror is offering to pay:

 

•  

for each AsiaSat Share, HK$18.30 in cash; and

 

•  

for each ADS, HK$183.00 per ADS in cash (ten times the Share Offer Price since each ADS represents ten AsiaSat Shares).

 

The amount paid in respect of AsiaSat Shares underlying the ADSs will be converted by and paid directly by the ADS Depositary (less any fees and expenses of the ADS Depositary in connection with currency conversions under the ADS Deposit Agreement and withholding taxes, if applicable) into US dollars at the exchange rate obtainable on the spot market on the date the cash consideration is received by the ADS Depositary for delivery in respect of your ADSs. You will not be required to pay any cancellation fee to the ADS Depositary for the cancellation of the ADSs. However, you will be required to pay the fees or expenses charged by your financial intermediary, if any.

 

Will the Offeror increase the Share Offer Price?

 

As a result of the inclusion of a “no increase” statement in the Announcement, under the Takeovers Code, the Offeror may not increase the consideration offered in the Proposals, other than in wholly exceptional circumstances namely in the event of a higher competing offer and the improved offer is recommended by the Board. See “Part VII – US Special Factors; 1.1 Past Contacts, Transactions, Negotiations and Agreements.”

 

As a holder of Outstanding Options, what do I receive for my Outstanding Options if the Scheme takes effect?

 

As holder of Outstanding Options, you have two alternatives: (1) you can accept the Offeror’s offer to cancel your Outstanding Options at a price of HK$0.82 in cash for each Outstanding B Option and HK$3.95 in cash for each Outstanding C Option; or, (2) you are entitled to exercise in accordance with the Rules of the Share Option Scheme, your Outstanding Options, which confer rights to subscribe for AsiaSat Shares at a price of HK$17.48 per AsiaSat Share in respect of B Options and HK$14.35 per AsiaSat Share in respect of C Options, in full or in part, in which case you will receive Scheme Shares and, accordingly you will be entitled to the Share Offer Price if the Share Proposal becomes effective. Scheme Shares you receive may not be voted at the Court Meeting to the extent that any of those Scheme Shares are held by parties acting in concert with the Offeror or to the extent you exercise your Options after the Voting Record Time.

 

If you do not exercise your Outstanding Options under the Share Option Scheme in accordance with the Rules of the Share Option Scheme, or accept the Option Proposal by the Effective Date, your Outstanding Options will lapse if the Scheme becomes effective and binding. Holders of Outstanding Options should also note that implementation of the Option Proposal is conditioned upon the Scheme becoming effective and binding.

 

How do the Proposals compare with recent prices of AsiaSat Shares?

 

As of 8 February 2007, the Pre-Suspension Date, the closing price of AsiaSat Shares was HK$14.00 and of the ADSs was US$17.75. As of 9 February 2007, the Suspension Date, the closing price of AsiaSat Shares was

 

6

PART II – QUESTIONS AND ANSWERS

 

HK$14.10. The average closing price of AsiaSat Shares as quoted on the Stock Exchange over the 30 full Trading Days prior to the date of the Announcement was HK$13.84.

 

The Share Offer Price represents:

 

  •  

a premium of approximately 30.7 per cent over the closing price of HK$14.00 per AsiaSat Share as quoted on the Stock Exchange on the Pre-Suspension Date;

 

  •  

a premium of approximately 32.0 per cent over the closing price of US$17.75 per ADS as quoted on the NYSE on the Pre-Suspension Date;

 

  •  

a premium of approximately 29.8 per cent over the closing price of HK$14.10 per AsiaSat Share as quoted on the Stock Exchange on the Suspension Date;

 

  •  

a premium of approximately 32.2 per cent over the 30-day Average Pre-Announcement Price of HK$13.84 per AsiaSat Share;

 

  •  

a premium of approximately 30.7 per cent over the 30-day Average Pre-Announcement ADS Price of US$17.93 per ADS;

 

  •  

a premium of approximately 4.3 per cent over the closing price of HK$17.54 per AsiaSat Share as quoted on the Stock Exchange on the Latest Practicable Date;

 

  •  

a discount of approximately 0.5 per cent to the closing price of US$23.55 per ADS as quoted on the NYSE on the Latest Practicable Date;

 

  •  

a premium of approximately 1.4 per cent over the highest closing price of approximately HK$18.04 per AsiaSat Share over the one year period prior to the Latest Practicable Date;

 

  •  

a discount of approximately 0.5 per cent to the highest closing price of approximately US$23.55 per ADS over the one year period prior to the Latest Practicable Date;

 

  •  

an implied price to earnings multiple of 19.5 times, based on AsiaSat’s reported basic earnings per share of HK$0.94 for the year ended 31 December 2005;

 

  •  

an implied price to earnings multiple of 15.8 times, based on AsiaSat’s reported basic earnings per share of HK$1.16 for the year ended 31 December 2006;

 

  •  

a premium of approximately 74.0 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$10.52 as at 31 December 2005;

 

  •  

a premium of approximately 61.5 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$11.33 as at 31 December 2006; and

 

  •  

a premium of approximately 14.4 per cent over the Possible MGO Share Offer Price.

 

What is the position of the Independent Board Committee in regard to the Proposals?

 

The Independent Board Committee, having considered the terms of the Proposals and having taken into account the advice and recommendations of the Independent Financial Adviser, considers that the terms of the Share Proposal and the Option Proposal are fair and reasonable so far as the Scheme Shareholders (including without limitation, the ADS Holders) and Optionholders, respectively, are concerned.

 

I am an AsiaSat Shareholder, how do I vote on the Proposals?

 

If you are an AsiaSat Shareholder, you may vote in person or by proxy at the Court Meeting (during which the Scheme will be voted on, but only if you are also a Scheme Shareholder) and at the Special General Meeting (during which the Scheme and its implementation will be voted on by all AsiaSat Shareholders). Whether or not you intend to attend either or both of the Meetings, you should complete and sign the enclosed Forms of Proxy and return them in accordance with the instructions printed on them as soon as possible, but in any event so as to be received by Computershare Hong Kong Investor Services Limited at Rooms 1806-1807, 18th Floor, Hopewell

 

7

PART II – QUESTIONS AND ANSWERS

 

Centre, 183 Queen’s Road East, Wanchai, Hong Kong at least 48 hours before the time fixed for the relevant Meeting or any adjournment of the relevant Meeting. Forms of Proxy returned by facsimile will not be accepted.

 

If the pink Form of Proxy for use at the Court Meeting is not lodged prior to the Court Meeting as set out above, it may be handed to the Chairman of the Court Meeting at that meeting. In the case of the Special General Meeting, however, unless the white Form of Proxy is lodged at least 48 hours before the time fixed for the Special General Meeting, it will be invalid. Completion and return of a Form of Proxy will not prevent you from attending and voting in person either at the Court Meeting or at the Special General Meeting, or any adjournment thereof, if you wish to do so.

 

I am an ADS Holder, how do I vote on the Proposals?

 

Since ADS Holders are not AsiaSat Shareholders of record, they do not have the right to vote at the Court Meeting or the Special General Meeting. However, using the ADS Voting Instruction Card, ADS Holders may instruct the ADS Depositary to vote the AsiaSat Shares underlying their ADSs.

 

ADS Holders must return their completed ADS Voting Instruction Card to the ADS Depositary no later than 5:00 p.m. (New York time) on 17 April 2007. If you hold your ADSs through a financial intermediary, please follow the instructions they provide to you.

 

ADS Holders may also become AsiaSat Shareholders of record, and thereby have the right to vote at the Court Meeting and the Special General Meeting, by surrendering their ADSs for the purpose of withdrawal of the AsiaSat Shares underlying such ADSs in accordance with the terms of the ADS Deposit Agreement no later than 4:30 p.m. (New York time), on 13 April 2007. ADS Holders seeking to become AsiaSat Shareholders of record will incur cancellation fees, taxes and other charges in connection with the exchange and withdrawal of their ADSs.

 

What is the location, date and time of the Meetings?

 

The Court Meeting will be held at 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong, on Tuesday, 24 April 2007 at 10.00 a.m. local time. The Special General Meeting will be held at 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong, on Tuesday, 24 April 2007 at 10:30 a.m. local time (or as soon thereafter as the Court Meeting ends).

 

Are any of the Conditions waivable?

 

AsiaSat cannot waive any of the Conditions. The Offeror has reserved the right to waive the Consent Condition, either in whole or in part in respect of any particular matter. In the event that the Authorisation Condition and the Further Authorisation Condition are not fulfilled by reason of an Authorisation not having been obtained, the Offeror reserves the right to assess the materiality of such non-fulfilment and to waive the fulfilment of such condition(s) to such extent it considers appropriate. The Offeror may only invoke the MAE Condition as a basis for not proceeding with the Share Proposal if the provisions of Note 2 to Rule 30.1 of the Takeovers Code are satisfied. Note 2 to Rule 30.1 of the Takeovers Code provides that an offeror should not invoke any condition (other than the acceptance condition) so as to cause the offer to lapse unless the circumstances which give rise to the right to invoke the condition are of material significance to the offeror in the context of the offer. The waiver or invocation by the Offeror of any Condition in accordance with the terms of this paragraph shall not be subject to the Company’s agreement, approval or consent.

 

What happens if the Conditions are not met?

 

All of the conditions set out below under “Part VIII – Explanatory Statement; 3. Conditions of Proposals” will have to be fulfilled or waived, as applicable, on or before 30 June 2007 (or such later date as the Offeror and the Company may agree or (to the extent applicable) as the Supreme Court may direct and as may be permitted by the Takeovers Code), failing which the Scheme will lapse. Any extension to such later date shall not be beyond 31 October 2007.

 

8

PART II – QUESTIONS AND ANSWERS

 

What is the Exchange Transaction?

 

The Exchange Transaction is a transaction pursuant to which GECC and SES have agreed that SES shall redeem GECC’s entire indirect holding of SES shares (of approximately 19 per cent of the issued share capital of SES) in exchange for shares of a new company holding a number of assets and cash, including SES’s entire shareholding in Bowenvale. Upon completion of the Transfer, Bowenvale will be jointly and indirectly owned by CITIC Group (through Able Star) and the GE Entities. The completion of the Exchange Transaction is one of the conditions to the Share Proposal, and is itself subject to satisfaction of certain conditions. See “Part VIII – Explanatory Statement; 9. The Exchange Transaction”.

 

Do the Scheme Shareholders have the right to vote on the Exchange Transaction?

 

No, the Exchange Transaction, including the Transfer, is a bilateral, privately negotiated transaction among SES, GECC and the GECC Parties. AsiaSat is not a party to any such transaction.

 

What vote is required from the Scheme Shareholders in order for the Scheme to be approved?

 

The Scheme must be approved by a majority in number of the Scheme Shareholders representing not less than three-fourths in value of the Scheme Shares, present and voting either in person or by proxy at the Court Meeting, provided that:

 

  (a) the Scheme is approved by at least 75 per cent of the votes attaching to Scheme Shares held by Scheme Shareholders that are cast either in person or by proxy at the Court Meeting; and

 

  (b) the number of votes cast against the resolution to approve the Scheme at the Court Meeting is not more than 10 per cent of the votes attaching to all Scheme Shares held by Scheme Shareholders.

 

In the event that the Scheme Shareholders do not approve the Scheme, it will not take effect.

 

In addition to the vote for approving the Scheme at the Court Meeting, approval of the special resolution for implementing the Scheme will require the affirmative vote of not less than three-fourths of the votes cast by the AsiaSat Shareholders present and voting (either in person or by proxy) at the Special General Meeting.

 

If the Scheme is approved at the Court Meeting, Bowenvale has indicated that its AsiaSat Shares (approximately 68.9 per cent of the total outstanding issued share capital) will be voted in favour of the special resolution to be proposed at the Special General Meeting for implementing the Scheme.

 

What will happen to the Company if the Scheme is approved?

 

Upon the Scheme becoming effective, all Scheme Shares will be cancelled and share certificates for the Scheme Shares will cease to have effect as documents of evidence of title and should be returned to the Company for cancellation. The Company will become indirectly wholly owned by CITIC Group and GECC through the Offeror and Bowenvale.

 

As soon as practicable after the Scheme becomes effective, AsiaSat will apply to the Stock Exchange for the withdrawal of the listing of the AsiaSat Shares pursuant to Rule 6.15 of the Listing Rules. Scheme Shareholders will be notified by way of a press announcement of the exact dates on which the Scheme and the withdrawal of the listing of the AsiaSat Shares on the Stock Exchange will become effective.

 

CITIC Group and GECC intend to seek to cause AsiaSat to terminate the ADS Deposit Agreement and to have the listing of the ADSs on the NYSE terminated. In addition, if the Scheme becomes effective, the Offeror intends to cause AsiaSat to file a Form 15 with the SEC to request that the Company’s reporting obligations under the Exchange Act be terminated or suspended, provided that the relevant rules and regulations of the SEC are satisfied.

 

It is the intention of CITIC Group and GECC to maintain the existing businesses of the Group upon successful privatisation of the Company. CITIC Group and GECC do not intend to introduce any major changes to the existing operating and management structure of the Group, or to discontinue the employment of any employees of the AsiaSat Group, as a result of the implementation of the Proposals. Upon the successful implementation of the Proposals and AsiaSat becoming a private company, AsiaSat will, however, no longer have access to equity

 

9

PART II – QUESTIONS AND ANSWERS

 

funding through the public capital markets. CITIC Group and GECC also expect that there will be no material change to the existing business (such as business focus and operating model) of the AsiaSat Group as a result of the implementation of the Proposals. CITIC Group and GECC intend to retain the Company’s existing senior management team to manage the Company after the implementation of the Proposals.

 

It is, however, intended that subject to obtaining the Executive’s consent under Rule 7 of the Takeovers Code, upon completion of the Exchange Transaction, each of Mr. Romain Bausch, Ms. Cynthia Dickins and Mr. Mark Rigolle, the SES appointees to the AsiaSat Board, will resign as Directors, and the GE Entities will appoint four Directors to the Board for so long as the Company remains public. Rule 7 of the Takeovers Code provides that once a bona fide offer has been communicated to the board of the offeree company, except with the consent of the Executive, the directors of an offeree company should not resign until the first closing date of the offer, or the date when the offer becomes or is declared unconditional, whichever is later. In the context of the Proposals this means that none of the Directors should resign before the date of the Court Meeting. In the context of the Possible MGO Share Offer this means that none of the Directors should resign before the first closing date of the Possible MGO Share Offer. An application was made to the Executive by GE Equity and SES on 13 March 2007 to obtain consent in respect of Rule 7, however, it is uncertain as to whether such consent will be granted. No determination has yet been made as to whether, and if so, how, the composition of the Board may be changed upon completion of the Proposals.

 

It is intended that the Possible MGO Share Offer document and Possible MGO Option Offer letter (and related forms of acceptance) in respect of the Possible MGO Offers would not be posted until after the Meetings are held. This is because if the Scheme Shareholders approve the Scheme, the substance of the obligations that would arise under the Possible MGO Offers will have been satisfied and it would be redundant to despatch the formal documentation in respect of the Possible MGO Offers.

 

What will happen to the Company if the Scheme Shareholders do not approve the Scheme?

 

If the Scheme Shareholders do not approve the Scheme and the Transfer is completed, then the Possible MGO Offers will proceed. The Possible MGO Share Offer document and Possible MGO Option Offer letter (and related forms of acceptance) in respect of the Possible MGO Offers would be despatched to AsiaSat Shareholders and the Optionholders, respectively, following the failure or lapsing of the Scheme. On 7 March 2007 the Offeror and the Company made a Rule 8.2 application to the Executive in relation to the time for despatch of the documentation in respect of the Possible MGO Offers, and the Executive has agreed to extend this period to 2 May 2007. If the Exchange Transaction is not completed by this date the Offeror and the Company will make a further Rule 8.2 application to the Executive for a further extension to the time for despatch but there is no guarantee that the further extension will be granted.

 

If the Possible MGO Share Offer is made, it would be made at the Possible MGO Share Offer Price, payable in cash. The Possible MGO Share Offer Price is HK$16.00, compared to the Share Offer Price of HK$18.30. If the Possible MGO Offers are required to be made, they would be made in compliance with the applicable requirements of the Takeovers Code and the Exchange Act, as well as in accordance with the terms of any relief from the SEC obtained in connection with the Proposals and the Possible MGO Offers.

 

If the Possible MGO Option Offer is made it would be made at the Possible MGO Option Offer Price, payable in cash. The Offeror would offer to purchase Options for cancellation in exchange for HK$0.01 for each B Option and HK$1.65 for each C Option.

 

If the Scheme does not become effective and binding and the Transfer does not complete, the Possible MGO Offers will not be made.

 

See “What are the Possible MGO Offers?” below.

 

What will happen to the ADSs if the Scheme takes effect?

 

If the Scheme takes effect, the ADS Depositary will upon exchange of your ADSs, receive cash in respect of the AsiaSat Shares underlying the ADSs. Each ADS represents ten Scheme Shares and, accordingly, ADS Holders will be entitled to receive HK$183.00 per ADS in cash, which will be converted into US dollars and paid directly by the ADS Depositary (less any fees and expenses of the ADS Depositary in connection with currency

 

10

PART II – QUESTIONS AND ANSWERS

 

conversions under the ADS Deposit Agreement and withholding taxes, if any). Such conversion would be at the exchange rate obtainable on the spot market on the date the cash consideration is received by the ADS Depositary for delivery in respect of the ADSs.

 

In addition, completion of the Scheme will ultimately result in the de-registration of the Company under the Exchange Act, which would substantially reduce the information required to be publicly furnished by AsiaSat in the United States and would make certain provisions of the Exchange Act no longer applicable to AsiaSat (although, irrespective of the outcome of the Scheme, it is expected that the maintenance of the ADS listing on the NYSE will be re-examined by AsiaSat and the Board, the outcome of which may be to terminate such listing). For example, AsiaSat would no longer be required to file an annual report on Form 20-F or to submit other materials under Form 6-K. Furthermore, AsiaSat would not be required to file any financial statements with the SEC and would not be required to reconcile its financial statements to US GAAP. In addition, if registration of the AsiaSat Securities were terminated or suspended, the ADSs would no longer be eligible for listing on the NYSE. Furthermore, the ADS Deposit Agreement may be terminated.

 

Can I choose the currency in which I receive payment for my AsiaSat Shares, Options or ADSs?

 

No. AsiaSat Shareholders and Optionholders will receive payment in Hong Kong dollars, irrespective of their location. ADS Holders will receive payment in US dollars through the ADS Depositary or through their financial intermediary.

 

Does the Offeror have the financial resources to make payment of the consideration for the AsiaSat Shares and the ADSs?

 

The Proposals will be financed from the existing resources of CITIC Group and GECC. The Offeror’s financial adviser, Morgan Stanley, is satisfied that sufficient financial resources are and will be available to the Offeror for the implementation in full of the Proposals.

 

If my AsiaSat Shares or ADSs are held in “street name” by my financial intermediary, will my financial intermediary vote my AsiaSat Shares or ADSs for me?

 

Your financial intermediary (such as a broker) should send you directions on how to provide it with instructions to vote your AsiaSat Shares. If you do not provide your financial intermediary with instructions on how to vote your “street name” AsiaSat Shares (whether in the form of AsiaSat Shares or ADSs), your financial intermediary will not be permitted to vote them on the Share Proposal. You should therefore be sure to provide your financial intermediary with instructions on how to vote your AsiaSat Shares. If you do not give voting instructions to your financial intermediary, you will not be counted as voting for the purposes of the Share Proposal unless you have the AsiaSat Shares (including any AsiaSat Shares underlying your ADSs) registered in your name prior to the Voting Record Time and appear in person at the relevant Meeting or submit the Forms of Proxy in accordance with the instructions set out therein.

 

As discussed above, ADS Holders do not have the right to vote at the Court Meeting or the Special General Meeting, but pursuant to the ADS Voting Instruction Card, ADS Holders may instruct the ADS Depositary to vote the AsiaSat Shares underlying their ADSs at either Meeting.

 

Can I change my vote after I have submitted my proxy with voting instructions?

 

Yes. If you hold AsiaSat Shares there are three ways in which you may revoke your proxy and change your vote in respect of the Scheme and the resolutions for implementing the Scheme before the Court Meeting and the Special General Meeting, respectively:

 

  (a) you may notify the Company in writing of the revocation of your proxy and lodge a new Form of Proxy, provided such revised Form of Proxy is lodged not less than forty-eight hours before the time for holding the Court Meeting or the Special General Meeting, or handed to the Chairman of the Court Meeting, (as applicable); or

 

  (b)

you may notify the Company in writing of the revocation of your proxy, provided such revocation is lodged not less than two hours before the time for holding the Court Meeting or the Special General

 

11

PART II – QUESTIONS AND ANSWERS

 

 

Meeting (as applicable). As any revised Form of Proxy is required to be lodged not less than forty-eight hours before the time for holding the Court Meeting or the Special General Meeting, or handed to the Chairman of the Court Meeting, (as the case may be), should you notify the Company of the revocation of your proxy less than forty-eight hours before the time for the relevant Meeting, you should attend and vote at the relevant Meeting in person, or in the case of the Court Meeting ensure your revised Form of Proxy is handed to the Chairman of the Court Meeting, should you still wish to vote your AsiaSat Shares or Scheme Shares (as applicable) at such Meeting; or

 

  (c) you may attend and vote at the Court Meeting or the Special General Meeting in person and in such event your proxy shall be deemed to be revoked.

 

If you hold ADSs, you must contact the ADS Depositary in writing informing them of your revocation of your voting instruction and lodging of a new instruction, which must be received by the ADS Depositary no later than 5:00 p.m. (New York time) on 17 April 2007.

 

If you have instructed a broker or other financial intermediary to vote your AsiaSat Shares or ADSs, you must follow directions received from such broker or other financial intermediary to change or revoke your proxy.

 

What are the Possible MGO Offers?

 

The Possible MGO Offers are the Possible MGO Share Offer and the Possible MGO Option Offer, which are potential obligations on the part of Able Star and the GE Entities to make a mandatory general offer for all AsiaSat Shares and Options not owned by Bowenvale or parties acting in concert with it. The Executive has taken the view that the acquisition by the GE Entities of SES’s entire shareholding in Bowenvale pursuant to the Exchange Transaction would, on completion, result in the formation of a new concert group that has statutory control over Bowenvale, which would trigger an obligation to make a mandatory general offer for AsiaSat under the Takeovers Code. Whilst the view taken by Able Star and GE Equity is different from that of the Executive, the Offeror has indicated it is prepared to make the Possible MGO Offers in the event the Transfer completes but the Scheme is unsuccessful. The Possible MGO Offers, if implemented, would be considered tender offers under the US federal securities laws and would comply with the relevant provisions of the Exchange Act, except to the extent exempted therefrom.

 

What happens to the Possible MGO Offers if the Scheme becomes effective?

 

If the Transfer is completed and all other conditions of the Scheme are either satisfied or waived, the Scheme will become effective and the substance of the obligations that would arise under the Possible MGO Offers will have been satisfied. In that case, no formal offer documentation will be despatched in respect of the Possible MGO Offers, and the Possible MGO Offers will not proceed.

 

When do you expect the privatisation of AsiaSat to be completed?

 

Assuming that the Scheme receives the approval of Scheme Shareholders at the Court Meeting and the resolutions for implementing the Scheme receive the approval of AsiaSat Shareholders at the Special General Meeting and all other Conditions are fulfilled or waived in a timely manner, it is currently expected that the privatisation will complete by the end of May 2007.

 

What are the US tax consequences of the privatisation of AsiaSat to Scheme Shareholders and ADS Holders?

 

The receipt of cash for Scheme Shares under the privatisation will be a taxable transaction for US federal income tax purposes and may also be taxable under applicable state, local, foreign or other tax laws. Generally, US holders of Scheme Shares will recognise a gain or loss for these purposes equal to the difference between the amount of cash received and their adjusted tax basis for the Scheme Shares that were owned immediately before completion of the Scheme. For US federal income tax purposes, this gain or loss generally would be a capital gain or loss if the Scheme Shares are held as a capital asset. A US holder of Options who receives cash in cancellation of such Options pursuant to the Option Proposal will generally recognise, as ordinary income for US federal income tax purposes, the cash payment received. See “Part VII – US Special Factors; 2.2 US Federal Income Tax Consequences”. Tax matters are very complex, and the tax consequences of the Scheme to you

 

12

PART II – QUESTIONS AND ANSWERS

 

will depend on the facts of your own situation. It is recommended that you consult your tax adviser for a full understanding of the tax consequences of the Scheme and the Proposals to you.

 

Will I have to pay any fees or commissions?

 

If you are the registered owner of your AsiaSat Shares and/or ADSs and the Scheme becomes effective, you will not have to pay brokerage fees or similar expenses. If you own your AsiaSat Shares and/or ADSs through a broker or other nominee, you should consult your broker or nominee to determine whether any charges will apply.

 

If the Scheme becomes effective and you hold ADSs, you will not be required to pay any cancellation fee to the ADS Depositary for the cancellation of your ADSs. You will, however, be responsible for covering any fees charged by your financial intermediary or any charges related to your exchange of ADSs for AsiaSat Shares for the purpose of voting at the Meetings. In addition, the Offeror will not pay interest on any amounts to be paid to AsiaSat Shareholders pursuant to the Scheme, the Possible MGO Offers or otherwise.

 

How can I help to prevent “empty voting” to avoid market participants using borrowed stock to vote against the Share Proposal?

 

If you are an AsiaSat Shareholder, we strongly encourage you to exercise your right to vote or give instructions to the relevant Registered Owner to vote at the Court Meeting and at the Special General Meeting. If you keep or think you may have any AsiaSat Shares in a share lending programme, we urge you to recall any outstanding AsiaSat Shares on borrow to avoid market participants using borrowed stock to vote against the Share Proposal, which potentially could have a negative impact on the value of your AsiaSat Shares.

 

If you are acting as a Registered Owner, we should be grateful if you could inform any ultimate beneficial AsiaSat Shareholders about the importance of exercising their vote.

 

If you are an ADS Holder, you cannot vote at the Court Meeting or the Special General Meeting directly but you may instruct the ADS Depositary (as the registered AsiaSat Shareholder) to exercise your right to vote in accordance with the ADS Voting Instruction Card enclosed. Please complete and return the ADS Voting Instruction Card to the ADS Depositary in a timely manner. If you hold your ADSs through a financial intermediary, please follow the instructions that they provide to you.

 

If you are in any doubt as to the action to be taken, you are encouraged to consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

 

Whom should I call with additional questions?

 

If ADS Holders or AsiaSat Shareholders that are US residents have questions concerning administrative matters such as dates, documentation and procedures relating to the Proposals, please call Mellon Investor Services LLC of 480 Washington Boulevard, Jersey City, New Jersey 07310, United States at +1 (866) 808-1336 or +1 (201) 680-5235.

 

These helplines cannot and will not provide advice on the merits of the Scheme, the Possible MGO Offers or the Proposals or give any financial or legal advice. Furthermore, Mellon Investor Services LLC will not be soliciting proxies or votes in respect of the Scheme.

 

13

PART III – EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

The following timetable takes into account the Supreme Court procedures for the Scheme. The expected timetable is indicative only and is subject to change. An outline timetable in respect of the Possible MGO Offers (if any) is set out in Part IX – The Possible MGO Offers. The offer documentation, if posted, in relation to the Possible MGO Offers would contain further details of the Possible MGO Offers timetable.

 

Date of despatch of this Scheme Document

   Monday, 19 March 2007

Latest time to surrender ADSs to vote directly at the Meetings

   4:30 p.m. on Friday, 13 April 2007 (New York time)

Latest time for receipt by the ADS Depositary of ADS Voting Instruction Cards from registered holders of ADSs (Note 1)

   5:00 p.m. on Tuesday, 17 April 2007 (New York time)

Latest time for lodging transfers of AsiaSat Shares to qualify for entitlement to attend and vote at the Court Meeting and the Special General Meeting

   4:30 p.m. on Friday, 20 April 2007

Register closed for determination of entitlements to attend and vote at the Court Meeting and the Special General Meeting (Note 2)

  

from 4:30 p.m. on Friday, 20 April 2007 to

 

Tuesday, 24 April 2007 (both dates inclusive)

Latest time for receipt by the Registrar of Forms of Proxy in respect of:

Court Meeting (Note 3)

   10:00 a.m. on Sunday, 22 April 2007

Special General Meeting (Note 3)

   10:30 a.m. on Sunday, 22 April 2007

Suspension of dealings in AsiaSat Shares

  

9:30 a.m. on Tuesday, 24 April 2007

Court Meeting

  

10:00 a.m. on Tuesday, 24 April 2007

Special General Meeting (Note 4)

  

10:30 a.m. on Tuesday, 24 April 2007

Press announcement of the results of the Meetings in The Standard and Hong Kong Economic Times

  

Wednesday, 25 April 2007

Resumption of dealing in AsiaSat Shares

  

9:30 a.m. on Wednesday, 25 April 2007

Last day for dealing in ADSs

  

Friday, 27 April 2007

Last day for dealing in AsiaSat Shares

  

Friday, 27 April 2007

Latest date for exercise of Options under the Share Option Scheme

   Friday, 4 May 2007

Latest time for lodging transfers of the Scheme Shares to qualify for entitlements under the Scheme

  

4:30 p.m. on Friday, 4 May 2007

Scheme Record Time

  

4:30 p.m. on Friday, 4 May 2007

Court Hearing of the petition to sanction the Scheme

  

9:30 a.m. on Friday, 4 May 2007 (Bermuda time)

Register closed for determination of entitlements to qualify under the Scheme (Note 5)

  

4:30 p.m. on Friday, 4 May 2007 to Monday, 7 May 2007 (inclusive)

Press announcement of the results of hearing of the petition to sanction the Scheme in The Standard and Hong Kong Economic Times

  


Monday, 7 May 2007

Effective Date (Note 6)

  

Monday, 7 May 2007

Last day to accept the Option Proposal

  

Monday, 7 May 2007

Press announcement on Effective Date and withdrawal of listing in The Standard and Hong Kong Economic Times

  


Tuesday, 8 May 2007

Expected withdrawal of the listing of AsiaSat Shares on the Stock Exchange becomes effective (Note 7)

  

9:30 a.m. on Tuesday, 8 May 2007

Expected withdrawal of the listing of the ADSs on the NYSE becomes effective (Note 8)

  

9:30 a.m. on Tuesday, 8 May 2007

Cheques for cash payment under the Scheme and the Option Proposal to be despatched on or before

  

Thursday, 17 May 2007

 

14

PART III – EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

The above timetable is subject to change. Unless otherwise stated, all times stated above are Hong Kong times. Further announcement(s) will be made in the event that there is any change.

Notes:

 

1. If you hold your ADSs through a financial intermediary, you must rely on the procedures of the financial intermediary through which you hold your ADSs if you wish to vote.

 

2. The register of members of the Company kept in Bermuda and the branch register of members kept in Hong Kong will be closed during such period for the purpose of determining the entitlements of the Scheme Shareholders to attend and vote at the Court Meeting and of AsiaSat Shareholders to attend and vote at the Special General Meeting. This book close period is not for determining Scheme Shareholders that are qualified for entitlements under the Scheme.

 

3.

Forms of Proxy for the Court Meeting or the Special General Meeting should be lodged with the Registrar at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than the relevant times and dates stated above or, in the case of the pink Form of Proxy in respect of the Court Meeting, it may be handed to the Chairman of the Court Meeting at the Court Meeting. Completion and return of a Form of Proxy for the Court Meeting or the Special General Meeting will not preclude an AsiaSat Shareholder from attending the relevant Meeting and voting in person. In such event, the returned Form of Proxy will be deemed to have been revoked.

 

4. The Special General Meeting will be held at the scheduled time as stated above or as soon thereafter on the conclusion of the Court Meeting or after any adjournment of the Court Meeting.

 

5. The register of members of the Company kept in Bermuda and the branch register of members of the Company kept in Hong Kong will be closed during such period for the purpose of determining those Scheme Shareholders who are qualified for entitlements under the Scheme.

 

6. The Scheme will become effective when (a) it is sanctioned (with or without modification) by the Supreme Court and (b) an office copy of the order of the Supreme Court sanctioning the Scheme is delivered to the Registrar of Companies in Bermuda for registration. Registration is expected to take place on or around 10:00 a.m. (Bermuda time) on 7 May 2007 (which will be around 9:00 p.m. on 7 May 2007 (Hong Kong time)). Scheme Shareholders should note the Conditions of the Proposals set out on pages 72 and 73 of this Scheme Document in “Part VIII – Explanatory Statement”.

 

7. It is expected that the listing of AsiaSat Shares on the Stock Exchange will be withdrawn on or before 9:30 a.m. on 8 May 2007, being the first Trading Day after the Effective Date.

 

8. Irrespective of the outcome of the Scheme, in due course, it is expected that the maintenance of the ADS listing on the NYSE will be re-examined by AsiaSat and the Board, the outcome of which may be to terminate such listing.

 

The Court Meeting and the Special General Meeting will both be held at 17/F The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong on Tuesday, 24 April 2007. Please see “Part XIII – Notice of Court Meeting” and “Part XIV – Notice of Special General Meeting” of this Scheme Document for details.

 

15

PART IV – LETTER FROM THE BOARD

 

LOGO

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

 

LOGO

(Incorporated in Bermuda with limited liability)

(Stock Code: 1135)

 

Directors:      Registered office:

Executive Directors:

Mr. Peter E. JACKSON (Chief Executive Officer)

Mr. William D. WADE (Deputy Chief Executive Officer)

Non-executive Directors:

Mr. MI Zeng Xin (Chairman)

Mr. Romain BAUSCH (Deputy Chairman)

Ms. Cynthia DICKINS

Mr. DING Yu Cheng

Mr. Mark RIGOLLE

Mr. JU Wei Min

Mr. KO Fai Wong

Independent Non-executive Directors:

Prof. Edward Kwan Yiu CHEN

Mr. Robert T. T. SZE

Mr. James WATKINS

     

Canon’s Court

22 Victoria Street

Hamilton HM12

Bermuda

 

 

Principal place of

business in Hong Kong:

 

17/F

The Lee Gardens

33 Hysan Avenue

Causeway Bay

Hong Kong

 

 

 

 

19 March 2007

 

To AsiaSat Shareholders, ADS Holders and Optionholders

 

Dear Sir or Madam,

 

Proposed Privatisation of Asia Satellite Telecommunications Holdings Limited

by AsiaCo Acquisition Ltd.*

(*formerly known as Modernday Limited)

and

Possible Mandatory General Offer

for Asia Satellite Telecommunications Holdings Limited

by AsiaCo Acquisition Ltd.*

 

1.    INTRODUCTION

 

On 13 February 2007, the Offeror requested the Board to put forward the Share Proposal (detailed below) to the Scheme Shareholders for cancellation of the Scheme Shares and the issue of the New AsiaSat Shares to effect the privatisation of the Company by way of a scheme of arrangement under Section 99 of the Companies Act and informed the Board that it will, in conjunction with the Share Proposal, make the Option Proposal (detailed below and in the Letter to Optionholders) to Optionholders for the cancellation of Outstanding Options in exchange for cash. Having reviewed and carefully considered the Share Proposal, the Board has agreed to put the Share Proposal forward to the Scheme Shareholders. In addition to the Offeror’s obligations under Rule 2.3 of the Takeovers Code, the direct expenses incurred by AsiaSat in connection with the Scheme of up to US$3 million (in addition to translation fees, and printing and publication expenses, which will be reimbursed by the Offeror to the Company in full and do not count towards the cap of US$3 million) will be borne by the

 

16

PART IV – LETTER FROM THE BOARD

 

Offeror in the event the Proposals do not become unconditional for any reason. The Offeror is jointly owned by, with equal voting power, Able Star (a subsidiary of CITIC Group) and GE Equity (a subsidiary of GECC).

 

If approved, the Scheme will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Special General Meeting. The AsiaSat Shares held by Bowenvale do not form part of the Scheme Shares.

 

Pursuant to the Share Proposal, all Scheme Shares (including without limitation the Scheme Shares underlying the ADSs) will be cancelled in exchange for the Share Offer Price of HK$18.30 in cash for each Scheme Share. Each ADS represents ten Scheme Shares and, accordingly, ADS Holders will receive ten times the Share Offer Price of HK$18.30 per Scheme Share, or HK$183.00 per ADS in cash. The price paid in respect of AsiaSat Shares underlying ADSs will be converted into US dollars and paid directly by the ADS Depositary (less any fees and expenses of the ADS Depositary in connection with currency conversions under the ADS Deposit Agreement and withholding taxes, if applicable). As at the Latest Practicable Date, the Scheme Shareholders were interested in 121,360,500 AsiaSat Shares, representing approximately 31.1 per cent of the issued share capital of the Company.

 

2.    INTERESTED PARTIES

 

The Non-executive Directors, namely Mr. Romain Bausch, Ms. Cynthia Dickins, Mr. Mark Rigolle, Mr. Mi Zeng Xin, Mr. Ding Yu Cheng, Mr. Ju Wei Min and Mr. Ko Fai Wong, are not considered to be independent for the purpose of giving any advice or recommendation to the Scheme Shareholders in relation to the Share Proposal and Optionholders in relation to the Option Proposal. Mr. Romain Bausch, Ms. Cynthia Dickins and Mr. Mark Rigolle are not considered independent because they have been nominated to the Board by SES, a party deemed to be acting in concert with the Offeror. Mr. Mi Zeng Xin, Mr. Ding Yu Cheng, Mr. Ju Wei Min and Mr. Ko Fai Wong are not considered independent because they have been nominated to the Board by CITIC Group, a party deemed to be acting in concert with the Offeror. Mr. Mi Zeng Xin, Mr. Ju Wei Min and Mr. Ko Fai Wong are also directors of the Offeror.

 

Scheme Shareholders on the register of members of the Company at the Voting Record Time will be entitled to attend and vote at the Court Meeting. AsiaSat Shareholders on the register of members of the Company at the Voting Record Time will be entitled to attend and vote at the Special General Meeting. None of the Non-executive Directors are Scheme Shareholders or AsiaSat Shareholders and accordingly none of the Non-executive Directors are entitled to vote at the Court Meeting or the Special General Meeting.

 

Each of the Directors who are also AsiaSat Shareholders who are eligible to attend and vote at the Meetings, namely Mr. Peter E. Jackson and Mr. William Wade, have indicated that they will vote in favour of the resolutions to approve the Share Proposal in respect of their entire beneficial holdings of AsiaSat Shares.

 

Mr. Peter E. Jackson holds 163,500 AsiaSat Shares and Mr. William Wade holds 5,000 AsiaSat Shares. Both Mr. Jackson and Mr. Wade are disinterested AsiaSat Shareholders who are not acting in concert with the Offeror, GE Equity or Able Star and are eligible to vote at the Meetings. Mr. Peter E. Jackson and Mr. William Wade were seconded to AsiaSat by Cable & Wireless and Hutchison Whampoa, respectively, the then AsiaSat Shareholders when AsiaSat first became a public company in 1996.

 

3.    FINANCIAL ADVISERS

 

Morgan Stanley has been appointed as the financial adviser to the Offeror in connection with the Proposals.

 

In accordance with Rule 2.1 of the Takeovers Code, the Independent Board Committee, comprising Professor Chen Kwan Yiu Edward, Mr. Sze Tsai To Robert and Mr. James Watkins, has been appointed by the Board to advise the Scheme Shareholders (including without limitation the ADS Holders) in connection with the Share Proposal and Possible MGO Offers and the Optionholders in connection with the Option Proposal and Possible MGO Offers.

 

17

PART IV – LETTER FROM THE BOARD

 

The Independent Financial Adviser, CLSA Equity Capital Markets Limited, has been appointed by the Independent Board Committee as the independent financial adviser to advise the Independent Board Committee in connection with the Proposals and the Possible MGO Offers.

 

4.    THIS SCHEME DOCUMENT

 

The purpose of this Scheme Document is to give you further information regarding the Share Proposal, the Option Proposal and the expected timetable, and to give you notice of the Court Meeting and the Special General Meeting. This Scheme Document will also contain the disclosure mandated by Rule 13e-3 under the Exchange Act and Schedule 13E-3. Your attention is drawn to the letter from the Independent Board Committee, the letter from the Independent Financial Adviser, Part VII entitled “US Special Factors”, the Explanatory Statement in Part VIII and the Scheme in Part XII. Further details of the Option Proposal are set out in the Letter to Optionholders. This Scheme Document does not constitute an offer to purchase AsiaSat Shares in the Possible MGO Offers.

 

5.    SUMMARY OF THE SHARE PROPOSAL

 

It is proposed that, subject to the fulfilment or waiver (as applicable) of the Conditions as described in the Explanatory Statement, the Share Proposal will be implemented by way of the Scheme, which will involve the cancellation of all the Scheme Shares and a reduction of the issued share capital of the Company under Section 46 of the Companies Act. Upon the Scheme becoming effective, all the Scheme Shares will be cancelled and the New AsiaSat Shares will be issued to the Offeror, and, as a result, the Company will be indirectly wholly owned by CITIC Group and GECC through the Offeror (as to approximately 31.1 per cent) and Bowenvale (as to approximately 68.9 per cent).

 

In consideration of the cancellation of their Scheme Share(s), each Scheme Shareholder will receive the Share Offer Price for each Scheme Share held of:

 

For each Scheme Share

    HK$ 18.30 in cash

For each ADS

    HK$ 183.00 in cash

 

The Share Offer Price represents:

 

  •  

a premium of approximately 30.7 per cent over the closing price of HK$14.00 per AsiaSat Share as quoted on the Stock Exchange on the Pre-Suspension Date;

 

  •  

a premium of approximately 32.0 per cent over the closing price of US$17.75 per ADS as quoted on the NYSE on the Pre-Suspension Date;

 

  •  

a premium of approximately 29.8 per cent over the closing price of HK$14.10 per AsiaSat Share as quoted on the Stock Exchange on the Suspension Date;

 

  •  

a premium of approximately 32.2 per cent over the 30-day Average Pre-Announcement Price of HK$13.84 per AsiaSat Share;

 

  •  

a premium of approximately 30.7 per cent over the 30-day Average Pre-Announcement ADS Price of US$17.93 per ADS ;

 

  •  

a premium of approximately 4.3 per cent over the closing price of HK$17.54 per AsiaSat Share as quoted on the Stock Exchange on the Latest Practicable Date;

 

  •  

a discount of approximately 0.5 per cent to the closing price of US$23.55 per ADS as quoted on the NYSE on the Latest Practicable Date;

 

  •  

a premium of approximately 1.4 per cent over the highest closing price of approximately HK$18.04 per AsiaSat Share over the one year period prior to the Latest Practicable Date;

 

  •  

a discount of approximately 0.5 per cent to the highest closing price of approximately US$23.55 per ADS over the one year period prior to the Latest Practicable Date;

 

 

18

PART IV – LETTER FROM THE BOARD

 

  •  

an implied price to earnings multiple of 19.5 times, based on AsiaSat’s reported basic earnings per share of HK$0.94 for the year ended 31 December 2005;

 

  •  

an implied price to earnings multiple of 15.8 times, based on AsiaSat’s reported basic earnings per share of HK$1.16 for the year ended 31 December 2006;

 

  •  

a premium of approximately 74.0 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$10.52 as at 31 December 2005;

 

  •  

a premium of approximately 61.5 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$11.33 as at 31 December 2006; and

 

  •  

a premium of approximately 14.4 per cent over the Possible MGO Share Offer Price.

 

The Scheme will lapse if it does not become effective on or before 30 June 2007 (or such later date as the Offeror and the Company may agree or (to the extent applicable) as the Supreme Court may direct and as may be permitted by the Takeovers Code) and provided that such extended date shall not be beyond 31 October 2007 and AsiaSat Shareholders will be notified by press announcement accordingly. Further announcements regarding the Share Proposal will be made as and when appropriate.

 

Assuming that the Scheme becomes effective on 7 May 2007, cheques for cash entitlements under the Scheme are expected to be despatched to Scheme Shareholders (including the ADS Depositary) on or before 17 May 2007.

 

Bowenvale will not be entitled to receive the Share Offer Price, as its AsiaSat Shares do not form part of the Scheme Shares and will not be cancelled under the Share Proposal.

 

ADS Holders

 

As ADS Holders are not holders of record of Scheme Shares, they do not have the right to vote at the Court Meeting or the Special General Meeting, but may instruct the ADS Depositary to vote the Scheme Shares underlying their ADSs pursuant to the ADS Voting Instruction Card. ADS Holders may also become holders of AsiaSat Shares by exchanging their ADSs and withdrawing AsiaSat Shares underlying such ADSs in accordance with the terms of the ADS Deposit Agreement provided they become holders of AsiaSat Shares not later than the Voting Record Time specified for the Court Meeting and the Special General Meeting. ADS Holders seeking to become holders of Scheme Shares will incur cancellation fees and may incur taxes and other charges in connection with the exchange and withdrawal of Scheme Shares underlying ADSs.

 

If you hold your ADSs through a financial intermediary, please follow the instructions the financial intermediary provides to you.

 

Assuming that the Scheme becomes effective on 7 May 2007, cash payments in respect of ADSs will be despatched by the ADS Depositary under the Deposit Agreement promptly upon cancellation of the ADSs and receipt by the ADS Depositary of the cash entitlements under the Scheme. In the case of persons holding ADSs through financial intermediaries (that is, in “street name”), the cash payments to them will be despatched by the ADS Depositary through the Depositary Trust Company on or before 17 May 2007. In the case of registered ADS Holders, the ADS Depositary will mail letters of transmittal to them on or before 17 May 2007. Payment to the registered ADS Holders will be despatched by the ADS Depositary upon receiving the letter of transmittal with the ADS certificate from such registered ADS Holders.

 

Dividends

 

A dividend declared by the Company after 13 February 2007 (the date of the Announcement) and prior to the Scheme becoming effective will be declared subject to the following:

 

(i) the amount of the dividend shall not affect the Share Offer Price if the Scheme becomes effective and binding on or before 10 May 2007;

 

(ii) the amount of the dividend will be deducted from the Share Offer Price if the Scheme becomes effective and binding after 10 May 2007;

 

(iii) if the Scheme becomes effective and binding on or before 10 May 2007, the dividend shall not be paid; and

 

(iv) if the Scheme does not become effective, the dividend will be paid to AsiaSat Shareholders on the register of members of the Company at 4:30 p.m. on 10 May 2007.

 

19

PART IV – LETTER FROM THE BOARD

 

6.    SUMMARY OF THE OPTION PROPOSAL

 

The Company established the Share Option Scheme on 25 January 2002 pursuant to which employees, executives and officers of the Company or any of its subsidiaries, and consultants, agents, representatives and advisers of the Company and/or its subsidiaries are eligible for the grant of Options. AsiaSat has granted 1,630,000 B Options and 3,202,500 C Options which remain outstanding as at the Latest Practicable Date. Each Option, on exercise, would entitle the Optionholder to be allotted one AsiaSat Share.

 

An Optionholder may exercise his/her B Option(s) at HK$17.48 per AsiaSat Share and C Option(s) at HK$14.35 per AsiaSat Share in accordance with the Rules of the Share Option Scheme. Upon notice from the Company (to be given on the same day as the notices to holders of AsiaSat Shares of the Meetings), the Optionholders shall be entitled to give notice to the Company to exercise their Options in full or in part at any time from the date of such notice until the earlier of (i) two calendar months after the date of the notice, and (ii) the date on which the Scheme is sanctioned by the Supreme Court, but the exercise of the Options as described above shall be conditional upon the Scheme becoming effective. AsiaSat Shares issued upon exercise of the Options prior to the Scheme Record Time will form part of the Scheme Shares.

 

The Option Proposal, which is conditional upon the Scheme becoming effective and binding, has been made by Morgan Stanley, on behalf of the Offeror, to the Optionholders. The Letter to Optionholders setting out the terms and conditions of the Option Proposal is being despatched separately to Optionholders. Optionholders should also refer to the Letter to Optionholders, which is substantially in the form set out in Appendix 1. The Option Proposal is made on the following basis:

 

For each Outstanding B Option

    HK$0.82 in cash

For each Outstanding C Option

    HK$3.95 in cash

 

Options which are not exercised in accordance with the Rules of the Share Option Scheme, or in relation to which the Option Proposal is not accepted within the relevant time period will lapse, subject to and conditional upon the Scheme becoming effective.

 

The attention of the Optionholders is drawn to the Rules of the Share Option Scheme, and in particular paragraph 8.5 of the Rules of the Share Option Scheme.

 

7.    FINANCING OF THE PROPOSALS

 

The Proposals will be financed from the existing resources of CITIC Group and GECC. The Offeror’s financial adviser, Morgan Stanley, is satisfied that sufficient financial resources are and will be available to the Offeror for the implementation in full of the Proposals.

 

8.    POSSIBLE MGO OFFERS

 

The Possible MGO Offers are the Possible MGO Share Offer and the Possible MGO Option Offer, which are potential obligations on the part of Able Star and the GE Entities to make a mandatory general offer for all the AsiaSat Shares not owned by Bowenvale or parties acting in concert with it. The Executive has taken the view that the acquisition by the GE Entities of SES’s entire shareholding in Bowenvale pursuant to the Exchange Transaction would, on completion, result in the formation of a new concert group that has statutory control over Bowenvale, which would trigger an obligation under the Takeovers Code to make a mandatory general offer for AsiaSat. Whilst the view taken by Able Star and the GE Equity is different from that of the Executive, the Offeror has indicated that it is prepared to make the Possible MGO Offers in the event the Transfer completes but the Scheme is unsuccessful. Please see “Part VIII – Explanatory Statement; 10. The Possible MGO Offers” and “Part IX – The Possible MGO Offers” of this Scheme Document for further details regarding the Possible MGO Offers.

 

9.    BEST OFFER PRICES

 

The Offeror has stated that it will not increase any of the Offer Prices and that each of the Share Offer Price, the Option Offer Price, the Possible MGO Share Offer Price and the Possible MGO Option Offer Price represents the

 

20

PART IV – LETTER FROM THE BOARD

 

best and final offer price in respect of the Share Proposal, the Option Proposal, the Possible MGO Share Offer and the Possible MGO Option Offer, respectively. AsiaSat Shareholders should be aware that, having made these statements in the Announcement, the Offeror is not permitted to increase any of the Offer Prices under the Takeovers Code, save in wholly exceptional circumstances, as provided in Rule 18.3 of the Takeovers Code. Notwithstanding the above, as permitted by the Takeovers Code, the Offeror reserves the right not to be bound by these statements in the event of a competing offer and such competing offer is recommended by the Board.

 

10.     BACKGROUND TO, AND REASONS FOR, THE PROPOSALS AND INFORMATION RELATING

TO THE GROUP AND THE OFFEROR

 

Scheme Shareholders (including without limitation ADS Holders) and Optionholders are urged to read carefully the relevant sections in the Explanatory Statement concerning the background to, and reasons for, the Proposals, and also the sections relating to information on the AsiaSat Group and on the Offeror.

 

11.    MEETINGS AND ACTION TO BE TAKEN BY SCHEME SHAREHOLDERS

 

As you will see from the notices in “Part XIII – Notice of Court Meeting” and “Part XIV – Notice of Special General Meeting” of this Scheme Document, the Meetings will be convened on Tuesday, 24 April 2007 at 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong at the times specified in the respective notices. The Supreme Court has directed that the Court Meeting be held to consider and, if thought fit, to approve the Scheme (with or without modification).

 

Following the conclusion of the Court Meeting, the Special General Meeting will be held for the purpose of considering and, if thought fit, passing a special resolution to approve, among other matters, the capital reduction arising as a result of the Scheme and the issue of the New AsiaSat Shares to the Offeror. If the Scheme is approved at the Court Meeting, Bowenvale has indicated that its AsiaSat Shares will be voted in favour of the special resolution to be proposed at the Special General Meeting to approve the capital reduction arising as a result of the Scheme and the issue of the New AsiaSat Shares to the Offeror.

 

Whether or not you are able to attend any of the Meetings in person, you are strongly urged to complete and sign the enclosed PINK Form of Proxy in respect of the Court Meeting, and also the enclosed WHITE Form of Proxy in respect of the Special General Meeting, in accordance with the instructions printed respectively on them and to lodge them with the Registrar, Computershare Hong Kong Investor Services Limited at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any case not later than the following respective times. In order to be valid, the PINK Form of Proxy for use at the Court Meeting should be lodged not later than 10:00 a.m. on Sunday, 22 April 2007, but if it is not so lodged, it may be handed to the Chairman of the Court Meeting at the Court Meeting. In order to be valid, the WHITE Form of Proxy for use at the Special General Meeting must be lodged not later than 10:30 a.m. on Sunday, 22 April 2007.

 

Completion and return of a Form of Proxy for each of the Court Meeting or the Special General Meeting will not preclude you from attending the relevant Meeting and voting in person. In such event, the returned Form of Proxy will be deemed to have been revoked.

 

Pursuant to Bye-law 78 of the Bye-laws of the Company, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

 

  (i) by the Chairman of the meeting;

 

  (ii) by at least three members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting;

 

  (iii) by any member or members present in person (or in the case of a member being a corporation, by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

 

  (iv)

by a member or members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at

 

21

PART IV – LETTER FROM THE BOARD

 

 

the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

 

12.     ASIASAT SHAREHOLDERS WHO HOLD THEIR ASIASAT SHARES THROUGH TRUST OR

CCASS

 

No person shall be recognised by the Company as holding any AsiaSat Shares on trust. Any Beneficial Owner whose AsiaSat Shares are registered in the name of a Registered Owner should contact the Registered Owner to give instructions to and/or to make arrangements with the Registered Owner as to the manner in which the AsiaSat Shares beneficially owned by the Beneficial Owner should be voted at the Court Meeting and/or the Special General Meeting. A Beneficial Owner who wishes to attend the Court Meeting and/or the Special General Meeting personally should contact the Registered Owner directly to make the appropriate arrangements with the Registered Owner to enable the Beneficial Owner to attend and vote at the Court Meeting and/or the Special General Meeting and for such purpose the Registered Owner may appoint the Beneficial Owner as its proxy. The appointment of a proxy by the Registered Owner at the Court Meeting and/or the Special General Meeting shall be in accordance with all relevant provisions in the Bye-laws of the Company. In the case of the appointment of a proxy by the Registered Owner, the Forms of Proxy shall be completed and signed by the Registered Owner and shall be lodged in the manner and before the latest time for lodging the relevant Forms of Proxy as more particularly set out in this Scheme Document.

 

Any Beneficial Owner whose AsiaSat Shares are deposited in CCASS and registered under the name of HKSCC Nominees Limited must, unless such Beneficial Owner is an Investor Participant, contact an Other CCASS Participant regarding voting instructions to be given to such persons if they wish to vote in respect of the Scheme. The procedure for voting in respect of the Scheme by the Investor Participants and the Other CCASS Participants with respect to the AsiaSat Shares registered under the name of HKSCC Nominees Limited shall be in accordance with the “General Rules of CCASS” and the “CCASS Operational Procedures” in effect from time to time.

 

13.    ACTION TO BE TAKEN BY ADS HOLDERS

 

If you are an ADS Holder, you cannot vote at the Court Meeting or the Special General Meeting directly but you may use the enclosed ADS Voting Instruction Card to instruct the ADS Depositary (as the registered holder of the Scheme Shares underlying the ADSs) on how to vote the AsiaSat Shares underlying your ADSs. If you are a registered holder of ADSs, please complete and sign the enclosed ADS Voting Instruction Card and return it in accordance with the instructions printed on it as soon as possible, but in any event, so as to be received by the ADS Depositary no later than 5:00 p.m. (New York time) on 17 April 2007. ADS Voting Instruction Cards returned by facsimile will not be accepted. If you hold your ADSs through a financial intermediary, you must rely on the procedures of the financial intermediary through which you hold your ADSs if you wish to vote.

 

You may also become an AsiaSat Shareholder of record, and thereby have the right to vote at the Meetings, by surrendering your ADSs for the purpose of withdrawal of the AsiaSat Shares underlying such ADSs in accordance with the terms of the ADS Deposit Agreement no later than 4:30 p.m. (New York time), on 13 April 2007. You will incur taxes and other charges in connection with such exchange and withdrawal. In order to exchange your ADSs and withdraw the underlying Scheme Shares, you should contact the ADS Depositary at The Bank of New York, 101 Barclay Street, 22nd Floor West, New York, NY 10286, United States.

 

Upon the Scheme becoming effective, the ADS Depositary (as the registered holder of the Scheme Shares underlying the ADSs) will receive an amount in Hong Kong dollars equal to the amount payable in respect of all Scheme Shares held by the ADS Depositary. Upon receipt, the ADS Depositary will convert such funds into US dollars at the then prevailing spot market rate. Upon exchange of your ADSs, you will receive your pro-rata portion of the consideration from the ADS Depositary, less any other fees and expenses of the ADS Depositary in connection with the currency conversion and withholding taxes, if applicable. You will also incur related taxes and other charges. If the Scheme becomes effective and you hold ADSs, you will not be required to pay any cancellation fee to the ADS Depositary for the cancellation of your ADSs. The Offeror will not, however, cover any fees charged by your financial intermediary or any charges related to your exchange of ADSs for AsiaSat Shares for the purpose of voting at the Meetings.

 

22

PART IV – LETTER FROM THE BOARD

 

14.    VOTES REQUIRED

 

In accordance with the direction of the Supreme Court, the Court Meeting will be convened for the purpose of considering and, if thought fit, passing the appropriate resolution to approve the Scheme (with or without modifications). Under Bermuda law, approval of the Scheme will require the affirmative vote of a majority in number of the Scheme Shareholders representing not less than three-fourths in value of the Scheme Shares present and voting either in person or by proxy (by way of poll) at the Court Meeting. Such a resolution will only be considered to have been passed under the Takeovers Code if (i) the Scheme is approved by at least 75 per cent of the votes attaching to the Scheme Shares of the Scheme Shareholders that are cast either in person or by proxy at the Court Meeting; and (ii) the number of votes cast against the resolution to approve the Scheme at the Court Meeting is not more than 10 per cent of the votes attaching to all Scheme Shares held by the Scheme Shareholders. Based on 121,360,500 Scheme Shares held by the Scheme Shareholders as at the Latest Practicable Date, 10 per cent of such Scheme Shares amounted to 12,136,050 Scheme Shares.

 

The passing of a special resolution to approve, among other matters, the capital reduction of the relevant portion of the issued share capital of the Company as a result of the Scheme and the issue of New AsiaSat Shares requires the affirmative vote by a majority of at least three-fourths of the votes cast by the AsiaSat Shareholders present and voting, in person or by proxy, at the Special General Meeting. If the Scheme is approved at the Court Meeting, Bowenvale has indicated that its AsiaSat Shares will be voted in favour of such special resolution.

 

15.    EXERCISING YOUR RIGHT TO VOTE

 

If you are an AsiaSat Shareholder, we strongly encourage you to exercise your right to vote or give instructions to the relevant Registered Owner to vote at the Court Meeting and at the Special General Meeting. If you keep or think you may keep any AsiaSat Shares in a share lending programme, we urge you to recall any outstanding AsiaSat Shares on borrow to avoid market participants using borrowed stock to vote against the Share Proposal, which potentially could have a negative impact on the value of your AsiaSat Shares.

 

If you are a Registered Owner, we should be grateful if you could inform any ultimate beneficial AsiaSat Shareholders about the importance of exercising their vote.

 

If you are an ADS Holder, please complete and return the ADS Voting Instruction Card to the ADS Depositary in a timely manner. If you hold your ADSs through a financial intermediary, please follow the instructions that the financial intermediary provides to you.

 

If you are in any doubt as to the action to be taken, you are encouraged to consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

 

16.    ACTION TO BE TAKEN BY OPTIONHOLDERS

 

The Letter to Optionholders setting out the terms and conditions of the Option Proposal is being despatched today separately to each of the Optionholders. Optionholders should refer to those letters, which are substantially in the form set out in “Appendix 1 – Sample Letter to Optionholders” to this Scheme Document. Optionholders should also note the instructions and terms printed on the Option Form of Acceptance.

 

The attention of Optionholders is drawn to the Rules of the Share Option Scheme, and in particular paragraph 8.5 of the Rules of the Share Option Scheme.

 

The Option Proposal is subject to and conditional upon the Scheme becoming effective and binding but does not otherwise form part of the Scheme.

 

17.    RECOMMENDATIONS

 

In the letter from the Independent Financial Adviser to the Independent Board Committee set out in “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee” of this Scheme Document, the Independent Financial Adviser states that it considers the terms of the Proposals to be fair and reasonable so far as the Scheme Shareholders (including without limitation the ADS Holders) are concerned and advises the Independent Board Committee to recommend the Scheme Shareholders (including without limitation the ADS

 

23

PART IV – LETTER FROM THE BOARD

 

Holders) to vote in favour of the resolution to approve the Scheme at the Court Meeting and to vote in favour of the special resolution to approve, among other matters, the capital reduction arising as a result of the Scheme and the issue of New AsiaSat Shares at the Special General Meeting, and the terms of the Option Proposal are fair and reasonable so far as the Optionholders are concerned.

 

The Independent Board Committee, having considered the terms of the Proposals and having taken into account the opinion of the Independent Financial Adviser, and in particular the factors, reasons and recommendations set out in its letter in “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee” of this Scheme Document, considers that the terms of the Proposals are fair and reasonable so far as the Scheme Shareholders (including without limitation the ADS Holders) are concerned and the terms of the Option Proposal are fair and reasonable so far as the Optionholders are concerned. Accordingly, the Independent Board Committee recommends the Scheme Shareholders (including without limitation the ADS Holders) to vote or procure to vote in favour of the resolution to approve, among other matters, the Scheme at the Court Meeting and to vote or procure to vote in favour of the special resolution to approve, among other matters, the capital reduction arising as a result of the Scheme at the Special General Meeting, and that Optionholders accept the Option Proposal if they have not exercised their Options in accordance with the Rules of the Share Option Scheme. The full text of the letter from the Independent Board Committee is set out in “Part V – Letter from the Independent Board Committee” of this Scheme Document.

 

FURTHER INFORMATION

 

You are urged to read carefully the letters from the Independent Board Committee and from the Independent Financial Adviser set out in “Part V – Letter from the Independent Board Committee” and “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee” of this Scheme Document, respectively, the US Special Factors and the Explanatory Statement set out in “Part VII – US Special Factors” and “Part VIII – Explanatory Statement” of this Scheme Document, the Appendices to this Scheme Document, the Scheme set out in “Part XII – Scheme of Arrangement” of this Scheme Document and the notices of the Meetings set out in “Part XIII – Notice of Court Meeting” and “Part XIV – Notice of Special General Meeting” of this Scheme Document.

 

In considering what actions to take in respect of the Share Proposal and Option Proposal, Scheme Shareholders and Optionholders, respectively, should consider their own tax position and, if they are in any doubt as to the taxation or other implications resulting from the Scheme becoming effective or otherwise, it is recommended that they consult their own professional advisers. It is emphasised that none of AsiaSat, the Offeror, Morgan Stanley or CLSA or any of their respective officers or any other person involved in the Proposals accepts responsibility for any tax or any other effects on, or liabilities of, any person or persons as a result of the implementation or otherwise of the Proposals. For further information, please see “Part VIII – Explanatory Statement; 20. Taxation” and “Part VII – US Special Factors; 2. Tax Consequences”.

 

AsiaSat Shareholders, ADS Holders and Optionholders should be aware that the implementation of the Proposals and the implementation of the Possible MGO Offers (if any) are subject to the Conditions being fulfilled or waived, as applicable, and thus the Proposals may or may not become effective and the Possible MGO Offers may or may not be made. Such persons are also advised to exercise caution when dealing in AsiaSat Shares, ADSs and/or Options.

 

Yours faithfully
for and on behalf of the Board
Mr. Peter E. Jackson
Chief Executive Officer

 

24

PART V – LETTER FROM THE INDEPENDENT BOARD COMMITTEE

 

LOGO

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

 

LOGO

(Incorporated in Bermuda with limited liability)

(Stock Code: 1135)

 

Members of the Independent Board Committee:

    Registered office:

Professor Chen Kwan Yiu Edward

    Canon’s Court,

Mr. Sze Tsai To Robert

    22 Victoria Street,

Mr. James Watkins

    Hamilton HM 12,
   Bermuda
   19 March 2007

 

To the Scheme Shareholders (including without limitation the ADS Holders) and the Optionholders

 

Dear Sir or Madam,

 

PROPOSED PRIVATISATION OF

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

BY ASIACO ACQUISITION LTD.*

(*formerly named Modernday Limited)

BY WAY OF A SCHEME OF ARRANGEMENT

UNDER SECTION 99 OF THE COMPANIES ACT OF BERMUDA

INVOLVING THE CANCELLATION OF THE

SCHEME SHARES

 

We have been appointed as the Independent Board Committee to give recommendations to the Scheme Shareholders (including without limitation the ADS Holders) and the Optionholders in connection with the Share Proposal and the Option Proposal, respectively, details of which are set out in the “Letter from the Board” contained in the Part IV of the Scheme Document. Terms used in this letter have the same meanings as defined in the Scheme Document. The Independent Financial Adviser has been appointed to advise us in connection with the Share Proposal and the Option Proposal.

 

Having considered the terms of the Share Proposal and the Option Proposal, and having taken into account the advice and recommendations of the Independent Financial Adviser contained in its letter in Part VI of the Scheme Document (including the factors under the heading “Conclusion and Opinion” in its letter, which should be read in the context of the full text of that letter), we are of the opinion that the terms of the Share Proposal are fair and reasonable so far as the Scheme Shareholders (including without limitation the ADS Holders) are concerned, and that the terms of the Option Proposal are fair and reasonable so far as the Optionholders are concerned. We therefore recommend the Scheme Shareholders (including without limitation the ADS Holders) to vote in favour of both the resolution to approve the Scheme at the Court Meeting and the special resolution to, among other matters, approve the capital reduction arising as a result of the Scheme at the Special General Meeting. We also recommend the Optionholders to accept the Option Proposal if they have not exercised their Options in accordance with the Rules of the Share Option Scheme prior to the Scheme Record Time. For further details, we recommend reading the discussion of “Fairness” in “Part VII – US Special Factors” and “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee” of the Scheme Document of which this letter forms part.

 

Yours faithfully
Independent Board Committee
Professor Chen Kwan Yiu Edward
Chairman

 

25

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

The following is the text of a letter of advice from CLSA, the Independent Financial Adviser appointed to advise the Independent Board Committee, which has been prepared for the purpose of incorporation into this Scheme Document, setting out its advice to the Independent Board Committee in connection with the Share Proposal and the Option Proposal.

 

LOGO

19 March 2007

 

To the Independent Board Committee of Asia Satellite Telecommunications Holdings Limited

 

Dear Sirs,

 

PROPOSED PRIVATISATION OF

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

BY ASIACO ACQUISITION LTD.

BY WAY OF A SCHEME OF ARRANGEMENT

UNDER SECTION 99 OF THE COMPANIES ACT OF BERMUDA

INVOLVING THE CANCELLATION OF THE

SCHEME SHARES, ISSUE OF THE NEW SHARES

AND WITHDRAWAL OF LISTING

AND

POSSIBLE MANDATORY GENERAL OFFER

 

INTRODUCTION

 

We refer to our engagement as the independent financial adviser to the Independent Board Committee, the Scheme Shareholders and Optionholders as to whether or not the terms and conditions of the proposal to privatise AsiaSat pursuant to the Scheme and the proposal to cancel all outstanding Options (together the “Proposals”), and more particularly, the cancellation price of HK$18.30 per Scheme Share (the “Share Offer Price”), HK$183.00 per ADS, HK$0.82 per outstanding B Option and HK$3.95 per outstanding C Option (the “Option Offer Price”), as defined and detailed herein below, are fair and reasonable so far as the Scheme Shareholders and Optionholders, respectively, are concerned.

 

This letter has been prepared for inclusion in the Scheme Document. Capitalised terms used in this letter shall have the same meanings as defined in the Scheme Document unless the context otherwise requires.

 

INDEPENDENT BOARD COMMITTEE

 

Pursuant to resolutions of the Board dated 5 February 2007, the following Independent Non-executive Directors of AsiaSat, being Prof. Edward Chen, Mr. Robert Sze and Mr. James Watkins, were appointed as members of the Independent Board Committee for the purposes of advising the Scheme Shareholders and Optionholders in respect of the Share Proposal and the Option Proposal respectively. In the event that the Possible MGO Share Offer and the Possible MGO Option Offer are subsequently made, the Independent Board Committee would also advise Scheme Shareholders and Optionholders in respect of such offers.

 

As all of the Non-executive Directors of the Company (other than the members of the Independent Board Committee) were nominated by either CITIC Group or SES, the Independent Board Committee therefore does not include the Non-executive Directors.

 

BASIS OF OUR OPINION

 

In connection with the preparation and delivery of our opinion to the Independent Board Committee and the Board, we performed a variety of financial and comparative analyses, as described below. The preparation of a fairness and reasonableness opinion involves various determinations as to the most appropriate and relevant methods of financial and comparative analysis, and the application of those methods to the particular circumstances. Furthermore, in arriving at our opinion, we did not attribute any particular weight to any analysis or factor considered by us, but rather made qualitative judgments as to the significance and relevance of each

 

26

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

analysis and factor. Accordingly, we believe that our analyses must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying our opinion.

 

In formulating our opinion with regard to the Proposals, we have relied on the information, opinions and facts supplied, and representations made, to us by the Directors and representatives of AsiaSat (including those contained or referred to in the Scheme Document and the announcement issued by the Offeror and AsiaSat dated 13 February 2007 (the “Announcement”)). We have assumed that all such information, opinions, facts and representations which have been provided to us by the Directors, and representatives of AsiaSat, and for which they are wholly responsible, are true and accurate in all material respects. We have also relied on certain information available to the public and we have assumed such information to be accurate and reliable, and we have not independently verified the accuracy of such information. Further, we have relied on the representations of the Directors that they have made all reasonable inquiries, and that, to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement contained in the Scheme Document or the Announcement untrue or misleading. We have also assumed that statements and representations made or referred to in the Scheme Document and the Announcement were accurate at the time they were made and continue to be accurate at the date of despatch of the Scheme Document.

 

We consider that we have reviewed sufficient information to enable us to reach an informed view regarding the Proposals to justify our recommendation, relying on the accuracy of the information provided in the Scheme Document and the Announcement as well as to provide a reasonable basis for our advice. As the independent financial adviser to the Independent Board Committee, we have not been involved in the negotiations in respect of the terms and conditions of the Proposals. Our opinion with regard to the terms and conditions thereof has been made on the assumption that all obligations to be performed by AsiaSat and the Offeror in relation to the Proposals will be fully performed in accordance with the terms and conditions thereof. Further, we have no reason to suspect that any material facts or information have been omitted or withheld from the information supplied or opinions expressed to us nor to doubt the truth, accuracy and completeness of the information, facts and representations provided, or the reasonableness of the opinions expressed, to us by AsiaSat, its Directors and its representatives. In line with normal practice, we have not, however, made any independent verification of the information and facts provided, representations made or opinions expressed by AsiaSat, its Directors and its representatives, nor have we conducted any form of independent investigation into the business affairs or assets and liabilities of AsiaSat. Accordingly, we do not warrant the accuracy or completeness of any such information.

 

Our opinion is necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information publicly available to us as of, the date of this opinion. As a result, circumstances could develop prior to completion of the Proposals that, if known to us at the time we rendered our opinion, would have altered our opinion.

 

Our opinion is also subject to the following qualifications:

 

  (i) It is not possible to confirm whether or not the Share Proposal and the Option Proposal, are in the interests of each individual Scheme Shareholder or Optionholder, respectively, and each Scheme Shareholder and Optionholder should consider his/her/its vote on the merits or otherwise of the Share Proposal and the Option Proposal respectively, in his/her/its own circumstances and from his/her/its own point of view having regard to all the circumstances (and not only the financial perspective offered in this letter) as well as his/her/its own investment objectives;

 

  (ii) We express no opinion as to whether the Proposals will be completed nor whether they will be successful;

 

  (iii) Nothing contained in this letter should be construed as us expressing any view as to the trading price or market trends of any securities of AsiaSat at any particular time; and

 

  (iv) Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any securities in AsiaSat.

 

27

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

This letter is for the information of the Independent Board Committee solely in connection with their consideration of the Proposals and, except for its inclusion in the Scheme Document and for references thereto in the letter from the Independent Board Committee set out in the Scheme Document, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose without our prior written consent. Our opinion is directed to the Independent Board Committee, addresses only the fairness and reasonableness of the consideration to be received by Scheme Shareholders and Optionholders in the Proposals and does not address the relative merits of the Proposals or any other transaction that may have been available as an alternative to the Proposals, whether or not any such alternative could be or could have been achieved, or the terms upon which any such alternative transaction could be or could have been achieved. Further, our opinion addresses only issues related to the fairness and reasonableness to Scheme Shareholders and Optionholders of the Proposals.

 

CLSA is a licensed securities adviser and corporate finance adviser under the SFO and we, together with our affiliates, provide a full range of investment banking and brokerage services, which, in the course of normal trading activities, may from time to time effect transactions and hold securities, including derivative securities, of AsiaSat, its subsidiaries or its substantial shareholder (as defined in the Listing Rules) or those of the Offeror, Able Star, CITIC Group, GE Equity and GECC for the accounts of customers. CLSA will receive a fee from AsiaSat for rendering this opinion. AsiaSat has also agreed to indemnify CLSA and certain related persons against liabilities and expenses in connection with this engagement.

 

In connection with the preparation of our opinion, we made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. Among other things, we:

 

  •  

reviewed AsiaSat’s audited financial statements for the fiscal years ended 2000 through 2006, the annual reports on Form 20-F for the fiscal years ended 2000 through 2005 and AsiaSat’s unaudited financial statements for the two months ended 28 February 2007, which AsiaSat’s management has identified as being the most current financial statements available;

 

  •  

met with certain members of AsiaSat’s management and auditors to discuss the operations, financial condition, future prospects and projected operations and performance of AsiaSat;

 

  •  

reviewed the historical market prices and trading volume for the AsiaSat Shares and the ADSs;

 

  •  

reviewed certain other publicly available financial data for certain companies that we deemed comparable to AsiaSat;

 

  •  

reviewed various documents relating to AsiaSat;

 

  •  

reviewed the Company’s current financial projections and its past financial projections against actual performance; and

 

  •  

conducted such other studies, analyses and inquiries as we deemed appropriate.

 

In assessing the fairness and reasonableness of the consideration to Scheme Shareholders and Optionholders under the Proposals, we independently valued AsiaSat using widely accepted valuation methodologies.

 

BACKGROUND TO AND MATERIAL TERMS OF THE PROPOSALS

 

Detailed terms of the Proposals are as set out in “Part IV – Letter from the Board” and “Part VIII – Explanatory Statement” in the Scheme Document and the Scheme Shareholders and Optionholders are strongly urged to read the entire “Part IV – Letter from the Board” and “Part VIII – Explanatory Statement” in the Scheme Document.

 

On 13 February 2007, the Offeror requested the Board to put forward the Share Proposal to the Scheme Shareholders for cancellation of the Scheme Shares to effect the privatisation of the Company by way of a scheme of arrangement under Section 99 of the Companies Act and informed the Board that it will make the Option Proposal (detailed below) to Optionholders for the cancellation of Outstanding Options in exchange for cash. If approved, the Scheme will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Special General Meeting. The effect of the Proposals is that AsiaSat will become wholly owned by CITIC Group and GECC, through Bowenvale as to 68.9 per cent and through the Offeror as to 31.1 per cent. The AsiaSat Shares held by Bowenvale will not form part of the Scheme Shares.

 

28

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

GECC and SES have agreed to pursue the Exchange Transaction, which involves the redemption by SES of GECC’s entire shareholding (of approximately 19 per cent) in SES in exchange for stock of a newly incorporated company that will own a number of assets. Among these assets is SES’s entire 49.5 per cent shareholding in Bowenvale which SES will transfer to such newly incorporated company. Bowenvale holds approximately 68.9 per cent of the issued ordinary shares of the Company. Accordingly, upon completion of the Exchange Transaction, Able Star and GE Equity will jointly own, through Bowenvale, 68.9 per cent of the AsiaSat Shares.

 

In consideration of CITIC Group agreeing to terminate, with respect to SES, the Shareholders’ Agreement, and releasing the SES parties from their obligations under and liabilities pursuant to the Shareholders’ Agreement, CITIC Group will receive a cash payment of HK$100 million from SES or any of its subsidiaries. Such cash payment will be made directly by SES (or the relevant subsidiary) to CITIC Group upon completion of the Exchange Transaction.

 

The Executive has taken the view that the Transfer would, on completion, result in the formation of a new concert group that has statutory control of Bowenvale, thereby triggering a mandatory general offer obligation in respect of AsiaSat. Accordingly, the Possible MGO Offers were announced simultaneously with the announcement of the Proposals. As explained in “Part VIII – Explanatory Statement” in the Scheme Document, the Possible MGO Offers will only be made in the event that the Transfer completes but the Scheme is unsuccessful, and the formal offer documentation in respect of the Possible MGO Offers will not be despatched, if at all, until after the Meetings have been held.

 

As Scheme Shareholders are not required to make a decision in relation to the Possible MGO Offers at this stage, we have considered the Possible MGO Offers in this letter solely for the purpose of comparing the Possible MGO Offers against the Proposals. In the event that the Possible MGO Offers are made, we will provide a separate opinion letter to the Independent Board Committee for inclusion in the formal offer documentation in respect of the Possible MGO Offers.

 

1. The Proposals

 

1.1. The Share Offer Price and Option Offer Price

 

As stated in “Part VIII – Explanatory Statement” in the Scheme Document, the Proposals are made on the following basis:

 

The Share Proposal
HK$18.30 in cash    for each Scheme Share
HK$183.00 in cash    for every ADS
The Option Proposal   
HK$0.82 in cash    for each outstanding B Option
HK$3.95 in cash    for each outstanding C Option

 

1.2. The Share Proposal

 

As stated in “Part VIII – Explanatory Statement” in the Scheme Document, the aim of the Share Proposal is to privatise the Company by way of the Scheme and to cancel all the Scheme Shares (including Scheme Shares underlying the ADSs), which will result in a reduction of the issued share capital of the Company under Section 46 of the Companies Act and to issue the New AsiaSat Shares to the Offeror. In consideration for the cancellation of the Scheme Shares, Scheme Shareholders will be entitled to receive the Share Offer Price, being HK$18.30 per Scheme Share, in cash.

 

No AsiaSat Share acquired by the Offeror pursuant to the Share Proposal will be transferred, charged or pledged to any other person, and there are no agreements, arrangements or understandings in place to do the same, nor are there any related charges or pledges which may result in the transfer of voting rights attached to AsiaSat Shares.

 

29

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

The effect of the Proposals is that AsiaSat will become wholly owned by CITIC Group and GECC, through Bowenvale as to 68.9 per cent and through the Offeror as to 31.1 per cent. After the Scheme becomes effective, the Offeror may transfer its entire interest in AsiaSat to Bowenvale.

 

A dividend declared by the Company after 13 February 2007 (being the date of the Announcement) and prior to the Scheme becoming effective will be declared on the following basis:

 

  (i) the amount of the dividend shall not affect the Share Offer Price if the Scheme becomes effective and binding on and before 10 May 2007;

 

  (ii) the amount of the dividend will be deducted from the Share Offer Price if the Scheme becomes effective and binding after 10 May 2007;

 

  (iii) if the Scheme becomes effective and binding prior to 10 May 2007, the dividend shall not be paid; and

 

  (iv) if the Scheme does not become effective, the dividend will be paid to AsiaSat Shareholders on the register of members of the Company at 4:30 p.m. on 10 May 2007.

 

Further terms of the Share Proposal, including the procedures for acceptances, are set out in “Part VIII – Explanatory Statement” in the Scheme Document.

 

1.3. Implications for ADS Holders

 

As the ADSs are governed by the ADS Deposit Agreement and not Bermuda law, implementation of the Scheme will not result in and of itself in cancellation of the ADSs. Instead, upon the Scheme becoming effective, the Scheme Shares underlying ADSs will be cancelled along with all other Scheme Shares, and the cash received by the ADS Depositary (as registered owner of the Scheme Shares underlying the ADSs) upon cancellation of such Scheme Shares will be converted into US dollars by the ADS Depositary and distributed (less any fees and expenses of the ADS Depositary in connection with currency conversions under the ADS Deposit Agreement and withholding tax, if applicable) to the ADS Holders pro rata to their holdings upon surrender of their ADSs, in accordance with the provisions of the ADS Deposit Agreement.

 

1.4. The Option Proposal

 

In accordance with the terms of the Share Option Scheme, Optionholders are entitled to exercise their Options, which confer rights to subscribe for AsiaSat Shares at a price of HK$17.48 per AsiaSat Share in respect of B Options and HK$14.35 per AsiaSat Share in respect of C Options, in full or in part at any time from the date of such notice until the earlier of (i) two calendar months after the date of the notice of the Court Meeting and (ii) the date on which the Scheme is sanctioned by the Supreme Court, but the exercise of the Options as described above shall be conditional upon the Scheme becoming effective.

 

Optionholders should note that under the Rules of the Share Option Scheme:

 

(i) Optionholders have the right to exercise Options up to two calendar months after the date of despatch of the Scheme Document or the date of the sanction of the Scheme by the Supreme Court, whichever is the earlier;

 

(ii) Optionholders who exercise their Options prior to the Voting Record Time will become Scheme Shareholders who may vote on the Scheme, provided they are not concert parties of the Offeror; and

 

(iii) Optionholders who exercise their Options after the Voting Record Time may do so until the Scheme Record Time, but will only be able to do so subject to the terms of the Scheme and conditional upon the Scheme being sanctioned by the Supreme Court, and will therefore be bound by the Scheme.

 

AsiaSat Shares issued upon exercise of the Options in accordance with the terms of the Share Option Scheme prior to the Scheme Record Time will form part of the Scheme Shares. Options which are not exercised in accordance with the terms of the Share Option Scheme and in relation to which the Option Proposal is not accepted will lapse, subject to and conditional upon the Scheme becoming effective. The Option Proposal is conditional upon the Scheme becoming effective and binding.

 

30

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

If Optionholders do not exercise their Options, the Option Proposal offers Optionholders the opportunity, in respect of each outstanding Option, to receive a payment of HK$0.82 for each B Option and HK$3.95 for each C Option, in cash.

 

As stated in “Part VIII – Explanatory Statement” in this Scheme Document, the Option Offer Price represents a see-through price of HK$0.82 per outstanding B Option and HK$3.95 per outstanding C Option, that is, the Share Offer Price less the relevant exercise price for the Options. This means that the Optionholders are being offered the same price they would have received if they had exercised the Options, became holders of Scheme Shares, and received the Share Offer Price upon cancellation of such Scheme Shares.

 

Further information on the Option Proposal is set out in the Scheme Document and the Option Proposal will be made by or on behalf of the Offeror in a Letter to Optionholders to be despatched on the same day as the Scheme Document.

 

1.5. Total Consideration

 

On the basis of the Share Offer Price of HK$18.30 per Scheme Share and 390,265,500 AsiaSat Shares in issue, of which 121,360,500 were Scheme Shares as at the Latest Practicable Date (including Scheme Shares underlying the ADSs), the Scheme Shares are valued at approximately HK$2,221 million.

 

Save for the Options, there are no outstanding options, warrants, derivatives or other securities issued by AsiaSat that carried a right to subscribe for or which are convertible into AsiaSat Shares. Assuming none of the Options are exercised prior to the Scheme Record Time in accordance with the terms of the Share Option Scheme and on the basis of the Option Offer Price of HK$0.82 per Outstanding B Option, and HK$3.95 per Outstanding C Option, the Option Proposal is valued at approximately HK$14 million. Assuming all Options are exercised in full by the Optionholders in accordance with the terms of the Share Option Scheme prior to the Scheme Record Time, no consideration will be payable under the Option Proposal, and the number of Scheme Shares will accordingly increase to 126,193,000 and the Scheme Shares would be valued at approximately HK$2,309 million.

 

The total amount of cash required to effect the Proposals is approximately HK$2,235 million if none of the Options are exercised prior to the Scheme Record Time. This amount would increase to an aggregate of approximately HK$2,309 million if all Options are exercised prior to the Scheme Record Time.

 

1.6. Conditions of the Proposals

 

The Share Proposal will become effective and binding on the Company and all Scheme Shareholders subject to fulfilment or waiver (as applicable) of the following conditions:

 

(a) the approval by way of poll of the Scheme by a majority in number of the Scheme Shareholders representing not less than three-fourths of the nominal value of the Scheme Shares, present and voting either in person or by proxy at the Court Meeting, provided that:

 

  (i) the Scheme is approved by at least 75 per cent of the votes attaching to Scheme Shares held by Scheme Shareholders that are cast either in person or by proxy at the Court Meeting; and

 

  (ii) the number of votes cast against the resolution to approve the Scheme at the Court Meeting is not more than 10 per cent of the votes attaching to all Scheme Shares held by Scheme Shareholders;

 

(b) the passing by AsiaSat Shareholders of a special resolution to approve and give effect to the Scheme (including the cancellation of the Scheme Shares and the reduction of the relevant portion of the issued share capital of the Company and the issue of the New AsiaSat Shares) by a majority of not less than three-fourths of the votes cast by the AsiaSat Shareholders present and voting in person or by proxy, at the Special General Meeting;

 

(c) the sanction of the Scheme (with or without modifications) by the Supreme Court and the delivery to the Registrar of Companies in Bermuda of a copy of the order of the Supreme Court for registration;

 

(d) the compliance with the procedural requirements of Section 46 of the Companies Act in relation to the reduction of the issued share capital of the Company;

 

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PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

(e) all other Authorisations in connection with the Share Proposal having been obtained from the Relevant Authorities in Bermuda, Hong Kong, the United States and other relevant jurisdictions (if any);

 

(f) all Authorisations remaining in full force and effect without variation, and all necessary statutory or regulatory obligations in all relevant jurisdictions having been complied with and no requirement having been imposed by any Relevant Authorities which is not expressly provided for in these conditions, or is in addition to the requirements expressly so provided for, in relevant laws, rules, regulations or codes in connection with the Proposals or any matters, documents (including circulars) or things relating thereto, which is material in the context of the Group as a whole in each aforesaid case up to and at the time when the Scheme becomes effective;

 

(g) all necessary third party consents required under contractual obligations of AsiaSat which are material in the context of the Group as a whole having been obtained;

 

(h) a waiver from the Hong Kong Broadcasting Authority in respect of compliance with statements and representations regarding the legal and beneficial interests in the Licensees’ voting control and shares set out in the Licensees’ non-domestic television programme service licences issued by the Hong Kong Broadcasting Authority;

 

(i) confirmation from OFTA (in a form satisfactory to the Executive for the purposes of compliance with Note 4 to Rule 26.2 of the Takeovers Code) that the Proposals will not have, or be likely to have, the effect of substantially lessening competition in a telecommunications market in Hong Kong as referred to in Section 7P of the Telecommunications Ordinance;

 

(j) no governments, governmental, quasi-governmental, supranational, statutory or regulatory bodies or courts in any jurisdiction having instituted any action, proceedings, suit, investigation or enquiry or enacted or made and there not continuing to be outstanding any statute, regulation or order that would make the Share Proposal void, unenforceable or illegal or prohibit the implementation of the Share Proposal;

 

(k) none of the telecommunications licences held by the Group which are material in the context of the Group as a whole having been revoked by OFTA when Conditions (f), (g), (h), (i) and (j) are satisfied;

 

(l) completion of the Exchange Transaction; and

 

(m) since the date of this Scheme Document, no event having occurred in relation to any satellite whether under construction or in service and owned and/or operated by any member of the Group (such as, without limitation, technical failure or launch failure, satellite defects, destruction and damage that may result in total or partial loss or incorrect orbital placement or prevent proper commercial operation) which has a material adverse effect on the business, assets, financial or trading position or prospects of the Group taken as a whole.

 

As stated in “Part VIII – Explanatory Statement” in this Scheme Document, the Offeror reserves the right to waive condition (g) either in whole or in part in respect of any particular matter. In the event that conditions (e) or (f) are not fulfilled by reason of an Authorisation not having been obtained, the Offeror reserves the right to assess the materiality of such non-fulfillment and to waive the fulfillment of such condition(s) to such extent where it considers appropriate. Conditions (a) to (d), and conditions (j) and (l) cannot be waived in any event. The Offeror may only invoke condition (m) as a basis for not proceeding with the Scheme if the provisions of Note 2 to Rule 30.1 of the Takeovers Code are satisfied. Note 2 to Rule 30.1 of the Takeovers Code provides that an offeror should not invoke any condition (other than the acceptance condition) so as to cause the offer to lapse unless the circumstances which give rise to the right to invoke the condition are of material significance to the offeror in the context of the offer. The waiver or invoking by the Offeror of any condition in accordance with the terms of this paragraph shall not be subject to the Company’s agreement, approval or consent. The Offeror may not waive any other condition in any event, and the Company has no right to waive any of the conditions.

 

All of the above conditions will have to be fulfilled or waived, as applicable, on or before 30 June 2007 (or such later date as the Offeror and the Company may agree or (to the extent applicable) as the Supreme Court may direct and as may be permitted by the Takeovers Code), failing which the Scheme will lapse. Any extension to such later date shall not be beyond 31 October 2007.

 

The implementation of the Option Proposal is conditional upon the Share Proposal becoming effective and binding.

 

32

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

As stated in the “Part IV – Letter from the Board” in this Scheme Document, AsiaSat Shareholders, ADS Holders and Optionholders should be aware that the implementation of the Proposals and the implementation of the Possible MGO Offers (if any) are subject to the Conditions being fulfilled or waived, as applicable, and thus the Proposals may or may not become effective and the Possible MGO Offers may or may not be made. Such persons are also advised to exercise caution when dealing in AsiaSat Shares, ADSs and/or Options.

 

2. The Possible MGO Offers

 

As stated in “Part IV – Letter from the Board” in this Scheme Document, the Possible MGO Offers are potential obligations on the part of Able Star and GE Equity to make a mandatory general offer for AsiaSat Shares not owned by Bowenvale and parties acting in concert with it. In the event that the Transfer completes but the Scheme fails or lapses, the Possible MGO Share Offer document, Possible MGO Option Offer letter and forms of acceptance in respect of the Possible MGO Offers would be despatched to AsiaSat Shareholders and Optionholders respectively, following the failure or lapsing of the Scheme.

 

If the Possible MGO Share Offer is made, it will be made at the Possible MGO Share Offer Price, payable in cash. The Possible MGO Share Offer Price is HK$16.00 compared to the Share Offer Price of HK$18.30. The Possible MGO Share Offer, if and when made, will not be subject to any condition.

 

If Scheme Shareholders vote in favour of the Scheme, the Supreme Court sanctions the Scheme and the order of the Supreme Court sanctioning the Scheme is filed with the Registrar of Companies in Bermuda, the Scheme will be binding on all Scheme Shareholders, including those that would not have voted in favour of the Scheme. In this event, there will not be a choice for the Offeror to pay the MGO Share Offer Price and the Share Offer Price, which is higher than the MGO Share Offer Price, will have to be paid.

 

In accordance with the terms of the Share Option Scheme, Optionholders are entitled to exercise their Options, which confer rights to subscribe for AsiaSat Shares at a price of HK$17.48 per Share in respect of B Options and HK$14.35 per Share in respect of C Options, in full or in part at any time within 21 days of despatch of the Formal MGO Documentation (or such later date as the Directors may determine). AsiaSat Shares issued upon exercise of the Options in accordance with the terms of the Share Option Scheme will form part of the Possible MGO Shares. If the Possible MGO Option Offer is not accepted within the relevant time period and in relation to which the Options are not exercised in accordance with the Rules of the Share Option Scheme, such Options will lapse.

 

Under the Possible MGO Option Offer, the Offeror will offer to purchase Options, for cancellation in exchange for HK$0.01 in cash for each B Option and HK$1.65 in cash for each Outstanding C Option. Further information on the Possible MGO Options Offer will be set out in the formal offer document to be issued in respect of the Possible MGO Share Offer (if and when made) and the Possible MGO Option Offer will be made by or on behalf of the Offeror in a letter to Optionholders to be despatched on the same day as such formal offer document.

 

As stated in “Part IX – The Possible MGO Offers” in this Scheme Document, if the Possible MGO Share Offer is made and sufficient acceptances of the Possible MGO Share Offer are received, it is the intention of the Offeror to make use of the compulsory acquisition provisions of the Companies Act.

 

In the event the compulsory acquisition thresholds are attained, subject to compliance with the applicable provisions of the Takeovers Code and the Listing Rules, the listing of AsiaSat Shares will be withdrawn from the Stock Exchange and the Offeror intends to cause the Company to apply for de-listing of the ADSs from the NYSE.

 

Please see “Part IX – The Possible MGO Offers” in this Scheme Document for further details regarding the Possible MGO Offers.

 

CLSA has also been appointed to advise the Independent Board Committee in relation to the Possible MGO Offers and, in the event that they are made, the related offer document would include letters of advice from the Independent Board Committee and CLSA in respect of the Possible MGO Offers. However, as the Share Offer

 

33

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

Price and the Option Offer Price are significantly higher than the Possible MGO Share Offer Price and Possible MGO Option Offer Price, and at this stage, Scheme Shareholders are only being asked to consider the Share Proposal, we do not express an opinion on the Possible MGO Offers themselves for the purposes of this letter.

 

PRINCIPAL FACTORS CONSIDERED

 

In considering whether or not the terms and conditions of the Proposals are fair and reasonable and in the interests of the Scheme Shareholders and Optionholders as a whole, we have taken into consideration, amongst others, the following factors:

 

1. Reasons for the Proposals

 

As described in “Part VIII – Explanatory Statement” in the Scheme Document, due to the persistent oversupply of transponder capacity and the slow introduction of new applications in the region, the Asia-Pacific satellite market remains very competitive. Such competition is cited as the reason for the underperformance of the Company’s share price which, in the three year period prior to the Announcement Date, decreased by 11.9 per cent compared to an increase of 51.1 per cent in the Hang Seng Index over the same period. Based on our discussions with AsiaSat’s management, we do not expect a dramatic improvement in the competitive environment in which the Company operates in the near term.

 

Given the overcapacity in the market, Able Star and GE Equity believe that the unsatisfactory share performance of AsiaSat’s Shares may continue. In the view of the Offeror, AsiaSat’s dividend yield remains relatively low as the Company needs to preserve cash to endure competition in the market for commercial supply of satellite transponder capacity, to launch new satellites from time to time and to participate in potential acquisitions. As stated in “Part VIII – Explanatory Statement” in this Scheme Document, the amount of dividends per AsiaSat Share paid in the past two years were:

 

Payment Date

    Dividends
Paid per
AsiaSat Share
     HK$

14 November 2006 (interim dividend)

    0.08

23 May 2006 (final dividend)

    0.27

15 November 2005 (interim dividend)

    0.08

18 May 2005 (final dividend)

    0.27

 

Able Star and GE Equity therefore believe that the earnings of AsiaSat will continue to be under pressure in the short to medium term. As stated in “Part VIII – Explanatory Statement” in this Scheme Document, the Offeror currently has no plans to increase the Company’s annual or interim dividend, cause the Company to distribute any extraordinary dividend, or recapitalise the Company’s balance sheet by increasing the Company’s financial leverage in the ordinary course of business in the event the Transfer Completes and/or the Scheme becomes effective.

 

As stated in “Part VIII – Explanatory Statement” in this Scheme Document, Able Star and GE Equity propose to effect a privatisation through the Scheme to enable AsiaSat to pursue development of its business with greater flexibility, and to effect the privatisation at a price in excess of the Possible MGO Share Offer Price in order to give minority shareholders a premium price for their AsiaSat Shares.

 

A further reason advanced for the Proposals is that the privatisation would also, if it completes, relieve AsiaSat of the heavy financial and administrative burden of dual listings on both the Stock Exchange and the NYSE. In particular, as stated in the Explanatory Statement, the listing on the NYSE has, in recent years, resulted in substantial recurrent professional fees and time costs, which, in the view of Able Star and GE Equity are disproportionate to the benefits of maintaining such listing.

 

The final reason advanced in the Scheme Document for the Proposals is that, as a private company, AsiaSat management should have greater flexibility to focus on the development of business and marketing activities, which is cited as being particularly important given that AsiaSat is operating in a competitive market in which

 

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PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

profitability is under pressure as a result of persistent oversupply of transponder capacity and the substantial investment required to construct and launch new satellites.

 

2. Intentions of the Offeror regarding AsiaSat

 

As stated in “Part VIII – Explanatory Statement” in this Scheme Document, it is the intention of the CITIC Group and GECC to maintain the existing businesses of the AsiaSat Group upon the successful privatisation of the Company. CITIC Group and GECC do not intend to introduce any major changes to the existing operating and management structure of the AsiaSat Group, or to discontinue the employment of any employees of the AsiaSat Group, as a result of the implementation of the Proposals. Upon the successful implementation of the Proposals and AsiaSat becoming a private company, AsiaSat will no longer have access to equity funding through the public capital markets. CITIC Group and GECC also expect that there will be no material change to the existing business (such as business focus and operating mode) of the AsiaSat Group as a result of the implementation of the Proposals.

 

We note that subject to the privatisation of the Company, CITIC Group and GECC contemplate that they will assess whether to revise AsiaSat’s Bye-laws to reflect its change from a public to a private company.

 

We also note that CITIC Group and GECC intend to retain the Company’s existing senior management team to manage the Company after the implementation of the Proposals.

 

35

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

3. Precedent Privatisation Premiums

 

We have identified from publicly available sources1 all successful privatisation transactions, to the best of our knowledge, by way of scheme of arrangements on the main board of the Stock Exchange announced since 1 January 2003 up to and including 13 February 2007, being the date of the Announcement (the “Precedent Privatisations”), and have reviewed the premiums represented by the acquisition price over the net asset value (“NAV”) per share and the average daily closing price of various periods of the Precedent Privatisations. The following is a summary of the Precedent Privatisations:

 

             Share Premium (%)            

Company

  

Date of
Announcement

   Cancellation
Price		   Last Full
Trading
Day 2		     Last 5-day
Trading
Price		     Last 10-day
Trading
Price		     Last 30-day
Trading
Price		     NAV
per
share 3		   NAV
Premium		  
         (HK$)                           (HK$)   (%)  

St Honore Holdings Ltd

   17 November 2006   2.95   43.9 %   45.6 %   51.9 %   57.5 %   1.02   188.8 %

Winsor Industrial Corporation Ltd.

   4 September 2006   5.50   48.6 %   50.9 %   59.4 %   69.0 %   5.43   1.3 %

Egana Jewellery and Pearls Ltd

   10 July 2006   1.80   13.9 %   14.2 %   15.9 %   23.2 %   1.57   14.6 %

SNP Leefung Holdings Ltd

   28 June 2006   1.68   60.0 %   62.5 %   66.8 %   66.9 %   1.49   12.8 %

China National Aviation Company Ltd

   8 June 2006   2.80   42.1 %   45.8 %   52.2 %   51.8 %   0.99   181.6 %

China Resources Cement Holdings Ltd

   31 March 2006   2.45   35.4 %   43.6 %   49.8 %   70.0 %   3.32   -26.3 %

Asia Aluminum Holdings Ltd

   16 March 2006   1.45   26.1 %   31.3 %   36.3 %   49.7 %   0.92   58.0 %

New World TMT Ltd

   2 November 2005   0.75   78.6 %   79.9 %   76.1 %   70.1 %   0.75   0.3 %

Henderson China Holdings Ltd

   19 May 2005   8.00   66.7 %   61.6 %   61.1 %   64.3 %   13.97   -42.7 %

HGC Holdings Ltd

   3 May 2005   0.65   36.8 %   45.1 %   44.0 %   43.8 %   0.03   N/M  

Kwong Sang Hong International Ltd

   4 November 2004   1.25   5.0 %   13.8 %   23.0 %   36.2 %   1.34   -6.5 %

Alpha General Holdings

   13 October 2004   0.70   125.8 %   134.9 %   134.1 %   134.2 %   1.33   -47.4 %

Chevalier Construction Holdings Ltd

   31 October 2003   0.25   16.3 %   16.3 %   16.5 %   23.9 %   0.31   -18.5 %

Pacific Concord Holding Ltd

   26 May 2003   0.65   51.2 %   55.1 %   61.3 %   60.8 %   2.19   -70.3 %

Oxford Properties & Finance Ltd

   21 May 2003   15.00   68.5 %   68.9 %   68.7 %   71.2 %   14.03   6.9 %

Top Glory International Holdings Ltd

   3 May 2003   0.74   85.0 %   83.2 %   81.2 %   73.7 %   1.44   -48.7 %
      High   125.8 %   134.9 %   134.1 %   134.2 %       188.8 %
      Low   5.0 %   13.8 %   15.4 %   22.8 %     -70.3 %
      Average   50.2 %   53.0 %   55.7 %   60.3 %     13.6 %
      Median   46.3 %   47.6 %   54.4 %   62.5 %       0.3 %
                   

AsiaSat

   13 February 2007   18.30   30.7 %   30.8 %   30.9 %   32.2 %   11.06   65.3 %

 

36

 

1

Sources: Stock Exchange website.

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

N/M: Not meaningful

Notes:

1. Source: Bloomberg and respective company circulars and announcements.

 

2. The respective last full trading day prior to the issue of a privatisation announcement by the respective companies (the “Last Full Trading Day”) (in the case of AsiaSat, the Pre-Suspension Date).

 

3. NAV per share from latest published financial information of the respective companies available prior to the respective privatisation announcements and adjusted for any dividends paid between the date of the financial information and the date of the respective privatisation announcement. The NAV per AsiaSat Share is based on its audited consolidated balance sheet as at 31 December 2006 and adjusted for a final dividend of HK$0.27 per AsiaSat Share.

 

As shown in the table above, the premium of 65.3 per cent represented by the Share Offer Price over the NAV per AsiaSat Share is substantially higher than the median premiums over NAV per share of the Precedent Privatisations (“NAV Premiums”) of 0.3 per cent, and is on the high end of the NAV Premiums range of -70.3 per cent to 188.8 per cent.

 

On the other hand, the premiums represented by the Share Offer Price over the average daily closing price of the AsiaSat Shares at various periods are below the average and median premiums over the average daily closing price of the Precedent Privatisations (“Share Premiums”) at various periods, but is within the range of the Share Premiums.

 

4. Precedent Transactions in the Satellite Industry

 

We have identified from publicly available sources1 all completed transactions since 2004 which involved the acquisition of more than a 30 per cent interest in companies that mainly provide satellite services, with a transaction value of over US$100 million (approximately HK$780 million) (the “Precedent Transactions”), and have reviewed the key multiples of the Precedent Transactions. The following is a summary of the Precedent Transactions:

 

Target Name

   

Acquirer Name

   

Date of
Announcement

    % Interest
Acquired		     Transaction
Value
(US$millions)		     Implied
EV/EBITDA
(times) 3		    Implied
P/E
(times) 3		  

New Skies Satellites Holdings Ltd.

    SES Global S.A.    14 December 2005    100.0 %   1,132.03     7.22    N/M 4

PanAmSat Holding Corporation

    Intelsat, Ltd    29 August 2005    100.0 %   6,271.11     21.90    N/M 4

Intelsat, Ltd.

    Zeus Holdings Limited    16 August 2004    100.0 %   5,000.00     6.78    16.60  

New Skies Satellites N.V.

    Blackstone Group    6 June 2004    Note 2     955.95     7.76    80.37  

PanAmSat Corp

    Kohlberg Kravis Roberts & Co.    20 April 2004    80.4 %   4,608.67     7.98    35.46  
                           
             Average     10.33    44.15  
                           
                   

AsiaSat

    Offeror    13 February 2007    31.1 %   284.74 5   6.38    15.78  

Notes:

1. Source: Bloomberg and respective company circulars and announcements.

 

2. The acquisition was structured as a sale of the target’s assets and liabilities.

 

3. Calculated based on the respective acquisition price per share (for AsiaSat, the Share Offer Price) and the latest financial statements of the respective companies published prior to the date of the announcement (for AsiaSat, the audited consolidated financial statements for the year ended 31 December 2006).
4. Not meaningful as the relevant company reported a net loss for the last full financial year prior to the release of the announcements.
5. Based on consideration of HK$2,221 million and an exchange rate of 1 USD = 7.81 HK$

 

37

 

1 Source: Thomson ONE Banker.

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

As shown in the table above, the enterprise value over earnings before interest, tax, depreciation and amortisation (“EV/EBITDA”) represented by the Share Offer Price of 6.38 times is lower than those of the Precedent Transactions; while the price earnings multiple (“P/E”) represented by the Share Offer Price of 15.78 times is lower than those of the Precedent Transactions. However, as all of the Precedent Transactions involved European and US targets that enjoy more favourable operating conditions than satellite operators in the Asia-Pacific region, in which we have not been able to identify recent precedent transactions, we consider the Precedent Transactions to be of limited relevance to the Proposals for comparison purposes. We also note that, unlike the Share Proposal, the majority of the Precedent Transactions involved the acquisition of a majority interest in the target.

 

5. Share Offer Price Compared to Comparable Companies

 

We have identified from publicly available sources1 all listed companies mainly engaged in the provision of satellite services with a market capitalisation of more than US$100 million in Europe, the United States and Asia-Pacific (the “Comparable Companies”) and have reviewed the key multiples of the Comparable Companies. The following is a summary of the Comparable Companies:

 

     

Market

Capitalisation 2

    P/E 3
         2006    2007
      (US$ million)    (times)    (times)

European Companies

           

SES Global

    5,914.5    16.38    17.37

Inmarsat Plc

    3,730.1    N/M    42.76

Eutelsat Communications

    4,343.1    25.67    18.28
                
     Average    21.02    26.14
                

US Companies

           

Globalstar Inc

    755.8    23.35    55.08

RRSat Global Comm.

    176.7    N/A    N/A

GeoEye Inc

    313.0    N/A    N/A
                
     Average    23.35    55.08
                

Asia-Pacific Companies

           

Shin Satellite Public Comp.

    246.1    N/M    14.39

Measat Global Berhad

    298.0    17.34    N/A

JSAT Corp

    873.4    49.02    19.18
                
     Average    33.18    16.79
                
            

AsiaSat

    914.0    15.78    15.50

N/A: Not available

 

Notes:

1. Source: Bloomberg.

 

2. Calculated based on the closing share price on the Pre-Suspension Date, as well as the following exchange rates:

 

1 EURO = 1.30 USD

1 GBP = 1.95 USD

1 USD = 33.70 THB

1 USD = 3.49 MYR

1 USD = 121.94 JPY

1 USD = 7.81 HK$

 

3. For Comparable Companies, calculated based on the closing share price on the Pre-Suspension Date and Bloomberg estimates. For AsiaSat, calculated based on the Share Offer Price and the audited financial statements for the year ended 31 December 2006 and Bloomberg estimates for the year 2007.

 

38

 

1 Source: Bloomberg

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

As shown in the table above, the P/E represented by the Share Offer Price is lower than those of the Comparable Companies.

 

6. Historical Trading Liquidity and Trading Price of AsiaSat Shares

 

The following chart sets out the historical daily closing prices and trading volumes of AsiaSat Shares traded on the Stock Exchange from 1 January 2005 to the Latest Practicable Date:

 

LOGO

 

The average, highest and lowest daily closing prices and the average daily trading volume of AsiaSat Shares for each quarter from 1 January 2005 to the Pre-Suspension Date (the “Review Period”) were as follows:

 

     Average Daily
Closing Price		    Highest Closing
Price
    Lowest Closing
Price
    Average Daily
Trading Volume
     (HK$)    (HK$)    (HK$)    (Shares)

2005

            

1st quarter

    14.66    15.00    14.20    129,781

2nd quarter

    14.12    15.10    13.50    201,008

3rd quarter

    14.61    15.95    13.60    121,474

4th quarter

    13.51    14.90    12.95    162,160

2006

            

1st quarter

    13.39    14.85    12.20    210,969

2nd quarter

    13.27    14.00    13.00    288,513

3rd quarter

    13.04    13.30    12.28    146,134

4th quarter

    13.88    15.00    12.90    116,297

2007

            

1 January - Pre-Suspension Date

    13.84    14.00    13.54    193,250

Source: Bloomberg

 

The Share Offer Price represents a premium of:

 

  •  

approximately 30.7 per cent over the closing price of AsiaSat Shares of HK$14.00 as quoted on the Stock Exchange on the Pre-Suspension Date;

 

  •  

approximately 32.5 per cent over the average daily closing price of AsiaSat Shares of HK$13.81 during the Review Period;

 

39

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

  •  

approximately 14.7 per cent over the highest daily closing price of AsiaSat Shares of HK$15.95 during the Review Period; and

 

  •  

approximately 14.4 per cent over the Possible MGO Share Offer Price of HK$16.00.

 

During the Review Period, AsiaSat Shares traded within the range of HK$12.20 to HK$15.95 (the highest price being achieved in August 2005), and the closing price as at the Pre-Suspension Date was HK$14.00. Following the date of the Announcement, the price of AsiaSat Shares has significantly increased, and as at the Latest Practicable Date, the closing price of AsiaSat Shares was HK$17.54. On the other hand, the average daily trading volume of AsiaSat Shares during the Review Period was about 175,000 AsiaSat Shares, but has significantly increased to about 251,000 AsiaSat Shares between the date of the Announcement to the Latest Practicable Date.

 

Scheme Shareholders should note that there is no assurance that the trading price of AsiaSat Shares will remain at current levels if the Scheme does not proceed to completion. Scheme Shareholders should also note that the past trading performance of AsiaSat Shares should not in any way be relied upon as an indication of its future trading performance. If the Scheme is not successful, the trading price of AsiaSat Shares may revert to their historical trading range before the date of the Announcement, which may be below the Share Offer Price.

 

As such, the Proposals offer the Scheme Shareholders and the Optionholders an opportunity to exit and monetise their investment in AsiaSat Shares and Options at the Share Offer Price and the Option Offer Price, respectively.

 

7. Discounted Cash Flow (“DCF”) Analysis

 

We have also analysed the Share Offer Price using the DCF methodology. We performed the DCF analysis based on projections provided by management of AsiaSat, as adjusted based on our discussions with AsiaSat management regarding AsiaSat’s operating environment, business expansion plans and other factors, but have not independently verified the information used. We then applied different discount rates and terminal growth rates to derive an indicative valuation range for AsiaSat Shares. The Share Offer Price falls within our DCF analysis result range. The DCF analysis should not be regarded as an indication of what price AsiaSat Shares should or could be achieved or indications of profit forecast.

 

8. Other Considerations

 

As stated in “Part VIII – Explanatory Statement” in this Scheme Document, the Offeror has no current intention to introduce any major change to the existing operating and management structures of AsiaSat.

 

As stated in “Part VIII – Explanatory Statement” in this Scheme Document, the Offeror will not increase any of the Offer Prices. Each of the Share Offer Price, the Option Offer Price, the Possible MGO Share Offer Price and the Possible MGO Option Offer Price represents the best and final offer price in respect of the Share Proposal, the Option Proposal, the Possible MGO Share Offer and the Possible MGO Option Offer, respectively. AsiaSat Shareholders should be aware that, following the making of these statements in the Announcement, the Offeror is not allowed to increase any of the Offer Prices, save in wholly exceptional circumstances, as provided in Rule 18.3 of the Takeovers Code. Notwithstanding the above, the Offeror has stated that it reserves the right not to be bound by these statements in the event of a competing offer and such competing offer is recommended by the Board.

 

As at the Latest Practicable Date, Bowenvale and parties acting in concert with it hold an aggregate beneficial ownership of approximately 68.9 per cent of the issued share capital of AsiaSat. If any third party were to make a competing offer for the Privatisation of AsiaSat, such competing offer would not succeed without the acceptance by Bowenvale and parties acting in concert with it. Bowenvale has stated that it has no intention to accept any competing offer.

 

AsiaSat Shareholders should be aware that, in the event AsiaSat Shares held by the public represent less than 25 per cent of the issued AsiaSat Shares, trading in AsiaSat Shares on the Stock Exchange may be suspended. It should be noted that if the Possible MGO Offers are made and close, there may be insufficient public float in AsiaSat Shares and therefore, trading in AsiaSat Shares may be suspended until the prescribed level of public float is attained.

 

AsiaSat Shareholders should also note that the Share Offer Price represents a premium of approximately 14.4 per cent to the Possible MGO Share Offer Price. If the Possible MGO Share Offer is made and sufficient acceptances

 

40

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

of the Possible MGO Share Offer are received, it is the intention of the Offeror to make use of the compulsory acquisition provisions of the Companies Act. In the event the compulsory acquisition thresholds are attained, subject to compliance with the applicable provisions of the Takeovers Code and the Listing Rules, the listing of AsiaSat Shares will be withdrawn from the Stock Exchange and the Offeror intends to cause the Company to apply for de-listing of the ADSs from the NYSE.

 

Rule 2.11 of the Takeovers Code states that, except with the consent of the Executive, where any person seeks to acquire or privatise a company by means of an offer and the use of compulsory acquisition rights, such rights may only be exercised if, in addition to satisfying any requirements imposed by law, acceptances of the offer and purchases, in each case of the disinterested shares, made by the Offeror and persons acting in concert with it during the period of four months after the posting of the initial offer document total 90 per cent of the disinterested shares.

 

CONCLUSION AND OPINION

 

In reaching our opinion (on the bases set out at the beginning of this letter), we have considered the above principal factors and reasons and, in particular, have taken into account the following in arriving at our opinion:

 

  – the reasons for the Proposals, in particular the competitive environment for satellite service providers in the Asia-Pacific region due to the persistent oversupply of transponder capacity and the slow introduction of new applications in the region;

 

  – the historical trading performance of AsiaSat Shares and persistent low levels of liquidity in AsiaSat Shares;

 

  – the Share Offer Price represents a premium of approximately 30.7 per cent over the closing price of HK$14.00 of AsiaSat Shares as quoted on the Stock Exchange on the Pre-Suspension Date, a premium of approximately 32.5 per cent over the average daily closing price of AsiaSat Shares of HK$13.81 during the Review Period, a premium of approximately 14.7 per cent over the highest daily closing price of AsiaSat Shares of HK$15.95 during the Review Period, and a premium of approximately 14.4 per cent over the Possible MGO Share Offer Price of HK$16.00;

 

  – the Share Offer Price represents a premium over the NAV per share (after adjusting for dividends), which is substantially higher than the median premium over NAV per share offered in the Precedent Privatisations, and is on the high end of the premiums over NAV per share per share range of the Precedent Privatisations;

 

  – the premium represented by the Share Offer Price over the price of AsiaSat Shares as of the Pre-Suspension Date and average daily closing prices of AsiaSat Shares over various periods falls within the range of relevant premiums of the Precedent Privatisations;

 

  – while the EV/EBITDA and P/E represented by the Share Offer Price are lower than those of the Precedent Transactions, all of the Precedent Transactions involved European and US targets that enjoy more favourable operating conditions than satellite operators in the Asia-Pacific region;

 

  – the P/E represented by the Share Offer Price is lower than those of the Comparable Companies;

 

  – the Share Offer Price is within the DCF analysis result range based on the projections provided to us by the management of AsiaSat;

 

  – the Option Offer Price represents cash equal to the cash payment which Optionholders would receive if they had exercised their outstanding Options and accepted the Share Proposal in respect of those Shares arising as a result of such exercise;

 

  – as Bowenvale and parties acting in concert with it hold an aggregate beneficial ownership of approximately 68.9 per cent of the issued share capital of AsiaSat, if any third party were to make a competing offer for the Privatisation of AsiaSat, such competing offer would not succeed without the acceptance by Bowenvale and parties acting in concert with it, and Bowenvale has stated that it and parties acting in concert with it have no intention to accept any competing offer;

 

  – the Offeror will not be allowed to increase any of the Offer Prices, save in wholly exceptional circumstances, as provided in Rule 18.3 of the Takeovers Code; and

 

41

PART VI – LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE

INDEPENDENT BOARD COMMITTEE

 

  – the Proposals offer the Scheme Shareholders and the Optionholders an opportunity to exit and monetise their investment in AsiaSat Shares and Options at the Share Offer Price and the Option Offer Price, respectively.

 

Having considered the above, we are of the opinion that the terms and conditions of the Proposals, in particular the Share Offer Price and the Option Offer Price, are fair and reasonable so far as the Scheme Shareholders and the Optionholders, respectively, are concerned. Accordingly, we advise the Independent Board Committee to recommend to the Scheme Shareholders to approve the Scheme at the Court Meeting and to vote in favour of the special resolution to approve and give effect to the Scheme at the Special General Meeting to be convened on Tuesday, 24 April 2007 and recommend to the Optionholders to accept the Option Proposal for any Options outstanding as at the day of the hearing of the petition for the sanction of the Scheme by the Supreme Court.

 

Yours faithfully,
For and on behalf of
CLSA Equity Capital Markets Limited
Robert Reid
Managing Director

 

42

PART VII – US SPECIAL FACTORS

 

1. SPECIAL FACTORS

 

1.1 Past Contacts, Transactions, Negotiations and Agreements

 

1.1.1 Past Contacts, Transactions and Negotiations

 

Except as described below and as set forth in this Scheme Document, there have not been any negotiations, transactions or material contacts during the past two years concerning any merger, consolidation, acquisition, tender offer or other acquisition of any class of AsiaSat’s securities, election of AsiaSat’s directors or sale or other transfer of a material amount of AsiaSat’s assets between (i) AsiaSat or any of its affiliates within the meaning of US federal securities laws, on the one hand, and (ii) the Offeror or any of its affiliates within the meaning of US federal securities laws, on the other hand.

 

AsiaSat has entered into transactions from time to time with its current and former shareholders, their affiliates and other connected persons. It is AsiaSat’s policy that such transactions be effected on terms which AsiaSat believes to be comparable to those available with unaffiliated parties. For so long as AsiaSat is listed on the Stock Exchange, all transactions between AsiaSat and its directors or any of their respective associates (as defined in the Listing Rules) constitute connected transactions of AsiaSat under the Listing Rules and unless exemptions are applicable or waivers are granted, are subject to independent shareholders’ approval in a general meeting.

 

AsiaSat has from time to time conducted transactions, including those specifically described below, with its shareholders, their affiliates and other connected persons:

 

(i) in 2005 and 2006, the Company made payments to SES and a subsidiary of CITIC Group amounting to approximately HK$0.5 million and approximately HK$0.5 million respectively in each year, for certain Non-executive Directors representing SES and CITIC Group; and

 

(ii) in a 1996 agreement among the Company, CITIC Group, and other parties, CITIC Group acquired demand and piggyback registration rights, according to which CITIC Group may require the Company (a) to register, under the US Securities Act of 1933, its AsiaSat Shares for public offering, and (b) to pay all expenses in connection with such registration. In the Shareholders’ Agreement, CITIC Group acquired the right to require Bowenvale, on CITIC Group’s behalf, to cause the Company to file such registration. Also in the Shareholders’ Agreement, SES acquired the right to cause Bowenvale to cooperate with the Company to procure for SES registration rights on similar terms to those held by CITIC Group. Upon the completion of the Exchange Transaction, the Shareholders’ Agreement will be terminated. CITIC Group and the GE Entities will execute a new shareholders’ agreement in respect of Bowenvale, to become effective upon the completion of the Exchange Transaction, and which will be substantially similar to the Shareholders’ Agreement (so long as AsiaSat remains a public company). As a result, the GE Entities will have rights similar to those granted to SES under the Shareholders’ Agreement and described above. The exercise by CITIC Group or SES (or, following the Exchange Transaction, the GE Entities) of registration rights could adversely affect the market price of the AsiaSat Shares and the ADSs and could impair AsiaSat’s future ability to raise capital through an offering of its equity securities.

 

The Exchange Transaction

 

GECC indirectly acquired a significant equity investment in SES in 2001 as partial consideration for the transfer of GECC’s satellite business to SES. Over time GECC disposed of a portion of its indirect equity investment in SES. In October 2006, GECC and SES began discussions in relation to the Exchange Transaction. On 17 October 2006, SES suggested several assets that might be included in the Exchange Transaction, one of which was its shareholding in AsiaSat (through Bowenvale).

 

Since 25 October 2006, representatives of GECC and SES met from time to time to discuss the outline of the Exchange Transaction. Those discussions resulted in a 30 November 2006 non-binding outline of proposed terms that representatives of the parties agreed to use as the basis for consulting their boards of directors and negotiating a definitive agreement. The outline included the following assets owned by SES that would be exchanged for SES shares held indirectly by GECC:

 

•  

The AMC-23 satellite and its related business;

 

•  

100 per cent of SATLYNX, a managed satellite services business based in Europe;

 

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•  

49.5 per cent economic interest and 50 per cent voting interest in Bowenvale (representing a 34.1 per cent economic interest in AsiaSat);

 

•  

19.99 per cent of Star One, a satellite operator based in Brazil; and

 

•  

5.5 per cent of Orbcomm, a satellite services business based in the United States.

 

While the parties considered the values of each component of the proposed exchange transaction, they negotiated the transaction as a whole and did not negotiate separate prices for individual components.

 

In its consideration of the Exchange Transaction, GECC was assisted by representatives of Morgan Stanley & Co. Incorporated (“Morgan Stanley & Co.”) and its affiliates based in New York and Europe. GECC also engaged Near Earth LLC (a provider of financial advisory services to companies and investors in the satellite, media and telecom industries) and Morgan Stanley & Co. to provide valuations of the businesses and assets to be acquired in the Exchange Transaction. GECC also appointed Weil Gotshal & Manges LLP (“Weil Gotshal”) as its legal adviser on US law in respect of the Exchange Transaction.

 

On 7 December 2006, the SES board of directors reviewed the proposed Exchange Transaction, authorised SES management to continue negotiating it, and appointed a special committee of the board to review terms of the transaction as it evolved through negotiation.

 

On 8 December 2006, SES approached Able Star to seek its consent to the Transfer pursuant to the Shareholders’ Agreement. On 12 December 2006, representatives of GECC met with representatives of CITIC Group to discuss the Transfer. CITIC Group had been provided limited advice on an ad hoc basis with regard to AsiaSat by representatives of Morgan Stanley based in Hong Kong, and GECC agreed not to object to the continued representation of CITIC Group by Morgan Stanley and CITIC Group agreed not to object to the continued representation of GECC by Morgan Stanley & Co. as described above. While SES had expected that GECC could indirectly acquire the Bowenvale shares without triggering a mandatory general offer under the Takeovers Code for all other AsiaSat Shares not held by Bowenvale or parties acting in concert with it, CITIC Group expressed concern about the possible effects of the transfer under the Takeovers Code, including any impact on CITIC Group’s ability to participate in a voluntary offer for AsiaSat Shares, if desired. CITIC Group also inquired about GECC’s intentions as a prospective Bowenvale shareholder. CITIC Group mentioned the possibility of the privatisation of AsiaSat, and the possibility of a joint privatisation of AsiaSat with GE Equity (the “Privatisation”), and enquired whether GE Equity would be supportive of the Privatisation. In subsequent discussions, Able Star imposed conditions for its consent and its release of the SES parties from most of their obligations and liabilities under the Shareholders’ Agreement. These conditions include a cash payment of HK$100 million by SES and/or its subsidiaries on completion of the Exchange Transaction and SES’s continuation of certain of its obligations under the Shareholders’ Agreement, in modified form, under a new agreement.

 

Representatives of GECC and SES commenced negotiation of definitive documentation to effect the proposed exchange transaction in early December 2006. At a meeting held on 21 December 2006, a specially constituted committee of the board of directors of SES authorised SES management to continue negotiating the Exchange Transaction. Negotiation of definitive agreements continued between SES and GECC, at the same time as discussions were proceeding with CITIC Group and other parties whose consent was required for the Exchange Transaction. On 8 January 2007, SES and GECC representatives met with the Executive to discuss the proposed Exchange Transaction. On 12 February 2007, SES and GECC completed negotiations and signed definitive agreements for the Exchange Transaction in escrow, with release of such documents and effectiveness of such signing to occur upon public release of the Announcement.

 

The Privatisation of AsiaSat

 

Since June 2003, management of AsiaSat and the Board have considered from time to time de-listing from NYSE and de-registering from the SEC due to the high cost involved of maintaining the NYSE listing and SEC registration. In August 2005, in light of the increasing costs of consultants and external accountants to carry out the work required under the US Sarbanes-Oxley Act of 2002 and related SEC rules, the two major shareholders of the Company (through Bowenvale), CITIC Group and SES, started to consider alternatives to deal with this issue, including the de-listing and privatisation of AsiaSat. At the 17 November 2005 Board meeting of AsiaSat,

 

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de-listing and de-registration of AsiaSat in the United States were discussed, but since the estimated number of US AsiaSat Shareholders was greater than 300 and possible reforms of the SEC de-registration rules were still in flux, de-listing and more importantly de-registration in the United States were considered impracticable. Privatisation seemed to be a viable option to reduce the heavy financial and administrative burden of the listing of ADSs on the NYSE and to provide greater flexibility on developing business and marketing activities.

 

In 2006, following SES’s acquisition of New Skies Satellites, numerous discussions were held between CITIC Group and SES to resolve the issues of conflict between New Skies Satellites and AsiaSat but without success. Several parties each contacted CITIC Group in 2006 to ascertain if CITIC Group would be receptive to a transaction involving SES’s Bowenvale stake, but in each case CITIC Group determined that it was not interested in pursuing discussions at that time. In the second quarter of 2006, Able Star began to consider the options and alternatives available for its investment in AsiaSat. For this purpose, Able Star approached several financial institutions, including Morgan Stanley, for financial advice and Linklaters for legal advice. Most of the proposals received from the financial institutions were for Able Star to privatise the Company. It was also concluded that any change in the present Bowenvale structure, such as replacing SES with a third party, might trigger a mandatory general offer under the Takeovers Code.

 

During January 2007 and February 2007, as described above, further discussions were held between SES and GECC with a view to concluding an agreement regarding an exchange transaction, and between Able Star and GE Equity regarding the Privatisation. Discussions were also held with the SFC, OFTA and the SEC to obtain relevant approvals, consents and guidance in respect of, among other things, the HK$100 million cash payment, the SFC’s views on the obligation to make a mandatory general offer, the Exchange Transaction, the Possible MGO Share Offer Price and the change of control regulations under the Telecommunications Ordinance of Hong Kong.

 

On 10 January 2007, representatives of Morgan Stanley presented to representatives of CITIC Group and GECC in Beijing on the proposed timetable, privatisation tactics, AsiaSat historical price performance and financial analysis to evaluate the potential offer price range.

 

As part of the Privatisation plans, it was decided that a bid vehicle would be used to make an offer for AsiaSat. Accordingly, Able Star and GE Equity formed the Offeror and acquired one share each in the total issued share capital of two shares of the Offeror on 17 January 2007. The Offeror appointed Linklaters as its legal advisers on Hong Kong law, English law and US law on 5 January 2007 and Morgan Stanley as its financial adviser and Appleby Hunter Bailhache as its legal advisers on both Bermudan and British Virgin Islands law on 9 February 2007.

 

GE Equity had previously appointed Morgan Stanley & Co. as its financial adviser in relation to the Exchange Transaction and Weil Gotshal as its legal adviser on US law in respect of the Exchange Transaction. In January 2007, as part of the discussions relating to the Privatisation, GE Equity appointed Freshfields Bruckhaus Deringer as its legal advisers on Hong Kong law in respect of the Privatisation.

 

On 5 February 2007, the Board held a meeting with and at which Mr. Mi Zeng Xin, a designee of CITIC Group on the Board, explained that CITIC Group and a possible joint offeror (a GE Entity) were contemplating the possibility of making a proposal to the Company to privatise the Company by way of a scheme of arrangement under Section 99 of the Companies Act. The proposal would involve a cancellation scheme whereby existing shares of the Company not already held by CITIC Group and persons acting in concert with it would be cancelled in exchange for cash. Mr. Mi Zeng Xin also explained that separately, the possible joint offerors would propose a cash offer to purchase for cancellation options issued pursuant to a share option scheme established by the Company, subject to and conditional upon the scheme of arrangement becoming effective and binding. Mr. Romain Bausch, a designee of SES on the Board, explained, as well, that SES intended to dispose of its interest in the Company’s controlling shareholder, Bowenvale, and that the Executive had advised SES that the transfer of such interest to a third party would, on completion, result in the formation of a new concert group that has statutory control over Bowenvale, which would trigger an obligation to make a mandatory general offer for all AsiaSat Shares not already owned by Bowenvale or parties acting in concert with it. It was noted that no purchase price for any of the foregoing had yet been set.

 

In light of the proposals put forward at the meeting, the Board resolved to create the Independent Board Committee. Professor Edward Kwan Yiu Chen, Mr. Robert Tsai To Sze and Mr. James Watkins, as the

 

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Independent Non-executive Directors of the Board, were appointed to the Independent Board Committee. The Board then discussed the need to engage legal counsel to advise it of its duties and responsibilities under the Takeovers Code and other relevant laws and regulations, and its obligation to retain an independent financial adviser to advise the Independent Board Committee in connection with the proposals.

 

On 6 February 2007 and 7 February 2007, representatives from the Company (including Mr. Peter E. Jackson, the Chief Executive Officer, Mr. William Wade, the Deputy Chief Executive Officer, Ms. Sue Yeung, the Chief Financial Officer, and Ms. Catherine Chang, Legal Counsel), and external Bermudan counsel Conyers Dill & Pearman (“Conyers”) (on 7 February 2007 only), external Hong Kong counsel Johnson Stokes & Master (“JSM”) and external US counsel Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”) participated in conference calls to discuss the Company’s response to the proposals. The parties discussed the implications of the proposals under the various legal and regulatory regimes that would be applicable, including the procedural and substantive requirements of a “going private” transaction in the form of a scheme of arrangement under applicable Hong Kong, United States and Bermuda laws and regulations. External Hong Kong and US counsel to the Offeror, Linklaters, had provided representatives of the Company with a draft of a joint announcement that would set forth the details of the proposals. Over the course of the next few days, Conyers, JSM and Paul Weiss exchanged comments on drafts of the joint announcement with Linklaters.

 

On 8 February 2007, the Independent Board Committee, representatives from the Company (including Mr. Peter E. Jackson, Ms. Sue Yeung and Ms. Catherine Chang), JSM, Conyers and Paul Weiss participated in conference calls to discuss the process by which the Company and the Independent Board Committee would respond to the proposals. The Independent Board Committee was advised as to the implications of the proposals under the various legal and regulatory regimes that would be applicable, including the procedural and substantive requirements of a “going private” transaction in the form of a scheme of arrangement. The parties also discussed negotiation of coverage by the Offeror of a portion of the Company’s out-of-pocket expenses in the event that following announcement, the Scheme did not become effective and binding.

 

Also on 8 February 2007, a draft of the Announcement was submitted to the SFC for its comments and approval, and further discussions were held among Conyers, JSM and Paul Weiss and between such counsel and Linklaters.

 

On 9 February 2007, due to the fluctuations in the trading price of the Company’s shares, the Company requested trading in AsiaSat Shares on the Stock Exchange to be suspended and trading was suspended from 11:19 a.m. on 9 February 2007 (Hong Kong time). Later in the day, Paul Weiss contacted the NYSE to inform it of the suspension in trading of the AsiaSat Shares on the Stock Exchange, and the NYSE determined that trading in the Company’s ADSs would also be suspended.

 

On 12 February 2007, the Offeror held a board meeting during which two alternative offer prices were discussed, namely HK$18.00 without a “no increase” statement or HK$18.25 with a “no increase” statement. Under the Takeovers Code, if the offer price is accompanied by a “no increase” statement, the offeror will not be able to raise the offer price save in wholly exceptional circumstances (unless the right to do so had been specifically reserved). Although the Offeror believed HK$18.00 to be a fair and reasonable offer price, which was based on a number of considerations including the historical performance of the AsiaSat Shares, the premiums paid in relevant previous privatisation transactions in respect of companies listed on the Stock Exchange, the implied multiples paid in precedent acquisitions of satellite companies despite the control premium element of those transactions and the valuation multiples implied by the trading share prices of other public regional satellite companies although they are not direct comparables, representatives of the Offeror decided to approach AsiaSat with the HK$18.25 offer price with the qualification that it would be accompanied when announced with a “no increase” statement. The rationale was to give public shareholders an extra HK$0.25 premium as well as to put forward its the best offer price at the outset. The Offeror had not considered any price above HK$18.25, which it saw as the highest price it would be willing to pay.

 

Later on 12 February 2007, representatives from the Offeror, along with Morgan Stanley, conducted a telephone discussion with the management of AsiaSat regarding the Offeror’s proposal. The Offeror proposed a fixed best and final offer price of HK$18.25, which represented approximately a 30 per cent premium over the latest closing price of AsiaSat Shares as well as over the 30-day average closing price of AsiaSat Shares. During the

 

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telephone discussion, the AsiaSat representatives expressed concerns that “no increase” statement may limit the ability of the Independent Board Committee to negotiate with the representatives of the Offeror. The AsiaSat representatives also explained that any proposed price must be considered further by the Independent Board Committee and by the independent financial adviser, which had not yet been appointed, before the Independent Board Committee could agree to recommend the Share Proposal to Scheme Shareholders. The parties ended the teleconference with an agreement that no announcement would be made until the price issues could be resolved. Following the call, AsiaSat management and Mr. Sze discussed AsiaSat’s alternatives with Paul Weiss.

 

Also on 12 February 2007, a revised draft of the Announcement was submitted to the SFC and the Stock Exchange. Further drafts of the Announcement were commented upon by counsel. The SFC and the Stock Exchange issued comments to the announcement on the same day, which were considered and incorporated by counsel.

 

On 13 February 2007, Mr. Peter E. Jackson discussed with Mr. Mi Zeng Xin (representing the Offeror) regarding the fixed offer price of HK$18.25 put forth the previous day. Mr. Peter E. Jackson counter-offered for HK$18.50. Mr. Mi Zeng Xin did not accept the counter-offer and explained that HK$18.25 already represented the best offer price that the Offeror would consider. Thereafter, another conversation was conducted between Mr. Peter E. Jackson and Morgan Stanley. Representatives of Morgan Stanley re-iterated on behalf of the Offeror that HK$18.25 was the Offeror’s best and final offer, and that if the Independent Board Committee wanted an offer price without a “no increase” statement, the offer price would have to be lower in order to leave negotiating room for the Offeror. The Offeror would be likely to start with a price lower than HK$18.00 and there was no guarantee that the final offer price could be negotiated up to the best offer price of HK$18.25. During the conversation, Mr. Peter E. Jackson, negotiating on behalf of the Board, counter-offered for HK$18.35 with a “no increase” statement in order for the Board to consider putting forward the Share Proposal to the Scheme Shareholders. Representatives of Morgan Stanley suggested that they would attempt to convince the Offeror to add HK$0.05 on top of the best and final price of HK$18.25 in good faith, if the Board would agree to put forward a joint announcement with the HK$18.30 proposal. Morgan Stanley representatives stressed that although an additional HK$0.05 might not seem to be a large amount, it was material and significant from the Offeror’s perspective as it increased what the Offeror believed to be the highest price it would consider. Mr. Peter E. Jackson discussed with Mr. William Wade, who agreed with the proposal and the issuance of the joint announcement.

 

Mr. Peter E. Jackson also conveyed the proposal to Mr. Robert Tsai To Sze and Mr. James Watkins, on behalf of the Independent Board Committee. Messrs. Sze and Watkins advised Mr. Peter E. Jackson to communicate to Morgan Stanley that ultimately they could not fully assess a fair price without more time and the involvement of an independent financial adviser (which would have to await the latter’s appointment), but that if in keeping with market practice in Hong Kong an announcement would have to contain a price, the Offeror should make its formal proposal to AsiaSat with the understanding that the Independent Board Committee process would have to run its course following the issuance of the announcement and that, if the price had a “no increase statement”, the Independent Board Committee would be left with the options of determining that the terms of the Proposals are fair or declining to do so. After negotiations that resulted in an increase in offer price from the earlier HK$18.25 “best and final offer price” to HK$18.30, Mr. Peter E. Jackson called Morgan Stanley to convey that the Board would be willing to support a joint announcement with the improved HK$18.30 Share Offer Price and the “no increase” statement. Based on this, the Offeror agreed to the HK$18.30 proposal.

 

Later on 13 February 2007, the Offeror requested the Board to put forth the Share Proposal to the Scheme Shareholders, at an offer price of HK$18.30 per AsiaSat Share. Representatives of the Offeror also informed the Board that the Offeror would, in conjunction with the Share Proposal, make the Option Proposal to Optionholders for the cancellation of Options in exchange for cash. The same day, the announcement was re-submitted to the SFC and the Stock Exchange with updated terms and responses to the comments of the SFC and the Stock Exchange of 12 February 2007. The SFC and the Stock Exchange subsequently indicated their approval and clearance of the announcement. Later on 13 February 2007, the Board met to review and to put forward the Announcement as a joint announcement, along with the Offeror and ratified the application for suspension of trading of the AsiaSat Shares and authorised preparation of a scheme document in respect of the Scheme.

 

On 13 February 2007, in consideration for Able Star and CITIC Group agreeing to enter into a consent letter (as outlined further below), SES entered into an agreement of restrictive covenants with CITIC Group, SES Global

 

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Holding AG, Bowenvale and the Offeror pursuant to which SES agreed on behalf of the SES Group to certain restrictive covenants relating to AsiaSat customers, certain limited business opportunities and employees of AsiaSat up until 30 June 2008.

 

On 13 February 2007, GECC, CITIC Group, Able Star, SES, SES Global Holding AG and Bowenvale entered into a consent letter (the “Consent Letter”) pursuant to which, among other things, (i) CITIC Group consented to the transfer of the Bowenvale Shares by SES to a newly incorporated company subject to the acquisition by GE (as defined in the Consent Letter) of the beneficial and legal ownership of the entire share capital of such newly formed company, (ii) certain parties agreed certain outline terms of a new shareholders’ agreement in respect of Bowenvale to be entered upon completion of the Exchange Transaction, (iii) CITIC Group and GE agreed, subject to the terms and conditions set forth in the Consent Letter, to a potential joint privatisation of AsiaSat to be implemented by way of a general offer or a scheme of arrangement of AsiaSat, to be announced at or around the same time as the Exchange Transaction was announced, (iv) for CITIC Group’s and Able Star’s consent and release of its obligations and liabilities under the Shareholders’ Agreement, SES or any of its subsidiaries including SES Global Holding AG would pay HK$100 million in cash to CITIC Group upon the closing of the Exchange Transaction, and (v) the parties to the Shareholders’ Agreement agreed that the Shareholders’ Agreement (other than Clause 19 (Confidentiality)) would be terminated in its entirety and cease to have effect as from completion of the Exchange Transaction and SES would be released from certain liabilities under the Shareholders’ Agreement. The new shareholders’ agreement to be entered into in respect of Bowenvale on completion of the Exchange Transaction has not yet been agreed, but will be based upon the current Shareholders’ Agreement with certain changes. Upon the successful privatisation of AsiaSat, Able Star and the GE Entities may consider entering into a simpler shareholders’ agreement in respect of Bowenvale to reflect AsiaSat’s status as a private company, as opposed to a publicly listed company.

 

On 13 February 2007, CITIC Group, Able Star, GECC and GE Equity entered into a cooperation agreement pursuant to which the parties agreed, among other things, on (i) how the conduct of the Privatisation would be regulated, including but not limited to using reasonable endeavours to take all steps necessary or desirable in connection with the implementation of and obtaining all necessary clearances for the Privatisation and agreeing to discuss significant matters in respect of the Privatisation in good faith, (ii) using reasonable endeavours to amalgamate the AsiaSat Shares held by the Offeror and Bowenvale after the successful Privatisation in a manner to be discussed in good faith, (iii) the sharing of expenses in respect of the Privatisation, and (iv) the basis upon which a new shareholders’ agreement in respect of Bowenvale will be entered into.

 

On 13 February 2007, the Offeror and AsiaSat entered into an agreement pursuant to which the Offeror agreed to reimburse AsiaSat for any direct expenses up to a maximum aggregate amount of US$3 million which are incurred by AsiaSat in connection with (i) the proposed privatisation of AsiaSat by the Offeror by way of a scheme of arrangement under Section 99 of the Companies Act and/or, (ii) the possible unconditional mandatory general offer for AsiaSat by the Offeror. Such costs would only be reimbursed in the circumstance where (i) the Scheme or the Possible MGO Share Offer is not announced pursuant to the Takeovers Code on or prior to 31 March 2007, or (ii) after announcement, the Scheme does not become unconditional for any reason (unless it is not recommended by the Independent Board Committee or not recommended as fair and reasonable by the independent financial adviser appointed by such committee). This reimbursement obligation is in addition to the Offeror’s obligation under Rule 2.3 of the Takeovers Code to cover AsiaSat’s expenses if either the Independent Board Committee or CLSA does not recommend the Proposals and the Scheme is not approved.

 

On 13 February 2007 GE Equity, Able Star, CITIC Group, General Electric Company and the Offeror entered into a shareholders’ agreement regulating the parties’ respective rights and obligations (whether direct or indirect) in respect of the Offeror and, upon completion of the Scheme, the AsiaSat Shares acquired by the Offeror as a result of the Privatisation. The main provisions of this shareholders’ agreement reflect those of the current Shareholders’ Agreement and will become effective only upon the Offeror acquiring all of the outstanding AsiaSat Shares not already owned by Bowenvale (“Completion”) and include, among other things, (i) an agreement to transfer the Offerer’s interest in AsiaSat to Bowenvale as soon as reasonably practicable after Completion, (ii) the reorganisation of the capital structure of the Offeror, (iii) provisions governing the composition of the board of the Offeror, (iv) provisions governing the representation of the Offeror directors on the Board (of AsiaSat), (v) rules governing the operation of board and shareholder meetings, (vi) the exercise of voting rights in the Offeror, and (vii) restrictions on disposals of shares in the Offeror for a period of three years (subject to certain exceptions).

 

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On 14 February 2007 (Hong Kong time), the Announcement by the Company and the Offeror regarding the Proposals was published. In addition, an application was made by the Company to the Stock Exchange for resumption of trading in AsiaSat Shares with effect from 9:30 a.m. on 14 February 2007 (Hong Kong time). Trading in AsiaSat Shares resumed on the Stock Exchange. Trading also resumed in the ADSs with effect from commencement of the NYSE trading day on 14 February 2007.

 

Commencing 14 February 2007, CITIC Group, GECC, the Offeror and AsiaSat, as well as their respective legal and financial advisers, held a series of meetings and telephone conversations in connection with the preparation of this document and other documentation to be sent to AsiaSat Shareholders, Optionholders and ADS Holders.

 

On 16 February 2007, the Independent Financial Adviser met with Mr. Peter E. Jackson, Mr. William Wade, Ms. Sue Yeung and Ms. Catherine Chang from the Company, and JSM, to discuss the regulatory requirements under the Takeovers Code.

 

On 21 February 2007, the Independent Board Committee appointed CLSA as independent financial adviser to advise the Independent Board Committee in relation to the Proposals and the Possible MGO Offers.

 

On 23 February 2007, a representative of CLSA, Ms. Catherine Chang and Mr. William Wade spoke with Paul Weiss concerning CLSA’s role and proposed approach.

 

On 27 February 2007, the Board received a copy of a letter dated 26 February 2007 addressed to the Offeror from an investment fund (the “Fund”) purporting to hold in excess of 10 per cent of the Scheme Shares, which stated that the Fund believed that the Share Offer Price is inadequate. The Fund indicated its intention to vote against the Scheme, which would prevent the Scheme conditions from being satisfied. However, it should be noted that the Fund is not obligated to inform the Offeror or the Board of any changes in its holdings or voting intention.

 

On 27 February 2007, the Independent Board Committee met with CLSA, with Paul Weiss in attendance via conference call, to discuss the procedures to be followed by CLSA in preparing its letter to the Independent Board Committee and the process to be followed by the Independent Board Committee in reaching the determination that would be reflected in its letter to the Scheme Shareholders and the Optionholders. Following discussion of a draft of CLSA’s letter, the Independent Board Committee members requested that CLSA address additional analyses in their letter. The members also discussed the receipt of the 26 February 2007 shareholder letter.

 

On 28 February 2007, AsiaSat sent a letter to the Fund requesting disclosure of its interests in the Company pursuant to section 329 of the SFO. In response to such request, the Company received a letter from the Fund on 7 March 2007 confirming the number of shares that it held (which as at 6 March 2007 would be in excess of 10 per cent of the Scheme Shares). The Fund further stated that, while it maintained its intention to vote against the Proposals, it would continue to evaluate its position regarding the Share Proposal and invited the Company to direct the Fund’s attention to any relevant information which the Company believed would impact on the Fund’s preliminary decision.

 

On 3 March 2007, the Independent Board Committee met with CLSA, at which meeting Paul Weiss, JSM and Conyers were also present by telephone, and at which CLSA made a presentation to the Independent Board Committee, providing financial analyses of certain factors, methodologies and other information for possible consideration by the Independent Board Committee in evaluating the Proposals. Counsel provided advice as to procedure and responded to questions concerning legal aspects of the Proposals and related transactions.

 

On 5 March 2007, in a telephone conversation with a representative of Morgan Stanley, the Fund indicated that although such Fund currently intended to vote against the Scheme, it reserved the right to reconsider its position in light of the additional information it would receive, including the information contained in the Scheme documentation.

 

On 16 March 2007, after discussion and review of the final draft of the Independent Financial Adviser’s letter to the Independent Board Committee, the Independent Board Committee, by unanimous vote, determined the Share Offer Price to be fair and reasonable to the Scheme Shareholders (including without limitation ADS Holders) and the Option Offer Price to be fair and reasonable to the Optionholders and to recommend that the Scheme Shareholders (including without limitation ADS Holders) vote in favour of both the resolution to approve the Scheme at the Court Meeting and the special resolution to, among other matters, approve the capital reduction arising as a result of the Scheme at the Special General Meeting and recommend the Optionholders to accept the Option Proposal if they have not exercised their Options in accordance with the Rules of the Share Option

 

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Scheme. The recommendations of the Independent Board Committee are set out in its letter dated 19 March 2007.

 

On 19 March 2007, CLSA issued its opinion letter to the Independent Board Committee. See “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee”.

 

 

1.1.2 Agreements involving AsiaSat’s Securities

 

As described in more detail below under “Effects of the Proposals”, as soon as practicable after the Scheme becomes effective, CITIC Group and GECC intend to cause the Company to apply to the Stock Exchange for the withdrawal of the listing of the AsiaSat Shares on the Stock Exchange and to apply for the de-listing of the ADSs from the NYSE. In addition, provided the relevant conditions are satisfied, CITIC Group and GECC shall procure that AsiaSat terminates or suspends its reporting obligations under the Exchange Act. CITIC Group and GECC also intend to seek to cause the Company to terminate the ADS Deposit Agreement. Concurrently with the NYSE de-listing, CITIC Group and GECC intend to file a Form 15 with the SEC to terminate or suspend AsiaSat’s SEC reporting obligations under the Exchange Act in the event the relevant conditions are satisfied. Irrespective of the outcome of the Scheme, in due course, it is expected that the maintenance of the ADS listing on the NYSE will be re-examined by AsiaSat and the Board, the outcome of which may be to terminate such listing.

 

Upon the completion of the Exchange Transaction, the Shareholders’ Agreement will be terminated. CITIC Group and the GE Entities will execute a new shareholders’ agreement in respect of Bowenvale, to become effective upon the completion of the Exchange Transaction, and which will be substantially similar to the Shareholders’ Agreement. In addition, on 13 February 2007, GE Equity, Able Star, CITIC Group, General Electric Company and the Offeror entered into a shareholders’ agreement with respect to the Offeror pursuant to which the parties respective rights and obligations (whether direct or indirect) in respect of the Offeror and in respect of AsiaSat would be regulated. Please see Section “1.1.1 Past Contacts, Transactions and Negotiations” above for a description of the material terms of such shareholders’ agreement.

 

1.2    Purposes, Reasons for, Benefits of and Alternatives to the Proposals

 

Due to the persistent oversupply of transponder capacity and the slow introduction of new applications in the region, the Asia-Pacific satellite market remains very competitive. As a result, the Company’s share price has not performed satisfactorily. In the three year period prior to the Announcement Date, the price of AsiaSat Shares decreased by 11.9 per cent compared with an increase of 51.1 per cent in the Hang Seng Index over the same period.

 

Given the overcapacity in the market, Able Star and GE Equity believe that the unsatisfactory share performance of AsiaSat’s Shares may continue. AsiaSat’s dividend yield remains relatively low as the Company needs to preserve cash to endure competition in the market for commercial supply of satellite transponder capacity, to launch new satellites from time to time and to participate in potential acquisitions. Therefore, the earnings of AsiaSat will continue to be under pressure in the short to medium term. For similar reasons, the Offeror currently has no plans to increase the Company’s annual or interim dividend, cause the Company to distribute any extraordinary dividend, or recapitalise the Company’s balance sheet by increasing the Company’s financial leverage in the ordinary course of business in the event the Transfer completes and/or the Scheme becomes effective. Able Star and GE Equity propose to effect the Privatisation through the Scheme to enable AsiaSat to pursue development of its business with greater flexibility, and to effect the Privatisation at a price in excess of the Possible MGO Share Offer Price in order to give minority shareholders a premium price for their AsiaSat Shares.

 

The Scheme provides an opportunity for AsiaSat Shareholders to exit and monetise their AsiaSat Shares at a significant premium to the current market price. This price represents a premium of approximately 30.7 per cent over the closing price of HK$14.00 per AsiaSat Share on the Pre-Suspension Date, a premium of 29.8 per cent over the closing price of HK$14.10 per AsiaSat Share on the Suspension Date, a premium of 32.2 per cent over the 30-day Average Pre-Announcement Price, and a premium of 22.0 per cent over the highest closing price during the year prior to the Announcement. The Scheme also provides Scheme Shareholders with an opportunity to receive an offer price higher than the Possible MGO Share Offer Price. If the Exchange Transaction is completed but the Scheme is unsuccessful, the Possible MGO Offers would be made and the Scheme Shareholders would have the choice of accepting the Possible MGO Share Offer at a lower price per AsiaSat Share than the Share Offer Price.

 

The Privatisation would also, if it completes, relieve AsiaSat of the heavy financial and administrative burden of dual listings on both the Stock Exchange and the NYSE. In particular, compliance costs of the US Sarbanes-

 

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Oxley Act of 2002 and the maintenance costs of the listing on the NYSE have, in recent years, resulted in substantial recurrent professional fees and time costs, which in the view of the Offeror are disproportionate to the benefits of maintaining such listing.

 

As a private company, AsiaSat management should have greater flexibility to focus on the development of business and marketing activities. This is particularly important given that AsiaSat is operating in a competitive market in which profitability is under pressure as a result of persistent overcapacity and the substantial investment required to construct and launch new satellites.

 

As at the Latest Practicable Date, Bowenvale and parties acting in concert with it hold an aggregate beneficial ownership of approximately 68.9 per cent of the issued share capital of AsiaSat. If any third party were to make a competing offer for the privatisation of AsiaSat, such competing offer would not succeed without the acceptance by Bowenvale and parties acting in concert with it. Bowenvale and parties acting in concert with it have no intention to accept any competing offer.

 

1.3 Fairness

 

The Scheme and Proposals will be treated as a “going-private” transaction under the applicable rules and regulations of the Exchange Act. The Company and the Offeror are required, and under a potential interpretation of such rules, the Offeror’s shareholders, Able Star and GE Equity, may be required, to state their respective beliefs as to the fairness of the Proposals to the Scheme Shareholders (including without limitation the ADS Holders) and Optionholders. The Company, the Offeror, and the Offeror’s shareholders, Able Star and GE Equity, are making the statements included in this section for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

 

1.3.1 The Offeror

 

The views of the Offeror, and the Offeror’s shareholders, Able Star and GE Equity, as to the fairness of the Scheme and the Proposals should not be construed as a recommendation to any AsiaSat Shareholder, ADS Holder or Optionholder as to how that security holder should vote on the proposal to adopt the Scheme. The Offeror and its shareholders, Able Star and GE Equity, have interests in the Scheme and the Proposals different from, and in addition to, those of the AsiaSat Shareholders, ADS Holders and Optionholders. These interests are described under “Part VIII – Explanatory Statement; 13. Interests of the Offeror and its concert parties in AsiaSat”.

 

The Offeror, Able Star and GE Equity believe that the Proposals are substantively and procedurally fair to the Scheme Shareholders (including without limitation the ADS Holders) based on the following factors:

 

  •  

persistent oversupply of transponder capacity, slow introduction of new applications and competitive price pressure in the Asian satellite industry have resulted in unsatisfactory trading performance of AsiaSat in the past few years. In the three-year period prior to the Announcement Date, the price of AsiaSat Shares decreased by 11.9 per cent compared with an increase of 51.1 per cent in the Hang Seng Index over the same period;

 

  •  

overcapacity in the market may continue and the earnings of AsiaSat will continue to be under pressure in the short to medium term;

 

  •  

AsiaSat Shares have experienced relatively low trading volumes in the last three years. The average trading volume on the Stock Exchange was merely 172,011 shares per day in 2006, representing 0.14 per cent of the free float of AsiaSat. The Scheme provides Scheme Shareholders with a significant liquidity opportunity to dispose of their AsiaSat Shares while at the same time achieving a substantial premium;

 

  •  

AsiaSat’s dividend payments remain relatively low, as the Company needs to preserve cash to endure competition in the market for the commercial supply of satellite transponder capacity, to launch new satellites from time to time and to participate in potential acquisitions. For similar reasons, the Offeror currently has no plans to increase the Company’s annual or interim dividend, cause the Company to distribute any extraordinary dividend, or recapitalise the Company’s balance sheet by increasing the Company’s financial leverage in the ordinary course of business in the event the Transfer completes and/or the Scheme becomes effective;

 

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  •  

the Scheme provides Scheme Shareholders an opportunity to receive a Share Offer Price at a 14.4 per cent premium to the Possible MGO Share Offer Price, which is the value of the AsiaSat Shares implied by the Exchange Transaction between SES and GECC;

 

  •  

the Scheme provides an opportunity for AsiaSat Shareholders to monetise their AsiaSat Shares at a significant premium to the current market price. This price represents a premium of 30.7 per cent over the closing price of last full trading day prior to the Announcement; approximately 32.2 per cent over the 30-day Average Pre-Announcement Price; approximately 22.0 per cent over the highest closing price during the year prior to the Announcement Date; and approximately 10.9 per cent over the highest closing price in the past three years prior to the Announcement Date;

 

  •  

the Share Offer Price represents a significant premium to AsiaSat’s trading multiples over the last three years from 2004 to 2006, during which the average last twelve month trailing enterprise value (“EV”) to EBITDA, price to earnings (“P/E”) and price to book value (“P/BV”) multiples were 5.6 times, 13.3 times and 1.4 times, respectively, while the Share Offer Price represents last twelve month trailing EV/EBITDA, P/E and P/BV multiples prior to the Announcement of 6.9 times, 17.0 times and 1.7 times, respectively. The trading multiples of other regional satellite companies have been considered but the Offeror does not believe that other publicly-traded satellite companies such as Shin Satellite PLC (“ShinSat”), MEASAT Satellite Systems Sdn. Bhd. (“MEASAT”) and JSAT Corporation (“JSAT”) are appropriate comparables for AsiaSat. ShinSat has wireless operations and is not engaged solely in the provision of transponder capacity; MEASAT benefits from a large customer, MEASAT Broadcast Network Systems Sdn Bhd, under common control; and JSAT has significant scale advantages with nine satellites, large revenue contribution from major shareholders NTT Communications and affiliates, as well as global footprints spanning Hawaii, Oceania and North America;

 

  •  

eight precedent merger and acquisition transactions involving global fixed satellite services companies since 2003 were priced at an average last-twelve-month trailing multiple of 8.5 times EV/EBITDA. The Share Offer Price represents a last-twelve-month trailing multiple of 6.9 times EV/EBITDA prior to the Announcement. The Offeror believes that these global transactions were priced at a higher multiple due to three major reasons. Firstly, these global transactions represented change of control transactions. Secondly, these global satellite companies benefit from the stronger state of the satellite sector outside of Asia. The majority of AsiaSat’s revenue is derived from the Greater China region including Hong Kong, Mainland China and Taiwan, where there is intense competition from regional satellite companies. In addition, three new satellites, SinoSat-3, ChinaSat-6B and ChinaSat 9 are planned to be launched in 2007, intensifying the competition in this region. Thirdly, these global satellite companies are not as highly regulated as in Asia in terms of foreign ownership limits and business operations;

 

  •  

the Share Offer Price is consistent with precedent transactions in Hong Kong. The Share Offer Price represents a premium of approximately 32.2 per cent over the 30-day Average Pre-Announcement Price of HK$13.84 per AsiaSat Share, which is consistent with the 35.6 per cent mean and 23.9 per cent median premiums over 30-day Average Pre-Announcement Price of the seven selected relevant Hong Kong non-real estate takeover transactions since 2003 where a controlling shareholder acquired the portion of the company it did not already own. The Offeror believes that real estate deals are inappropriate comparables as they are largely driven by net asset value. Furthermore, the Offeror believes deals which involve a change of control are not applicable as CITIC Group and GE Equity would already indirectly through Bowenvale have control over the Company should the Exchange Transaction complete;

 

  •  

the Share Offer Price represents a significant premium of 28 per cent to the average of available research analyst price targets of HK$14.29 for AsiaSat Shares for the time period between the release of AsiaSat’s 2006 interim results on 24 August 2006 and the Announcement date of 13 February 2007;

 

  •  

the terms of the Proposals were agreed between the Offeror and AsiaSat in arm’s length negotiations; and

 

  •  

the Scheme must, among other things, be approved by the affirmative vote of a majority in number of the Scheme Shareholders that represent at least three-fourths in nominal value of the Scheme Shares, present and voting (either in person or by proxy) at the Court Meeting, and not more than 10 per cent of the vote attaching to all Scheme Shares held by Scheme Shareholders may have been cast against the Scheme at the Court Meeting, thereby presenting an opportunity for Scheme Shareholders to independently express their views on and approve or reject the Scheme.

 

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The Offeror, Able Star and the GE Equity implicitly considered the “going concern” value of AsiaSat by taking into account, as discussed above, AsiaSat’s current and anticipated business, financial conditions, results and operations and prospects, expectations of profitability, and other forward-looking matters.

 

The liquidation value of AsiaSat was not considered a factor because AsiaSat will continue to operate as a subsidiary of the Offeror and Bowenvale after completion of the transactions. In addition, the Offeror, Able Star and GE Equity did not consider any other potential offers made by any unaffiliated third parties with respect to any tender offer, merger, consolidation, sale of assets or other sales of AsiaSat, as (i) they were not aware of any such offers and (ii) the Offeror, Able Star and GE Equity understand that it is CITIC Group’s intention to maintain its significant shareholding in the Company, which would make it unlikely that any such offers would be able to succeed without CITIC Group’s consent. Furthermore, if any third party were to make a competing offer for the privatisation of AsiaSat, such competing offer would not succeed without the acceptance by Bowenvale and parties acting in concert with it. As stated in the Announcement, it is the understanding of the Offeror, Able Star and GE Equity that Bowenvale has no intention to accept any competing offer and it is unlikely that another offeror would make an offer to the public shareholders to acquire the public float at a price higher than the Share Offer Price or the Possible MGO Share Offer Price.

 

1.3.2 Additional matters

 

In view of the many considerations, the Offeror, Able Star and the GE Equity did not find it practical to, and did not, quantify or otherwise assign weighting to the specific factors considered. These factors are not intended to be exhaustive but include the material factors considered by the Offeror, Able Star and GE Equity.

 

Except for the letter from CLSA set out in “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee”, neither AsiaSat nor any of its affiliates (as defined in the US federal securities laws) has sought or obtained a fairness opinion or appraisal from any third party adviser (including Morgan Stanley) in connection with the Proposals. The Offeror, Able Star and the GE Entities have not made any provisions to grant Scheme Shareholders or ADS Holders access to their corporate files or obtain any counsel or to provide appraisal services to Scheme Shareholders or ADS Holders and do not have any intention of doing so in the future.

 

1.3.3 AsiaSat

 

 

On 16 March 2007, at a meeting of the Board, the Board unanimously determined that the Proposals by means of the Scheme are fair and reasonable to the Scheme Shareholders (including without limitation ADS Holders) and recommended the approval and adoption of the Scheme by the Scheme Shareholders, based on the Independent Board Committee’s recommendation.

 

The Independent Board Committee

 

In reaching the recommendations described in “Part V – Letter from the Independent Board Committee” of this Scheme Document, the Independent Board Committee considered a number of factors, including the following:

 

(i) AsiaSat Operating and Financial Condition. The Independent Board Committee took into account the current and historical financial condition and results of operations of AsiaSat, as well as the prospects and strategic objectives of AsiaSat, including the risks involved in achieving those prospects and objectives, and the current and expected conditions in the general economy and in the sectors in which AsiaSat operates or has interests.

 

(ii) CLSA Financial Analysis and Opinion. The Independent Board Committee considered the presentation delivered on 3 March 2007 by CLSA to the Independent Board Committee and CLSA’s written opinion dated 2 March 2007 to the effect that, as of such date and based upon and subject to the matters stated in such opinion, the consideration to be received by the Scheme Shareholders and the Optionholders in the Proposals is fair and reasonable to the Scheme Shareholders and the Optionholders. The Independent Board Committee adopted the analysis of CLSA and its conclusions. The full text of the letter delivered by CLSA to the Independent Board Committee dated 19 March 2007, which describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken, is set forth in Part VI of this Scheme Document. CLSA’s letter is addressed to the Independent Board Committee and relates only to the fairness and reasonableness of the

 

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Proposals to the Scheme Shareholders and the Optionholders. Among other things, CLSA did not consider, and its report does not address, the Exchange Transaction or the Possible MGO Offers. The description of CLSA’s opinion included in this Scheme Document is qualified in its entirety by the full text of CLSA’s letter set forth in Part VI of this Scheme Document. Holders of Scheme Shares and Options are urged to read the opinion carefully in its entirety. See “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee”.

 

(iii) Relation to Certain Market Prices. The Independent Board Committee considered the relationship of the Share Offer Price and the Option Offer Price to the historical market prices of the AsiaSat Shares. The AsiaSat Shares are listed on the Stock Exchange; there is no public trading market for the AsiaSat Shares outside Hong Kong. The ADSs have a trading market and a listing on the NYSE. The following table shows the price per AsiaSat Share and per ADS in respect of:

 

  •  

the Pre-Suspension Date,

 

  •  

the Suspension Date,

 

  •  

the 30-day Average Pre-Announcement Price,

 

  •  

the average daily closing price during the period from 1 January 2005 to the Pre-Suspension Date,

 

  •  

the highest daily closing price during the period from 1 January 2005 to the Pre-Suspension Date,

 

and the premium that the Share Offer Price of HK$18.30 per Scheme Share represents and Offer Price per ADS of HK$183.00 per ADS represents over the above.

 

     AsiaSat Shares     ADS  
     Price (HK$)    Premium(a)     Price (US$)    Premium(a)  

Pre-Suspension Date (8 February 2007)

    14.00    30.7 %   17.75    31.9 %

Suspension Date (9 February 2007)

    14.10    29.8 %   17.75    35.7 %

30-day Average Pre-Announcement Price

    13.84    32.2 %   17.93    34.3 %

Average daily closing price 1 January 2005 – Pre-Suspension Date

    13.81    32.5 %   17.77    35.5 %

Highest daily closing price 1 January 2005 – Pre-Suspension Date

    15.95    14.7 %   20.45    17.7 %

(a) Premium based on conversion of the Share Offer Price per ADS to US dollars at the Bloomberg rate on the Pre-Suspension Date of US$1.00 = HK$ 7.82.

 

(iv) Premium to Net Asset Value. The Independent Board Committee considered the relationship of the Share Offer Price and the Option Offer Price to the net asset value per share of the AsiaSat Shares in the light of the premiums to net asset value represented by the acquisition prices in precedent privatisation transactions in Hong Kong. The Independent Financial Adviser compiled a list of the precedent transactions disclosing acquisitions premiums which ranged from a discount of 70.3 per cent to a premium of 188.8 per cent to net asset value, with an average premium of 13.6 per cent and a medium premium of 0.3 per cent. The acquisition premium of the AsiaSat Shares represented by the Share Offer Price and the Option Offer Price is 65.3 per cent.

 

(v) Discounted Cash Flow Valuation. The Independent Board Committee evaluated AsiaSat as a going concern through the discounted cash flow analysis prepared by the Independent Financial Adviser in connection with its fairness and reasonableness opinion, which took into account financial forecasts, cash flow streams and other qualitative factors. See “Part VI – Letter from the Independent Financial Adviser to the Independent Board Committee”.

 

(vi) Likely Effect on the Market Price of the AsiaSat Shares if the Proposals were Withdrawn. The Independent Board Committee considered the possible trading prices of the AsiaSat Shares in the short- through the long-term if the Proposals were to be withdrawn or rejected. The Independent Board Committee concluded that the trading value of the AsiaSat Shares likely would decline in the short- and medium-term as a result of a withdrawal or rejection of the Proposals. The Independent Board Committee was mindful of the fact that if the Scheme Shareholders do not approve the Scheme and the Transfer completed, the Offeror would undertake the Possible MGO Offers, and that the Possible MGO Share Offer Price would be HK$2.30 less per share than the Share Offer Price. The Independent Board Committee also took note of the fact that in the event the public float is less than 25 per cent trading in the AsiaSat Shares might be suspended as well as the possibility that the Offeror might be in a position to make use of the compulsory acquisition provisions of the Companies Act.

 

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(vii) Condition to Completion. The Independent Board Committee took note of the fact that a condition to the completion of the Scheme is that the Scheme receive the approval by way of poll of the Scheme by a majority in number of the Scheme Shareholders representing not less than three-fourths in value of the Scheme Shares, present and voting either in person or by proxy at the Court Meeting, provided that the Scheme is approved by at least 75 per cent of the votes attaching to Scheme Shares held by Scheme Shareholders that are cast either in person or by proxy at the Court Meeting, and the number of votes cast against the resolution to approve the Scheme at the Court Meeting is not more than 10 per cent of the votes attaching to all Scheme Shares held by Scheme Shareholders.

 

(viii) Court Sanction. The Independent Board Committee took note of the fact that another one of the conditions to the completion of the Scheme is that following approval by the Scheme Shareholders at the Court Meeting, the Scheme is sanctioned by the Supreme Court and that the Supreme Court may decline to sanction the Scheme unless it is satisfied that the results of the Court Meeting fairly reflects the views of the parties concerned.

 

(ix) 26 February 2007 Letter. The Independent Board Committee took note of the fact that in a letter dated 26 February 2007 to the Offeror and copied to the Board, notwithstanding the “no increase” statement a person claiming to be a significant Scheme Shareholder had expressed the view that it believes the Share Offer Price is inadequate, based on among other things the intrinsic value of the AsiaSat Shares, and also noted, in this regard, that CLSA had delivered its letter to the Independent Board Committee setting forth its opinion that the terms and conditions of the Proposals, in particular the Share Proposal Price and the Option Proposal Price, are fair and reasonable so far as the Scheme Shareholders and the Optionholders are concerned and, in arriving at that opinion, CLSA had, among other things, performed a discounted cash flow analysis that showed the Share Offer Price to be within the range of intrinsic value of AsiaSat identified by CLSA.

 

(x) Form of the Consideration; Taxable Transactions. The Independent Board Committee took into consideration that the holders of Scheme Shares would be paid in cash for the Scheme Shares and Options under the Proposals, and the certainty of value of such cash consideration compared to equity securities. The Independent Board Committee was aware that the consideration received by holders of Scheme Shares and Options in the Proposals would be taxable to some holders for income tax purposes.

 

(xi) Absence of Alternative Transactions. The Independent Board Committee took into consideration the fact that with ownership of approximately 68.9 per cent of the AsiaSat Shares in the hands of two controlling shareholders through Bowenvale, the likelihood of a competing transaction was remote as was the prospect of pursuing any strategic alternative not consistent with the interests of the controlling shareholders. The Independent Board Committee took note of the statement in the Announcement that Bowenvale had no intention of accepting a competing offer. The Independent Board Committee also took into consideration the fact that although one of the two controlling shareholders (SES) was exiting its investment in AsiaSat, it was doing so in a transaction that would result in the substitution of a new controlling shareholder (a GE Entity) for such exiting shareholder. As a result, the Independent Board Committee did not evaluate the prices potentially attainable in any alternative transaction.

 

(xii) Procedural Fairness. The Independent Board Committee considered that:

 

  •  

the Independent Board Committee consisted of the three non-executive independent directors of AsiaSat appointed to represent the interests of the Scheme Shareholders; and

 

  •  

the Independent Board Committee had retained and was advised by CLSA, as its independent financial advisor, with the sole objective of rendering an opinion as to the fairness and reasonableness of the Proposals to the Scheme Shareholders and Optionholders.

 

(xiii) Timing of Completion. The Independent Board Committee considered the anticipated timing of consummation of the Proposals, which should allow holders of Scheme Shares and Options to receive the Share Offer Price and the Option Offer Price within a reasonable period of time.

 

(xiv) Limited Conditions to Consummation. The Independent Board Committee considered the fact that the Offeror’s obligation to consummate the Proposals is subject to a limited number of conditions, with no financing condition. The Independent Board Committee also considered the fact that Morgan Stanley is satisfied that sufficient financial resources are and will be available to the Offeror to implement the Proposals.

 

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The members of the Independent Board Committee evaluated the Proposals in light of their knowledge of the business, financial condition and prospects of AsiaSat. In view of the wide variety of factors considered in connection with the evaluation of the Proposals, the Independent Board Committee did not find it practicable to, and did not, quantify or otherwise attempt to assign numerical weights to the specific factors it considered in reaching its determination.

 

The foregoing discussion of the information and factors considered by the Independent Board Committee is not intended to be exhaustive but is believed to include all material factors considered by the Independent Board Committee.

 

The Board

 

The Board adopted the foregoing recommendations of the Independent Board Committee after considering the following factors, each of which, in the view of the Board, supported such adoption:

 

  •  

the conclusions and recommendations of the Independent Board Committee; and

 

  •  

the factors referred to above as having been taken into account by the Independent Board Committee.

 

The Board did not independently analyse the factors taken into account by the Independent Board Committee. Instead, the Board adopted the analysis of the Independent Board Committee and its conclusions.

 

The members of the Board, including the members of the Independent Board Committee, considered the Proposals in light of their knowledge of the business, financial condition and prospects of AsiaSat, and based upon the advice of financial and legal advisors.

 

Neither the Independent Board Committee nor the Board considered the liquidation of AsiaSat’s assets to be a viable course of action. Therefore, no appraisal of liquidation values was sought for purposes of evaluating the Proposals.

 

In view of the wide variety of factors considered in connection with their evaluation of the Proposals, neither the Independent Board Committee nor the Board found it practicable to, and did not, quantify or otherwise attempt to assign relative weights to the specific factors they considered in reaching their determinations.

 

The foregoing discussion of the information and factors considered by the Independent Board Committee and the Board is not intended to be exhaustive but is believed to include all material factors considered by the Independent Board Committee and the Board. Executive Officers have not been asked to make a recommendation as to the Proposals.

 

Independent Board Committee Compensation

 

The members of the Independent Board Committee did not receive compensation in connection with serving on the Independent Board Committee.

 

Summary of Report and Opinion of the Independent Financial Adviser

 

Under an engagement letter, dated 21 February 2007, the Independent Board Committee retained CLSA to render an opinion as to whether or not the terms and conditions of the Proposals, and more particularly, the cancellation price of HK$18.30 per Scheme Share, HK$183.00 per ADS, HK$0.82 per Outstanding B Option and HK$3.95 per Outstanding C Option, are fair and reasonable so far as the Scheme Shareholders and Optionholders, respectively, are concerned.

 

In connection with the preparation and delivery of its opinion to the Independent Board Committee, CLSA performed a variety of financial and comparative analyses, as described below. The preparation of a fairness and reasonableness opinion involves various determinations as to the most appropriate and relevant methods of financial and comparative analysis, and the application of those methods to the particular circumstances. Furthermore, in arriving at its opinion, CLSA did not attribute any particular weight to any analysis or factor

 

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considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, CLSA believes that its analyses must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying its opinion.

 

In formulating its opinion with regard to the Proposals, CLSA relied on the information, opinions and facts supplied, and representations made to it by the Directors and representatives of AsiaSat (including those contained or referred to in this Scheme Document and the Announcement). CLSA assumed that all such information, opinions, facts and representations that were provided to it by the Directors, and representatives of AsiaSat, and for which they are wholly responsible, are true and accurate in all material respects. CLSA also relied on certain information available to the public and assumed such information to be accurate and reliable, and has not independently verified the accuracy of such information. Further, CLSA relied on the representations of the Directors of AsiaSat that they have made all reasonable inquiries, and that, to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement contained in the Scheme Document or the Announcement untrue or misleading. It also assumed that statements and representations made or referred to in the Scheme Document and the Announcement were accurate at the time they were made and continue to be accurate as of the date of despatch of the Scheme Document.

 

CLSA considers that it has reviewed sufficient information to enable it to reach an informed view regarding the Proposals to justify its recommendation, relying on the accuracy of the information provided in the Scheme Document and the Announcement, as well as to provide a reasonable basis for its advice. As the independent financial adviser to the Independent Board Committee, it has not been involved in the negotiations in respect of the terms and conditions of the Proposals. Its opinion with regard to the terms and conditions thereof has been made on the assumption that all obligations to be performed by AsiaSat and the Offeror in relation to the Proposals will be fully performed in accordance with the terms and conditions thereof. Further, CLSA has no reason to suspect that any material facts or information have been omitted or withheld from the information supplied or opinions expressed to it, nor to doubt the truth, accuracy and completeness of the information, facts and representations provided, or the reasonableness of the opinions expressed, to it by AsiaSat, its directors and its representatives. In line with normal practice, CLSA has not made any independent verification of the information and facts provided, representations made or opinions expressed by AsiaSat, its Directors and its representatives, nor has it conducted any form of independent investigation into the business affairs or assets and liabilities of AsiaSat. Accordingly, CLSA does not warrant the accuracy or completeness of any such information.

 

CLSA’s opinion is necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information publicly available to it as of the date of this opinion. As a result, circumstances could develop prior to completion of the Proposals that, if known to CLSA at the time it rendered its opinion, would have altered its opinion.

 

CLSA’s opinion is directed to the Independent Board Committee, addresses only the fairness and reasonableness of the consideration to be received by Scheme Shareholders and Optionholders in the Proposals and does not address the relative merits of the Proposals or any other transaction that may have been available as an alternative to the Proposals, whether or not any such alternative could be or could have been achieved, or the terms upon which any such alternative transaction could be or could have been achieved. Further, CLSA’s opinion addresses only issues related to the fairness and reasonableness to the Scheme Shareholders and Optionholders of the Proposals.

 

Materials summarising CLSA’s analyses were presented to the Independent Board Committee and the Board on 3 March 2007. Copies of these materials have been filed with the SEC as an exhibit to the Schedule 13E-3. Copies of these materials are available for inspection and copying at AsiaSat’s principal executive offices, during regular business hours, by any interested AsiaSat Shareholder or representative who has been so designated in writing. Scheme Shareholders may also obtain these materials from the SEC under AsiaSat’s SEC filings.

 

CLSA, in connection with the potential transaction, has delivered to the Independent Board Committee a written opinion, dated 19 March 2007, to the effect that, as of that date, and based upon and subject to the assumptions made, procedures followed, matters considered, and limitations on the review set forth therein and described to

 

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the Independent Board Committee, the Share Proposal Price and the Option Proposal Price to be received under the Proposals are fair and reasonable to the Scheme Shareholders and the Optionholders, respectively.

 

The summary of the opinion set forth below is qualified in its entirety by reference to the full text of such opinion. Shareholders are urged to read such opinion carefully in its entirety for a description of the procedures followed, the factors considered, the assumptions made, and the limitations on the analysis undertaken by CLSA. CLSA’s written opinion is for the information and assistance of the Independent Board Committee and the Board. CLSA’s opinion does not address the Independent Board Committee’s, the Board’s or AsiaSat’s underlying business decision to proceed with the Proposals. CLSA has not been requested to, and did not, participate in the process to explore strategic alternatives for AsiaSat nor did it actively solicit third party indications of interest in acquiring all or any part of AsiaSat.

 

In connection with the preparation of its opinion, CLSA made such reviews, analyses and inquiries as its representatives deemed necessary and appropriate under the circumstances. Among other things CLSA:

 

  •  

reviewed AsiaSat’s audited financial statements for the fiscal years ended 2000 through 2006, the annual reports on Form 20-F for the fiscal years 2000 to 2005 and of AsiaSat’s unaudited financial statements for the two months ended 28 February 2007, which AsiaSat’s management has identified as being the most current financial statements available;

 

  •  

met with certain members of AsiaSat’s management and auditors to discuss the operations, financial condition, future prospects and projected operations and performance of AsiaSat;

 

  •  

reviewed the historical market prices and trading volume for the AsiaSat Shares and the ADSs;

 

  •  

reviewed certain other publicly available financial data for certain companies that CLSA deemed comparable to AsiaSat;

 

  •  

reviewed various documents relating to AsiaSat;

 

  •  

reviewed the Company’s current financial projections and its past financial projections against actual performance; and

 

  •  

conducted such other studies, analyses and inquiries as they deemed appropriate.

 

Summary of Certain Financial Analyses Conducted by CLSA

 

In assessing the fairness and reasonableness of the consideration to the Scheme Shareholders and Optionholders under the Proposals, CLSA independently valued AsiaSat using widely accepted valuation methodologies.

 

Reasons for the Proposals

 

As described in “Part VIII – Explanatory Statement” of this Scheme Document, the principal reasons for the Proposals are that, due to the persistent oversupply of transponder capacity and the slow introduction of new applications in the region, the Asia-Pacific satellite market remains very competitive. Such competition is cited as the reason for the underperformance of the Company’s share price which, in the three year period prior to the Announcement Date, decreased by 11.9 per cent compared to an increase of 51.1 per cent in the Hang Seng Index over the same period. Based on its discussions with AsiaSat’s management, CLSA does not expect a dramatic improvement in the competitive environment in which the Company operates in the near term.

 

Given the overcapacity in the market, Able Star and GE Equity believe that the unsatisfactory share performance of AsiaSat’s Shares may continue. In the view of the Offeror, AsiaSat’s dividend yield remains relatively low as the Company needs to preserve cash to endure competition in the market for commercial supply of satellite transponder capacity, to launch new satellites from time to time and to participate in potential acquisitions. Able Star and GE Equity therefore believe that the earnings of AsiaSat will continue to be under pressure in the short to medium term.

 

As stated in “Part VIII – Explanatory Statement” of this Scheme Document, Able Star and GE Equity propose to effect a Privatisation through the Scheme to enable AsiaSat to pursue development of its business with greater

 

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flexibility, and to effect the Privatisation at a price in excess of the Possible MGO Share Offer Price in order to give minority shareholders a premium price for their AsiaSat Shares.

 

A further reason advanced for the Proposals is that the Privatisation would also, if it completes, relieve AsiaSat of the financial and administrative burden of dual listings on both the Stock Exchange and the NYSE. In particular, as stated in the Explanatory Statement, the listing on the NYSE has, in recent years, resulted in substantial recurrent professional fees and time costs, which, in the view of Able Star and GE Equity are disproportionate to the benefits of maintaining such listing.

 

The final reason advanced in for the Proposals is that, as a private company, AsiaSat management should have greater flexibility to focus on the development of business and marketing activities, which is cited as being particularly important given that AsiaSat is operating in a competitive market in which profitability is under pressure as a result of persistent oversupply of transponder capacity and the substantial investment required to construct and launch new satellites.

 

Intentions of the Offeror regarding AsiaSat

 

As stated in “Part VIII – Explanatory Statement” of this Scheme Document, it is the intention of the CITIC Group and GECC to maintain the existing businesses of the AsiaSat Group upon the successful Privatisation of the Company. CITIC Group and GECC do not intend to introduce any major changes to the existing operating and management structure of the AsiaSat Group, or to discontinue the employment of any employees of the AsiaSat Group, as a result of the implementation of the Proposals. Upon the successful implementation of the Proposals and AsiaSat becoming a private company, AsiaSat will no longer have access to equity funding through the public capital markets. CITIC Group and GECC also expect that there will be no material change to the existing business (such as business focus and operating mode) of the AsiaSat Group as a result of the implementation of the Proposals.

 

CLSA noted that subject to the Privatisation of the Company, CITIC Group and GECC contemplate that they will assess whether to revise AsiaSat’s Bye-laws to reflect its change from a public to a private company. CLSA also noted that CITIC Group and GECC intend to retain the Company’s existing senior management team to manage the Company after the implementation of the Proposals.

 

Precedent Privatisation Premiums

 

CLSA identified from publicly available sources all successful privatisation transactions, to the best of its knowledge, by scheme of arrangements on the main board of the Stock Exchange announced since 1 January 2003 up to and including the date of the Announcement (the “Precedent Privatisations”), and reviewed the premiums represented by the acquisition price over the NAV per share and the average daily closing price of various periods of the Precedent Privatisations.

 

CLSA found that the premium of 65.3 per cent as represented by the Share Offer Price over the NAV per AsiaSat Share, is substantially higher than the median premiums over NAV per share of the Precedent Privatisations (“NAV Premiums”) of 0.3 per cent, and is on the high end of the NAV Premiums range of -70.3 per cent to 188.8 per cent.

 

On the other hand, the premiums represented by the Share Offer Price over the average daily closing price of the AsiaSat Shares at various periods are below the average and median premiums over the average daily closing price of the Precedent Privatisations (“Share Premiums”) at various periods, but are within the range of the Share Premiums.

 

Precedent Transactions in the Satellite Industry

 

CLSA identified, from publicly available sources, completed transactions since 2004 that involved the acquisition of more than a 30 per cent interest in companies that mainly provide satellite services and with a transaction value of over US$100 million (approximately HK$780 million) (the “Precedent Transactions”) and reviewed the key multiples of the Precedent Transactions. It summarised certain information for the Precedent Transactions, including EV/EBITDA and P/E. It found that the EV/EBITDA represented by the Share Offer Price of 6.38 times

 

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is lower than those of the Precedent Transactions; while the P/E represented by the Share Offer Price of 15.78 times is lower than those of the Precedent Transactions. However, as all of the Precedent Transactions involved European and US targets that enjoy more favourable operating conditions than satellite operators in the Asia-Pacific region, in which CLSA was not able to identify recent precedent transactions, CLSA considered the Precedent Transactions to be of limited relevance to the Proposals for comparison purposes. CLSA also noted that, unlike the Share Proposal, the majority of the Precedent Transactions involved the acquisition of a controlling interest in the target.

 

Share Proposal Price Compared to Comparable Companies

 

CLSA identified from publicly available sources all listed companies mainly engaged in the provision of satellite services with a market capitalisation of more than US$100 million in Europe, the United States and Asia-Pacific (the “Comparable Companies”) and reviewed the key multiples of the Comparable Companies. For the Comparable Companies, it summarised market capitalisation, and P/E for 2006 and 2007. Based on these comparables, CLSA found that the P/E represented by the Share Offer Price is lower than those of the Comparable Companies.

 

Historical Trading Liquidity and Trading Price of AsiaSat Shares

 

CLSA evaluated information on the daily historical closing prices and trading volumes of AsiaSat Shares traded on the Stock Exchange between from 1 January 2005 to the Pre-Suspension Date (the “Review Period”). It also presented the average, highest and lowest daily closing prices and the average daily traded volume of the Shares for each quarter during the Review Period.

 

Based on this information CLSA noted that the Share Offer Price represents a premium of:

 

  •  

approximately 30.7 per cent over the closing price of AsiaSat Shares of HK$14.00 as quoted on the Stock Exchange on the Pre-Suspension Date;

 

  •  

approximately 32.5 per cent over the average daily closing price of AsiaSat Shares of HK$13.81 during the Review Period;

 

  •  

approximately 14.7 per cent over the highest daily closing price of AsiaSat Shares of HK$15.95 during the Review Period; and

 

  •  

approximately 14.4 per cent over the Possible MGO Share Offer Price of HK$16.00.

 

CLSA also noted that during the Review Period, AsiaSat Shares traded within the range of HK$12.20 to HK$15.95 (the highest price being achieved in August 2005), and the closing price as at the Pre-Suspension Date was HK$14.00. Following the date of the Announcement, the price of AsiaSat Shares has significantly increased, and as at the Latest Practicable Date, the closing price of AsiaSat Shares was HK$17.54. CLSA noted as well that the average daily trading volume of AsiaSat Shares during the Review Period was about 175,000 AsiaSat Shares, but had significantly increased to about 251,000 AsiaSat Shares between the date of the Announcement to the Latest Practicable Date.

 

DCF Analysis

 

CLSA also analysed the Share Offer Price using the DCF methodology. CLSA performed the DCF analysis based on projections provided by management of AsiaSat, as adjusted based on its discussions with AsiaSat management regarding AsiaSat’s operating environment, business expansion plans and other factors, but have not independently verified the information used. CLSA then applied different discount rates and terminal growth rates to derive an indicative valuation range for AsiaSat Shares. It found that the Share Offer Price falls within its DCF analysis result range. The DCF analysis should not be regarded as an indication of what price AsiaSat Shares should or could be achieved or indications of profit forecast.

 

Other Considerations

 

CLSA also considered that the Offeror has no current intention to introduce any major change to the existing operating and management structures of AsiaSat irrespective of whether or not the Scheme becomes effective. It also noted that, as at the Latest Practicable Date, Bowenvale and parties acting in concert with it hold an

 

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aggregate beneficial ownership of approximately 68.9 per cent of the issued share capital of AsiaSat. Therefore, if any third party were to make a competing offer for the privatisation of AsiaSat, such competing offer would not succeed without the acceptance by Bowenvale and parties acting in concert with it, and Bowenvale has stated that it has no intention to accept any competing offer. Finally, CLSA noted that the Offeror will not increase any of the Offer Prices, except that the Offeror has stated that it reserves the right not to be bound by these statements in the event of a competing offer and such competing offer is recommended by the Board.

 

Conclusions and Opinion

 

In reaching its opinion (on the basis set out at the beginning of this summary), CLSA considered the above principal factors and reasons and, in particular, took into account the following in arriving at its opinion:

 

  •  

the reasons for the Proposals, in particular the competitive environment for satellite service providers in the Asia-Pacific region due to the persistent oversupply of transponder capacity and the slow introduction of new applications in the region;

 

  •  

the historical trading performance of AsiaSat Shares and persistent low levels of liquidity in AsiaSat Shares;

 

  •  

the Share Offer Price represents a premium of approximately 30.7 per cent over the closing price of HK$14.00 of AsiaSat Shares as quoted on the Stock Exchange on the Pre-Suspension Date, a premium of approximately 32.5 per cent over the average daily closing price of AsiaSat Shares of HK$13.81 during the Review Period, a premium of approximately 14.7 per cent over the highest daily closing price of AsiaSat Shares of HK$15.95 during the Review Period, and a premium of approximately 14.4 per cent over the Possible MGO Share Offer Price of HK$16.00;

 

  •  

the Share Offer Price represents a premium over the NAV per share (after adjusting for dividends), which is substantially higher than the median premiums over NAV per share offered in the Precedent Privatisations, and is on the high end of the premiums over NAV per share per share range of the Precedent Privatisations;

 

  •  

the premium represented by the Share Offer Price over the price of AsiaSat Shares as of the Pre-Suspension Date and average daily closing prices of AsiaSat Shares over various periods falls within the range of relevant premiums of the Precedent Privatisations;

 

  •  

while the EV/EBITDA and P/E represented by the Share Offer Price is lower than those of the Precedent Transactions, all of the Precedent Transactions involved European and US targets that enjoy more favourable operating conditions than satellite operators in the Asia-Pacific region;

 

  •  

the P/E represented by the Share Offer Price is lower than that of the Comparable Companies;

 

  •  

the Share Offer Price is within the DCF analysis result range based on the projections provided to CLSA by the management of AsiaSat;

 

  •  

the Option Offer Price represents cash equal to the cash payment which Optionholders would receive if they had exercised their outstanding Options and accepted the Share Proposal in respect of those Shares arising as a result of such exercise;

 

  •  

as Bowenvale and parties acting in concert with it hold an aggregate beneficial ownership of approximately 68.9 per cent of the issued share capital of AsiaSat, if any third party were to make a competing offer for the Privatisation of AsiaSat, such competing offer would not succeed without the acceptance by Bowenvale and parties acting in concert with it, and Bowenvale has stated that it and parties acting in concert with it have no intention to accept any competing offer;

 

  •  

the Offeror will not be allowed to increase any of the Offer Prices, save in wholly exceptional circumstances, as provided in Rule 18.3 of the Takeovers Code; and

 

  •  

the Proposals offer the Scheme Shareholders and the Optionholders an opportunity to exit and monetise their investment in AsiaSat Shares and Options at the Share Offer Price and the Option Offer Price, respectively.

 

Having considered the above, CLSA is of the opinion that the terms and conditions of the Proposals, in particular the Share Proposal Price and the Option Proposal Price, are fair and reasonable so far as the Scheme

 

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Shareholders and the Optionholders, respectively, are concerned. Accordingly, CLSA advised the Independent Board Committee to recommend to the Scheme Shareholders to approve the Scheme at the Court Meeting and to vote in favour of the special resolution to approve and give effect to the Scheme at the Special General Meeting to be convened on 24 April 2007 and recommend to the Optionholders to accept the Option Proposal for any Options outstanding as at the day of the hearing of the petition for the sanction of the Scheme by the Supreme Court.

 

1.3.4 Certain Projections

 

At the November 2006 meeting of the AsiaSat Board of Directors, management provided, as is customary on an annual basis, the directors with a five-year business plan. The business plan was prepared and provided by management well before management was first advised of the Proposals. Between November 2006 and the initial contact between representatives of the Offeror and AsiaSat concerning the Proposals, some of the Directors who received the business plan, later became directors of the Offeror. They did not, however, share the business plan with the Offeror or the other directors of the Offeror. In addition, as Directors, the members of the Independent Board Committee had copies of the business plan, and a copy of the business plan was made available to CLSA. As a result of the foregoing, projections included in the business plan are included in this Scheme Document.

 

The following sets forth the material portions of the projections contained in the business plan (HK$ in thousands):

 

     2007     2008     2009     2010     2011  

Revenue

    923,109     973,647     1,031,384     1,126,021     1,251,119  

Operating Expenses (Net)

    (217,569 )   (227,900 )   (242,017 )   (292,103 )   (306,398 )

EBITDA

    705,540     745,747     789,367     833,918     944,721  

Depreciation & Amortisation

    (297,600 )   (299,368 )   (223,689 )   (311,055 )   (312,209 )

EBIT

    407,940     446,379     565,678     522,863     632,512  

Other Income/(Expenses)

    75,018     72,079     71,339     83,353     103,954  

EBT

    482,958     518,458     637,017     606,216     736,466  

Taxation

    (62,834 )   (67,554 )   (82,955 )   (78,908 )   (95,660 )

Earnings After Tax

    420,124     450,904     554,062     527,308     640,806  

Minority Interest & Share of Loss from Associate

    (796 )   1,296     3,603     3,573     1,604  

Profit Attributable to Shareholders

    419,328     452,200     557,665     530,881     642,410  

 

     2007    2008    2009    2010    2011

Capital Expenditure

    512,963    282,700    273,141    10,898    10,435

 

EBITDA is commonly used in the satellite industry to analyse companies on the basis of operating performance, leverage and liquidity. EBIDTA is not intended to represent cash flow for the period, nor has it been presented as an alternative to earnings after tax as an indicator of operating performance. The items of earnings after tax excluded from EBITDA are significant components in understanding and assessing the financial performance of the Group, and this computation of EBITDA may not be comparable to other similarly titled measures of other companies.

 

The projections included in this Scheme Document have been prepared by, and are the responsibility of, the Company’s management. Management had advised the Directors that its internal financial forecasts were prepared solely for internal use in business planning and are subjective in many respects and thus susceptible to interpretations and periodic revision based on actual experience and business developments.

 

The Company does not, as a matter of course, publicly disclose projections of future revenues, earnings or other financial performance. The projections were not prepared with a view to public disclosure and are included in this Scheme Document because representatives of the Offeror had access to such projections and such projections were also made available to CLSA. The projections were not prepared with a view to complying with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or generally accepted accounting principles.

 

Neither the Company’s independent auditors nor any other independent accountants have examined, compiled or performed any procedures with respect to the financial information contained in the projections, nor have they expressed any opinion or given any other form of assurance with respect to the projections, the assumptions

 

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underlying the projections or the achievability of the projections. These projections have been included in this Scheme Document by reason of the applicability of Rule 13e-3 of the Exchange Act to the Proposals (as they were provided to certain members of the board of the Offeror and CLSA) and is not strictly in compliance with the disclosure requirements of Rule 10 and Rule 11 of the Takeovers Code.

 

In compiling the projections, the Company’s management took into account historical performance, combined with estimates, among others, regarding revenues and net income. Furthermore:

 

  •  

The projections were developed in a manner consistent with management’s historical development of internal financial forecasts used in the preparation of annual budgets.

 

  •  

The projections are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments.

 

  •  

Although the projections are presented with numerical specificity, these projections reflect numerous assumptions and estimates relating to Company’s business made by the Company’s management that Company’s management believed were reasonable at the time the projections were prepared.

 

  •  

Factors such as industry performance, competitive uncertainties and general business, economic, political, regulatory, market and financial conditions, all of which are difficult to predict and beyond the control of Company’s management, may cause actual results to vary from the projections or the underlying assumptions. See “Important Notices; Information for US AsiaSat Shareholders and ADS Holders”.

 

Accordingly, while the projections were prepared in good faith by Company’s management, there can be no assurance that the estimates and assumptions made in preparing the projections will prove to be accurate or that the projections will be realised, and actual results may be materially greater or less than those contained in the projections. The inclusion of this information in this Scheme Document should not be regarded as an indication that the projections will be predictive of actual future results, and the projections should not be relied upon as such. Moreover, the Independent Board Committee and CLSA may have varied some of the assumptions underlying the projections for purposes of their analyses set forth in this document.

 

As part of a business plan prepared for internal purposes, the projections reflect management’s view of the business as of November 2006. As such, the projections do not reflect the privatisation nor do they reflect any possible strategic initiatives that have been considered, or are under consideration, by management. Except to the extent required by applicable law, the Company does not intend to update or otherwise revise any of the projections included in this Scheme Document to reflect circumstances existing after the date when such projections were made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error or otherwise no longer appropriate.

 

The basis for accounting for the financial information contained in the business plan is consistent with the accounting policies normally adopted by the Company. The Company’s underlying financial statements are prepared in accordance with HKFRS. The following assumptions, among others, were used by the Company’s management in developing the foregoing projections:

 

•  

the Company will continue to operate with three satellites for its existing transponder leasing business;

 

•  

AsiaSat 5 will be launched in the second half of 2009;

 

•  

expenses in connection with staff on-site monitoring and overseas training in connection with AsiaSat 5, such as staff costs, passages, accommodations, etc. will be capitalised;

 

•  

there will be improvement in demand for transponder capacity in the Asian region;

 

•  

the direct-to-home business will operate with four broadcast satellite service transponders in the business plan; and

 

•  

Tai Po SCC Phase II is excluded.

 

In addition, the projections were based on a number of assumptions regarding the broader operating environment of AsiaSat, including the following:

 

•  

there will be no material change in existing political, legal and fiscal, market, economic or social conditions in markets serviced by the Group;

 

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•  

there will be no change in legislation, regulations or rules in markets serviced by the Group which adversely affect the business of the Group;

 

•  

there will be no material change in the bases or rates of taxation applicable to the Group and the tax dispute with the Indian tax authorities will be resolved in favour of the Group; and

 

•  

there will be no material changes in interest rates or foreign currency exchange rates from those currently prevailing.

 

1.4 Effects of the Proposals

 

1.4.1 Participation in AsiaSat

 

Upon the Scheme becoming effective and binding, CITIC Group and GECC will own indirectly 100 per cent of the issued share capital of the Company. If the Scheme is completed, the Scheme Shareholders will cease to have ownership interests in the Company and rights as the Company’s shareholders, and, as a result, Scheme Shareholders will not participate in any future earnings, losses, growth or decline of the Company. Moreover, the Company intends to have the ADSs de-listed from the NYSE following completion of the Scheme. As a result, public trading of the ADSs will cease.

 

The Company’s net income was HK$453,405,000 for the year ended 31 December 2006 and the shareholders’ equity was HK$4,421,604,000 as of 31 December 2006. As of 31 December 2006, Bowenvale was the holder of approximately 68.9 per cent of the issued and outstanding share capital of the Company. Pursuant to the Share Proposal, each of the Scheme Shareholders (being holders of the approximately 31.1 per cent of the issued and outstanding share capital of the Company), totalling 121,360,500 AsiaSat Shares) will receive HK$18.30 in cash for each AsiaSat Share it holds. If the Scheme becomes effective, CITIC Group and GECC’s indirect interest in the Company’s net income and in the Company’s shareholders’ equity will equal to 100 per cent. After the transaction, CITIC Group and GECC (through their respective affiliates) will be entitled to all benefits resulting from such interest, including all income generated by the Company’s operations and any future increase in the Company’s value. Similarly, CITIC Group and GECC (through their respective affiliates) will also bear all the risks of losses generated by the Company’s operations and any future decrease in the value of the Company after the transaction. If the Scheme becomes effective, the Scheme Shareholders will have no interest in AsiaSat’s net book value or net earnings.

 

The table below sets forth the direct and indirect interests in AsiaSat’s net book value and net earnings of each of Bowenvale, the Offeror, Able Star, and GE Equity prior to and immediately after the Privatisation, based upon the net book value of AsiaSat at 31 December 2006 and net income of AsiaSat for the year ended 31 December 2006. Following the Privatisation, the entire interest in AsiaSat net book value and net earnings will be held by CITIC Group and GECC (through their respective affiliates).

 

     Pre-Privatisation(1)    Post-Privatisation(2)
     Net Book Value    Net Income    Net Book Value    Net Income

Name

    HK$    %    HK$    %    HK$    %    HK$    %

Offeror

    0    0.0    0    0.0    1,375,119    31.1    141,009    31.1

Bowenvale

    3,046,485    68.9    312,396    68.9    3,046,485    68.9    312,396    68.9

Able Star(3)

    3,046,485    68.9    312,396    68.9    2,232,910    50.5    228,970    50.5

CITIC Group(3)

    3,046,485    68.9    312,396    68.9    2,232,910    50.5    228,970    50.5

GE Equity

    0    0.0    0    0.0    2,188,694    49.5    224,435    49.5
(1) Based upon beneficial ownership as of the Latest Practicable Date, excluding any Options (whether or not exercisable), and AsiaSat’s net book value as at 31 December 2006 and profit from continuing operations for the year ended 31 December 2006, in each case as disclosed in AsiaSat’s announcement of final results for the year ended 31 December 2006.

 

(2) Based upon AsiaSat’s net book value at as 31 December 2006 and profit from continuing operations for the year ended 31 December 2006, in each case as disclosed in AsiaSat’s announcement of audited results for the year ended 31 December 2006, without giving effect to the payment of any transaction expenses in connection with the Privatisation.

 

(3) Includes beneficial ownership of AsiaSat Shares held by Bowenvale.

 

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1.4.2    Market for AsiaSat Securities

 

As soon as practicable after the Scheme becomes effective, the Company will apply to the Stock Exchange for the withdrawal of the listing of the AsiaSat Shares on the Stock Exchange pursuant to Rule 6.15 of the Listing Rules. Scheme Shareholders will be notified by way of a press announcement of the exact dates on which the Scheme and the withdrawal of the listing of the AsiaSat Shares on the Stock Exchange will become effective.

 

Upon the Scheme becoming effective, all Scheme Shares will be cancelled and share certificates for the Scheme Shares will cease to have effect as documents of evidence of title and should be returned to the Company for cancellation.

 

Upon the Scheme becoming effective and the Company becoming wholly owned by CITIC Group and GECC through the Offeror and Bowenvale, the Company will also apply for de-listing of the ADSs from the NYSE. CITIC Group and GECC also intend to seek to cause the Company to terminate the ADS Deposit Agreement. If the Scheme becomes effective, CITIC Group and GECC intend to cause the Company to file a Form 15 with the SEC to request that the Company’s reporting obligations under the Exchange Act be terminated or suspended, provided the relevant rules and regulations under the Exchange Act are satisfied. Irrespective of the outcome of the Scheme, in due course, it is expected that the maintenance of the ADS listing on the NYSE will be re-examined by AsiaSat and the Board, the outcome of which may be to terminate such listing.

 

1.4.3    Margin regulations

 

The ADSs are currently “margin securities” under the regulations of the Federal Reserve Board, which has the effect, amongst other things, of allowing brokers to extend credit on the collateral of the ADSs. Depending upon factors similar to those described above regarding listing and market quotations, it is likely that following effectiveness of the Scheme, the ADSs may no longer constitute “margin securities” for purposes of the margin regulations of the Federal Reserve Board and, as a result, could no longer be used as collateral for loans made by brokers.

 

1.4.4    Exchange Act de-registration and availability of public information

 

The ADSs and the AsiaSat Shares are currently registered under the Exchange Act. Currently, registration of such ADSs and AsiaSat Shares may be terminated or suspended upon application of AsiaSat to the SEC if the ADSs are neither listed on a national securities exchange (in the United States) or quoted on an inter-dealer quotation system nor held by 300 or more beneficial owners in the United States or satisfy such other criteria as the SEC may establish in the future.

 

Termination or suspension of registration of ADSs and AsiaSat Shares under the Exchange Act would substantially reduce the information required to be furnished by AsiaSat to ADS Holders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to AsiaSat. For example, AsiaSat would no longer be required to file an annual report on Form 20-F or to make submissions of material information on Form 6-K. Furthermore, AsiaSat would not be required to file any financial statements with the SEC and would not be required to reconcile its financial statements to US GAAP. In addition, delisting from the NYSE would render inapplicable certain corporate governance standards that currently apply to AsiaSat (including independence requirements for members of the audit committee).

 

1.4.5    No Appraisal Rights

 

Shareholders do not have express appraisal rights in connection with the Scheme under the Companies Act. However, the Supreme Court in considering whether to sanction a scheme of arrangement may decline to sanction a scheme unless it is satisfied not only that the required Court Meeting was properly constituted and that the Share Proposal was approved by the requisite majority, but also that the result of the Court Meeting fairly reflected the view of the parties concerned.

 

1.4.6    Material Accounting Treatment

 

Upon cancellation of the Scheme Shares, AsiaSat’s issued share capital will be reduced by HK$12,136,050, the par value of the AsiaSat Shares cancelled. There will then be an immediate issue of New AsiaSat Shares, so that the net effect on the Company’s issued share capital will be nil.

 

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2.    TAX CONSEQUENCES

 

2.1    Hong Kong Tax Consequences

 

As the Scheme does not involve the sale and purchase of Hong Kong stock, no stamp duty will be payable pursuant to the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong) on the cancellation of the Scheme Shares upon the Scheme becoming effective and binding.

 

The Scheme Shareholders, whether in Hong Kong or in other jurisdictions, are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of the Share Proposal and, in particular, whether the receipt of the Share Offer Price would make such Scheme Shareholders liable to taxation in Hong Kong or in other jurisdictions.

 

2.2    US Federal Income Tax Consequences

 

This section describes the material US federal income tax consequences of the Proposals. It applies to you only if you are a US holder, as defined below, and you hold your Scheme Shares as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”), or you hold Options received through compensation arrangements. This section does not address any tax considerations under state, local or foreign laws or US federal laws (e.g. estate or gift tax laws) other than those pertaining to US federal income tax. This section does not address all aspects of US federal income taxation that may be relevant to US holders in light of their particular circumstances. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

 

  •  

a broker or dealer in securities or foreign currencies,

 

  •  

a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings,

 

  •  

a non-US holder,

 

  •  

a financial institution,

 

  •  

a mutual fund,

 

  •  

a partnership or other entity treated as a partnership for US federal income tax purposes,

 

  •  

a tax-exempt organisation,

 

  •  

a life insurance company,

 

  •  

a person liable for alternative minimum tax,

 

  •  

a person that actually or constructively owns 10 per cent or more of the voting stock of the Company,

 

  •  

a person that holds Scheme Shares as part of a straddle or a hedging or conversion transaction, or

 

  •  

a person whose functional currency is not the US dollar.

 

This section is based on the Code, its legislative history, existing and proposed US Treasury Regulations, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. In addition, the Company believes, and this summary assumes, that the Company is not and never has been a passive foreign investment company for US federal income tax purposes. There can be no assurance that the US Internal Revenue Service will not challenge one or more of the tax considerations described herein, and no ruling has been sought from the Internal Revenue Service as to the US federal income tax consequences of the Proposals.

 

You are a US holder if you are a beneficial owner of Scheme Shares or Options and you are:

 

  •  

a citizen or resident of the United States,

 

  •  

a corporation or other entity taxable as a corporation for US federal income tax purposes, created or organised in or under the laws of the United States, any state within the United States, or the District of Columbia,

 

  •  

an estate whose income is subject to US federal income tax regardless of its source, or

 

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  •  

a trust if (i) a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable US Treasury Regulations to be treated as a US person.

 

If a partnership or other flow-through entity holds Scheme Shares or Options, the US federal income tax treatment of a partner or other owner generally will depend on the status of the partner or other owner and the activities of the partnership or other flow-through entity. It is recommended that a US holder that is a partner of a partnership or an owner of another flow-through entity holding Scheme Shares or Options consult its own tax adviser.

 

It is recommended that you consult your own tax adviser regarding the US federal, state and local other tax consequences of the Proposals in your particular circumstances.

 

2.2.1    Tax Consequences of the Share Proposal

 

If you are a US holder of Scheme Shares you will recognise capital gain or loss for US federal income tax purposes equal to the difference between the total consideration you receive for your Scheme Shares and your adjusted tax basis, determined in US dollars, in your Scheme Shares. Capital gain of a non-corporate US holder is generally taxed at a maximum rate of 15 per cent where the property is held more than one year. The deductibility of a capital loss is subject to certain limitations under the Code. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

 

2.2.2    Tax Consequences of the Option Proposal

 

A US holder of Options received through compensation arrangements that is an individual who receives cash in cancellation of such Options will generally recognise, as ordinary income for US federal income tax purposes and potentially subject to withholding and information reporting, the cash payment received. If the Optionholder is an employee, or received the Options as an employee, the cash payments received by such holder will constitute wage income and will be subject to income and employment taxes. If the Optionholder is a non-employee, the cash payment will be self-employment income.

 

2.2.3    Foreign Currency Considerations

 

A US holder’s receipt of cash with respect to Scheme Shares or Options that are paid in foreign currency will be included in the gross income of a US holder as translated into US dollars calculated by reference to the exchange rate prevailing on the date of receipt of such amount, regardless of whether the foreign currency is converted into US dollars at that time. If the foreign currency received is converted into US dollars on the date of receipt, a US holder generally should not be required to recognise foreign currency gain or loss in respect of the amount. If the foreign currency received is not converted into US dollars on the date of receipt, a US holder will have a basis in the foreign currency equal to its US dollar value on the date of receipt. Any US holder who receives payment in foreign currency and engages in a subsequent conversion or other disposition of the foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be US source income or loss for foreign tax credit purposes. US holders are urged to consult their own tax advisers concerning the US tax consequences of acquiring, holding and disposing of foreign currency.

 

2.2.4    Backup Withholding and Information Reporting

 

If you are a non-corporate US holder, information reporting requirements, on Internal Revenue Service Form 1099, generally will apply to the payment of the consideration to you from the cancellation of your Scheme Shares or Options effected at a US office of a broker.

 

Additionally, backup withholding may apply to such payments if you are a non-corporate US holder that:

 

  •  

fails to provide an accurate taxpayer identification number,

 

  •  

is notified by the US Internal Revenue Service that you have failed to report all interest and dividends required to be shown on your US federal income tax returns, or

 

  •  

in certain circumstances, fails to comply with applicable certification requirements.

 

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PART VII – US SPECIAL FACTORS

 

Backup withholding is not an additional tax, and you generally may obtain a refund or credit of any amounts withheld under the backup withholding rules that exceed your income tax liability, provided that you have furnished the required information to the US Internal Revenue Service in a timely manner.

 

TAX MATTERS ARE VERY COMPLEX, AND THE TAX CONSEQUENCES OF THE SCHEME TO YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. IT IS RECOMMENDED THAT YOU SHOULD CONSULT YOUR TAX ADVISER FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE SCHEME TO YOU.

 

3.    MANAGEMENT – INTENTIONS AND PLANS

 

CITIC Group and GECC intend to retain the Company’s existing senior management team to manage the Company after completion of the Proposals. As of the date of this Scheme Document, no member of the Company’s management team has entered into any agreement, arrangement or understanding with the Offeror or its affiliates regarding employment with, or the right to purchase or participate in the equity of, the Company. In addition, as of the date of this Scheme Document, no member of the Board has entered into any agreement, arrangement or understanding with the Offeror or its affiliates regarding any position on the Board, or the right to purchase or participate in the equity of, the Company.

 

Provided the Executive’s consent under Rule 7 of the Takeovers Code is obtained, Mr. Romain Bausch, Ms. Cynthia Dickins and Mr. Mark Rigolle, the SES’s appointees to the Board, will resign from the Board on completion of the Exchange Transaction and the GE Entities will appoint new directors to the Board to replace the SES appointees. It is anticipated that such new directors will be Mr. Ronald J. Herman, Jr., Ms. Nancy Ku, Mr. Mark Chen (each of whom is also a director of the Offeror) and, so long as the Company remains public, an additional person still to be determined by the GE Entities. These changes to the Board are in no way dependent on whether or not the Proposals complete. No determination has yet been made as to whether, and if so, how, the composition of the Board may be changed upon completion of the Proposals.

 

4.    WHERE YOU CAN FIND MORE INFORMATION

 

AsiaSat files annual and other reports and submits other information with the SEC. The SEC maintains an internet web site that contains reports and other material that are filed through the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) System. This system can be accessed at http://www.sec.gov. Information filed by AsiaSat with the SEC can be found by reference to AsiaSat’s corporate name or to its SEC file number, 1-14396. You may also read and copy any document filed by AsiaSat at the SEC’s public reference room located at:

 

100 F Street, N.E., Room 1580

Washington, D.C. 20549

United States

 

Please call the SEC at 1-800-SEC-0330 (within the United States) or +1 202 551 8090 (outside the United States) for further information on the public reference room and its copy charges.

 

Because the Privatisation is a “going private” transaction, AsiaSat, the Offeror and the Offeror’s shareholders, Able Star and GE Equity, will file with the SEC a Transaction Statement on Schedule 13E-3 with respect to the proposed Privatisation. The Schedule 13E-3, including any amendments and exhibits filed or incorporated by reference as a part of it, is available for inspection as set forth above. The Schedule 13E-3 will be amended to report promptly any material changes in the information set forth in the most recent Schedule 13E-3 filed with the SEC.

 

The SEC allows AsiaSat and the Offeror to “incorporate by reference” into this Scheme Document the information AsiaSat files with it, which means that important information can be disclosed by referring to those documents. The information incorporated by reference is an important part of this Scheme Document, and information that is filed later with the SEC will automatically update and supersede this information. AsiaSat and the Offeror incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the initial filing date of this Scheme Document and before the Meetings:

 

  •  

AsiaSat’s Annual Report on Form 20-F for the year ended 31 December 2005; and

 

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PART VII – US SPECIAL FACTORS

 

  •  

AsiaSat’s Reports of a foreign issuer on Form 6-K, filed with the SEC on 7 March 2007.

 

AsiaSat will provide a copy of any document incorporated by reference in this Scheme Document and any exhibit specifically incorporated by reference in those documents, without charge, by written or oral request directed to us at the following address and telephone number:

 

Address: Asia Satellite Telecommunications Holdings Limited,

  

17/F, The Lee Gardens, 33 Hysan Avenue,

   Causeway Bay, Hong Kong

 

Telephone Number: (852) 2500 0888

 

Should you want more information regarding AsiaSat, please refer to the annual and other reports filed with or submitted to the SEC.

 

AsiaSat Shareholders and Scheme Shareholders should rely only on the information contained or incorporated by reference in this Scheme Document to vote their Scheme Shares at the Court Meeting and their AsiaSat Securities at the Special General Meeting. Neither AsiaSat nor the Offeror has authorised anyone to provide you with information that is different from what is contained in this Scheme Document. This Scheme Document is dated 19 March 2007. No assumption should be made that the information contained in this Scheme Document is accurate as of any date other than the Latest Practicable Date, and neither the mailing of the Scheme Document to AsiaSat Shareholders nor the payment of the consideration pursuant to the Scheme shall create any implication to the contrary.

 

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PART VIII – EXPLANATORY STATEMENT

 

This Explanatory Statement constitutes the statement required under Section 100 of the Companies Act.

 

SCHEME OF ARRANGEMENT

FOR THE CANCELLATION OF THE SCHEME SHARES, THE CREATION, ALLOTMENT AND ISSUE OF THE NEW ASIASAT SHARES

AND

THE PAYMENT OF THE SHARE OFFER PRICE AND OPTION OFFER PRICE

 

1.    INTRODUCTION

 

On 13 February 2007, the Offeror requested the Board to put forward the Share Proposal (detailed below) to the Scheme Shareholders for cancellation of the Scheme Shares to effect the privatisation of the Company by way of a scheme of arrangement under Section 99 of the Companies Act and informed the Board that it will make the Option Proposal (detailed below) to Optionholders for the cancellation of Outstanding Options in exchange for cash. If approved, the Scheme will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Special General Meeting. The effect of the Proposals is that AsiaSat will become wholly owned by CITIC Group and GECC, through Bowenvale as to approximately 68.9 per cent and through the Offeror as to approximately 31.1 per cent. The AsiaSat Shares held by Bowenvale will not form part of the Scheme Shares.

 

2.    TERMS OF THE PROPOSALS

 

The Proposals are made on the following basis:

 

The Share Proposal

   

For each Scheme Share

    HK$ 18.30 in cash

For each ADS

    HK$ 183.00 in cash

The Option Proposal

   

For each Outstanding B Option

    HK$ 0.82 in cash

For each Outstanding C Option

    HK$ 3.95 in cash

 

The Share Offer Price represents a premium of approximately 30.7 per cent over the closing price of HK$14.00 per AsiaSat Share as quoted on the Stock Exchange on the Pre-Suspension Date, a premium of approximately 29.8 per cent over the closing price of HK$14.10 per AsiaSat Share as quoted on the Stock Exchange on the Suspension Date and a premium of approximately 32.2 per cent over the 30-day Average Pre-Announcement Price of HK$13.84 per AsiaSat Share. The Share Offer Price represents a discount of approximately 0.5 per cent to US$23.55 per ADS as quoted on the NYSE on the Latest Practicable Date and a premium of approximately 14.4 per cent over the Possible MGO Share Offer Price.

 

2.1    The Share Proposal

 

The aim of the Share Proposal is to privatise the Company by way of the Scheme and to cancel all the Scheme Shares (including Scheme Shares underlying the ADSs), which will result in a reduction of the issued share capital of the Company under Section 46 of the Companies Act, and to issue the New AsiaSat Shares to the Offeror. In consideration for the cancellation of the Scheme Shares, Scheme Shareholders will be entitled to receive the Share Offer Price, being HK$18.30 per Scheme Share, in cash.

 

As the ADSs are governed by the ADS Deposit Agreement and not Bermuda law, implementation of the Scheme will not result in and of itself in cancellation of the ADSs. Instead, upon the Scheme becoming effective, the Scheme Shares underlying the ADSs will be cancelled along with all other Scheme Shares, and the cash received by the ADS Depositary (as registered owner of the Scheme Shares underlying the ADSs) upon cancellation of such Scheme Shares will be converted into US dollars by the ADS Depositary and distributed (less any fees and expenses of the ADS Depositary in connection with currency conversions under the ADS Deposit Agreement and withholding taxes, if applicable) to the ADS Holders pro rata to their holdings upon exchange of their ADSs, in accordance with the provisions of the ADS Deposit Agreement.

 

No AsiaSat Share acquired by the Offeror pursuant to the Share Proposal will be transferred, charged or pledged to any other person, and there are no agreements, arrangements or understandings in place to do the same, nor are

 

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PART VIII – EXPLANATORY STATEMENT

 

there any related charges or pledges which may result in the transfer of voting rights attached to AsiaSat Shares, provided, however, that after the Scheme becomes effective, the Offeror may transfer its entire interest in AsiaSat to Bowenvale.

 

2.2    The Option Proposal

 

In accordance with the terms of the Share Option Scheme, Optionholders are entitled to exercise their Options, which confer rights to subscribe for AsiaSat Shares at a price of HK$17.48 per AsiaSat Share in respect of B Options and HK$14.35 per AsiaSat Share in respect of C Options, in full or in part at any time from the date of such notice until the earlier of (i) two calendar months after the date of the notice of the Court Meeting and, (ii) the date on which the Scheme is sanctioned by the Supreme Court, but the exercise of the Options as described above shall be conditional upon the Scheme becoming effective.

 

Optionholders should note that under the Rules of the Share Option Scheme, in particular paragraph 8.5:

 

(i) Optionholders have the right to exercise Options up to two calendar months after the date of despatch of the Scheme Document or the date of the sanction of the Scheme by the Supreme Court, whichever is the earlier;

 

(ii) Optionholders who exercise their Options prior to the Voting Record Time will be Scheme Shareholders who may vote on the Scheme, provided they are not concert parties of the Offeror; and

 

(iii) Optionholders who exercise their Options after the Voting Record Time may do so until the Scheme Record Time, but will only be able to do so subject to the terms of the Scheme and conditional upon the Scheme being sanctioned by the Supreme Court, and will therefore be bound by the Scheme.

 

AsiaSat Shares issued upon exercise of the Options in accordance with the terms of the Share Option Scheme prior to the Scheme Record Time will form part of the Scheme Shares. Options which are not exercised in accordance with the terms of the Share Option Scheme and to the extent in relation to which the Option Proposal is not accepted will lapse, subject to and conditional upon the Scheme becoming effective and binding. The Option Proposal is conditional upon the Scheme becoming effective and binding.

 

Under the Option Proposal, the Offeror will offer to purchase Outstanding Options, for cancellation in exchange for HK$0.82 in cash for each Outstanding B Option, and HK$3.95 in cash for each Outstanding C Option subject to and conditional upon the Scheme becoming effective and binding.

 

Further information on the Option Proposal has been set out in this Scheme Document and the Option Proposal will be made by or on behalf of the Offeror in a Letter to Optionholders despatched on the same day as this Scheme Document.

 

2.3    Total Consideration

 

On the basis of the Share Offer Price of HK$18.30 per Scheme Share and 390,265,500 AsiaSat Shares in issue, of which 121,360,500 were Scheme Shares as at the Latest Practicable Date (including Scheme Shares underlying the ADSs), the Scheme Shares are valued at approximately HK$2,221 million.

 

Save for the Options, there are no outstanding options, warrants, derivatives or other securities issued by AsiaSat that carried a right to subscribe for or which are convertible into AsiaSat Shares. Assuming none of the Options are exercised prior to the Scheme Record Time in accordance with the terms of the Share Option Scheme and on the basis of the Option Offer Price of HK$0.82 per Outstanding B Option, and HK$3.95 per Outstanding C Option, the Option Proposal is valued at approximately HK$14 million. Assuming all Options are exercised in full by the Optionholders in accordance with the terms of the Share Option Scheme prior to the Scheme Record Time, no consideration will be payable under the Option Proposal, and the number of Scheme Shares will accordingly increase to 126,193,000 and the Scheme Shares would be valued at approximately HK$2,309 million.

 

The total amount of cash required to effect the Proposals is approximately HK$2,235 million if none of the Options are exercised prior to the Scheme Record Time. This amount would increase to an aggregate of approximately HK$2,309 million if all Options are exercised prior to the Scheme Record Time.

 

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PART VIII – EXPLANATORY STATEMENT

 

The consideration to which any AsiaSat Shareholder is entitled under the Proposals will be implemented in full in accordance with the terms of the Proposals without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such AsiaSat Shareholder.

 

3.    CONDITIONS OF THE PROPOSALS

 

The Share Proposal will become effective and binding on the Company and all Scheme Shareholders, subject to fulfilment or waiver (as applicable) of the following conditions:

 

(a) the approval by way of poll of the Scheme by a majority in number of the Scheme Shareholders representing not less than three-fourths in value of the Scheme Shares, present and voting either in person or by proxy at the Court Meeting, provided that:

 

  (i) the Scheme is approved by at least 75 per cent of the votes attaching to Scheme Shares held by Scheme Shareholders that are cast either in person or by proxy at the Court Meeting; and

 

  (ii) the number of votes cast against the resolution to approve the Scheme at the Court Meeting is not more than 10 per cent of the votes attaching to all Scheme Shares held by Scheme Shareholders;

 

(b) the passing by AsiaSat Shareholders of a special resolution to approve and give effect to the Scheme (including the cancellation of the Scheme Shares and the reduction of the relevant portion of the issued share capital of the Company and the issue of the New AsiaSat Shares) by a majority of not less than three-fourths of the votes cast by the AsiaSat Shareholders present and voting in person or by proxy, at the Special General Meeting;

 

(c) the sanction of the Scheme (with or without modifications) by the Supreme Court and the delivery to the Registrar of Companies in Bermuda of a copy of the order of the Supreme Court for registration;

 

(d) the compliance with the procedural requirements of Section 46 of the Companies Act in relation to the reduction of the issued share capital of the Company;

 

(e) all other Authorisations in connection with the Share Proposal having been obtained from the Relevant Authorities in Bermuda, Hong Kong, the United States and other relevant jurisdictions (if any);

 

(f) all Authorisations remaining in full force and effect without variation, and all necessary statutory or regulatory obligations in all relevant jurisdictions having been complied with and no requirement having been imposed by any Relevant Authorities which is not expressly provided for in these conditions, or is in addition to the requirements expressly so provided for, in relevant laws, rules, regulations or codes in connection with the Proposals or any matters, documents (including circulars) or things relating thereto, which is material in the context of the Group as a whole in each aforesaid case up to and at the time when the Scheme becomes effective;

 

(g) all necessary third party consents required under contractual obligations of AsiaSat which are material in the context of the Group as a whole having been obtained;

 

(h) a waiver from the Hong Kong Broadcasting Authority in respect of compliance with statements and representations regarding the legal and beneficial interests in the Licensees’ voting control and shares set out in the Licensees’ non-domestic television programme service licences issued by the Hong Kong Broadcasting Authority;

 

(i) confirmation from OFTA (in a form satisfactory to the Executive for the purposes of compliance with Note 4 to Rule 26.2 of the Takeovers Code) that the Proposals will not have, or be likely to have, the effect of substantially lessening competition in a telecommunications market in Hong Kong as referred to in Section 7P of the Telecommunications Ordinance;

 

(j) no governments, governmental, quasi-governmental, supranational, statutory or regulatory bodies or courts in any jurisdiction having instituted any action, proceedings, suit, investigation or enquiry or enacted or made and there not continuing to be outstanding any statute, regulation or order that would make the Share Proposal void, unenforceable or illegal or prohibit the implementation of the Share Proposal;

 

(k) none of the telecommunications licences held by the Group which are material in the context of the Group as a whole having been revoked by OFTA when Conditions (f), (g), (h), (i) and (j) are satisfied;

 

(l) completion of the Exchange Transaction; and

 

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PART VIII – EXPLANATORY STATEMENT

 

(m) since the date of this Scheme Document, no event having occurred in relation to any satellite whether under construction or in service and owned and/or operated by any member of the Group (such as, without limitation, technical failure or launch failure, satellite defects, destruction and damage that may result in total or partial loss or incorrect orbital placement or prevent proper commercial operation) which has a material adverse effect on the business, assets, financial or trading position or prospects of the Group taken as a whole.

 

The Offeror reserves the right to waive condition (g) either in whole or in part in respect of any particular matter. In the event that conditions (e) or (f) are not fulfilled by reason of an Authorisation not having been obtained, the Offeror reserves the right to assess the materiality of such non-fulfilment and to waive the fulfilment of such condition(s) to such extent where it considers appropriate. Conditions (a) to (d), and conditions (j) and (l) cannot be waived in any event. The Offeror may only invoke condition (m) as a basis for not proceeding with the Scheme if the provisions of Note 2 to Rule 30.1 of the Takeovers Code are satisfied. Note 2 to Rule 30.1 of the Takeovers Code provides that an offeror should not invoke any condition (other than the acceptance condition) so as to cause the offer to lapse unless the circumstances which give rise to the right to invoke the condition are of material significance to the offeror in the context of the offer. The waiver or invoking by the Offeror of any condition in accordance with the terms of this paragraph shall not be subject to the Company’s agreement, approval or consent. The Offeror may not waive any other condition in any event, and the Company has no right to waive any of the conditions.

 

All of the above conditions will have to be fulfilled or waived, as applicable, on or before 30 June 2007 (or such later date as the Offeror and the Company may agree or (to the extent applicable) as the Supreme Court may direct and as may be permitted by the Takeovers Code), failing which the Scheme will lapse. Any extension to such later date shall not be beyond 31 October 2007.

 

The Offeror reserves the right to implement the privatisation of AsiaSat by way of a general offer.

 

The implementation of the Option Proposal is conditional upon the Share Proposal becoming effective and binding.

 

The Offeror is not a party to any agreements or arrangements which relate to the circumstances in which it may or may not invoke or seek to invoke a condition to the Share Proposal and the Option Proposal.

 

4.    BACKGROUND TO, REASONS FOR AND BENEFITS OF THE PROPOSALS

 

4.1    Reasons for and Benefits of the Proposals

 

Due to the persistent oversupply of transponder capacity and the slow introduction of new applications in the region, the Asia-Pacific satellite market remains very competitive. As a result, the Company’s share price has not performed satisfactorily. In the three year period prior to the Announcement Date, the price of AsiaSat Shares decreased by 11.9 per cent compared with an increase of 51.1 per cent in the Hang Seng Index over the same period.

 

Given the overcapacity in the market, Able Star and GE Equity believe that the unsatisfactory share performance of AsiaSat’s Shares may continue. AsiaSat’s dividend yield remains relatively low as the Company needs to preserve cash to endure competition in the market for commercial supply of satellite transponder capacity, to launch new satellites from time to time and to participate in potential acquisitions. Therefore, the earnings of AsiaSat will continue to be under pressure in the short to medium term. For similar reasons, the Offeror currently has no plans to increase the Company’s annual or interim dividend, cause the Company to distribute any extraordinary dividend, or recapitalise the Company’s balance sheet by increasing the Company’s financial leverage in the ordinary course of business in the event the Transfer completes and/or the Scheme becomes effective. Able Star and GE Equity propose to effect the privatisation through the Scheme to enable AsiaSat to pursue development of its business with greater flexibility, and to effect the privatisation at a price in excess of the Possible MGO Share Offer Price in order to give minority shareholders a premium price for their AsiaSat Shares.

 

The Scheme provides an opportunity for AsiaSat Shareholders to exit and monetise their AsiaSat Shares at a significant premium to the current market price. This price represents a premium of approximately 30.7 per cent over the closing price of HK$14.00 per AsiaSat Share on the Pre-Suspension Date, a premium of approximately 29.8 per cent over the closing price of HK$14.10 per AsiaSat Share on the Suspension Date, a premium of

 

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PART VIII – EXPLANATORY STATEMENT

 

approximately 32.2 per cent over the 30-day Average Pre-Announcement Price, and a premium of approximately 22.0 per cent over the highest closing price during the year prior to the Announcement. The Scheme also provides Scheme Shareholders with an opportunity to receive an offer price higher than the Possible MGO Share Offer Price. If the Exchange Transaction is completed but the Scheme is unsuccessful, the Possible MGO Offers would be made and the Scheme Shareholders would have the choice of accepting the Possible MGO Share Offer at a lower price per AsiaSat Share than the Share Offer Price.

 

The privatisation would also, if it completes, relieve AsiaSat of the heavy financial and administrative burden of dual listings on both the Stock Exchange and the NYSE. In particular, compliance costs of the US Sarbanes-Oxley Act of 2002 and the maintenance costs of the listing on the NYSE have, in recent years, resulted in substantial recurrent professional fees and time costs, which are disproportionate to the benefits of maintaining such listing.

 

As a private company, AsiaSat management should have greater flexibility to focus on the development of business and marketing activities. This is particularly important given that AsiaSat is operating in a competitive market in which profitability is under pressure as a result of persistent overcapacity and the substantial investment required to construct and launch new satellites.

 

As at the Latest Practicable Date, Bowenvale and parties acting in concert with it hold an aggregate beneficial ownership of approximately 68.9 per cent of the issued share capital of AsiaSat. If any third party were to make a competing offer for the privatisation of AsiaSat, such competing offer would not succeed without the acceptance by Bowenvale and parties acting in concert with it. Bowenvale and parties acting in concert with it have no intention to accept any competing offer.

 

4.2    Effects of Proposals

 

4.2.1    Shareholder Structure

 

As at the Latest Practicable Date, there were 390,265,500 AsiaSat Shares in issue. The Offeror currently neither owns nor has control or direction over any voting rights or rights over any AsiaSat Shares; however, so far as the Offeror is aware, the Offeror and parties acting in concert with it are beneficially interested in 268,905,000 AsiaSat Shares, representing approximately 68.9 per cent of the issued share capital of the Company. The table below sets out the shareholding structure of the Company as at the Latest Practicable Date and immediately after the Scheme becoming effective, completion of the Option Proposal and the listing of AsiaSat Shares and the ADSs on the Stock Exchange and the NYSE (respectively) is withdrawn and assuming (i) none of the Options have been exercised on or prior to the Scheme Record Time and (ii) all Optionholders accept the Option Proposal:

 

     As at the Latest Practicable Date   Immediately after the Scheme
becomes effective and the listing of
AsiaSat Shares on the Stock
Exchange and ADSs on the NYSE
is withdrawn
     Number of
        AsiaSat Shares        		        %       Number of
        AsiaSat Shares        		       %    

The Offeror

    —      —     121,360,500   31.1

Bowenvale

    268,905,000    68.9   268,905,000   68.9
                 

The Offeror and parties acting in concert with the Offeror

    268,905,000    68.9   390,265,500   100.0

Scheme Shareholders

    121,360,500    31.1   —     —  
                 

(all of the Scheme Shareholders are also independent shareholders for the purposes of the Takeovers Code)

          

Total

    390,265,500    100.0   390,265,500   100.0
                 

 

Following the Effective Date and the withdrawal of the listing of AsiaSat Shares on the Stock Exchange, the Company will become wholly indirectly owned by CITIC Group and GECC, through Bowenvale as to approximately 68.9 per cent and through the Offeror as to approximately 31.1 per cent.

 

The Company had 1,630,000 B Options and 3,202,500 C Options outstanding as at the Latest Practicable Date. Each Option, on exercise, entitles the Optionholder to be allotted one AsiaSat Share. As at the Latest Practicable

 

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PART VIII – EXPLANATORY STATEMENT

 

Date, parties acting in concert with the Offeror held in aggregate 300,000 C Options. To the extent that any of the 300,000 C Options held by parties acting in concert with the Offeror are exercised and converted into AsiaSat Shares prior to the Scheme Record Time, the AsiaSat Shares will form part of the Scheme Shares, but may not be voted at the Court Meeting. The table below sets out details of the Options as at the Latest Practicable Date:

 

Optionholders

    Number of Options
   B Options    C Options

Bowenvale

      

Directors

      

Mi Zeng Xin (also a director of the Offeror)

    —      100,000

Ju Wei Min (also a director of the Offeror)

    —      50,000

Ding Yu Cheng

    —      50,000

Romain Bausch

    —      100,000
         

Other employees of the Company, and directors of the Company (other than those four directors named above)1

    1,630,000    2,902,500
         

Total

    1,630,000    3,202,500
         
1 The other directors of the Company holding Options being Professor Chen Kwan Yiu Edward (50,000 C Options), Mr. Sze Tsai To Robert (75,000 C Options), Mr. Peter E. Jackson (150,000 B Options and 430,000 C Options) and Mr. William Wade (114,000 B Options and 330,000 C Options), none of whom are acting in concert with the Offeror, CITIC Group or GEC.

 

Save as disclosed above, there were no outstanding options, warrants, derivatives or other securities issued by the Company that carried a right to subscribe for or which were convertible into AsiaSat Shares and no other director of the Company had any interest in AsiaSat Shares, as at the Latest Practicable Date. Upon the Scheme becoming effective, the Company will be owned as to approximately 31.1 per cent by the Offeror and as to approximately 68.9 per cent by Bowenvale.

 

4.2.2    Participation in AsiaSat

 

Upon the Scheme becoming effective and binding, CITIC Group and GECC will own indirectly 100 per cent of the issued share capital of the Company. If the Scheme is completed, the Scheme Shareholders will cease to have ownership interests in the Company and rights as the Company’s shareholders, and, as a result, Scheme Shareholders will not participate in any future earnings, losses, growth or decline of the Company. Moreover, the Company intends to have the ADSs de-listed from the NYSE following completion of the Scheme. As a result, public trading of the ADSs will cease.

 

The Company’s net income was HK$453,405,000 for the year ended 31 December 2006 and the shareholders’ equity was HK$4,421,604,000 as of 31 December 2006. As of 31 December 2006, Bowenvale was the holder of approximately 68.9 per cent of the issued and outstanding share capital of the Company. Pursuant to the Share Proposal, each of the Scheme Shareholders (being holders of the approximately 31.1 per cent of the issued and outstanding share capital of the Company), totalling 121,360,500 AsiaSat Shares) will receive HK$18.30 in cash for each AsiaSat Share it holds. If the transaction is consummated, CITIC Group and GECC’s indirect interest in the Company’s net income and in the Company’s shareholders’ equity will equal 100 per cent. After the transaction, CITIC Group and GECC (through their respective affiliates) will be entitled to all benefits resulting from such interest, including all income generated by the Company’s operations and any future increase in the Company’s value. Similarly, CITIC Group and GECC (through their respective affiliates) will also bear all the risks of losses generated by the Company’s operations and any future decrease in the value of the Company after the transaction.

 

4.2.3    Market for AsiaSat Securities

 

The Company will apply to the Stock Exchange for the withdrawal of the listing of the AsiaSat Shares on the Stock Exchange pursuant to Rule 6.15 of the Listing Rules as soon as practicable after the Scheme becomes effective. Scheme Shareholders will be notified by way of a press announcement of the exact dates on which the Scheme and the withdrawal of the listing of the AsiaSat Shares on the Stock Exchange will become effective.

 

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PART VIII – EXPLANATORY STATEMENT

 

Upon the Scheme becoming effective, all Scheme Shares will be cancelled and share certificates for the Scheme Shares will cease to have effect as documents of evidence of title and should be returned to the Company for cancellation.

 

Upon the Scheme becoming effective and the Company becoming wholly indirectly owned by CITIC Group and GECC through the Offeror and Bowenvale, the Company will also apply for de-listing of the ADSs from the NYSE. CITIC Group and GECC also intend to seek to cause the Company to terminate the ADS Deposit Agreement. If the Scheme becomes effective, CITIC Group and GECC intend to cause the Company to file a Form 15 with the SEC to request that the Company’s reporting obligations under the Exchange Act be terminated or suspended, provided the relevant rules and regulations under the Exchange Act are satisfied. Irrespective of the outcome of the Scheme, in due course, it is expected that the maintenance of the ADS listing on the NYSE will be re-examined by AsiaSat and the Board, the outcome of which may be to terminate such listing.

 

5.    INTENTIONS AND PLANS

 

5.1    Intentions regarding AsiaSat

 

It is the intention of CITIC Group and GECC to maintain the existing businesses of the AsiaSat Group upon successful privatisation of the Company. CITIC Group and GECC do not intend to introduce any major changes to the existing operating and management structure of the AsiaSat Group, or to discontinue the employment of any employees of the AsiaSat Group, as a result of the implementation of the Proposals. Upon the successful implementation of the Proposals and AsiaSat becoming a private company, AsiaSat will, however, no longer have access to equity funding through the public capital markets. CITIC Group and GECC also expect that there will be no material change to the existing business (such as business focus and operating model) of the AsiaSat Group as a result of the implementation of the Proposals.

 

Upon the completion of the Exchange Transaction, the Shareholders’ Agreement will be terminated. CITIC Group and the GE Entities will execute a new shareholders agreement in respect of Bowenvale, to become effective upon the completion of the Exchange Transaction, which will be substantially similar to the Shareholders’ Agreement. The new shareholders agreement will contain a provision prohibiting CITIC Group or the GE Entities from transferring any Bowenvale shares for a period of three years following the completion of the Exchange Transaction. Upon the successful privatisation of AsiaSat, Able Star and the GE Entities may consider entering into a simpler shareholders’ agreement in respect of Bowenvale to reflect AsiaSat’s status as a private company, as opposed to a publicly listed company.

 

CITIC Group and GE Equity entered into a shareholders agreement dated 13 February 2007 in respect of the Offeror which becomes effective in all material respects with effect from the Scheme becoming effective and binding.

 

After the successful privatisation of the Company, CITIC Group and GECC contemplate that they will assess whether to revise AsiaSat’s Bye-laws to reflect its change from a public to a private company.

 

5.2    Management

 

CITIC Group and GECC intend to retain the Company’s existing senior management team to manage the Company after completion of the Proposals, save that provided the Executive’s consent under Rule 7 of the Takeovers Code is obtained, the SES appointees upon completion of the Exchange Transaction to the Board, namely Mr. Roman Bausch, Ms. Cynthia Dickins and Mr. Mark Rigolle will resign as Directors, and the GE Entities will appoint four Directors to replace them (for so long as the Company remains public). It is anticipated that the four Directors to be appointed by the GE Entities will be Mr. Ronald J. Herman, Jr., Ms. Nancy Ku and Mr. Mark Chen, each of whom is a GE Equity appointed director of the Offeror, and an additional person still to be determined by the GE Entities. These changes to the Board are in no way dependent on whether or not the Proposals complete. Rule 7 of the Takeovers Code provides that once a bona fide offer has been communicated to the board of the offeree company, except with the consent of the Executive, the directors of an offeree company should not resign until the first closing date of the offer, or the date when the offer becomes or is declared unconditional, whichever is later. In the context of the Proposals this means none of the Directors should resign before the date of the Court Meeting. In the context of the Possible MGO Share Offer this means none of the Directors should resign before the first closing date of the Possible MGO Share Offer (if the Scheme fails). An application was made to the Executive by GE Equity and SES on 13 March 2007 to obtain consent in respect of Rule 7, however it is uncertain as to whether such consent will be granted. No determination has yet been made as to whether, and if so, how, the composition of the Board may be changed upon completion of the Proposals.

 

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6.    SOURCE AND AMOUNT OF FUNDS

 

The Offeror expects that the total amount of cash required to effect the Proposals is approximately HK$2,235 million if none of the Outstanding Options is exercised prior to the Scheme Record Time. This amount would increase to an aggregate of approximately HK$2,309 million if all Outstanding Options are exercised prior to the Scheme Record Time. The Proposals will be financed from the existing resources of CITIC Group and GECC. The Offeror’s financial adviser, Morgan Stanley, is satisfied that sufficient financial resources are and will be available to the Offeror for the implementation in full of the Proposals.

 

The Offeror will not increase any of the Offer Prices. Each of the Share Offer Price, the Option Offer Price, the Possible MGO Share Offer Price and the Possible MGO Option Offer Price represents the best and final offer price in respect of the Share Proposal, the Option Proposal, the Possible MGO Share Offer and the Possible MGO Option Offer, respectively. AsiaSat Shareholders should be aware that, following the making of these statements in the Announcement, the Offeror is not allowed to increase any of the Offer Prices, save in wholly exceptional circumstances, as provided in Rule 18.3 of the Takeovers Code. Notwithstanding the above, the Offeror reserves the right not to be bound by these statements in the event of a competing offer and such competing offer is recommended by the Board.

 

7.    COMPARISONS OF VALUE

 

7.1    Comparables

 

The Stock Exchange is the principal trading market for the AsiaSat Shares, which are not listed on any other exchange in or outside of the United States. The high and low closing prices for the AsiaSat Shares on the Stock Exchange for each full quarterly period during the past two years are as follows:

 

     High    Low

2005

      

First Quarter

    HK$ 15.00    HK$ 14.20

Second Quarter

    HK$ 15.10    HK$ 13.50

Third Quarter

    HK$ 15.95    HK$ 13.60

Fourth Quarter

    HK$ 14.90    HK$ 12.95

2006

      

First Quarter

    HK$ 14.85    HK$ 12.20

Second Quarter

    HK$ 14.00    HK$ 13.00

Third Quarter

    HK$ 13.30    HK$ 12.28

Fourth Quarter

    HK$ 15.00    HK$ 12.90

 

The Share Offer Price represents:

 

  •  

a premium of approximately 30.7 per cent over the closing price of HK$14.00 per AsiaSat Share as quoted on the Stock Exchange on the Pre-Suspension Date;

 

  •  

a premium of approximately 29.8 per cent over the closing price of HK$14.10 per AsiaSat Share as quoted on the Stock Exchange on the Suspension Date;

 

  •  

a premium of approximately 32.2 per cent over the 30-day Average Pre-Announcement Price of HK$13.84 per AsiaSat Share;

 

  •  

a premium of approximately 4.3 per cent over the closing price of HK$17.54 per AsiaSat Share as quoted on the Stock Exchange on the Latest Practicable Date;

 

  •  

a premium of approximately 1.4 per cent over the highest closing price of approximately HK$18.04 per AsiaSat Share over the one year period prior to the Latest Practicable Date;

 

  •  

an implied price to earnings multiple of 19.5 times, based on AsiaSat’s reported basic earnings per share of HK$0.94 for the year ended 31 December 2005;

 

  •  

an implied price to earnings multiple of 15.8 times, based on AsiaSat’s reported basic earnings per share of HK$1.16 for the year ended 31 December 2006;

 

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PART VIII – EXPLANATORY STATEMENT

 

  •  

a premium of approximately 74.0 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$10.52 as at 31 December 2005;

 

  •  

a premium of approximately 61.5 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$11.33 as at 31 December 2006; and

 

  •  

a premium of approximately 14.4 per cent over the Possible MGO Share Offer Price.

 

The NYSE is the principal trading market for the ADSs, which are not listed on any other exchange in or outside of the United States. At the Exchange Rate in effect on the Latest Practicable Date, the Share Offer Price of HK$18.30, which translates into a price of HK$183.00 per ADS, would be equal to US$23.43. The high and low closing prices for the ADSs on the NYSE for each full quarterly period during the past two years are as follows:

 

     High    Low

2005

      

First Quarter

    US$ 19.07    US$ 18.27

Second Quarter

    US$ 19.08    US$ 17.11

Third Quarter

    US$ 20.45    US$ 17.61

Fourth Quarter

    US$ 19.02    US$ 16.55

2006

      

First Quarter

    US$ 19.40    US$ 16.15

Second Quarter

    US$ 18.35    US$ 16.65

Third Quarter

    US$ 17.19    US$ 16.05

Fourth Quarter

    US$ 18.85    US$ 16.21

 

The Share Offer Price represents:

 

  •  

a premium of approximately 32.0 per cent over the closing price of US$17.75 per ADS as quoted on the NYSE on the Pre-Suspension Date;

 

  •  

a premium of approximately 30.7 per cent over the 30-day Average Pre-Announcement ADS Price of US$17.93 per ADS;

 

  •  

a discount of approximately 0.5 per cent to the closing price of US$23.55 per ADS as quoted on the NYSE on the Latest Practicable Date; and

 

  •  

a discount of approximately 0.5 per cent to the highest closing price of approximately US$23.55 per ADS over the one year period prior to the Latest Practicable Date.

 

7.2    Net tangible assets

 

As at 31 December 2006, the audited consolidated net assets of the Group amounted to approximately HK$4.422 million, or approximately HK$11.33 per AsiaSat Share. The Share Offer Price represents a premium of approximately 62 per cent to the audited consolidated net asset value per Share as at 31 December 2006.

 

7.3    Earnings

 

The Group’s audited consolidated profit attributable to the AsiaSat Shareholders for the year ended 31 December 2006 amounted to approximately HK$454 million, representing basic and diluted earnings of approximately HK$1.16 and HK$1.16 per AsiaSat Share, respectively.

 

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PART VIII – EXPLANATORY STATEMENT

 

7.4    Dividends

 

The following table shows the amount of dividends per AsiaSat Share paid in the past two years:

 

Payment Date

    Dividends paid per
AsiaSat Share
     HK$

14 November 2006 (interim dividend)

    0.08

23 May 2006 (final dividend)

    0.27

15 November 2005 (interim dividend)

    0.08

18 May 2005 (final dividend)

    0.27

 

A dividend declared by the Company after 13 February 2007 (the date of the Announcement) and prior to the Scheme becoming effective will be declared subject to the following:

 

  (i) the amount of the dividend shall not affect the Share Offer Price if the Scheme becomes effective and binding on or before 10 May 2007;

 

  (ii) the amount of the dividend will be deducted from the Share Offer Price if the Scheme becomes effective and binding after 10 May 2007;

 

  (iii) if the Scheme becomes effective and binding on or before 10 May 2007, the dividend shall not be paid; and

 

  (iv) if the Scheme does not become effective, the dividend will be paid to AsiaSat Shareholders on the register of members of the Company at 4:30 p.m. on 10 May 2007.

 

AsiaSat has been designated as a non-resident for exchange control purposes by the Bermuda Monetary Authority. Consequently, there are no restrictions on its ability to pay dividends, other than in respect of local Bermuda currency.

 

8.    CASH PAYMENT TO CITIC GROUP

 

In consideration of CITIC Group’s consent to the Transfer and in exchange for the release of the SES parties from their obligations and liabilities under the Shareholders’ Agreement CITIC Group will receive a cash payment of HK$100 million from SES and/or its subsidiaries and SES’s continuation of certain of its obligations under the Shareholders’ Agreement, in modified form, under a new arrangement. The cash payment will be made directly by SES (or the relevant subsidiary) to CITIC Group upon completion of the Exchange Transaction.

 

9.    THE EXCHANGE TRANSACTION

 

Bowenvale, AsiaSat’s largest shareholder, is a joint venture indirectly and jointly owned by CITIC Group (through Able Star) and SES. Bowenvale has three classes of share capital – “X Ordinary Shares” (representing 49.5 per cent of its share capital), “Y Ordinary Shares” (representing 49.5 per cent of its share capital) and “Special Shares” (representing 1 per cent of its share capital). Currently, CITIC Group is the beneficial owner of the X Ordinary Shares and SES (prior to the closing of the Exchange Transaction) is the beneficial owner of the Y Ordinary Shares. The X and Y Ordinary Shares have full and equal rights to vote, receive dividends and receive capital upon the winding up of Bowenvale. CITIC Group is also the beneficial owner of the Special Shares, which have no voting rights.

 

Bowenvale currently holds approximately 68.9 per cent of AsiaSat’s entire issued share capital. Pursuant to the Exchange Transaction, SES proposes to redeem GECC’s entire indirect shareholding in SES (approximately 19 per cent of SES’ issued share capital) in exchange for the stock of a newly incorporated company, SIH, that will hold cash and a number of assets, among which are the Y Ordinary Shares that SES will transfer to SIH. The Transfer represents an integral part of the Exchange Transaction. The Exchange Transaction is structured as a package deal in order to achieve the business purposes of SES without negative US tax consequences for GECC. Upon completion of the Exchange Transaction, Able Star and the GE Entities will jointly own, through Bowenvale, approximately 68.9 per cent of the AsiaSat Shares. The Exchange Transaction was publicly announced on 13 February 2007. On completion of the Exchange Transaction, GECC will obtain a 49.5 per cent economic interest and 50 per cent voting interest in Bowenvale and, as a result, an approximately 34.1 per cent indirect economic interest in AsiaSat.

 

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PART VIII – EXPLANATORY STATEMENT

 

The Executive has taken the view that the Transfer would, on completion, result in the formation of a new concert group that has statutory control of Bowenvale, thereby triggering a mandatory general offer obligation under the Takeovers Code in respect of AsiaSat. Whilst the view taken by Able Star and GE Equity is different from that of the Executive, the Offeror agreed that it would be prepared, in the event the Transfer completes, to make a mandatory general offer for all the shares in the Company not owned by Bowenvale or parties acting in concert with it.

 

If the Possible MGO Share Offer is made, it would be at the Possible MGO Share Offer Price.

 

The Executive also raised a concern that the Exchange Transaction, when considered in conjunction with a general offer for the Company, could potentially give rise to a special deal prohibited under Rule 25 of the Takeovers Code, if certain elements of the Exchange Transaction, other than the Transfer, represent favourable conditions that are not extended to all shareholders of the Company.

 

Each of GECC and SES had separate discussions with the Executive to clarify the relevant aspects and background of the Exchange Transaction, including the reasons why it was structured as a package deal and why the Bowenvale shares were included.

 

SES has indicated that its business purposes for engaging in the Exchange Transaction are (i) to remove the “overhang” effect on the trading market for its shares so as to meaningfully facilitate its acquisition strategy; and (ii) to restructure and optimise its newly acquired business assets and its portfolio of shareholdings in satellite system owners and operators and to refocus its satellite service activities to match its intended market positioning, in a single transaction. The Exchange Transaction was structured to achieve these business purposes in a manner that is tax-efficient for GECC.

 

The completion of the Exchange Transaction is subject to certain conditions, including, among others:

 

  (a) conditions to the obligations of SES, GECC and the GECC Parties under the Share Redemption Agreement:

 

  (i) SES shareholder approval, which approval has been obtained;

 

  (ii) regulatory approvals, including:

 

  •  

the expiration or termination of any waiting period pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which waiting period has been terminated;

 

  •  

the issue of orders by the US Federal Communications Commission;

 

  •  

the approval of the Austrian and German merger control authorities, or the expiration of any relevant review period, which approval from the German merger control authority has been obtained;

 

  •  

the approval of the Japanese telecom authority required in respect of the Exchange Transaction;

 

  •  

the issue by the US Department of State of any approvals which may be required pursuant to the US International Traffic in Arms Regulations in respect of the Exchange Transaction and the Proposals and the Possible MGO Offers;

 

  •  

the issue, by OFTA, of a formal consent or other instrument acceptable to the SFC as necessary for the purposes of a waiver of compliance with note 4 of Rule 26.2 of the Takeovers Code;

 

  •  

receipt of a waiver of condition 10.1 of the broadcasting licences held by Skywave TV Company and Auspicious Color Limited from the Hong Kong Broadcasting Authority;

 

  •  

except in certain circumstances, the approval of the Agencia Nacional de Telcomunicacoes of Brazil; and

 

  •  

the approval of any merger control authority that is mandatory or suspensory and which is either (i) due to a change in law following 13 February 2007 or (ii) as a result of the correction or addition of any inaccurate or incomplete information provided to the GECC Parties prior to 13 February 2007;

 

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PART VIII – EXPLANATORY STATEMENT

 

  (iii) the absence of any action or investigation commenced or threatened by any government agency, or any law or judgment in effect that would or is reasonably likely to (i) restrain, prohibit or make illegal the transactions contemplated by the Share Redemption Agreement, (ii) result in a governmental investigation or governmental damages being imposed on any of the assets or shares transferred pursuant to the Exchange Transaction or on SES or any of its affiliates, or (iii) restrain, prohibit or make illegal GECC or SES’s ownership or operation of a material portion of the assets or businesses transferred pursuant to the Exchange Transaction, or as a result of the Exchange Transaction, of either GECC and its subsidiaries as a whole or SES and its subsidiaries as a whole.

 

  (b) conditions to the obligations of the GECC Parties under the Share Redemption Agreement:

 

  (i) the representations and warranties of SES in the Share Redemption Agreement and any ancillary agreement are true and correct when made and as of the completion of the Exchange Transaction, or if such representation is made as of a specified date, as of such specified date, except where the failure to be true and correct (without giving effect to any qualifications as to materiality) would not, individually or in the aggregate, reasonably be expected to have an “SES Material Adverse Effect” (as defined in the Share Redemption Agreement);

 

  (ii) SES and certain of its affiliates shall have performed or complied in all material respects with all obligations and covenants required by the Share Redemption Agreement and ancillary agreements to be performed or complied with by SES or certain of its affiliates by the completion of the Exchange Transaction;

 

  (iii) the absence of an SES Material Adverse Effect;

 

  (iv) the determination that, based on an agreed methodology, the ratio of the value of certain of the assets of the company the stock of which is to be transferred to the GECC Parties in the Exchange Transaction to the value of all of such company’s assets meets a certain threshold;

 

  (v) the receipt of a private letter ruling from the US Internal Revenue Service;

 

  (vi) the receipt of certain US tax opinions;

 

  (vii) the receipt of certificates related to tax matters from an officer of SES;

 

  (viii) the receipt of an opinion from SES’s Luxembourg counsel;

 

  (ix) the transfer of certain businesses and assets to a new company, the stock of which is to be transferred by SES to the GE Entities pursuant to an agreed plan;

 

  (x) the receipt of written confirmation from a financial advisor to SES that certain facts and conclusions continue to be true and correct as of the closing of the Exchange Transaction; and

 

  (xi) the receipt of certain third party consents and waivers.

 

  (c) conditions to the obligations of SES under the Share Redemption Agreement:

 

  (i) the representations and warranties of each of the GECC Parties in the Share Redemption Agreement and any ancillary agreement are true and correct when made and as of the completion of the Exchange Transaction, or if such representation is made as of a specified date, as of such specified date, except where the failure to be true and correct (without giving effect to any qualifications as to materiality) would not, individually or in the aggregate, reasonably be expected to have an material adverse effect on the ability of the parties to consummate the Exchange Transaction or the ability of the GECC Parties to consummate the Exchange Transaction;

 

  (ii) the GECC Parties shall have performed or complied in all material respects with all obligations and covenants required by the Share Redemption Agreement and ancillary agreements to be performed or complied with by the GECC Parties by the completion of the Exchange Transaction;

 

  (iii) the receipt of certain waivers and consents in respect of SES’s credit facilities and pursuant to US private placements which are guaranteed by SES; and

 

  (iv) the receipt of a Luxembourg tax ruling.

 

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PART VIII – EXPLANATORY STATEMENT

 

The Share Redemption Agreement may be terminated prior to its completion under the following circumstances:

 

•  

by mutual consent of the parties to it;

 

•  

by either party, if SES shareholder approval is not obtained;

 

•  

by either the GECC Parties or SES if the Exchange Transaction has not been completed by 15 May 2007 (the “Termination Date”), provided that SES or the GECC Parties may extend the Termination Date to no later than 14 June 2007 if certain other conditions are met with respect to the value and nature of assets to be transferred from SES to the GECC Parties;

 

•  

by the GECC Parties if the US Internal Revenue Services notifies GECC that it will not issue a private letter ruling;

 

•  

by either party if any of the conditions to the obligations of the other party pursuant to the Share Redemption Agreement have become incapable of fulfillment by the Termination Date; or

 

•  

by either party if there is a final, non-appealable order of a court or government administrative agency prohibiting the consummation of the Exchange Transaction.

 

The summary of the Share Redemption Agreement set forth in this Scheme Document is qualified in its entirety by reference to the full text of the Share Redemption Agreement, which was filed by SES with the SEC in an amendment to SES’s Schedule 13D relating to AsiaSat. Free copies of such agreement may be obtained at the website maintained by the SEC (http://www.sec.gov).

 

Following such discussions and upon examining the details of the Exchange Transaction, the Executive was satisfied that the Exchange Transaction has no favourable conditions attached to any part of the Exchange Transaction and therefore, does not give rise to a special deal prohibited under Rule 25 of the Takeovers Code.

 

10.    THE POSSIBLE MGO OFFERS

 

In the event the Transfer completes prior to the Meetings, an announcement will be made of the satisfaction of that Condition. It is intended that the formal offer documentation in respect of the Possible MGO Offers would not be posted until after the Meetings have been held. If the requisite voting thresholds for approval of the Scheme are obtained at the Meetings, the formal offer documentation in respect of the Possible MGO Offers will not be despatched and the Possible MGO Offers will not commence. If the requisite voting thresholds for approval of the Scheme are not obtained at the Meetings, the formal offer documentation in respect of the Possible MGO Offers will be posted. For the avoidance of doubt, the formal offer documentation in respect of the Possible MGO Offers will not be despatched, if at all, until after the Meetings have been held. Also, for the avoidance of doubt, this Scheme Document does not constitute offer documentation for the Possible MGO Offers.

 

In the event that the Transfer completes but the Scheme fails or lapses, the Possible MGO Offers would be made in respect of the Possible MGO Shares at the Possible MGO Share Offer Price and the Possible MGO Outstanding Options at the Possible MGO Option Offer Price. The Possible MGO Share Offer document, Possible MGO Option Offer letter and forms of acceptance in respect of the Possible MGO Offers would be despatched to AsiaSat Shareholders and Optionholders, respectively, following the failure or lapsing of the Scheme.

 

Further details of the Possible MGO Offers are set out in “Part IX – The Possible MGO Offers”, including an indicative timetable.

 

11.    BEST OFFER PRICES

 

The Offeror will not increase any of the Offer Prices. Each of the Share Offer Price, the Option Offer Price, the Possible MGO Share Offer Price and the Possible MGO Option Offer Price represents the best and final offer price in respect of the Share Proposal, the Option Proposal, the Possible MGO Share Offer and the Possible MGO Option Offer, respectively. AsiaSat Shareholders should be aware that, following the making of these statements in the Announcement, the Offeror is not allowed to increase any of the Offer Prices, save in wholly exceptional circumstances, as provided in Rule 18.3 of the Takeovers Code. Notwithstanding the above, the

 

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PART VIII – EXPLANATORY STATEMENT

 

Offeror reserves the right not to be bound by these statements in the event of a competing offer and such competing offer is recommended by the Board.

 

12.    INFORMATION ON THE COMPANIES

 

12.1    The Company

 

The name of the subject company is Asia Satellite Telecommunications Holdings Limited. The Company is engaged in the provision of satellite communication channel capacity and satellite services to broadcasting and telecommunications markets. The address of the Company’s principal executive office is 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong. The telephone number of the Company’s principal executive office is (852) 2500 0888.

 

During the past five years, the Company has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor was a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining the Company from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of US federal or state securities laws.

 

The directors and executive officers of the Company and their respective positions are identified below:

 

Name and Present

Position with AsiaSat

   

Country of
Citizenship

   

Business Experience during the Past Five Years

Mr. Mi Zeng Xin (1) Chairman and Director

    PRC    Mr. Mi Zeng Xin was appointed a Non-executive Director of the Company on 28 February 2001. Since then, he acted as Deputy Chairman (2001-2002), Chairman (2003-2004), and Deputy Chairman (2005-2006) of the Board on a rotational basis, biennially. For the current term (2007-2008), he acts as Chairman. He is an Executive Director and Vice President of CITIC Group. Prior to his appointment to the present position, he held executive management positions with various subsidiaries of CITIC Group and was the Chief Executive Officer of CITISTEEL in the United States from 1992 to 1997. He is also Chairman of the Board of CITIC USA Holdings and CITIC Australia Pty Limited and an Executive Director of CITIC Resources Holdings Limited in Hong Kong. He joined CITIC Group in 1985 and holds a Master of Science degree.

Mr. Romain Bausch (2)
Deputy Chairman and Director

    Luxembourg    Mr. Romain Bausch was appointed a Non-executive Director of the Company on 15 January 1999. Since then, he has acted as Deputy Chairman (1999-2000), Chairman (2001-2002), Deputy Chairman (2003-2004), and Chairman (2005-2006) of the Board on a rotational basis, biennially. For the current term (2007-2008), he acts as Deputy Chairman. He is the President and CEO of SES S.A. He started his career in the Luxembourg civil service and, after subsequent promotions, he became General Administrator of the Ministry of Finance. He occupied key positions in the banking and media sectors and spent a five-year term as a Director and Vice Chairman of SES. He graduated with a Master of Arts degree in Economics (specialisation in Business Administration) from the University of Nancy (France).

 

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PART VIII – EXPLANATORY STATEMENT

 

Name and Present

Position with AsiaSat

   

Country of
Citizenship

   

Business Experience during the Past Five Years

Professor Edward Kwan Yiu Chen G.B.S., C.B.E., J.P. (3)
Director

    United Kingdom    Professor Edward Chen has been an Independent Non-executive Director of the Company since May 1996. He was educated at Hong Kong University (Bachelor of Arts, Master of Social Science) and Oxford University (Doctor of Philosophy) and is currently President of Lingnan University in Hong Kong. He was a member of the Executive Council of Hong Kong from 1992 to 1997 and Chairman of the Consumer Council from 1991 to 1997. He is now Chairman of the Press Council, a Director of First Pacific Company Limited, a Trustee of Eaton Vance Management Funds (Boston), and a director of The Wharf (Holdings) Limited.

Mr. Ding Yu Cheng (1)
Director

    PRC    Mr. Ding Yu Cheng was appointed a Non-executive Director of the Company on 15 January 1999. He was the Assistant President of CITIC Securities Company Limited and was with the company from April 1998 to September 2004. CITIC Securities Company Limited is a subsidiary of CITIC Group engaging in securities and investment banking business. He has been an independent non-executive director of SEEC Media Group Limited since June 2005. He holds a Master of Business Administration degree from the University of Pittsburgh and a Doctor of Philosophy degree in Economics from Tsinghua University.

Mr. James Watkins (3)
Director

    United Kingdom    Mr. James Watkins was appointed an Independent Non-executive Director of the Company on 30 June 2006. He qualified as a solicitor in 1969 and was for 20 years a Partner in Linklaters, an international law firm. From 1997 to 2003, he was a Director and General Counsel of the Jardine Matheson Group in Hong Kong. He is a non-executive director of a number of Hong Kong and overseas listed companies. He holds a degree in Law from the University of Leeds, United Kingdom.

Mr. Peter E. Jackson
Director and Chief Executive Officer

    United Kingdom    Mr. Peter E. Jackson has been an Executive Director and the Chief Executive Officer of the Company since May 1996, having served in that position with AsiaSat since July 1993 prior to the listing of the Company. He has over 30 years’ experience in the telecommunications field. Prior to his appointment as the Chief Executive Officer in 1993, he was employed by Cable & Wireless plc where he held engineering, marketing and management positions and was responsible for several satellite telecommunications ventures. He is a non-executive director of Daum Communications Group, a company that is listed in Korea. He has also served on Board of the Cable & Satellite Broadcasting Association of Asia (CASBAA) in various positions since 1997 and is currently the Treasurer.

 

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PART VIII – EXPLANATORY STATEMENT

 

Name and Present

Position with AsiaSat

   

Country of
Citizenship

   

Business Experience during the Past Five Years

Mr. Ju Wei Min (1)
Director

    PRC    Mr. Ju Wei Min was appointed a Non-executive Director of the Company on 12 October 1998. He is a director and Chief Financial Officer of CITIC. He is also a non-executive director of CITIC International Financial Holdings Limited and a director of CITIC Ka Wah Bank. He holds a Bachelor degree and Master degree in Economics.

Mr. Ko Fai Wong (1)
Director

    Australia    Mr. Ko Fai Wong was appointed a Non-executive Director of the Company on 11 March 2004. He is the Deputy General Manager of CITIC United Asia Investments Limited, a wholly-owned subsidiary of CITIC Group in Hong Kong and had over 20 years’ experience in banking and finance before joining CITIC Group. He holds a Bachelor and a Master degree in Business Administration.

Mr. Mark Rigolle (2)
Director

    Belgium    Mr. Mark Rigolle was appointed a Non-executive Director of the Company on 17 November 2004. He is the Chief Financial Officer of SES. Prior to joining SES, he held various financial and strategic positions in Belgacom. He holds a degree in Economic Sciences from the Catholic University of Leuven, Belgium.

Mr. Robert Sze Tsai To (3)
Director

    United Kingdom    Mr. Robert Sze has been an Independent Non-executive Director of the Company since May 1996. He is a fellow of the Institute of Chartered Accountants in England and Wales and of the Hong Kong Institute of Certified Public Accountants. He was a partner in an international firm of accountants with which he practised for over 20 years, and is a non-executive director of a number of Hong Kong listed companies. He is also a member of the Shanghai Committee of the Chinese People’s Political Consultative Conference.

Mr. William Wade
Director and Deputy Chief Executive Officer

    United States    Mr. William Wade has been an Executive Director and the Deputy Chief Executive Officer of the Company since May 1996, having served in that position with AsiaSat since April 1994 prior to the listing of the Company. He has over 22 years’ experience in the satellite and cable television industry. He speaks Mandarin Chinese and holds a Bachelor of Arts (Honours) degree in Communications from the University of Utah and a Master of International Management degree from Thunderbird (the Garvin School of International Management).

 

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PART VIII – EXPLANATORY STATEMENT

 

Name and Present

Position with AsiaSat

   

Country of
Citizenship

   

Business Experience during the Past Five Years

Ms. Cynthia Dickins (2)
Director

    United Kingdom    Ms. Cynthia Dickins was appointed as a Non-executive Director of the Company on 17 November 2005. She is currently President of SES Asia S.A., a wholly-owned subsidiary of SES. She has been with the SES via various predecessor companies since 1997, when she joined GE Americom as Managing Director of Americom Asia Pacific based in Singapore. Prior to GE, she held International Management positions with TV Shopping Network, PanAmSat Corporation and Pharmacia (formerly Monsanto Company). She holds a Master of International Management degree from the Garvin School of International Management (Thunderbird) in Arizona (USA) and a Bachelor of Arts degree in International Relations from Gonzaga University, Washington (USA).

Ms. Catherine Chang
Legal Counsel, Assistant Secretary

    Australia    Ms. Catherine Chang is Legal Counsel of the Company. She joined AsiaSat in 1994 and established the legal department to manage the legal affairs of the Company. Prior to joining the Company, she was a solicitor at Ebsworth & Ebsworth, an Australian law firm. She graduated from the University of New South Wales, Australia, with a Bachelor’s degree in Law and a Bachelor’s degree in Commerce, majoring in Accountancy.

Mr. Liqun Chen
General Manager, China

    PRC    Mr. Liqun Chen is AsiaSat’s General Manager, China, in which capacity he is responsible for marketing transponder capacity and managing customer relations in the China market. He was on secondment to AsiaSat from his employer, CITIC Group, from 1989 and became a permanent employee of AsiaSat in January 1997. He graduated with a Master degree in Business Administration from the University of Leuven in Belgium and a Bachelor of Science degree in Electronics and Industrial Automation from Tsinghua University, China.

Mr. Ya Hui Chiu
General Manager, Operation

    United States    Dr. Ya Hui Chiu is AsiaSat’s General Manager, Operations, in which capacity he is responsible for maintaining and operating the Company’s satellites. He has 23 years’ experience in telecommunications engineering and operations, with the last 20 years being in the satellite communications area. He received his Bachelor of Science degree from the National Taiwan University and his M. Phil and Ph.D. degrees from Yale University, all in Physics.

 

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PART VIII – EXPLANATORY STATEMENT

 

Name and Present

Position with AsiaSat

   

Country of
Citizenship

   

Business Experience during the Past Five Years

Ms. Sabrina Cubbon
General Manager, Marketing

    United Kingdom    Ms. Sabrina Cubbon is AsiaSat’s General Manager, Marketing, in which capacity she is responsible for sales and marketing, business development, corporate affairs and market research. She has over 22 years of marketing experience in the telecommunications industry. Prior to joining AsiaSat in August 1992, she was employed by Case Communications, a Hong Kong company, between 1987 and 1992 as Regional Manager Asia-Pacific responsible for the sales and marketing activities to multinational clients. She graduated from the University of Manchester, United Kingdom, with a Master degree in Electronic and Electrical Engineering, specialised in cryptography. She is also a non-executive director of AsiaSat’s subsidiary, Skywave TV Company Limited.

Ms. Sue Yeung
General Manager, Finance and Administration and Company Secretary

    United Kingdom    Ms. Sue Yeung was appointed AsiaSat’s General Manager, Finance and Administration, and the Secretary of the Company on 1 January 2007. She is a member of the Institute of Chartered Accountants in England and Wales. In 1993, she joined British Telecommunications (HK) Limited (“BT”) and held various senior positions including Chief Financial Officer of Smartone in 1999, when BT acquired an equity interest in Smartone. Subsequently, she joined Wavecome Asia Pacific Limited, a company listed in Paris and NASDAQ, as the Regional Finance Director for the Asia Pacific region. Prior to joining AsiaSat, she was the Regional Chief Financial Officer of Pearson Education Asia Limited with the overall responsibilities of its Asia Operations. She holds a Bachelor of Science degree in Chemical Engineering from London University and is a fellow member of Hong Kong Institute of Certified Public Accountants.

Mr. Barry Turner
General Manager, Engineering

    Canada    Mr. Barry Turner is AsiaSat’s General Manager, Engineering. He joined AsiaSat in 1997 as Deputy General Manager of Engineering and was appointed to his present position in May 1998. He has 33 years of experience in the satellite communications industry and has held senior and executive management positions in engineering and in sales and marketing at Telesat Canada, and in strategic planning at TMI Communications Inc. He holds a Bachelor’s degree in Electrical Engineering from the Technical University of Nova Scotia, Canada, and a Master degree in Business Administration from the University of Ottawa, Canada.
(1) Appointed by CITIC Group.

 

(2) Appointed by SES.

 

(3) Independent.

 

The address of each of the directors and executive officers of the Company is c/o Asia Satellite Telecommunications Holdings Limited, 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong.

 

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PART VIII – EXPLANATORY STATEMENT

 

During the past five years, none of the individuals above have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanours) nor were they party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

 

The following table sets forth certain information regarding ownership of the Company’s voting securities as of the Latest Practicable Date by (i) all persons who are known by the Company to be the beneficial owner of more than 5 per cent of any class of the Company’s voting securities and (ii) the total number of any class of the Company’s voting securities owned by the officers and Directors of the Company as a group.

 

Title of Class

   

Identity of the Person or the Group

    Number of
AsiaSat
Shares owned		    Percentage of class

Ordinary shares

    Bowenvale    268,905,000    68.90

Ordinary shares

    Directors and Officers (none of whom are concert parties of the Offeror, CITIC Group or GEC)    304,500    0.08

 

Pursuant to the Share Option Scheme, the Board may grant options to any employees (including officers and directors) of the Company or any of its subsidiaries to subscribe for shares in the Company. At the Latest Practicable Date, Options granted under the Share Option Scheme were as follows:

 

Exercise Period

   

Option
exercise
price

    Aggregate
number of
AsiaSat Shares
the Options are
exercisable into
     HK$     

B Options:

      

1 October 2002 to 30 September 2009

    17.48    1,630,000

C Options:

      

4 February 2004 to 3 February 2012

    14.35    3,202,500
         

Total:

       4,832,500
       

 

As required to be disclosed under US securities laws, the following Directors and Executive Officers of the Company had the following interests in Options as at the Latest Practicable Date:

 

Mr. Romain Bausch has been granted 100,000 C Options, exercisable from 4 February 2004 to 3 February 2012;

 

Mr. Mi Zeng Xin has been granted 100,000 C Options, exercisable from 4 February 2004 to 3 February 2012;

 

Professor Edward Kwan Yiu Chen has been granted 50,000 C Options, exercisable from 4 February 2004 to 3 February 2012;

 

Mr. Ding Yu Cheng has been granted 50,000 C Options, exercisable from 4 February 2004 to 3 February 2012;

 

Mr. Ju Wei Min has been granted 50,000 C Options, exercisable from 4 February 2004 to 3 February 2012;

 

Mr. Robert To Tsai Sze has been granted 75,000 C Options, exercisable from 4 February 2004 to 3 February 2012;

 

Mr. Peter E. Jackson has been granted 150,000 B Options exercisable from 1 January 2002 to 30 September 2009, and 430,000 C Options exercisable from 4 February 2004 to 3 February 2012; and

 

Mr. William Wade has been granted 114,000 B Options exercisable from 1 January 2002 to 30 September 2009, and 330,000 C Options exercisable from 4 February 2004 to 3 February 2012.

 

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PART VIII – EXPLANATORY STATEMENT

 

12.2    The Offeror

 

The Offeror has been established for the purpose of effecting the Proposals and implementation of the Possible MGO Offers (if and when made) and has no other business activities. The Offeror was formerly named Modernday Limited.

 

The Offeror, incorporated in the British Virgin Islands on 19 December 2006, is a company owned (as to 50 per cent voting interest) by Able Star, a wholly owned subsidiary of CITIC Group and (as to 50 per cent voting interest) by GE Equity, which is a wholly owned subsidiary of GECC. Such joint ownership interest will, on successful completion of the Scheme, be adjusted so that Able Star will hold 50.5 per cent of the economic interest and 50 per cent of the voting interest in the Offeror, with GE Equity holding the remaining 49.5 per cent economic interest and 50 per cent voting interest in the Offeror. As Able Star also owns 50.5 per cent of the economic interest and 50 per cent of the voting interest in Bowenvale, which in turns owns approximately 68.9 per cent of the AsiaSat Shares, the Offeror may be considered an “affiliate” of AsiaSat under US securities laws as it is arguably under common control with AsiaSat due to Able Star’s ownership interests described above. The Offeror’s address is c/o Room 2118, Hutchison House, 10 Harcourt Road, Hong Kong. The Offeror’s telephone number is (852) 2861 2727.

 

During the past five years, the Offeror has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor was a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining the Offeror from future violations of, or prohibiting activities subject to, US federal or state securities laws, or a finding of any violation of US federal or state securities laws.

 

The directors and executive officers of the Offeror and their respective positions and business backgrounds are identified below:

 

Name and Present

Position with Offeror

   

Country of Citizenship

   

Business Experience during the Past Five Years

Mr. Mi Zeng Xin
Director

   

PRC

    See above under “12.1 The Company”.

Mr. Ronald J. Herman, Jr.
Director

    United States    Mr. Ronald J. Herman, Jr. is the President & CEO of GE Commercial Finance – Equity and Vice President of GECC. Since May 2003, Mr. Herman has been the President and CEO of GE Commercial Finance – Equity. Prior to this role, Mr. Ronald J. Herman spent 10 years, starting in January 1993, in GE’s headquarters as the General Manager of Mergers and Acquisitions. Mr. Ronald J. Herman has worked for GE for 23 years, his entire business career.

Mr. Ju Wei Min
Director

   

PRC

    See above under “12.1 The Company”.

Mr. Ko Fai Wong
Director

   

Australia

    See above under “12.1 The Company”.

Ms. Nancy Ku
Director

   

Canada

    Ms. Nancy Ku is the President & CEO, Asia Pacific of GE Commercial Finance – Corporate Financial Services and has held this position since March 2006. Prior to this role, Ms. Nancy Ku was the Managing Director, Asia Pacific of GE Equity. Ms. Ku has worked for GE for eight years.

 

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PART VIII – EXPLANATORY STATEMENT

 

Name and Present

Position with Offeror

   

Country of Citizenship

   

Business Experience during the Past Five Years

Mr. Mark Chen
Director

    United States    Mr. Mark Chen is the Managing Director of GE Commercial Finance – Equity, Asia Pacific. Since June 2006, Mr. Mark Chen has been the business leader and subsequently Managing Director, Asia Pacific of GE Commercial Finance – Equity. Prior to this role, Mr. Mark Chen held positions as an Associate, Assistant Vice President, Vice President and Senior Vice President in GE Commercial Finance – Equity. Mr. Mark Chen has worked for GE for seven years.

 

The business address and telephone number of each of the directors and executive officers of the Offeror is c/o Room 2118, Hutchison House, 10 Harcourt Road, Hong Kong, telephone number (852) 2861 2727.

 

During the past five years, none of the individuals above have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanours) nor were they party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, US federal or state securities laws, or a finding of any violation of US federal or state securities laws.

 

The following parties have controlling interests in the Offeror:

 

Name of shareholder

   

Percentage held

   

Number of
ordinary shares

Able Star

    50    1

GE Equity

    50    1

 

On successful completion of the privatisation, Able Star and GE Equity will each have 50 per cent voting interests, but Able Star will have a 50.5 per cent economic interest and 50 per cent voting interest and GE Equity a 49.5 per cent economic interest and 50 per cent voting interest in the Offeror (to mirror the shareholding structure of Bowenvale).

 

12.3    Bowenvale

 

Bowenvale is an exempted company incorporated with limited liability under the laws of the British Virgin Islands. The registered address of Bowenvale is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. Bowenvale’s telephone number is (852) 2861 2727. Bowenvale is a holding company.

 

As the holder of approximately 68.9 per cent of the issued and outstanding share capital of the Company, Bowenvale is considered an “affiliate” of the Company under US securities laws as it controls the Company and is able to:

 

  •  

nominate the Company’s entire Board (other than the Independent Non-executive Directors) and, in turn, indirectly influence the selection of the Company’s senior management;

 

  •  

determine the timing and amount of the Company’s dividend payments;

 

  •  

otherwise control or influence actions that require the approval of AsiaSat Shareholders; and

 

  •  

effect certain corporate transactions without the concurrence of the Company’s minority shareholders.

 

During the past five years, Bowenvale has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor was a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining Bowenvale from future violations of, or prohibiting activities subject to, US federal or state securities laws, or a finding of any violation of US federal or state securities laws.

 

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PART VIII – EXPLANATORY STATEMENT

 

The directors and executive officers of Bowenvale and their respective positions and business backgrounds are identified below:

 

Name and Present

Position with Bowenvale

   

Country of Citizenship

   

Business Experience during the Past Five Years

Mr. Ko Fai Wong
Director

    Australia    See above under “12.1 The Company”.

Mr. Mi Zeng Xin
Director

    PRC    See above under “12.1 The Company”.

Mr. Ding Yu Cheng
Director

    PRC    See above under “12.1 The Company”.

Mr. Ju Wei Min
Director

    PRC    See above under “12.1 The Company”.

Mr. Mark Rigolle
Director

    Belgium/United Kingdom    See above under “12.1 The Company”.

Ms. Cynthia Dickins
Director

    United Kingdom    See above under “12.1 The Company”.

Mr. Romain Bausch
Director

    Luxembourg    See above under “12.1 The Company”.

Mr. Robert Bednarek
Director

    United States    Mr. Robert Bednarek is Chief Executive Officer of SES New Skies and a member of the Executive Committee of SES. Prior to joining SES, he was Executive Vice President and Chief Technology Officer of PamAmSat Corporation. He graduated with a Bachelor of Science degree in Electronic Engineering from the University of Florida.

 

The business address of each of the directors and executive officers of Bowenvale is c/o Room 2118, Hutchison House, 10 Harcourt Road, Central, Hong Kong.

 

During the past five years, none of the individuals above have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanours) nor were they party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, US federal or state securities laws, or a finding of any violation of US federal or state securities laws.

 

The following parties have controlling interests in Bowenvale:

 

Name of shareholder

   

Percentage held

   

Number of shares held

CITIC Group

   

50% voting interest

50.5% economic interest

   

133,107,975 X ordinary shares

2,689,050 special shares (non voting)

SES

   

50% voting interest

49.5% economic interest

   

133,107,975 Y ordinary shares

 

SES has agreed as part of the Exchange Transactions to effect the Transfer, upon the closing of which GECC will indirectly hold the shares of Bowenvale currently held by SES.

 

12.4    Able Star

 

Able Star is a company incorporated in the British Virgin Islands. Its business is that of a holding company. Able Star is considered an “affiliate” of the Company under US securities laws as a result of its ownership interest in Bowenvale described above. The registered address of Able Star is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. Able Star’s telephone number is (852) 2861 2727.

 

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PART VIII – EXPLANATORY STATEMENT

 

The directors and executive officers of Able Star are identified below:

 

Name and Present Position with Able Star

   

Country of Citizenship

   

Business Experience during the Past Five Years

Mr. Ko Fai Wong
Director

    Australia    See above under “12.1 The Company”.

Mr. Mi Zeng Xin
Director

    PRC    See above under “12.1 The Company”.

Mr. Ju Wei Min
Director

    PRC    See above under “12.1 The Company”.

Mr. Qiu Yi Yong
Director

    PRC    Mr. Qiu Yi Yong is the managing director of CITIC United Asia Investments Ltd. He is a director of CITIC Group and holds directorships in several other subsidiaries of the CITIC Group. He is also an executive director of CITIC Resources Holdings Limited and DVN Holdings Limited that are listed on the Stock Exchange. He holds a Bachelor of Economics degree from Xiamen University and is a qualified senior statistician in the PRC. Mr. Qiu has over 25 years’ experience in investment management.

 

The business address of each of the directors or executive officers of Able Star is c/o Room 2118, Hutchison House, 10 Harcourt Road, Central, Hong Kong.

 

During the last five years, none of the individuals above have been (i) convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining such person from future violations of, or prohibiting activities subject to, US federal or state securities laws, or a finding of any violation of US federal or state securities laws.

 

12.5    GE Equity

 

GE Equity is a Delaware Corporation. The principal office address of GE Equity is 201 Merritt 7, Norwalk, CT 06851, United States. GE Equity’s business telephone number is (1) 203 229 5000.

 

The directors and executive officers of GE Equity are identified below:

 

Name and Present
Position with GE Equity

   

Country of Citizenship

   

Business Experience during the Past Five Years

Mr. Ronald J. Herman, Jr, Director and President

    United States    See above under “12.2 The Offeror”.

Ms. Andrea Assarat
Senior Managing Director

    United States    Ms. Assarat is currently a Senior Managing Director at GE Commercial Finance – Equity. Since 1996, Ms. Assarat has been an employee at GE Commercial Finance – Equity.

Mr. Sherwood Dodge
Senior Managing Director

    United States   

From 1999-2004, Mr. Dodge was a Managing Director of GE Equity and headed European private equity activities. Since 2005, Mr. Dodge has been a Senior Managing Director of GE Commercial Finance – Equity, covering leveraged buy-outs and the transportation industry in the United States.

 

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PART VIII – EXPLANATORY STATEMENT

 

Name and Present
Position with GE Equity

   

Country of Citizenship

   

Business Experience during the Past Five Years

Mr. Michael Fisher
Senior Managing Director

    United States    Since January 2006, Mr. Fisher has been a Senior Managing Director of GE Commercial Finance – Equity. From November 2003 to January 2006, Mr. Fisher was Operations Leader at GE Commercial Finance and from 1994 to November 2003, Mr. Fisher was Managing Director of GE Commercial Finance – Equity.

Ms. Karen Rode
Managing Director

    United States    Ms. Rode has worked in equity fund investments and direct equity investments since 2001. Ms. Rode has been a Managing Director at GE Commercial Finance – Equity since 2006. Between 2001 and 2005, Ms. Rode worked for GE Commercial Finance – Corporate Financial Services as Senior Vice President, Managing Director and Senior Managing Director.

Mr. John W. Campo, Jr.
Managing Director, General Counsel & Secretary

    United States    Since 2004, Mr. Campo has been Managing Director & General Counsel of GE Commercial Finance – Equity. Between 1999 and 2004, Mr. Campo was General Counsel & Director of Government Affairs, GE Healthcare Asia.

Mr. Frank Ertl
Managing Director,
Chief Financial
Officer & Treasurer

    United States    Mr. Ertl has been the Chief Financial Officer of GE Commercial Finance – Equity since December 2002. From January 2002 until December 2002, Mr. Ertl was Senior Risk Officer for the GE Financial Assurance M&A group.

Mr. Michael Donnelly
Senior Vice President

    United States    Currently Mr. Donnelly is Senior Vice President of Asset Management, GE Commercial Finance – Equity. Mr. Donnelly was previously (for three years) Risk Manager at GE Commercial Finance – Corporate Financial Services. Prior to that Mr. Donnelly was Senior Vice President of Asset Management at GE Commercial Finance – Equity (for three years).

Mr. Bruce Ingram
Senior Vice President

    United States    Mr. Ingram has held various positions with GE Commercial Finance – Corporate Financial Services since 2002.

Mr. Patrick Kocsi
Senior Vice President

    Austria    Mr. Kocsi has been Senior Vice President with GE Commercial Finance – Equity since 1997.

 

The business address of each of the directors or executive officers of GE Equity is c/o 201 Merritt 7, Norwalk, CT 06851, and the telephone number is (1) 203-229-5000.

 

During the last five years, none of the individuals listed above have been (i) convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgement, decree or final order enjoining such person from future violations of, or prohibiting activities subject to, US federal or state securities laws, or a finding of any violation of US federal or state securities laws.

 

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PART VIII – EXPLANATORY STATEMENT

 

13.    INTERESTS OF THE OFFEROR AND ITS CONCERT PARTIES IN ASIASAT

 

13.1    Interested parties

 

As at the Latest Practicable Date, Bowenvale held, and its two shareholders, SES and CITIC Group, were beneficially interested in 268,905,000 AsiaSat Shares, representing approximately 68.9 per cent of the issued share capital of the Company. AsiaSat Shares held by Bowenvale, the Offeror and parties acting in concert with either will not, subject to the paragraphs below, form part of the Scheme Shares.

 

Bowenvale, the Offeror and the parties acting in concert with each of them who hold any AsiaSat Shares will abstain from voting at the Court Meeting but will vote or will procure the voting of their beneficial interests in the Company in favour of the special resolution to be proposed at the Special General Meeting to, among other matters, approve and give effect to the cancellation of the Scheme Shares and the reduction of the relevant portion of the issued share capital of the Company. The Offeror and Bowenvale will undertake to appear by counsel at the hearing of the petition to sanction the Scheme and to undertake to the Supreme Court to be bound thereby and to execute and do and procure to be executed and done all such documents, acts and things as may be necessary or desirable to be executed and done by the Offeror and Bowenvale for the purposes of giving effect to the Scheme.

 

The Non-executive Directors of the Company, namely Mr. Romain Bausch, Ms. Cynthia Dickins, Mr. Mark Rigolle, Mr. Mi Zeng Xin, Mr. Ding Yu Cheng, Mr. Ju Wei Min and Mr. Ko Fai Wong, are not considered to be independent for the purpose of giving any advice or recommendation to the Scheme Shareholders in relation to the Share Proposal and Optionholders in relation to the Option Proposal. Mr. Romain Bausch, Ms. Cynthia Dickins and Mr. Mark Rigolle are not considered independent because they have been nominated to the Board by SES, a party deemed to be acting in concert with the Offeror. Mr. Mi Zeng Xin, Mr. Ding Yu Cheng, Mr. Ju Wei Min and Mr. Ko Fai Wong are not considered independent because they have been nominated to the Board by CITIC Group, a party deemed to be acting in concert with the Offeror. Mr. Mi Zeng Xin, Mr. Ju Wei Min and Mr. Ko Fai Wong are also directors of the Offeror.

 

As at the Latest Practicable Date, Mr. Mi Zeng Xin, Mr. Ding Yu Cheng, Mr. Ju Wei Min and Mr. Romain Bausch were holders of C Options in the following amounts:

 

Directors

    Number of
C Options

Mr. Mi Zeng Xin (also a director of the Offeror)

    100,000

Mr. Ju Wei Min (also a director of the Offeror)

    50,000

Mr. Ding Yu Cheng

    50,000

Mr. Romain Bausch

    100,000
    

Total

    300,000
      

 

To the extent that any of the 300,000 C Options held by parties acting in concert with the Offeror are exercised and converted into AsiaSat Shares prior to the Scheme Record Time, the AsiaSat Shares will form part of the Scheme Shares, but may not be voted at the Court Meeting.

 

In the six months prior to the Latest Practicable Date, no dealings for value in AsiaSat Shares have taken place by Bowenvale or the Offeror, CITIC Group, GEC, Able Star or GE Equity and, persons who are or are deemed to be acting in concert with any one of them.

 

13.2    Related party transactions and connected party transactions

 

AsiaSat has entered into transactions from time to time with its current and former shareholders, their affiliates and other connected persons. It is AsiaSat’s policy that such transactions be effected on terms which AsiaSat believes to be comparable to those available with unaffiliated parties. For so long as AsiaSat is listed on the Stock Exchange, all transactions between AsiaSat and its Directors or any of their respective associates (as defined in the Listing Rules) constitute connected transactions of AsiaSat under the Listing Rules and unless exemptions are applicable or waivers are granted, are subject to independent shareholders’ approval in a general meeting. Further details of related parties transactions are provided in “Part VII – US Special Factors”.

 

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PART VIII – EXPLANATORY STATEMENT

 

13.3    Concert party interests

 

As at the Latest Practicable Date, the Offeror and parties acting or deemed to be acting in concert with it were beneficially interested in 268,905,000 AsiaSat Shares, representing approximately 68.9 per cent of the issued share capital of the Company. AsiaSat Shares held by the Offeror and parties acting in concert with it will not, subject to the paragraphs below, form part of the Scheme Shares.

 

Mr. Mi Zeng Xin and Mr. Ju Wei Min, both being directors of the Offeror and Bowenvale, are interested in 100,000 and 50,000 Options, respectively, with an exercise price of HK$14.35. Mr. Romain Bausch and Mr. Ding Yu Cheng, both being directors of Bowenvale, are interested in 100,000 and 50,000 Options respectively, with an exercise price of HK$14.35. To the extent that any of the 300,000 Options held by parties acting in concert with the Offeror are exercised and converted into AsiaSat Shares prior to the Scheme Record Time, the AsiaSat Shares will form part of the Scheme Shares, but may not be voted at the Court Meeting. Each of Mr. Mi Zeng Xin, Mr. Ju Wei Min, Mr. Ding Yu Cheng and Mr. Romain Bausch has, however, undertaken not to exercise any of his Options prior to the Scheme becoming effective or the completion of the Possible MGO Offers (if any).

 

In view of their interest in the Proposals, neither the Offeror, nor Bowenvale nor any persons acting in concert with any of them will vote in respect of the resolution to approve the Scheme at the Court Meeting. The Offeror and Bowenvale have, however, stated that, if the Scheme is approved at the Court Meeting, all the AsiaSat Shares held by them will be voted in favour of the special resolution to, among other matters, approve the capital reduction arising as a result of the Scheme at the Special General Meeting. The Offeror and Bowenvale will undertake to appear by counsel at the hearing of the petition to sanction the Scheme and to undertake to the Supreme Court to be bound thereby and to execute and do and procure to be executed and done all such documents, acts and things as may be necessary or desirable to be executed and done by the Offeror and Bowenvale for the purposes of giving effect to the Scheme.

 

Save as disclosed above, the Directors have no material interests in the Scheme as directors, shareholders or creditors of the Company or otherwise. All Scheme Shareholders are being treated the same under the Scheme, regardless of the size of their shareholding.

 

14.    OVERSEAS SHAREHOLDERS AND OVERSEAS OPTIONHOLDERS

 

14.1    Overseas Shareholders and Overseas Optionholders generally

 

The making of the Share Proposal and the Possible MGO Share Offer (if and when made) to Scheme Shareholders, and the making of the Option Proposal and the Possible MGO Option Offer (if and when made) to Optionholders, respectively, who are not resident in Hong Kong, may be subject to the laws of the relevant jurisdictions in which such Scheme Shareholders and Optionholders are located. Such Scheme Shareholders and Optionholders should inform themselves about and observe any applicable legal and regulatory requirements. It is the responsibility of any overseas Scheme Shareholder wishing to accept the Share Proposal or the Possible MGO Share Offer (if and when made), and any overseas Optionholder wishing to accept the Option Proposal or the Possible MGO Option Offer (if and when made) to satisfy itself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such jurisdiction.

 

14.2    Information for ADS Holders

 

As ADS Holders are not holders of record of Scheme Shares they do not have the right to vote at the Court Meeting or the Special General Meeting, but may instruct the ADS Depositary to vote the Scheme Shares underlying their ADSs pursuant to their ADS Voting Instruction Card. ADS Holders may also become holders of AsiaSat Shares by exchanging their ADSs and withdrawing AsiaSat Shares underlying such ADSs in accordance with the terms of the ADS Deposit Agreement provided they become holders of AsiaSat Shares not later than the Voting Record Time specified for the Court Meeting and the Special General Meeting. ADS Holders seeking to become holders of AsiaSat Shares will incur cancellation fees and may incur taxes and other charges in connection with the exchange and withdrawal of ADSs. AsiaSat has instructed the ADS Depositary to provide ADS Voting Instruction Cards to requesting ADS Holders.

 

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15.    COSTS OF THE SCHEME

 

In addition to the Offeror’s obligations under Rule 2.3 of the Takeovers Code, the direct expenses incurred by AsiaSat in connection with the Scheme of up to US$3 million (excluding translation fees, and printing and publication costs, which will be reimbursed by the Offeror to the Company in full and do not count towards the cap of US$3 million) will be borne by the Offeror in the event the Proposals do not become unconditional for any reason. Rule 2.3 of the Takeovers Code provides that if the Independent Board Committee or CLSA fails to recommend the Proposals, all expenses of the Company in connection with the Proposals will be borne by the Offeror if the Scheme is not approved.

 

In the event the Scheme is not approved at the relevant Meeting(s), all the expenses incurred by AsiaSat in connection with the Scheme shall be borne by the Offeror.

 

The estimated aggregate expenses of the Offeror in connection with the Proposal are as follows:

 

Accounting fees

    HK$0.10m

Filing fees

   

HK$0.63m

Financial adviser fees and expenses

   

HK$35.79m

Legal fees and expenses

   

HK$34.08m

Printing and mailing

   

HK$8.95m

Vote solicitation fees

   

(N/A)

    

Total

   

HK$79.54m

    

 

16.    PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED

 

The Company formally retained CLSA to act as independent financial adviser to the Independent Board Committee in connection with the Proposals and the Possible MGO Offers and to prepare a letter of advice with respect to the same. The Company engaged CLSA based on its qualifications, expertise and reputation. CLSA has not in the past two years acted as financial adviser to or agent for AsiaSat. CLSA is a licensed securities adviser and corporate finance adviser under the SFO and together with its affiliates, provide a full range of investment banking services, which, in the course of normal trading activities, may from time to time effect transactions and hold securities, including derivative securities, of AsiaSat, its subsidiaries or its substantial shareholder (as defined in the Listing Rules) or those of the Offeror, Able Star, CITIC Group, GE Equity and GECC for the accounts of customers. CLSA will receive a fee from AsiaSat for rendering its opinion. AsiaSat has also agreed to indemnify CLSA and certain related persons against liabilities and expenses in connection with its engagement. Pursuant to the Company’s letter agreement with CLSA, dated 21 February 2007 (the “CLSA Agreement”), the Company agreed to pay CLSA a fee in the amount of US$600,000, paid in two instalments, half on signing of the CLSA Agreement and half within seven days after the date of the Special General Meeting. The Company also agreed to reimburse CLSA for reasonable out-of-pocket expenses and disbursements, and agreed to indemnify CLSA and related persons against various liabilities except in the case of CLSA or its related persons’ wilful default or negligence.

 

CITIC Group and GE Equity formally engaged Morgan Stanley to act as their financial adviser in connection with the Proposals and the Possible MGO Offers. Pursuant to a letter agreement between CITIC Group, GE Equity and Morgan Stanley dated 9 February 2007, CITIC Group and GE Equity agreed to pay Morgan Stanley a maximum fee in the amount of US$4 million, a portion of which consists of an incentive fee. CITIC Group and GE Equity also agreed to reimburse Morgan Stanley for all reasonable expenses including travel and accommodation costs, document production, delivery and other expenses of this type, and agreed to indemnify Morgan Stanley and related persons against various liabilities except if such liabilities result primarily from the wilful default, negligence or bad faith of such persons.

 

Under the ADS Deposit Agreement, the ADS Depositary is entitled to certain cancellation fees upon cancellation of the ADSs (US$0.05 per ADS). Fees in respect of ADSs cancelled in connection with the implementation of the Scheme will be borne by the Offeror.

 

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The Offeror formally engaged Mellon Investor Services LLC to act as Information Agent in connection with the Proposals and the Possible MGO Offers. Pursuant to the Offeror’s letter agreement with Mellon Investor Services LLC dated 8 March 2007, the Offeror agreed to pay Mellon Investor Services LLC a fee in the amount of US$2,500 plus additional costs and expenses incurred in providing information agent services to the AsiaSat Shareholders. The Offeror has also agreed to indemnify Mellon Investor Services LLC and related persons against various liabilities except in the case of wilful breach or gross negligence of such persons.

 

Neither the Company nor any person acting on its behalf intends to employ, retain or compensate any person to make solicitations or recommendations to AsiaSat Shareholders or ADS Holders on its behalf concerning the Proposals or the Possible MGO Offers.

 

17.    SHARE CERTIFICATES, DEALINGS AND WITHDRAWAL OF LISTINGS

 

Upon the Scheme becoming effective, all the Scheme Shares will be cancelled and extinguished, and all the certificates representing the Scheme Shares will accordingly cease to have effect as documents or evidence of title.

 

The Company will apply to the Stock Exchange for the withdrawal of the listing of the AsiaSat Shares on the Stock Exchange as soon as practicable after the Share Proposal becomes effective pursuant to Rule 6.15 of the Listing Rules. Dealings in AsiaSat Shares on the Stock Exchange are expected to cease after 9.30 a.m. on 8 May 2007 and the listing of AsiaSat Shares on the Stock Exchange is expected to be withdrawn at 9.30 a.m. on 8 May 2007.

 

AsiaSat Shareholders will be notified of the exact dates on which the Scheme and the withdrawal of the listing of AsiaSat Shares on the Stock Exchange will become effective by press announcement.

 

Upon the Scheme becoming effective and the Company becoming wholly indirectly owned by CITIC Group and GECC through the Offeror and Bowenvale, the Company will also apply for de-listing of the ADSs from the NYSE. CITIC Group and GECC also intend to cause the Company to terminate the ADS Deposit Agreement. If the Scheme becomes effective, CITIC Group and GECC intend to cause the Company to file a Form 15 with the SEC to request that the Company’s reporting obligations under the Exchange Act be terminated or suspended, provided that the relevant rules and regulations under the Exchange Act are satisfied.

 

Irrespective of the outcome of the Scheme, in due course, it is expected that the maintenance of the ADS listing on the NYSE will be re-examined by AsiaSat and the Board, the outcome of which may be to terminate such listing.

 

18.    REGISTRATION AND PAYMENT

 

Assuming that the Scheme Record Time falls at 4:30 p.m. on 4 May 2007, it is proposed to close the register of members of the Company immediately after 4:30 p.m. on 4 May 2007 (or such other date as may be notified to Scheme Shareholders by press announcement) in order to establish entitlements under the Scheme. In order to qualify for entitlements under the Scheme, Scheme Shareholders should ensure that their AsiaSat Shares are lodged with the Registrar for registration in their names or in the names of their nominees before the closure of the register of members of the Company. The Registrar is Computershare Hong Kong Investor Services Limited which is located at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

 

18.1    Payment – Scheme Shareholders

 

Upon the Scheme becoming effective and in the absence of any specific instructions to the contrary received in writing by the Registrar on or before the Scheme Record Time, cheques for cash entitlements under the Scheme will be sent to the holders of Scheme Shares whose names appear on the register of members of the Company at the Scheme Record Time. In the case of joint holders, cheques for cash entitlements will be sent to the holder whose name first appears in respect of such holdings in the register of members of the Company at the Scheme Record Time.

 

Cheques in respect of the Share Offer Price are expected to be sent out to the holders of Scheme Shares not later than ten calendar days after the Effective Date. Assuming that the Scheme becomes effective on 7 May 2007, cheques for cash entitlements under the Scheme are expected to be despatched on or before 17 May 2007. All

 

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such cheques will be sent at the risk of the holders of the Scheme Shares and neither the Offeror nor the Company will be responsible for any loss or delay in transmission.

 

On the day being six calendar months after the posting of such cheques, the Offeror will have the right to cancel or countermand payment of any such cheque which has not then been cashed or has been returned uncashed, and will place all such monies in a bank account in the Company’s name with a licensed bank in Hong Kong selected by the Company. The Company will hold such monies until the expiry of six years from the Effective Date and will, prior to such date, make payments out of the sums (without interest in accordance with paragraph 3(e) of the Scheme) payable pursuant to paragraph 2 of the Scheme to persons who satisfy the Company that they are respectively entitled thereto and that the cheques referred to in paragraph 3(b) of the Scheme of which they are payees have not been cashed.

 

On the expiry of six years from the Effective Date, the Offeror will be released from any further obligation to make any payments under the Scheme and the Company will thereafter transfer to the Offeror the balance (if any) of the sums then standing to the credit of the bank account referred to in paragraph 3(e) of the Scheme including accrued interest subject, if applicable, to the deduction of interest tax or any withholding or other tax or any other deduction required by law and subject to the deduction of any expenses.

 

18.2    Payment – ADS Holders

 

As the ADSs are governed by the ADS Deposit Agreement and not Bermuda law, implementation of the Scheme will not in itself result in the cancellation of the ADSs. Instead, upon the Scheme becoming effective, the Scheme Shares underlying ADSs will be cancelled along with all other Scheme Shares, and the cash received by the ADS Depositary (as registered owner of the Scheme Shares underlying the ADSs) upon cancellation of such Scheme Shares will be converted into US dollars by the ADS Depositary and distributed (less any fees and expenses of the ADS Depositary in connection with currency conversions under the ADS Deposit Agreement and withholding taxes, if applicable) to the ADS Holders pro rata to their holdings upon exchange of their ADSs, in accordance with the provisions of the ADS Deposit Agreement.

 

18.3    Payment – Optionholders

 

Monies due to Optionholders who accept the Option Proposal in accordance with the terms of the Option Proposal will be despatched to such accepting Optionholders within ten days of the closing of the Option Proposal.

 

19.    MEETINGS

 

In accordance with the direction of the Supreme Court, the Court Meeting will be convened for the purpose of considering and, if thought fit, passing the appropriate resolution to approve the Scheme (with or without modifications). In so far as the sanction of the Scheme by the Supreme Court is concerned, such a resolution will be deemed to have been passed if a majority in number representing three-fourths in value of the Scheme Shares held by the Scheme Shareholders present and voting either in person or by proxy at the Court Meeting vote in favour of the Scheme. Such a resolution will only be considered to have been passed under the Takeovers Code if (i) the Scheme is approved by at least 75 per cent of the votes attaching to the Scheme Shares of the Scheme Shareholders that are cast either in person or by proxy at the Court Meeting; and (ii) the number of votes cast against the resolution at the Court Meeting is not more than 10 per cent of all the Scheme Shares held by all of the Scheme Shareholders. Based on 121,360,500 Scheme Shares held by the Scheme Shareholders as at the Latest Practicable Date, 10 per cent of such Scheme Shares amounted to 12,136,050 Scheme Shares.

 

Immediately following the Court Meeting, the Special General Meeting will be convened for the purpose of considering and, if thought fit, passing a special resolution to approve, among other matters, the capital reduction arising as a result of the Scheme. The special resolution will be passed provided that it is approved by a majority of at least three-fourths of the votes cast by AsiaSat Shareholders present and voting in person or by proxy, at the Special General Meeting. All AsiaSat Shareholders will be entitled to attend and vote on such special resolution at the Special General Meeting.

 

As at the Latest Practicable Date, Bowenvale was beneficially interested in an aggregate of 268,905,000 AsiaSat Shares, representing approximately 68.9 per cent of the issued share capital of the Company. AsiaSat Shares

 

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PART VIII – EXPLANATORY STATEMENT

 

owned by Bowenvale, by reason of the fact that Bowenvale is a party acting in concert with the Offeror under the Takeovers Code, will not form part of the Scheme Shares eligible for voting in the Court Meeting and, accordingly, will neither be represented nor voted at the Court Meeting to approve the Scheme. Bowenvale intends to vote at the Special General Meeting and has indicated that if the Scheme is approved at the Court Meeting, those AsiaSat Shares held by it will be voted in favour of the special resolution to be proposed at the Special General Meeting to approve the capital reduction arising as a result of the Scheme.

 

Notices of the Meetings are set out in “Part XIII – Notice of Court Meeting” and “Part XIV – Notice of Special Meeting” of this Scheme Document. The Meetings will be held on Tuesday, 24 April 2007 at the respective times specified in such notices.

 

20.    TAXATION

 

20.1    Hong Kong Tax Consequences

 

As the Scheme does not involve the sale and purchase of Hong Kong stock, no stamp duty will be payable pursuant to the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong) on the cancellation of the Scheme Shares upon the Scheme becoming effective.

 

The Scheme Shareholders, whether in Hong Kong or in other jurisdictions, are recommended to consult their professional advisers if they are in any doubt as to the taxation implications of the Share Proposal and, in particular, whether the receipt of the Share Offer Price would make such Scheme Shareholders liable to taxation in Hong Kong or in other jurisdictions.

 

20.2    US Tax

 

Details of the US tax consequences and other US tax matters are set out in “Part VII – US Special Factors”.

 

TAX MATTERS ARE VERY COMPLEX, AND THE TAX CONSEQUENCES OF THE SCHEME TO YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. IT IS RECOMMENDED THAT YOU SHOULD CONSULT YOUR TAX ADVISER FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE SCHEME TO YOU.

 

21.    ACTION TO BE TAKEN

 

21.1    Action to be taken by Scheme Shareholders

 

A pink Form of Proxy for use at the Court Meeting and a white Form of Proxy for use at the Special General Meeting are enclosed with this Scheme Document.

 

Whether or not you are able to attend the Meetings in person, the Scheme Shareholders are strongly urged to complete and sign the enclosed PINK Form of Proxy in respect of the Court Meeting, and also the enclosed WHITE Form of Proxy in respect of the Special General Meeting, in accordance with the instructions printed respectively on them and to lodge them with the Registrar at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible, but in any case not later than the following respective times. In order to be valid, the PINK Form of Proxy for use at the Court Meeting should be lodged not later than 10:00 a.m. on Sunday, 22 April 2007 or if it is not so lodged, it may be handed to the Chairman of the Court Meeting at the Court Meeting. In order to be valid, the WHITE Form of Proxy for use at the Special General Meeting must be lodged not later than 10:30 a.m. on Sunday, 22 April 2007.

 

The completion and return of a Form of Proxy for the Court Meeting or the Special General Meeting will not preclude you from attending the relevant Meeting and voting in person. In such event, the returned Form of Proxy will be deemed to have been revoked.

 

21.2    Action to be taken by ADS Holders

 

If you are an ADS holder, you cannot vote at the Court Meeting or the Special General Meeting directly but you may use the enclosed ADS Voting Instruction Card to instruct the ADS Depositary (as the registered holder of

 

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PART VIII – EXPLANATORY STATEMENT

 

the Scheme Shares underlying the ADSs) how to vote the AsiaSat Shares underlying your ADSs. If you are a registered holder of ADSs, please complete and sign the enclosed ADS Voting Instruction Card and return it in accordance with the instructions printed on it as soon as possible, but in any event, so as to be received by the ADS Depositary no later than 5:00 p.m. (New York time) on 17 April 2007. ADS Voting Instruction Cards returned by facsimile will not be accepted. If you hold your ADSs indirectly, you must rely on the procedures of the financial intermediary through which you hold your ADSs if you wish to vote.

 

You may also elect to become an AsiaSat Shareholder of record, and thereby have the right to vote at the Meetings, by surrendering your ADSs for the purpose of withdrawal of the AsiaSat Shares underlying such ADSs in accordance with the terms of the ADS Deposit Agreement no later than 4:30 p.m. (New York time), on 13 April 2007. You will incur taxes and other charges in connection with such exchange and withdrawal. In order to exchange your ADSs and withdraw the underlying Scheme Shares, you should contact the ADS Depositary at The Bank of New York, 101 Barclay Street, 22nd Floor West, New York, NY 10286, United States.

 

Upon the Scheme becoming effective, the ADS Depositary (as the registered holder of the Scheme Shares underlying the ADSs) will receive an amount in Hong Kong dollars equal to the amount payable in respect of all Shares held by the ADS Depositary. Upon receipt, the ADS Depositary will convert such funds into US dollars at the then prevailing spot market rate. Upon exchange of your ADSs in accordance with the terms of the ADS Deposit Agreement, you will receive your pro-rata portion of the consideration from the ADS Depositary, less any fees or expenses of the ADS Depositary in connection with the currency conversion or withholding taxes (if applicable). You will also incur related taxes and other charges.

 

21.3    Shareholders Who Hold Their Shares in CCASS

 

No person shall be recognised by the Company as holding any Shares on trust. Any Beneficial Owner whose Shares are registered in the name of a Registered Owner should contact such Registered Owner to give instructions to and/or to make arrangements with such Registered Owner as to the manner in which the Shares beneficially owned by the Beneficial Owner should be voted at the Court Meeting and/or the Special General Meeting. A Beneficial Owner who wishes to attend the Court Meeting and/or the Special General Meeting personally should contact the Registered Owner directly to make the appropriate arrangements with the Registered Owner to enable the Beneficial Owner to attend and vote at the Court Meeting and/or the Special General Meeting and for such purpose the Registered Owner may appoint the Beneficial Owner as its proxy. The appointment of a proxy by the Registered Owner to attend and vote at the Court Meeting and/or the Special General Meeting shall be made in accordance with all relevant provisions in the Bye-laws of the Company. In the case of the appointment of a proxy by the Registered Owner, the Forms of Proxy shall be completed and signed by the Registered Owner and shall be lodged in the manner and before the latest time for lodging the Forms of Proxy as more particularly set out in this Scheme Document.

 

Any Beneficial Owner whose Shares are deposited in CCASS and registered under the name of HKSCC Nominees Limited must, unless such Beneficial Owner is an Investor Participant, contact their Other CCASS Participant regarding voting instructions to be given to such persons if they wish to vote in respect of the Scheme. The procedure for voting in respect of the Scheme by the Investor Participants and the Other CCASS Participants with respect to Shares registered under the name of HKSCC Nominees Limited shall be in accordance with the “General Rules of CCASS” and the “CCASS Operational Procedures” in effect from time to time.

 

21.4    EXERCISING YOUR RIGHT TO VOTE

 

IF YOU ARE AN ASIASAT SHAREHOLDER, WE STRONGLY ENCOURAGE YOU TO EXERCISE YOUR RIGHT TO VOTE OR GIVE INSTRUCTIONS TO THE RELEVANT REGISTERED OWNER TO VOTE AT THE COURT MEETING AND AT THE SPECIAL GENERAL MEETING. IF YOU KEEP OR THINK YOU MAY KEEP ANY ASIASAT SHARES IN A SHARE LENDING PROGRAMME, WE URGE YOU TO RECALL ANY OUTSTANDING ASIASAT SHARES ON BORROW TO AVOID MARKET PARTICIPANTS USING BORROWED STOCK TO VOTE AGAINST THE SHARE PROPOSAL, WHICH POTENTIALLY COULD HAVE A NEGATIVE IMPACT ON THE VALUE OF YOUR ASIASAT SHARES.

 

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IF YOU ARE ACTING AS A REGISTERED OWNER, WE SHOULD BE GRATEFUL IF YOU COULD INFORM ANY ULTIMATE BENEFICIAL ASIASAT SHAREHOLDERS ABOUT THE IMPORTANCE OF EXERCISING THEIR VOTE.

 

IF YOU ARE AN ADS HOLDER, PLEASE COMPLETE AND RETURN THE ADS VOTING INSTRUCTION CARD TO THE ADS DEPOSITARY IN A TIMELY MANNER. IF YOU HOLD YOUR ADSS THROUGH A FINANCIAL INTERMEDIARY, PLEASE FOLLOW THE INSTRUCTIONS THAT THE FINANCIAL INTERMEDIARY PROVIDES TO YOU.

 

IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU ARE ENCOURAGED TO CONSULT YOUR LICENSED SECURITIES DEALER, BANK MANAGER, SOLICITOR, PROFESSIONAL ACCOUNTANT OR OTHER PROFESSIONAL ADVISER.

 

22.    RECOMMENDATIONS

 

In the letter from the Independent Financial Adviser to the Independent Board Committee set out in Part VI of this Scheme Document, the Independent Financial Adviser states that it considers the terms of the Share Proposal and the Option Proposal to be fair and reasonable so far as the Scheme Shareholders (including without limitation the ADS Holders) and Optionholders are respectively concerned and advises the Independent Board Committee to recommend the Scheme Shareholders (including without limitation the ADS Holders) to vote in favour of both the resolution to approve the Scheme at the Court Meeting and the special resolution to approve, among other matters, the capital reduction arising as a result of the Scheme at the Special General Meeting.

 

The Independent Board Committee, having considered the terms of the Proposals and having taken into account the advice and recommendations of the Independent Financial Adviser set out in its letter in Part VI of this Scheme Document (including the factors under the heading “Conclusion and Opinion” in its letter, which should be read in the context of the full text of that letter), considers that the terms of the Share Proposal and the Option Proposal are fair and reasonable so far as the Scheme Shareholders (including without limitation the ADS Holders) and Optionholders are respectively concerned. Accordingly, the Independent Board Committee has recommended that the Scheme Shareholders (including without limitation the ADS Holders) to vote or procure to vote in favour of both the resolution to approve the Scheme at the Court Meeting and the special resolution to approve, among other matters, the capital reduction arising as a result of the Scheme at the Special General Meeting, and that the Optionholders accept the Option Offer. The full text of the letter from the Independent Board Committee is set out in Part VI of this Scheme Document.

 

23.    INDEPENDENT ADVICE

 

AsiaSat Shareholders, ADS Holders and Optionholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation or other implications of the Scheme becoming effective or otherwise. It is emphasised that none of the Company, the Offeror, CLSA or Morgan Stanley or any of their respective directors or any other person involved in the Proposals accepts responsibility for any tax or other effects on, or liabilities of, any person or persons as a result of the implementation or otherwise of the Proposals.

 

24.    FURTHER INFORMATION

 

Further information is set out in the other Parts of this Scheme Document, all of which form part of this Explanatory Statement.

 

US holders are also directed to “Part VII – US Special Factors” which includes a section entitled “Where you can find more information”.

 

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GECC and SES have agreed to pursue the Exchange Transaction, which involves the redemption by SES of GECC’s entire indirect shareholding (of approximately 19 per cent) in SES in exchange for stock of a newly incorporated company that will own a number of assets. Among these assets is SES’s entire interest in Bowenvale which SES will transfer to such newly incorporated company. Bowenvale holds approximately 68.9 per cent of the issued ordinary shares of the Company.

 

The Executive has taken the view that the acquisition by the GE Entities of SES’s entire shareholding in Bowenvale pursuant to the Exchange Transaction would, on completion, result in the formation of a new concert group which has statutory control of Bowenvale, thereby triggering a mandatory general offer obligation under the Takeovers Code. Whilst the view taken by Able Star and GE Equity is different from that of the Executive, the Offeror agreed that it would be prepared, in the event the Transfer proceeds to completion, to make a mandatory general offer for all the shares in the Company not owned by Bowenvale or parties acting in concert with it. Accordingly, the Possible MGO Offers were announced simultaneously with the announcement of the Proposals.

 

If the Possible MGO Share Offer were to be made, it would be made at the Possible MGO Share Offer Price, payable in cash. The Possible MGO Share Offer Price is HK$16.00, compared to the Share Offer Price of HK$18.30. The Possible MGO Share Offer, if and when made, will not be subject to any condition.

 

It is envisaged that where the Transfer completes and all the other conditions to the Proposals are either satisfied or waived, the Scheme will become effective and all Scheme Shares will be acquired by the Offeror at the Share Offer Price, which will be HK$18.30, being approximately 14.4 per cent higher than the Possible MGO Share Offer Price. In such circumstance, the substance of the obligations that would arise under the Possible MGO Offers will have been satisfied and it would therefore be redundant to despatch the Formal MGO Documentation and to commence the offer in respect of the Possible MGO Offers.

 

In the event the Transfer completes prior to the Meetings an announcement will be made of the satisfaction of that condition. It is intended that the formal offer documentation in respect of the Possible MGO Offers would not be posted until after the Meetings are held. If the requisite voting thresholds are obtained at the Meetings, the formal offer documentation in respect of the Possible MGO Offers will not be despatched and the Possible MGO Offers will not commence. If the requisite voting thresholds are not obtained at the Meetings, the Formal MGO Documentation will be posted. An application under Rule 8.2 of the Takeovers Code has been made by the Offeror to extend the posting date in respect of the Formal MGO Documentation and the Executive has agreed to extend this period to 2 May 2007. If the Exchange Transaction is not completed by this date the Offeror and the Company will make a further Rule 8.2 application to the Executive for a further extension to the despatch date but there is no guarantee that the further extension will be granted. For the avoidance of doubt, the Formal MGO Documentation will not be despatched, if at all, until after the Meetings have been held.

 

In the event that the Transfer completes but the Scheme is unsuccessful, the Possible MGO Share Offer document, Possible MGO Option Offer letter and forms of acceptance in respect of the Possible MGO Offers would be despatched to AsiaSat Shareholders and Optionholders, respectively, following the failure or lapsing of the Scheme.

 

If Scheme Shareholders vote in favour of the Scheme, the Supreme Court sanctions the Scheme and the order of the Supreme Court sanctioning the Scheme is delivered to the Registrar of Companies in Bermuda for registration, the Scheme will be binding on all Scheme Shareholders, including those that may not have voted in favour of the Scheme. In this event, there will not be a choice for the Offeror to pay the MGO Share Offer Price, and the Share Offer Price, which is higher than the MGO Share Offer Price, will have to be paid.

 

If the Possible MGO Offers are required to be made, they would be made in compliance with the applicable requirements of the Exchange Act, as well as in accordance with the terms of any relief from the SEC obtained in connection with the Proposals and the Possible MGO Offers.

 

OFTA Investigation

 

Pursuant to Rule 26.2(a) of the Takeovers Code, except with the consent of the Executive, offers made under Rule 26 of the Takeovers Code must be conditional only upon the offeror having received acceptances in respect

 

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of voting rights which will result in the offeror and any person acting in concert with it holding more than 50 per cent. of the voting rights. Further, pursuant to Note 4 of Rule 26.2, an offeror must not trigger a mandatory offer of the shares in a telecommunications carrier licensee without obtaining OFTA’s consent under section 7(P) of the Telecommunications Ordinance.

 

GECC and CITIC Group have jointly sought informal advice from OFTA as to whether it will provide such consent under section 7(P) of the Telecommunications Ordinance. OFTA has indicated that it would not, having considered whether there are any anti-competitive effects arising from the Proposals, embark on a public consultation process under section 7(P) of the Telecommunications Ordinance.

 

Where completion of the Transfer occurs prior to or simultaneously with the Meetings

 

Pursuant to section 7(P) of the Telecommunications Ordinance, OFTA may initiate an investigation into the anti-competitive effects of any transaction within a period of two weeks from the time OFTA knows or ought reasonably to know that a relevant change (as defined in section 7(P)(16) of the Telecommunications Ordinance, being the completion of the Transfer) has occurred. OFTA has further indicated that it would, as soon as practicable following the receipt of a notice from GE Equity that the relevant change has occurred (the “Notice”), notify GE Equity whether or not it would initiate any such investigation.

 

It is intended that as soon as practicable after the completion of the Transfer, GE Equity will give Notice to OFTA (copied to CITIC Group). It is envisaged that by the time the Formal MGO Documentation is expected to be despatched, it will become clear whether OFTA will initiate an investigation under section 7(P) of the Telecommunications Ordinance.

 

Where the voting thresholds in respect of the Scheme at the Meetings are met

 

In the event that the Transfer completes prior to or simultaneously with the Meetings and the requisite voting thresholds to privatise the Company are obtained at the Meetings, the Formal MGO Documentation will not be despatched.

 

Where the voting thresholds in respect of the Scheme at the Meetings are not met

 

As mentioned above, completion of the Transfer would be a relevant change for the purposes of section 7(P)(16) of the Telecommunications Ordinance. In the event that the Transfer completes prior to or simultaneous with the Meetings, but the Scheme is unsuccessful, it is envisaged that by the time the Formal MGO Documentation is expected to be despatched it will become clear whether OFTA will initiate an investigation under section 7(P) of the Telecommunications Ordinance.

 

The Possible MGO Offers

 

The Possible MGO Offers, if and when made, will be made on the following basis:

 

For each Possible MGO Share

    HK$ 16.00 in cash

For each ADS

    HK$ 160.00 in cash

For each B Option

    HK$ 0.01 in cash

For each C Option

    HK$ 1.65 in cash

 

Comparison of Value

 

The Possible MGO Share Offer Price represents:

 

  •  

a premium of approximately 14.3 per cent over the closing price of HK$14.00 per AsiaSat Share as quoted on the Stock Exchange on the Pre-Suspension Date;

 

  •  

a premium of approximately 15.4 per cent over the closing price of US$17.75 per ADS as quoted on the NYSE on the Pre-Suspension Date;

 

  •  

a premium of approximately 13.5 per cent over the closing price of HK$14.10 per AsiaSat Share as quoted on the Stock Exchange on the Suspension Date;

 

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PART IX – THE POSSIBLE MGO OFFERS

 

  •  

a premium of approximately 15.6 per cent over the 30-day Average Pre-Announcement Price of HK$13.84 per AsiaSat Share, respectively;

 

  •  

a premium of approximately 14.3 per cent over the 30-day Average Pre-Announcement ADS Price of US$17.93 per ADS;

 

  •  

a discount of approximately 11.3 per cent to the highest closing price of approximately HK$18.04 per AsiaSat Share over the one-year period prior to the Latest Practicable Date;

 

  •  

a discount of approximately 13.0 per cent to the highest closing price of approximately US$23.55 per ADS over the one-year period prior to the Latest Practicable Date;

 

  •  

a discount of approximately 13.0 per cent to US$23.55 per ADS as quoted on the NYSE on the Latest Practicable Date;

 

  •  

an implied price to earnings multiple of 17.0 times, based on AsiaSat’s reported basic earnings per share of HK$0.94 for the year ended 31 December 2005;

 

  •  

an implied price to earnings multiple of 13.8 times, based on AsiaSat’s reported basic earnings per share of HK$1.16 for the year ended 31 December 2006;

 

  •  

a premium of approximately 52.1 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$10.52 as at 31 December 2005; and

 

  •  

a premium of approximately 41.2 per cent to the audited consolidated net asset value per AsiaSat Share of approximately HK$11.33 as at 31 December 2006

 

The Possible MGO Option Offer

 

In accordance with the terms of the Share Option Scheme, Optionholders are entitled to exercise their Options, which confer rights to subscribe for AsiaSat Shares at a price HK$17.48 per Share in respect of B Options and HK$14.35 per Share in respect of C Options, in full or in part at any time within 21 days of despatch of the Formal MGO Documentation (or such later date as the Directors may determine). AsiaSat Shares issued upon exercise of the Options in accordance with the terms of the Share Option Scheme will form part of the Possible MGO Shares. If the Possible MGO Option Offer is not accepted within the relevant time period and in relation to which the Options are not exercised in accordance with the Rules of the Share Option Scheme, such Options will lapse.

 

Under the Possible MGO Option Offer, the Offeror will offer to purchase Options for cancellation in exchange for HK$0.01 in cash for each B Option and HK$1.65 in cash for each Outstanding C Option. Further information on the Possible MGO Options Offer will be set out in the formal offer document to be issued in respect of the Possible MGO Share Offer (if and when made) and the Possible MGO Option Offer will be made by or on behalf of the Offeror in a letter to Optionholders to be despatched on the same day as such formal offer document.

 

The attention of the Optionholders is drawn to the Rules of the Share Option Scheme, and in particular paragraph 8.4 of the Rules of the Share Option Scheme.

 

Total Consideration

 

On the basis of the Possible MGO Share Offer Price of HK$16.00 per Possible MGO Share and 390,265,500 AsiaSat Shares being in issue at the time the Possible MGO Share Offer is made (if made) and assuming there is no change to the issued share capital of AsiaSat as compared to the Latest Practicable Date and the closing of the Possible MGO Offers, the Possible MGO Shares are valued at approximately HK$1,942 million.

 

Save for the Options, there are no outstanding options, warrants, derivatives or other securities issued by AsiaSat that carried a right to subscribe for or which are convertible into AsiaSat Shares. Assuming none of the Options is exercised prior to the closing of the Possible MGO Offers in accordance with the terms of the Share Option Scheme and on the basis of the Possible MGO Option Offer Price of HK$0.01 per B Option and HK$1.65 per C Option, the Possible MGO Option Offer is valued at approximately HK$5 million. Assuming all Options are exercised in full by the Optionholders in accordance with the terms of the Share Option Scheme prior to the closing of the Possible MGO Offers, no consideration will be payable under the Possible MGO Option Offer, and the number of Possible MGO Shares will increase accordingly.

 

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PART IX – THE POSSIBLE MGO OFFERS

 

The total amount of cash required to effect the Possible MGO Offers is approximately HK$1,947 million if none of the Options is exercised prior to the closing of the Possible MGO Offers. This amount would increase to an aggregate of approximately HK$2,019 million if all Options are exercised prior to the closing of the Possible MGO Offers.

 

Confirmation of Financial Resources

 

The Possible MGO and the Possible MGO Option Offer will be financed from the existing resources of CITIC Group and GECC. The Offeror’s financial adviser, Morgan Stanley, is satisfied that sufficient financial resources are and will be available to the Offeror for the implementation of the Possible MGO Share Offer and the Possible MGO Option Offer.

 

Effect of accepting the Possible MGO Offer

 

By accepting the Possible MGO Offer, AsiaSat Shareholders would be required to sell to the Offeror AsiaSat Shares free from all rights of pre-emption, options, claims, equities, liens, charges, encumbrances and any third party rights or interests of any nature whatsoever and together with all rights, benefits and entitlements attaching to them, including the right to receive all dividends, rights and distributions declared, paid or made on or after the date of closing of the Possible MGO Share Offer. If any dividend is declared by the Company after 13 February 2007 and prior to the closing of the Possible MGO Share Offer, the amount of such dividend will be retained by AsiaSat Shareholders and deducted from the Possible MGO Share Offer Price to be received by AsiaSat Shareholders who have accepted the Possible MGO Offer.

 

Public Float and Compulsory Acquisition

 

AsiaSat Shareholders should be aware that, in the event the AsiaSat Shares held by the public represent less than 25 per cent of the issued AsiaSat Shares, trading in the AsiaSat Shares may be suspended. It should be noted that if the Possible MGO Offers are made and close, there may be an insufficient level of public float in AsiaSat Shares and therefore, trading in AsiaSat Shares may be suspended until the prescribed level of public float is attained.

 

If the Possible MGO Share Offer is made and sufficient acceptances of the Possible MGO Share Offer are received, it is the intention of the Offeror to make use of the compulsory acquisition provisions of the Companies Act. In the event the compulsory acquisition thresholds are attained, subject to compliance with the applicable provisions of the Takeovers Code and the Listing Rules, the listing of AsiaSat Shares will be withdrawn from the Stock Exchange and the Offeror intends to cause the Company to apply for de-listing of the ADSs from the NYSE.

 

Rule 2.11 of the Takeovers Code states that, except with the consent of the Executive, where any person seeks to acquire or privatise a company by means of an offer and the use of compulsory acquisition rights, such rights may only be exercised if, in addition to satisfying any requirements imposed by law, acceptances of the offer and purchases, in each case of the disinterested shares, made by the Offeror and persons acting in concert with it during the period of four months after the posting of the initial offer document total 90 per cent of the disinterested shares.

 

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PART IX – THE POSSIBLE MGO OFFERS

 

Tentative Possible MGO Offers Timetable

Assuming the Transfer completes prior to the Meetings, and the Scheme fails

Date

   

Event

Tuesday, 24 April 2007    Court Meeting and Special General Meeting
Wednesday, 25 April 2007    Announcement of the results of the Meetings – failure of the Scheme
Thursday, 26 April 2007   

(i)  Report to the Supreme Court by the Chairman of the AsiaSat Meetings

(ii) Announcement of implementation of Possible MGO Offers

Friday, 27 April 2007    Obtain final comments from the SFC and the Stock Exchange on the Formal MGO Documentation
Wednesday, 2 May 2007    Posting of the Formal MGO Documentation
Wednesday, 30 May 2007    Closing of the Possible MGO Offers1
Saturday, 9 June 2007    Last day for payment of consideration monies to AsiaSat Shareholders who have accepted the Possible MGO Share Offer and Optionholders who have accepted the Possible MGO Option Offer

 

1 Rule 14e-1 of the Exchange Act requires that a tender offer (such as the Possible MGO Offers) must be held open for 20 US Business Days from the commencement of the tender offer (for US purposes this is from when the Formal MGO Documentation is despatched).

 

106

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

All amounts in this Part X are in thousands of Hong Kong dollars unless otherwise stated.

 

1.    THREE YEAR FINANCIAL SUMMARY

 

The following financial information is extracted from the audited consolidated results of the Group, for each of the three financial years ended 31 December 2004, 31 December 2005 and 31 December 2006:

 

RESULTS

 

     Year ended 31 December  
     2006     2005     2004  

Sales

    929,092     879,705     1,004,982  
                  

Profit before income tax

    508,927     416,635     491,616  

Income tax expense

    (55,522 )   (51,270 )   (60,536 )
                  

Profit from continuing operations and for the year

    453,405     365,365     431,080  
                  

Attributable to:

       

Equity holders of the Company

    454,009     366,184     431,216  

Minority interests

    (604 )   (819 )   (136 )
                  
   453,405     365,365     431,080  
                  

Earnings per share for profit attributable to the equity holders of the Company during the year (expressed in HK$ per share)

       

- basic

    1.16     0.94     1.10  

- diluted

    1.16     0.94     1.10  

Dividends

    136,593     136,593     136,593  

Dividend per share (HK$ per share)

    0.35     0.35     0.35  

ASSETS AND LIABILITIES

       
     As at 31 December  
     2006     2005     2004  

Total assets

    5,091,212     4,683,530     4,549,247  

Total liabilities

    (664,675 )   (573,805 )   (668,294 )
                  
   4,426,537     4,109,725     3,880,953  

Minority interests

    (4,933 )   (5,537 )   (6,356 )
                  

Equity attributable to shareholders of the Company

    4,421,604     4,104,188     3,874,597  
                  

 

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PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

2.    AUDITED CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2006

 

The following information has been extracted from the audited consolidated accounts of the Group for the year ended 31 December 2006:

 

Consolidated balance sheet

 

    

  Note  

    As at 31 December
        2006    2005

ASSETS

         

Non-current assets

         

Property, plant and equipment

    7    2,630,847    2,620,911

Leasehold land and land use rights

    6    23,616    24,199

Intangible assets

    8    1,276    1,339

Unbilled receivable

       171,047    174,563

Interests in associates

    10    10,057    14,294

Amount paid to tax authority

    11    154,911    93,666
            

Total non-current assets

       2,991,754    2,928,972
            

Current assets

         

Inventories

    13    354    434

Trade and other receivables

    12    119,647    118,598

Cash and cash equivalents

    14    1,979,457    1,635,526
            

Total current assets

       2,099,458    1,754,558
            

Total assets

       5,091,212    4,683,530
            

EQUITY

         

Capital and reserves attributable to the Company’s equity holders

         

Ordinary shares

    15    39,027    39,027

Share premium

    15    4,614    4,614

Retained earnings

         

- Proposed final dividend

    26    105,372    105,372

- Others

       4,272,591    3,955,175
            
      4,421,604    4,104,188

Minority interests

       4,933    5,537
            

Total equity

       4,426,537    4,109,725
            

LIABILITIES

         

Non-current liabilities

         

Deferred income tax liabilities

    17    191,739    192,654

Deferred revenue

    16    142,624    87,654

Other payables

       1,770    —  
            

Total non-current liabilities

       336,133    280,308
            

Current liabilities

         

Construction payables

       1,736    3,096

Other payables and accrued expenses

       96,495    64,118

Deferred revenue

    16    153,101    151,982

Current income tax liabilities

       77,089    74,180

Dividend payable

       121    121
            

Total current liabilities

       328,542    293,497
            

Total liabilities

       664,675    573,805
            

Total equity and liabilities

       5,091,212    4,683,530
            

Net current assets

       1,770,916    1,461,061
            

Total assets less current liabilities

       4,762,670    4,390,033
            

 

The accompanying notes are an integral part of the consolidated financial statements.

 

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PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

Consolidated income statement

 

          Year ended 31 December  
       Note            2006                 2005        

Continuing operations

        

Sales

    5    929,902     879,705  

Cost of services

    19    (410,640 )   (419,029 )
               

Gross profit

       519,262     460,676  

Other gains - net

    18    92,793     43,711  

Administrative expenses

    19    (94,585 )   (83,880 )
               

Operating profit

       517,470     420,507  

Finance costs

    21    (152 )   —    

Share of loss of associates

       (8,391 )   (3,872 )
               

Profit before income tax

       508,927     416,635  

Income tax expense

    22    (55,522 )   (51,270 )
               

Profit from continuing operations and for the year

       453,405     365,365  
               

Attributable to:

        

- equity holders of the Company

    24    454,009     366,184  

- minority interests

       (604 )   (819 )
               
      453,405     365,365  
               

Earnings per share for profit attributable to the equity holders of the Company during the year

       

- basic

    25    1.16     0.94  
               

- diluted

    25    1.16     0.94  
               

Dividends

    26    136,593     136,593  
               

 

The accompanying notes are an integral part of the consolidated financial statements.

 

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PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

Consolidated statement of changes in equity

 

       Note      Attributable to equity holders of the Company    

Minority
Interests

    

Total

  
        Share
capital		    Share
premium		    Retained
earnings		     Total      

Balance at 1 January 2005

       39,027    4,614    3,830,956     3,874,597     6,356     3,880,953  

Profit/(Loss) for the year

       —      —      366,184     366,184     (819 )   365,365  

Final dividend relating to 2004

       —      —      (105,372 )   (105,372 )   —       (105,372 )

Interim dividend relating to 2005

    26    —      —      (31,221 )   (31,221 )   —       (31,221 )
                                     
      —      —      229,591     229,591     (819 )   228,772  
                                     

Balance at 31 December 2005

       39,027    4,614    4,060,547     4,104,188     5,537     4,109,725  
                                     

Balance at 1 January 2006, as per above

       39,027    4,614    4,060,547     4,104,188     5,537     4,109,725  

Profit/(Loss) for the year

       —      —      454,009     454,009     (604 )   453,405  

Final dividend relating to 2005

    26    —      —      (105,372 )   (105,372 )   —       (105,372 )

Interim dividend relating to 2006

    26    —      —      (31,221 )   (31,221 )   —       (31,221 )
                                     
      —      —      317,416     317,416     (604 )   316,812  
                                     

Balance at 31 December 2006

       39,027    4,614    4,377,963     4,421,604     4,933     4,426,537  
                                     

 

The accompanying notes are an integral part of the consolidated financial statements.

 

110

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

Consolidated cash flow statement

 

       Note      Year ended 31 December  
        2006     2005  

Cash flows from operating activities:

        

- continuing operations

    27    752,062     609,717  

- Hong Kong Profits Tax paid

       (40,260 )   (79,186 )

- overseas tax paid

       (13,268 )   (16,181 )
               

Cash flows from operating activities - net

       698,534     514,350  
               

Cash flows (used in)/from investing activities:

        

- purchase of property, plant and equipment

       (306,736 )   (23,659 )

- purchase of intangible assets

       (97 )   —    

- repayment of loan from an associate

    31    —       5,070  

- repayment of loan from an independent third party

       —       2,062  

- interest received

       88,747     39,833  

- proceeds from disposal of property, plant and equipment

       76     108  
               

Cash flows (used in)/from investing activities - net

       (218,010 )   23,414  
               

Cash flows used in financing activities:

        

- dividends paid

    26    (136,593 )   (136,593 )
               

Cash flows used in financing activities - net

       (136,593 )   (136,593 )
               

Net increase in cash and cash equivalents

       343,931     401,171  

Cash and cash equivalents at beginning of the year

       1,635,526     1,234,355  
               

Cash and cash equivalents at end of the year, representing bank balances and cash

    14    1,979,457     1,635,526  
               

 

The accompanying notes are an integral part of the consolidated financial statements.

 

111

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

1. General information

 

     Asia Satellite Telecommunications Holdings Limited (the Company) and its subsidiaries (together the Group) is engaged in the provision of transponder capacity.

 

     The Company is a limited liability company incorporated in Bermuda as an exempted company under the Companies Act 1981 of Bermuda (as amended). The address of its registered office is Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda.

 

     The Company’s shares are listed on the New York Stock Exchange (in the form of American Depositary Shares) and The Stock Exchange of Hong Kong Limited (hereafter collectively referred to as the “Stock Exchange”).

 

     These consolidated financial statements are presented in thousands of units of Hong Kong dollars (HK$’000), unless otherwise stated. These consolidated financial statements have been approved for issue by the Board of Directors on 5 March 2007 and signed on its behalf by Mr. JU Wei Min (Director) and Mr. Peter Jackson (Director).

 

2. Summary of significant accounting policies

 

     The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

 

  2.1 Basis of preparation

 

     The consolidated financial statements of the Group have been prepared in accordance with Hong Kong Financial Reporting Standards (HKFRSs) and have been prepared under the historical cost convention.

 

     The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.

 

     New standards and amendments to published standards

 

     The following new standards, amendments to standards and interpretations are mandatory for the financial year ended 31 December 2006:

 

  •  

Amendment to IAS/HKAS 19, “Actuarial gains and losses, group plans and disclosures”, effective for annual periods beginning on or after 1 January 2006. This amendment is not relevant for the Group;

 

  •  

Amendment to IAS/HKAS 39, Amendment to “The fair value option”, effective for annual periods beginning on or after 1 January 2006. This amendment is not relevant for the Group;

 

  •  

Amendment to IAS/HKAS 21, Amendment “Net investment in a foreign operation”, effective for annual periods beginning on or after 1 January 2006. This amendment has no impact on the Group;

 

  •  

Amendment to IAS/HKAS 39, Amendment “Cash flow hedge accounting of forecast intragroup transactions”, effective for annual periods beginning on or after 1 January 2006. This amendment is not relevant for the Group;

 

  •  

Amendment to IAS/HKAS 39 and IFRS/HKFRS 4, Amendment “Financial guarantee contracts”, effective for annual periods beginning on or after 1 January 2006. This amendment is not relevant for the Group;

 

  •  

IFRS/HKFRS 6, “Exploration for and evaluation of mineral resources”, effective for annual periods beginning on or after 1 January 2006. This standard is not relevant for the Group;

 

  •  

IFRIC/HK(IFRIC)-Int 4, “Determining whether an arrangement contains a lease”, effective for annual periods beginning on or after 1 January 2006. The Group has reviewed its contracts. Some of them are required to be accounted for as leases in accordance with IAS/HKAS 17, “Leases”. However, these leases are operating leases, and their reclassification has had no impact on the expense recognised in respect of them;

 

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PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

2. Summary of significant accounting policies (continued)

 

  •  

IFRIC/HK(IFRIC)-Int 5, “Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds”, effective for annual periods beginning on or after 1 January 2006. This interpretation is not relevant for the Group; and

 

  •  

IFRIC/HK(IFRIC)-Int 6, “Liabilities arising from participating in a specific market – waste electrical and electronic equipment”, effective for annual periods beginning on or after 1 December 2005. This interpretation is not relevant for the Group.

 

   The following new standards, amendments to standards and interpretations have been issued but are not effective for 2006 and have not been early adopted:

 

  •  

IFRIC/HK(IFRIC)-Int 7, “Applying the restatement approach under IFRS/HKFRS 29”, effective for annual periods beginning on or after 1 March 2006. Management does not expect this interpretation to be relevant for the Group;

 

  •  

IFRIC/HK(IFRIC)-Int 8, “Scope of IFRS/HKFRS 2”, effective for annual periods beginning on or after 1 May 2006. Management does not expect to be relevant for the Group;

 

  •  

IFRIC/HK(IFRIC)-Int 9, “Reassessment of embedded derivatives”, effective for annual periods beginning on or after 1 June 2006. Management does not expect the interpretation to be relevant for the Group;

 

  •  

IFRIC/HK(IFRIC)-Int 10, “Interim financial reporting and impairment”, effective for annual periods beginning on or after 1 November 2006. Management is currently assessing the impact of the interpretation on the Group’s operations.

 

  •  

IFRS/HKFRS 7, “Financial instruments: Disclosures”, effective for annual periods beginning on or after 1 January 2007. IAS/HKAS 1, “Amendments to capital disclosures”, effective for annual periods beginning on or after 1 January 2007. Management is currently assessing the impact of this standard on the Group’s operations;

 

  •  

IFRIC-Int 11-IFRS 2, “Group and treasury share transactions”, effective for annual periods beginning on or before 1 March 2007. Management does not expect this interpretation to be relevant for the Group;

 

  •  

IFRIC-Int 12, “Service concession arrangements”, effective for annual periods beginning on or before 1 January 2008. Management is currently assessing the impact of this interpretation on the Group’s operations; and

 

  •  

IFRS 8, “Operating segments”, effective for annual periods beginning on or before 1 January 2009. Management is currently assessing the impact of this standard on the Group’s operations.

 

  2.2 Consolidation

 

     The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up to 31 December.

 

  (a) Subsidiaries

 

     Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

 

     Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

 

    

The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured

 

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PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

2. Summary of significant accounting policies (continued)

 

 

initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

 

     Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

     In the Company’s balance sheet the investments in subsidiaries are stated at cost less provision for impairment losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

 

  (b) Associates

 

     Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20 per cent and 50 per cent of the voting rights. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

 

     The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

 

     Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

     In the Company’s balance sheet the investments in associated companies are stated at cost less provision for impairment losses. The results of associated companies are accounted for by the Company on the basis of dividends received and receivable.

 

  2.3 Segment reporting

 

     A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

 

  2.4 Foreign currency translation

 

  (a) Functional and presentation currency

 

     Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency.

 

  (b) Transactions and balances

 

     Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

 

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PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

2. Summary of significant accounting policies (continued)

 

     Translation differences on non-monetary items, such as equity instruments held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation difference on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity.

 

  (c) Group companies

 

     The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

  (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

 

  (ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

 

  (iii) all resulting exchange differences are recognised as a separate component of equity.

 

  2.5 Property, plant and equipment

 

   Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

 

     Buildings in the course of development for production, rental or administrative purposes or for purposes not yet determined, are carried at cost, less any identified impairment loss. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

 

     Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed in the income statement during the financial year in which they are incurred.

 

     Depreciation of property, plant and equipment is calculated using the straight-line method to allocate cost or revalued amounts to their residual values over their estimated useful lives, at the following rates per annum:

 

Satellites:

     

–       AsiaSat 2

    8%

–       AsiaSat 3S

    6.25%

–       AsiaSat 4

    6.67%

Buildings

    4%

Tracking facilities

    10%-20%

Furniture, fixtures and fittings

    20%-33%

Other equipment

    25%-33%

Motor vehicles

    25%

Plant and machinery

    20%

 

     The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

 

     An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

 

     Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

 

115

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

2. Summary of significant accounting policies (continued)

 

  2.6 Intangible assets – Licences

 

     The licences are shown at historical cost. One licence has a finite useful life and is carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the licence over its estimated useful life (112 months). The other licence does not have a finite useful life.

 

  2.7 Impairment of assets

 

     Assets that have an indefinite useful life are not subject to amortisation, are tested at least annually for impairment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

 

  2.8 Goodwill

 

     Goodwill represents the excess of the cost of an investment over the fair value of the Group’s share of the net identifiable assets of the acquired associates at the date of investment. Goodwill on investment of associates is included in interests in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 

     Goodwill is allocated to cash-generating units for the purpose of impairment testing.

 

  2.9 Inventories

 

     Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method and comprises all costs of purchase and other costs incurred in bringing the inventories to their present locations and conditions. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

 

  2.10 Trade and other receivables

 

     Trade and other receivables are recognised initially at fair value less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 180 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is recognised in the income statement within administrative expenses.

 

  2.11 Cash and cash equivalents

 

     Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

 

  2.12 Share capital

 

   Ordinary shares are classified as equity.

 

   Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

 

116

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

2. Summary of significant accounting policies (continued)

 

  2.13 Borrowings

 

   Borrowings are recognised initially at fair value, net of transaction costs incurred. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability, including fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

 

  2.14 Deferred income tax

 

   Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

 

   Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

 

   Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and jointly controlled entities, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

 

  2.15 Employee benefits

 

  (a) Pension obligations

 

   The Group participates in defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The pension plans are generally funded by payments from employees and by the relevant Group companies. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due and are reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

 

  (b) Share-based compensation

 

   The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period.

 

  (c) Profit-sharing and bonus plans

 

   The expected cost of profit sharing and bonus payments are recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

 

   Liabilities for profit sharing and bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.

 

117

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

2. Summary of significant accounting policies (continued)

 

  2.16 Provisions

 

   Provisions for environmental restoration, asset retirement obligations, restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

 

   Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

 

  2.17 Revenue recognition

 

   Revenue from transponder utilisation is recognised on a straight-line basis over the period of the agreements. The excess of revenue recognised on a straight-line basis over the amount received and receivable from customers in accordance with the contract terms is shown as unbilled receivable.

 

   Revenue from the sale of transponder capacity under transponder purchase agreements is recognised on a straight-line basis from the date of delivery of the transponder capacity until the end of the estimated useful life of the satellite.

 

   Deposits received in advance in connection with the provision of transponder capacity are deferred and included in other payables.

 

   Services under transponder utilisation agreements are generally billed quarterly in advance. Such amounts received in advance and amounts received from the sale of transponder capacity under transponder purchase agreements in excess of amounts recognised as revenue are recorded as deferred revenue. Deferred revenue which will be recognised in the following year is classified under current liabilities and amounts which will be recognised after one year are classified as non-current.

 

   Interest income is accrued on a time basis, by reference to the principal amounts outstanding and at the interest rate applicable.

 

  2.18 Operating leases (as the lessee)

 

   Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are expensed in the income statement on a straight-line basis over the period of the lease.

 

  2.19 Dividend distribution

 

   Dividend distribution to the Company’s equity holders is recognised as a liability in the financial statements in the period in which the dividends are approved by the Company’s equity holders.

 

3. Financial risk management

 

  3.1 Financial risk factors

 

   The Group’s activities expose it to a variety of financial risks: foreign exchange risk, credit risk and cash flow interest-rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

 

  (a) Foreign exchange risk

 

  

During the year, almost all of the Group’s revenues, premiums for satellite insurance coverage and substantially all capital expenditure were denominated in US dollars. The Group’s remaining expenses were primarily denominated in Hong Kong dollars. At 31 December 2006, almost all the Group’s transponder utilisation agreements, transponder purchase agreement, loan agreements, obligations to

 

118

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

3. Financial risk management (continued)

 

 

purchase telemetry, tracking and control equipment were denominated in US dollars. Hence, the Group does not have any significant currency exposure and does not need to hedge.

 

  (b) Credit risk

 

   The Group has no significant concentrations of credit risk. The Group maintains provision for impairment of receivables and for estimated losses that result from the inability of its customers to make the required payments. The Group bases its provision on the likelihood of recoverability of account receivables based on past experience and current collection trends that are expected to continue. The Group’s evaluation also includes the length of time the receivables are past due and the general business environment.

 

  (c) Cash flow interest-rate risk

 

   The Group has no significant interest-bearing assets or liabilities, however, the Group earns interest income from short term deposits which are affected by the changes in market interest rates.

 

4. Critical accounting estimates and judgments

 

     Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

  4.1 Critical accounting estimates and assumptions

 

     The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

  (a) Estimated impairment of goodwill

 

     The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.8. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates.

 

  (b) Income taxes

 

     The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

 

     The issue of Indian tax is covered under Contingencies in note 28 below.

 

  (c) Useful lives of in-orbit satellites

 

     The Group’s operations are capital intensive and it has significant investments in satellites. The carrying value of the Group’s in-orbit satellites (AsiaSat 2, AsiaSat 3S and AsiaSat 4) represented 42% of its total assets as of 31 December 2006 (2005: 52%). The Group estimates the useful lives of satellites in order to determine the amount of depreciation expense to be recorded during the reported period. The useful lives are estimated at the time satellites are put into orbit and are based on historical experience with other satellites as well as the anticipated technological evolution or other environmental changes. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these satellites may need to be shortened, resulting in the recognition of increased depreciation in a future period. Similarly, if the actual lives of satellites are longer than the Group has estimated, the Group would have a smaller depreciation expense. As a result, if the Group’s estimations of the useful lives of its satellites are not accurate or are required to be changed in the future, the Group’s net income in future periods would be affected.

 

119

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

4. Critical accounting estimates and judgments (continued)

 

  (d) Realisability of the carrying amounts of long-lived assets

 

     The Group is required to evaluate at each balance sheet date whether there is any indication that the carrying amounts of long-lived assets (primarily its satellites) may be impaired. If any such indication exists, the Group should estimate the recoverable amount of the long-lived assets. An impairment loss is recognised for the excess of the carrying amount of such long-lived assets over their recoverable amounts. The value in use is the discounted present value of the cash flows expected to arise from the continuing use of long-lived assets and cash arising from its disposal at the end of its useful life. The estimates of the cash flows are based on the terms and period of existing transponder utilisation agreements (“Existing Agreements”).

 

     Modifications to the terms of the Existing Agreements that result in shorter utilisation periods than previously agreed and/or those that result in the reduction in agreed rates will result in a lower recoverable amount (if the discount rate used is not changed); which may, in turn, result in a situation wherein the recoverable amounts are less than the carrying amounts (therefore, an impairment loss would need to be recognised).

 

  (e) Provision for impairment of receivables

 

     The issue is covered under credit risk in note 3.1 (b) above.

 

5. Sales and segment information

 

     Sales:

 

     The Group’s sales is analysed as follows:

 

     2006    2005

Income from provision of satellite transponder capacity

      

- recurring

    850,425    850,436

- non-recurring

    49,911    —  

Sales of satellite transponder capacity

    24,491    24,491

Other revenue

    5,075    4,778
         
   929,902    879,705
         

 

     The Group has only one business segment, namely the operation, maintenance and provision of satellite telecommunication systems for broadcasting and telecommunications. The Group’s primary reporting format for segment reporting purposes under HKAS 14 “Segment Reporting” is the geographical basis. For the purpose of classification, the country where the customer is incorporated is deemed to be the source of sales. However, the Group’s operating assets consist primarily of its satellites which are used, or are intended for use, for transmission to multiple geographical areas and therefore cannot be allocated between geographical segments. Accordingly, no geographical analysis of expenses, assets and liabilities has been presented.

 

     The following table provides an analysis of the Group’s sales by geographical markets:

 

     2006    2005

Hong Kong

    341,567    341,698

Greater China, including Taiwan

    194,831    202,730

United States of America

    79,813    78,205

United Kingdom

    53,211    49,401

Australia

    37,317    27,927

Others

    223,163    179,744
         
   929,902    879,705
         

 

120

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

6. Leasehold land and land use rights – Group

 

     The Group’s interests in leasehold land and land use rights represent prepaid operating lease payments and their net book value are analysed as follows:

 

     2006     2005  

In Hong Kong held on:

     

Leases of over 50 years

    —       —    

Leases of between 10 to 50 years

    23,616     24,199  
            
   23,616     24,199  
            
     2006     2005  

Opening

    24,199     24,782  

Amortisation of prepaid operating lease payment

    (583 )   (583 )
            

Closing

    23,616     24,199  
            

 

121

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

7. Property, Plant and Equipment – Group

 

    Satellites and tracking facilities     Furniture,
fixtures
and
fittings		     Office
equipment		     Motor
vehicles		     Plant and
equipment		     Total  
    In operation     Under
construction		     Buildings            

At 1 January 2005

                

Cost

   4,232,629     9,635     117,900     10,854     7,646     3,871     2,370     4,384,905  

Accumulated depreciation

   (1,467,509 )   —       (5,109 )   (8,699 )   (5,764 )   (1,715 )   (1,642 )   (1,490,438 )
                                               

Net book amount

   2,765,120     9,635     112,791     2,155     1,882     2,156     728     2,894,467  
                                               

Year ended 31 December 2005

                

Opening net book amount

   2,765,120     9,635     112,791     2,155     1,882     2,156     728     2,894,467  

Additions

   1,337     10,309     98     7,377     1,584     865     —       21,570  

Transfer

   19,539     (19,539 )   —       —       —       —       —       —    

Disposals (note 27)

   —       —       —       (7 )   (2 )   —       —       (9 )

Depreciation

   (286,032 )   —       (4,716 )   (2,178 )   (1,068 )   (907 )   (216 )   (295,117 )
                                               

Closing net book amount

   2,499,964     405     108,173     7,347     2,396     2,114     512     2,620,911  
                                               

At 31 December 2005

                

Cost

   4,253,504     405     117,998     11,142     8,928     4,137     2,371     4,398,485  

Accumulated depreciation

   (1,753,540 )   —       (9,825 )   (3,795 )   (6,532 )   (2,023 )   (1,859 )   (1,777,574 )
                                               

Net book amount

   2,499,964     405     108,173     7,347     2,396     2,114     512     2,620,911  
                                               

Year ended 31 December 2006

                

Opening net book amount

   2,499,964     405     108,173     7,347     2,396     2,114     512     2,620,911  

Additions

   6,332     297,537     81     1,747     728     1,111     4     307,540  

Transfer

   —       (538 )   538     —       —       —       —       —    

Disposals (note 27)

   —       —       —       (5 )   —       —       (1 )   (6 )

Depreciation

   (286,448 )   —       (4,743 )   (3,951 )   (1,196 )   (1,077 )   (183 )   (297,598 )
                                               

Closing net book amount

   2,219,848     297,404     104,049     5,138     1,928     2,148     332     2,630,847  
                                               

At 31 December 2006

                

Cost

   4,259,836     297,404     118,617     12,879     9,198     4,806     2,372     4,705,112  

Accumulated depreciation

   (2,039,988 )   —       (14,568 )   (7,741 )   (7,270 )   (2,658 )   (2,040 )   (2,074,265 )
                                               

Net book amount

   2,219,848     297,404     104,049     5,138     1,928     2,148     332     2,630,847  
                                               

 

   Depreciation expense of $297,598 (2005: $295,117) has been expensed in cost of services.

 

122

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

8. Intangible assets – Group

 

     Licences  

At 1 January 2005 and 31 December 2005

   

Cost

    1,500  

Accumulated amortisation and impairment

    (161 )
      

Net book amount

    1,339  
      

Year ended 31 December 2006

   

Opening net book amount

    1,339  

Additions (a)

    97  

Amortisation expense (b) (note 19)

    (160 )
      

Closing net book amount

    1,276  
      

At 31 December 2006

   

Cost

    1,597  

Accumulated amortisation and impairment

    (321 )
      

Net book amount

    1,276  
      

Notes:

 

(a) Additions refer to the Direct-to-Home (DTH) broadcasting licence fee at Macau which has an infinite useful life, as the Macau government granted a broadcasting right until the end of the DTH project and is carried at cost. The carrying value as at 31 December 2006 was $97 (2005: Nil).

 

(b) Amortisation expense of $160 (2005: $161) is included in the administrative expenses in the income statement.

 

9. Investments in subsidiaries

 

  Investments in subsidiaries

 

     Company
     2006    2005

Unlisted shares in subsidiaries, at cost

    429,054    429,054
         

 

   The cost of the unlisted shares is based on the book value of the underlying net assets of the subsidiaries attributable to the Group as at the date on which the Company became the ultimate holding company of the Group under the Group reorganisation in 1996.

 

123

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

9. Investments in subsidiaries (continued)

 

     The following is a list of the principal subsidiaries and a controlled partnership at 31 December 2006:

 

Name

  

Place of

incorporation and

kind of legal entity

  

Principal activities and
place of operation

  

Particulars of issued

share capital and debt

securities

   Interest held  

AsiaSat BVI Limited

  

British Virgin Islands, limited liability company

  

Investment holding in Hong Kong

  

3,000 ordinary shares of US$1 each

   *100 %

Asia Satellite Telecommunications Company Limited

  

Hong Kong, limited liability company

  

Provision of satellite transponder capacity worldwide

  

30,000 ordinary shares and 20,000 non-voting deferred shares of HK$10 each

   100 %

Hanbury International Limited

  

British Virgin Islands, limited liability company

  

Inactive in Hong Kong

  

1 ordinary share of HK$1 each

   100 %

SAT Limited

  

Republic of Mauritius, limited liability company

  

Inactive in Republic of Mauritius

  

100 ordinary shares of US$1 each

   *100 %

Skywave TV Company Limited (formerly known as Auspicious City Limited)

  

Hong Kong, limited liability company

  

Provision of DTH broadcasting services in Hong Kong and Mainland China

  

3,000,002 ordinary shares of HK$10 each

   80 %

Sornico Limited

  

Hong Kong, limited liability company

  

Inactive in Hong Kong

  

2 ordinary shares of HK$10 each

   100 %

The First Asian Satellite Leasing Limited Partnership (the “Partnership”)

  

Hong Kong, limited liability partnership

  

Inactive in Hong Kong

  

N/A

   1 %

Auspicious Colour Limited

  

Hong Kong, limited liability company

  

Inactive in Hong Kong

  

1 ordinary share of HK$1 each

   100 %
* Shares held directly by the Company.

 

     The Company continues to control the Partnership as it is a general partner and accordingly continues to consolidate it.

 

124

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

10. Interests in associates – Group

 

     2006     2005  

Beginning of the year

    14,294     13,397  

Share of associates’ losses

    (8,391 )   (3,872 )

Additions

    4,154     4,769  
            

End of the year

    10,057     14,294  
            

 

     Note:

 

     Interests in associates at 31 December 2006 include goodwill of $442 (2005: $442).

 

     The Group’s interest in its principal associates, all of which are unlisted, were as follows:

 

Name

   

Particulars of issued
shares held

    Country of
incorporation		    Assets    Liabilities    Revenues    Profit/(loss)     %
Interest
held
                                    %

2005

                    

Beijing Asia Sky Telecommunications Technology Company Limited

   

N/A

    China    42,011    25,945    2,721    (7,909 )   49

SpeedCast Holdings Limited

   

Ordinary shares of US$0.0001 each

    Cayman Islands    39,392    25,345    82,673    368     47

SpeedCast Limited
(Note (1))

   

Ordinary shares of HK$0.01 each

    Hong Kong    N/A    N/A    N/A    N/A     47
                             
         81,403    51,290    85,394    (7,541 )  
                             

2006

                    

Beijing Asia Sky Telecommunications Technology Company Limited

   

N/A

    China    25,829    26,406    9,235    (17,124 )   49

SpeedCast Holdings Limited

   

Ordinary shares of US$0.0001 each

    Cayman Islands    46,441    27,167    111,889    5,228     47

SpeedCast Limited
(Note (1))

   

Ordinary shares of HK$0.01 each

    Hong Kong    N/A    N/A    N/A    N/A     47
                             
         72,270    53,573    121,124    (11,896 )  
                             

Note:

(1) SpeedCast Limited is the wholly-owned subsidiary of SpeedCast Holdings Limited. Accordingly, assets, liabilities, revenues and profit/(loss) are not disclosed again.

 

     The Group has not recognised profit amounting to $2,473 (2005: $174) for SpeedCast Holdings Limited as the Group’s share of loss exceeds its interest in SpeedCast. The accumulated losses not recognised were $9,561 (2005: $12,034).

 

125

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

11. Amount paid to tax authority – Group

 

     At the balance sheet date, an amount of approximately $154,911 (2005: $93,666) had been paid to the Government of India. For details, please refer to note 28.

 

12. Trade and other receivables – Group

 

     2006     2005  

Trade receivables

    81,888     90,653  

Trade receivables from related parties (note 31)

    10,660     7,678  

Less: provision for impairment of receivables

    (22,462 )   (30,930 )
            

Trade receivables – net

    70,086     67,401  

Receivables from related parties (note 31)

    14,629     15,503  

Other receivables

    14,068     10,831  

Deposits and prepayments

    20,864     24,863  
            
   119,647     118,598  

Less non-current portion: loans to related parties

    —       —    
            

Current portion

    119,647     118,598  
            

 

   The Group does not normally provide credit terms to its trade customers. The Company usually bills its trade customers quarterly in advance in accordance with its agreements. The aged analysis of trade receivables is stated as follows:

 

     2006    2005

0 to 30 days

    29,329    27,768

31 to 60 days

    15,967    8,652

61 to 90 days

    15,717    14,315

91 to 180 days

    7,884    10,074

181 days or above

    1,189    6,592
         
   70,086    67,401
         

 

   There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers, internationally dispersed.

 

   As of 31 December 2006, trade receivables of $22,462 (2005: $30,930) were impaired and fully provided. The impaired receivables mainly relate to customers’ failure to make payment for more than six months. The ageing of these receivables is as follows:

 

     2006    2005

3 to 6 months

    9,830    1,682

Over 6 months

    12,632    29,248
         
   22,462    30,930
         

 

   Movements on the provision for impairment of trade receivables are as follows:

 

     2006     2005

At 1 January

    30,930     23,230

Provision for impairment of receivables

    —       7,700

Unused amounts reversed

    (8,468 )   —  
          

At 31 December

    22,462     30,930
          

 

   The creation and release of provision for impaired receivables have been included in administrative expenses in the income statement.

 

126

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

13. Inventories – Group

 

     2006    2005

Merchandise

    354    434
         

 

     The cost of inventories recognised as expense and included in cost of services amounted to HK$87 (2005: HK$500).

 

14. Cash and cash equivalents – Group

 

     2006    2005

Cash at bank and in hand

    4,506    13,173

Short-term bank deposits

    1,974,951    1,622,353
         
   1,979,457    1,635,526
         

 

     The effective interest rate on short-term bank deposits was 4.9% (2005: 3.1%); these deposits have an average maturity of 21 days (2005: 17 days).

 

     Cash includes the following for the purposes of the cash flow statement:

 

     2006    2005

Cash and cash equivalents

    1,979,457    1,635,526
         

 

15. Share capital

 

    

Number of
shares

   

Ordinary

shares

    Share
premium		    Total
     (thousands)               

At 31 December 2006 and 31 December 2005

   390,266    39,027    4,614    43,641
                   

 

     The total authorised number of ordinary shares is 550,000,000 shares (2005: 550,000,000 shares) with a par value of HK$0.10 per share (2005: HK$0.10 per share). All issued shares are fully paid.

 

     Share option schemes

 

     A share option scheme is adopted to provide incentives to employees and directors and to promote the long term financial success of the Company. The details of the scheme are as follows:

 

     (i) Share Option Scheme adopted on 3 June 1996

 

     In accordance with the Company’s share option scheme (the “1996 Scheme”) adopted pursuant to a resolution passed on 3 June 1996, the Board of Directors of the Company may at their discretion grant options to all permanent, full-time employees of the Company and its subsidiaries, to subscribe for shares in the Company. The primary purpose of the 1996 Scheme was to provide incentives to eligible employees.

 

     The total number of shares in respect of which options may be granted under the 1996 Scheme (including options already exercised) was not permitted to exceed 10 per cent of the issued share capital of the Company at any point in time. The maximum number of share options issued to any employee, based on the subscription price of the options, shall not exceed four times the annual basic salary (excluding bonuses and allowances) of that employee.

 

    

Options granted must be taken up within 28 days from the date of grant upon payment of HK$1 per each grant of share options. An option may be exercisable up to 50 per cent on or after the third anniversary of the date of grant, up to 75 per cent on or after the fourth anniversary and fully on or after the fifth anniversary but before the tenth anniversary of the date of offer unless the Board of Directors specifies

 

127

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

15. Share capital (continued)

 

 

other periods. The exercise price was determined by the Board of Directors and was based on the average closing price of the shares for the five trading days immediately preceding the date of grant.

 

     The 1996 Scheme was terminated on 25 January 2002 pursuant to a resolution passed on that date.

 

     (ii) Share Option Scheme adopted on 25 January 2002

 

     A share option scheme (the “2002 Scheme”) was adopted pursuant to a resolution passed on 25 January 2002 for the primary purpose of attracting and retaining the best personnel for the development of the Company’s businesses, and providing incentives to employees, Directors, consultants, agents, representatives and advisers, and promoting the long term financial success of the Company. The 2002 Scheme will expire on 24 January 2012.

 

     Under the 2002 Scheme, the Board of Directors of the Company may at their discretion grant options to the employees, including Directors, of the Company or any company that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Company, to subscribe for shares in the Company. Options granted to a Director, chief executive or substantial shareholder of the Company or any of their respective associates must be approved by the Independent Non-executive Directors of the Company (excluding any Independent Non-executive Director who is also the grantee).

 

     No options have been granted during 2003 and onwards. At 31 December 2002, the number of shares in respect of which options had been granted under the 2002 Scheme was 7,149,500 representing 1.83 per cent of the shares of the Company in issue at that date. Total consideration received in 2002 from employees for taking up the options granted amounted to HK$105.

 

     The total number of shares in respect of which options may be granted under the 2002 Scheme and any other schemes is not permitted to exceed 30 per cent of the issued share capital of the Company from time to time. In addition, the total number of shares in respect of which options may be granted under the 2002 Scheme and any other schemes must not, in aggregate, exceed 10 per cent of the issued share capital of the Company at the adoption date of the 2002 Scheme, being 39,026,550 shares, without prior approval from the Company’s shareholders.

 

     The number of shares in respect of which options may be granted to any individual in any one year is not permitted to exceed 1 per cent of the shares of the Company in issue, without prior approval from the Company’s shareholders. Options granted to a substantial shareholder, or an Independent Non-executive Director of the Company, or any of their respective associates under the 2002 Scheme and any other schemes in any one year in excess of 0.1 per cent of the Company’s issued share capital or with a value in excess of HK$5 million must be approved in advance by the Company’s shareholders.

 

     Options granted must be taken up within 28 days from the date of grant upon payment of HK$1 per each grant of share options. The exercise period of the share options granted under the 2002 Scheme shall be determined by the Board of Directors when such options are granted, provided that such period shall not end later than 10 years from the date of grant. The exercise price is determined by the Board of Directors and will not be less than the higher of the closing price of the Company’s shares on the date of grant, or the average closing price of the shares for the five trading days immediately preceding the date of grant, or the nominal value of a share of the Company.

 

     The financial impact of share options granted is not recorded in the Company’s or the Group’s balance sheet until such time as the options are exercised, and no charge is recognised in the income statement in respect of the value of options granted in the year. Upon the exercise of the share options, the resulting shares issued are recorded by the Company as additional share capital at the nominal value of the shares and the excess of the exercise price per share over the nominal value of the shares is recorded by the Company in the share premium account. Options which are lapsed or are cancelled prior to their exercise dates are deleted from the register of outstanding options.

 

128

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

15. Share capital (continued)

 

   Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

 

Option A:

     
     2006     2005  
    

Average
exercise

price in HK$
per share

    Options     Average
exercise
price in HK$
per share		    Options  

At 1 January

    17.48    1,634,000     17.48    1,691,500  

Granted

    —      —       —      —    

Forfeited

    —      —       —      —    

Exercised

    —      —       —      —    

Lapsed

    17.48    (1,634,000 )   17.48    (57,500 )
                  

At 31 December

    17.48    —       17.48    1,634,000  
                  

Option B:

        
     2006     2005  
     Average
exercise
price in HK$
per share		    Options     Average
exercise
price in HK$
per share		    Options  

At 1 January

    17.48    1,655,000     17.48    1,753,000  

Granted

    —      —       —      —    

Forfeited

    —      —       —      —    

Exercised

    —      —       —      —    

Lapsed

    17.48    (25,000 )   17.48    (98,000 )
                  

At 31 December

    17.48    1,630,000     17.48    1,655,000  
                  

Option C:

        
     2006     2005  
     Average
exercise
price in HK$
per share		    Options     Average
exercise
price in HK$
per share		    Options  

At 1 January

    14.35    3,311,500     14.35    3,481,500  

Granted

    —      —       —      —    

Forfeited

    —      —       —      —    

Exercised

    —      —       —      —    

Lapsed

    14.35    (100,000 )   14.35    (170,000 )
                  

At 31 December

    14.35    3,211,500     14.35    3,311,500  
                  

 

   Out of the 4,841,500 options outstanding (2005: 6,600,500 options), the number of exercisable options are as follows:

 

     2006    2005
     Average
exercise
price in HK$
per share		    Options    Average
exercise
price in HK$
per share		    Options

Option A

    17.48    —      17.48    1,634,000

Option B

    17.48    1,630,000    17.48    1,655,000

Option C

    14.35    3,211,500    14.35    1,655,750
               

Total

       4,841,500       4,944,750
               

 

129

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

15. Share capital (continued)

 

   Share options outstanding at the end of the year have the following expiry date and exercise prices:

 

     

Exercise price

in HK$ per share

    Share options

Expiry date

       2006    2005

25 November 2006

    17.48    —      1,634,000

30 September 2009

    17.48    1,630,000    1,655,000

3 February 2012

    14.35    3,211,500    3,311,500
            
      4,841,500    6,600,500
            

 

   Details of specific categories of options are as follows:

 

Option type

   

Date of grant

   

Vesting period

   

Exercise period

    Exercise
price
2002 Scheme                   HK$

A (note a)

    4 February 2002    —      4 February 2002 –
25 November 2006		    17.48

B (note a)

    4 February 2002    4 February 2002 –
30 September 2002		    1 October 2002 –
30 September 2009		    17.48

C (note b)

    4 February 2002    4 February 2002 –
3 February 2004		    4 February 2004 –
3 February 2012		    14.35
1996 Scheme                   HK$

D (note a)

    26 November 1996    26 November 1996 – 25 November 1999    26 November 1999 – 25 November 2006    17.48

E (note a)

    20 September 1999    20 September 1999 – 30 September 2002    1 October 2002 –
30 September 2009		    17.48
   Notes:

 

  a. Pursuant to a resolution passed in the special general meeting of the Company held on 25 January 2002, the 1996 Scheme was terminated and all existing options under that scheme were cancelled. New options were issued on 4 February 2002 under the 2002 Scheme with the same exercise price and exercise periods to replace the options granted under the 1996 Scheme.

 

     Option type A

 

     100% between 4 February 2002 and 25 November 2006

 

     The exercise periods of the following option types are divided into 3 tranches, as detailed below:

 

     Option type D

 

  1. Up to 50% between 26 November 1999 and 25 November 2006

 

  2. Up to 75% between 26 November 2000 and 25 November 2006

 

  3. Up to 100% between 26 November 2001 and 25 November 2006

 

     Option types B and E

 

  1. Up to 50% between 1 October 2002 and 30 September 2009

 

  2. Up to 75% between 1 October 2003 and 30 September 2009

 

  3. Up to 100% between 1 October 2004 and 30 September 2009

 

  b. Additional share options were issued on 4 February 2002 under the 2002 Scheme.

 

     The exercise period is divided into 3 tranches, as detailed below:

 

     Option type C

 

  1. Up to 25% between 4 February 2004 and 3 February 2012

 

  2. Up to 50% between 4 February 2005 and 3 February 2012

 

  3. Up to 100% between 4 February 2006 and 3 February 2012

 

130

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

16. Deferred revenue – Group

 

     2006     2005  

The maturity of deferred revenue is as follows:

     

Within one year

    153,101     151,982  

More than one year but not exceeding five years

    142,624     87,654  
            
   295,725     239,636  

Less: amount shown as current

    (153,101 )   (151,982 )
            
   142,624     87,654  
            

 

17. Deferred income tax

 

     Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset amounts are as follows:

 

     Group
     2006    2005

Deferred tax assets

    —      —  

Deferred tax liabilities:

      

- Deferred tax liabilities to be recovered after more than 12 months

    191,739    192,654
         
   191,739    192,654
         

 

     The gross movement on the deferred income tax account is as follows:

 

     Group  
     2006     2005  

Beginning of the year

    192,654     205,258  

Recognised in the income statement (note 22)

    (915 )   (12,604 )
            

End of the year

    191,739     192,654  
            

 

     The movement in deferred tax liabilities/(assets) during the year is as follows:

 

     Deferred tax liabilities/(assets):

 

     Group  
    

Accelerated

tax

depreciation

     Others     Total  

At 1 January 2005

    207,025     (1,767 )   205,258  

Recognised in the income statement

    (13,730 )   1,126     (12,604 )
                  

At 31 December 2005

    193,295     (641 )   192,654  

Recognised in the income statement

    (1,556 )   641     (915 )
                  

At 31 December 2006

    191,739     —       191,739  
                  

 

131

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

18. Other gains – net

 

     2006    2005

Interest income

    92,710    43,606

Gain on disposal of property, plant and equipment other than transponders

    70    99

Others

    13    6
         
   92,793    43,711
         

 

19. Expenses by nature

 

     Expenses included in cost of services and administrative expenses are analysed as follows:

 

     2006     2005

Auditors’ remuneration

    1,775     769

Bad debts written off

    11,997     2,987

(Write back)/provision for impairment of receivables made

    (8,468 )   7,700

Depreciation, amortisation and impairment expenses (notes 7 and 8)

    297,758     295,278

Employee benefit expense (note 20)

    87,555     65,092

Operating leases

     

- premises

    4,383     5,872

- leasehold land & land use rights

    583     583

Net exchange loss

    404     547
          

 

20. Employee benefit expense

 

     2006    2005

Salary and other benefits, including directors’ remuneration

    82,930    60,748

Pension costs – defined contribution plans

    4,625    4,344
         

Total staff costs

    87,555    65,092
         

Number of employees

    102    95

 

  (a) Pensions – defined contribution plans

 

     Forfeited contributions totaling $268 (2005: $292) were utilised during the year leaving $74 (2005: $43) available at the year-end to reduce future contributions.

 

     No contributions (2005: Nil) were payable to the fund at the year-end.

 

132

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

20. Employee benefit expense (continued)

 

  (b) Directors’ emoluments

 

     The remuneration of every Director for the year ended 31 December 2006 is set out below:

 

Name of Director

    Fees    Salary    Discretionary
bonuses		    Other
benefits(a)		    Employer’s
contribution
to pension
scheme		    Total

Romain BAUSCH (c)

    200    —      —      —      —      200

Robert BEDNAREK (c) & (e)

    125    —      —      —      —      125

Edward CHEN

    225    —      —      —      —      225

Cynthia DICKINS (c)

    100    —      —      —      —      100

DING Yu Cheng (d)

    100    —      —      —      —      100

R. Donald FULLERTON (f)

    83    —      —      —      —      83

JU Wei Min (d)

    100    —      —      —      —      100

KO Fai Wong (d)

    100    —      —      —      —      100

MI Zeng Xin (d)

    200    —      —      —      —      200

Mark RIGOLLE (c)

    100    —      —      —      —      100

Robert SZE

    250    —      —      —      —      250

James WATKINS (g)

    113    —      —      —      —      113

Peter JACKSON

    —      2,766    2,489    2,270    415    7,940

William WADE

    —      2,146    1,931    1,631    322    6,030
                             

Total

    1,696    4,912    4,420    3,901    737    15,666
                             

 

     The remuneration of every Director for the year ended 31 December 2005 is set out below:

 

Name of Director

    Fees    Salary    Discretionary
bonuses		    Other
benefits(a)		    Employer’s
contribution
to pension
scheme		    Total

Romain BAUSCH (c)

    200    —      —      —      —      200

Robert BEDNAREK (c) & (e)

    150    —      —      —      —      150

Edward CHEN

    225    —      —      —      —      225

Cynthia DICKINS (b) & (c)

    12    —      —      —      —      12

DING Yu Cheng (d)

    100    —      —      —      —      100

R. Donald FULLERTON (f)

    200    —      —      —      —      200

JU Wei Min (d)

    100    —      —      —      —      100

KO Fai Wong (d)

    100    —      —      —      —      100

MI Zeng Xin (d)

    200    —      —      —      —      200

Mark RIGOLLE (c)

    100    —      —      —      —      100

Robert SZE

    250    —      —      —      —      250

Peter JACKSON

    —      2,672    390    1,961    401    5,424

William WADE

    —      2,074    302    1,485    311    4,172
                             

Total

    1,637    4,746    692    3,446    712    11,233
                             

Notes:

 

  (a) Other benefits include accommodation, car, leave passage, insurance premium and club membership and are short term in nature.

 

  (b) Appointed on 17 November 2005.

 

  (c) Paid to SES and its subsidiary.

 

  (d) Paid to a subsidiary of CITIC.

 

  (e) Resigned on 31 October 2006.

 

  (f) Resigned on 30 May 2006.

 

  (g) Appointed on 30 June 2006.

 

133

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

20. Employee benefit expense (continued)

 

  (c) Five highest paid individuals

 

     The five individuals whose emoluments were the highest in the Group for the year include two (2005: two) directors whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining three (2005: three) individuals during the year are as follows:

 

     2006    2005

Basic salaries, housing allowances, share options, other allowances and benefits in kind

    9,189    8,450

Contributions to retirement benefits scheme

    726    701

Performance related incentive payments

    4,357    606
         
   14,272    9,757
         

 

     The emoluments fell within the following bands:

 

     Number of
individuals
         2006            2005    

Emolument bands

      

HK$2,500,001 – HK$3,000,000

    —      1

HK$3,000,001 – HK$3,500,000

    —      1

HK$3,500,001 – HK$4,000,000

    1    1

HK$4,000,001 – HK$4,500,000

    —      —  

HK$4,500,001 – HK$5,000,000

    1    —  

HK$5,000,001 – HK$5,500,000

    —      —  

HK$5,500,001 – HK$6,000,000

    1    —  
         
   3    3
         

 

21. Finance costs

 

     2006    2005

Interest expense:

      

- assets retirement obligation

    152    —  
         

 

22. Income tax expense

 

     A significant portion of the Group’s profit is treated as earned outside Hong Kong and is not subject to Hong Kong profits tax. Hong Kong profits tax has been provided at the rate of 17.5% (2005: 17.5%) on the estimated assessable profit for the year.

 

     Overseas tax, including the Foreign Enterprises Income Tax in the People’s Republic of China, is calculated at 5% to 20% of the gross revenue earned in certain of the overseas jurisdictions.

 

     Details of deferred taxation are set out in note 17.

 

     The Group currently has a tax case in dispute with the Indian tax authorities. Details of this are set out in note 28.

 

     2006     2005  

Current income tax

     

- Hong Kong profits tax

    38,856     45,056  

- Overseas taxation

    17,581     18,818  

Deferred income tax reversal (note 17)

    (915 )   (12,604 )
            
   55,522     51,270  
            

 

134

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

22. Income tax expense (continued)

 

   The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated companies as follows:

 

     2006     2005  

Profit before tax

    508,927     416,635  
            

Tax calculated at tax rate of 17.5% (2005: 17.5%)

    89,062     72,911  

Tax effect of income not subject to tax

    (96,999 )   (84,164 )

Tax effect of expenses not deductible for tax purposes

    45,440     43,027  

Tax effect of tax losses of associates not recognised

    438     678  

Effect of income tax rate differential between Hong Kong and overseas locations

    17,581     18,818  
            

Tax expense

    55,522     51,270  
            

 

   The effective tax rate of the Group was 10.9% (2005: 12.3%).

 

23. Net foreign exchange losses

 

   The exchange differences recognised in the income statement are included as follows:

 

       2006        2005  

Administrative expenses

    404    547
         

 

24. Profit attributable to equity holders of the Company

 

   The profit attributable to equity holders of the Company is dealt with in the financial statements of the Company to the extent of $137,225 (2005: $136,977).

 

25. Earnings per share

 

   Basic

 

   Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

 

     2006    2005

Profit attributable to equity holders of the Company

    454,009    366,184
         

Weighted average number of ordinary shares in issue (thousands)

    390,266    390,266
         

Basic earnings per share (HK$ per share)

    1.16    0.94
         

 

   Diluted

 

   Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has share options of dilutive potential ordinary shares. The calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

 

     2006    2005

Profit used to determine diluted earnings per share

    454,009    366,184
         

Weighted average number of ordinary shares in issue (thousands)

    390,266    390,266

Adjustments for – share options (thousands)

    —      26
         

Weighted average number of ordinary shares for diluted earnings per share (thousands)

    390,266    390,292
         

Diluted earnings per share (HK$ per share)

    1.16    0.94
         

 

135

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

26. Dividends

 

   The dividends paid during the years ended 2006 and 2005 were $136,593 (HK$0.35 per share) and $136,593 (HK$0.35 per share) respectively. A dividend in respect of 2006 of HK$0.27 per share, amounting to a total dividend of $105,372 is to be proposed at the Annual General Meeting on 18 May 2007. These financial statements do not reflect this dividend payable.

 

     2006    2005

Interim dividend paid of HK$0.08 (2005: HK$0.08) per ordinary share

    31,221    31,221

Proposed final dividend of HK$0.27 (2005: HK$0.27) per ordinary share

    105,372    105,372
         
   136,593    136,593
         

 

   Payment of Final Dividend

 

   Reference is made to the joint announcement issued by the Company and AsiaCo Acquisition Ltd. (formerly known as Modernday Limited) in relation to the privatisation of the Company by way of a scheme of arrangement under Section 99 of the Companies Act of Bermuda dated 13 February 2007.

 

   The Board would like to bring to the attention of the shareholders of the Company that the final dividend for the financial year ended 31 December 2006 is declared by the Board subject to the following:

 

  (i) the amount of the final dividend shall not affect the Share Offer Price if the Scheme becomes effective and binding on or before 10 May 2007;

 

  (ii) the amount of the final dividend will be deducted from the Share Offer Price if the Scheme becomes effective after 10 May 2007;

 

  (iii) if the Scheme becomes effective and binding on or before 10 May 2007, the final dividend shall not be paid; and

 

  (iv) if the Scheme does not become effective, the dividend will be paid to shareholders of the Company on the register of members of the Company at 4:30 p.m. on 10 May 2007.

 

136

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

27. Cash flows from operating activities – continuing operations

 

     2006     2005  

Profit for the year

    453,405     365,365  

Adjustments for:

     

– Tax (note 22)

    55,522     51,270  

– Bad debts written off

    11,997     2,987  

– (Write back)/provision for impairment of receivables made

    (8,468 )   7,700  

– Depreciation (note 7)

    297,598     295,117  

– Amortisation of prepaid operating lease payment (note 6)

    583     583  

– Amortisation of licence (note 8)

    161     161  

– Profit on sale of property, plant and equipment (see below)

    (70 )   (99 )

– Interest income (note 18)

    (92,710 )   (43,606 )

– Finance costs (note 21)

    152     —    

– Share of loss from associates (note 10)

    8,391     3,872  

Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation):

     

– Unbilled receivable

    3,516     704  

– Amount paid to tax authority

    (61,245 )   (26,643 )

– Inventories

    80     (18 )

– Trade and other receivables

    (5,316 )   779  

– Other payables and accrued expenses

    32,377     (1,204 )

– Deferred revenue

    56,089     (47,251 )
            

Cash flows from operating activities – continuing operations

    752,062     609,717  
            

In the cash flow statement, proceeds from sale of property, plant and equipment comprise:

     
     2006     2005  

Net book amount (note 7)

    6     9  

Profit on sale of property, plant and equipment

    70     99  
            

Proceeds from sale of property, plant and equipment

    76     108  
            

 

28. Contingencies

 

     Under Indian tax regulations, the Group may be subject to Indian income tax on revenues received by the Group in respect of income from provision of satellite transponder capacity to the Group’s customers for purposes of those customers carrying on business in India or earning income from any source in India.

 

     The Indian tax authorities have assessed the Group for income tax as follows:

 

Assessment year

    Amount HK$
(approximate)		    Amount INR1
(approximate)

1997-98

    20 million    115 million

1998-99

    23 million    141 million

1999-00

    22 million    127 million

2000-01

    14 million    84 million

2001-02

    29 million    171 million

2002-03

    38 million    210 million

2003-04

    50 million    316 million

2004-05

    58 million    330 million
         

Total

    254 million    1,494 million
         
 
  1 Indian Rupee

 

     The Group has filed appeals for each of the assessment years 1997-98 to 2004-05.

 

137

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

28. Contingencies (continued)

 

     No assessment has yet been made for the 2005-06 or 2006-07 assessment years.

 

     The Income Tax Appellate Tribunal (the “Tribunal”) in an earlier appeal filed against the original assessment for the assessment year 1997-98 held that the Group is liable for Indian income tax under certain circumstances. The Group does not believe that it is liable for the Indian income tax as held by the Tribunal and has filed an appeal against the Tribunal’s decision. The tax authorities have also filed an appeal against the Tribunal’s decision. Both the appeals have been admitted by the High Court.

 

     In order to obtain a stay of recovery proceedings, the Group has made payments as follows and has recorded these payments as an asset on the assumption that the amounts are recoverable:

 

Assessment year

    Amount HK$
(approximate)		    Amount INR1
(approximate)

1997-98

    13 million    78 million

1998-99

    14 million    88 million

1999-00

    11 million    62 million

2000-01

    9 million    50 million

2001-02

    20 million    119 million

2002-03

    27 million    148 million

2003-04

    39 million    226 million

2004-05

    22 million    125 million
         

Total

    155 million    896 million
         
 
  1 Indian Rupee

 

     In addition, based on the general principles set forth by the Tribunal, the amount of income taxable in India depends on the payments made by the Group’s customers to the Group for the purpose of those customers carrying on business in India or earning income from any source in India. As such information is proprietary in nature and has not been provided by the Group’s customers, the Group cannot reasonably estimate the taxable income and therefore also cannot estimate the amount of income tax to which the Group may be assessed. Furthermore, as stated above, the Group has filed an appeal against the Tribunal’s decision. The appeal has been admitted by the High Court and is pending before the Court. Accordingly, no provision has been recognised for Indian income tax in the Group’s financial statements.

 

29. Major non-cash transactions

 

     There was no major non-cash transaction during 2005 and 2006.

 

30. Commitments – Group

 

     Capital commitments

 

     Capital expenditure at the balance sheet date but not yet incurred is as follows:

 

     2006    2005

AsiaSat 5

      

Contracted but not provided for

    810,048    —  

Authorised but not contracted for

    296,548    —  

Other investment projects

      

Authorised but not contracted for

    —      10,140

Other assets

      

Contracted but not provided for

    111    5,750
         
   1,106,707    15,890
         

 

138

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

30. Commitments – Group (continued)

 

     Operating lease commitments – where the Group is the lessee

 

     The Group leases certain of its office and residential premises under non-cancellable operating leases. Leases are negotiated for an average term of two to four years. The lease expenditure expensed in the income statement during the year is disclosed in note 19.

 

     The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

 

     2006    2005

Not later than 1 year

    4,068    4,376

Later than 1 year and not later than 5 years

    745    4,773

Later than 5 years

    —      —  
         
   4,813    9,149
         

 

     Operating lease commitments – where the Group is the lessor

 

     The Group leases its office premises under non-cancellable operating leases. The lease is negotiable for four years. The lease income recognised in the income statement during the year was $552 (2005: $552).

 

     The Group had contracted with the customer for the following future minimum lease payments:

 

     2006    2005

Within one year

    552    552

One to two years

    184    552

Two to three years

    —      184

Three to four years

    —      —  
         
   736    1,288
         

 

31. Related-party transactions

 

   The Group is controlled by Bowenvale Limited (incorporated in British Virgin Islands), which owns approximately 68.9 per cent of the Company’s shares. The remaining approximately 31.1 per cent of the shares are widely held. The ultimate parents of the Group are CITIC Group (incorporated in China) and SES S.A. (incorporated in Luxembourg).

 

   The following transactions were carried out with related parties:

 

   (i) Income from provision of satellite transponder capacity

 

   The Group has entered into agreements for the provision of transponder capacity to a subsidiary of CITIC, CITIC Guoan Information Industry Company Limited. CITIC is a substantial shareholder of the Company throughout the year.

 

   During the year, the Group recognised income from provision of satellite transponder capacity from its associate, SpeedCast.

 

     2006    2005

CITIC Guoan Information Industry Company Limited

    1,424    2,461

SpeedCast Limited (an associate)

    46,264    32,202
         
   47,688    34,663
         

 

139

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

31. Related-party transactions (continued)

 

   (ii) Agency fee

 

   In addition, the Group has entered into an agreement with CITIC Technology Company Limited, a subsidiary of CITIC, for collecting money from China customers on behalf of the Group.

 

     2006    2005

CITIC Technology Company Limited

    564    723
         

 

   (iii) Key management compensation

 

     2006    2005

Salaries and other short-term employee benefits

    38,455    25,942
         

 

   The Group made payments to SES and its subsidiary and a subsidiary of CITIC for certain Non-executive Directors representing SES and CITIC.

 

     2006    2005

SES and its subsidiary

    525    462

A subsidiary of CITIC

    500    500
         
   1,025    962
         

 

   (iv) Income from provision of uplink services and certain equipments

 

   The Group has entered into an agreement for the provision of uplink services and certain equipments for Ku-Band monitoring capacity to a subsidiary of SES, SES AMERICOM, Inc.

 

   The Group has also provided temporary uplink services to its associate, SpeedCast.

 

     2006    2005

SES AMERICOM, Inc.

    239    —  

SpeedCast Limited (an associate)

    5    —  
         
   244    —  
         

 

     (v) Interest income on loan receivable from an associate

 

     2006    2005

SpeedCast Limited (an associate)

    —      176
         

 

     (vi) Year-end balances arising from these transactions

 

     2006    2005

Trade receivables from related parties (note 12):

      

CITIC Guoan Information Industry Company Limited

    —      39

SpeedCast Limited (an associate)

    10,660    7,639
         
   10,660    7,678
         

Receivables from related parties (note 12):

      

CITIC Technology Company Limited

    14,629    15,503
         

Payables to related parties:

      

CITIC Technology Company Limited

    479    455
         

Deferred revenue to related parties:

      

SES AMERICOM, Inc.

    22    —  
         

 

140

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

Notes to the consolidated financial statements

 

31. Related-party transactions (continued)

 

     The trade receivables from related parties are payable in accordance with the agreements. The receivables from and payables to related parties have no fixed terms of payment. The receivables and payables are unsecured in nature and bear no interest.

 

     (vii) Loan receivable from an associate

 

     2006    2005  

Loan receivable from SpeedCast Limited:

      

Beginning of the year

    —      5,070  

Loans advanced during the year

    —      —    

Loan repayments received

    —      (5,070 )
           

End of the year (note 12)

    —      —    
           

 

     The amount was secured, bearing interest at 6% per annum and was fully repaid as at 31 December 2005.

 

     The above transactions were entered into on commercial terms determined and agreed by the Group and the relevant parties.

 

32. Event after the balance sheet date

 

     On 13 February 2007, the Board has reviewed and agreed to put forward a share proposal to privatise the Company by way of a scheme of arrangement under Section 99 of the Companies Act, and an option proposal to purchase the outstanding share options in the Company. A possible mandatory general offer (MGO) obligation under the Takeovers Code may also be triggered as a result of completion of a transaction between SES and GECC. An independent board committee has been appointed to advise independent shareholders and optionholders in respect of the Proposals and the Possible MGO. Details of the aforementioned are contained in the announcement of the Company on 13 February 2007 and in the Scheme Document.

 

141

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

     Supplementary Information for ADS Holders

 

     The Group’s financial statements are prepared in accordance with HKFRS, which differ in certain significant respects from US GAAP. The significant differences relating principally to the following items and the adjustments considered necessary to restate profit for the year (net income) and shareholders’ funds (shareholders’ equity) in accordance with US GAAP are shown in the tables set out below.

 

     The following table summarises the effect on profit (net income) of differences between HKFRS and US GAAP for the year:

 

     Year ended 31 December  
     2006     2006     2005  
    

US$’000

(note 1)

              

Profit for the year (net income) as reported under
HKFRS

      58,206       454,009       366,184  

US GAAP adjustments:

       

Amortisation of interest and borrowing costs (a)

      (1,035 )     (8,072 )     (8,072 )

Stock compensation using the fair value method (c)

      (1,116 )     (8,707 )     —    

Tax effect on reconciling items (d)

      91       706       706  
                        

Profit for the year (net income) under US GAAP

      56,146       437,936       358,818  
                        

Basic earnings per share under US GAAP

    US$ 0.14     HK$ 1.12     HK$ 0.92  

Diluted earnings per share under US GAAP

    US$ 0.14     HK$ 1.12     HK$ 0.92  

Basic earnings per American Depositary Share (“ADS”) under US GAAP (note 2)

    US$ 1.44     HK$ 11.22     HK$ 9.19  

Diluted earnings per American Depositary Share (“ADS”) under US GAAP (note 2)

    US$ 1.44     HK$ 11.22     HK$ 9.19  

Shares used in computation of basic earnings per share (in thousands)

      390,266       390,266       390,266  

Shares used in computation of diluted earnings per share (in thousands)

      390,266       390,266       390,292  

 

     The following table summarises the effect on shareholders’ equity of the differences between HKFRS and US GAAP:

 

     As at 31 December  
     2006     2006     2005  
    

US$’000

(note 1)

              

Shareholders’ equity as reported under HKFRS

    566,872     4,421,604     4,104,188  

US GAAP adjustments:

       

Capitalisation of interest and borrowing costs (a)

    15,767     122,980     122,980  

Amortisation of interest and borrowing costs (a)

    (11,370 )   (88,689 )   (80,617 )

Amortisation of goodwill (b)

    1,452     11,325     11,325  

Impairment loss of goodwill (b)

    (1,424 )   (11,104 )   (11,104 )

Stock compensation using the fair value method (c)

    (1,116 )   (8,707 )   —    

Tax effect of reconciling items (d)

    (914 )   (7,125 )   (7,831 )
                  

Shareholders’ equity under US GAAP

    569,267     4,440,284     4,138,941  
                  

 

   (a) Capitalisation of interest and borrowing costs

 

   Under HKFRS, interest on bank loans and related costs of obtaining the loans (including costs incurred in connection with loan facilities) taken out to finance construction of satellites is capitalised during the period of construction. Under US GAAP, the interest cost incurred during the period of construction that could have been avoided if the construction of satellites had not been made, is capitalised. The interest capitalised is computed by applying an average borrowing rate of outstanding debt to the total amount of qualifying assets under construction, not to exceed total interest costs incurred.

 

   In addition, under US GAAP, certain related borrowing costs payable to lenders are excluded from the amounts capitalised.

 

142

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

Supplementary Information for ADR Holders

 

   (b) Amortisation and impairment loss of goodwill

 

   Under HKFRS, HKFRS 3 requires all business combinations for which the agreement date is on or after 1 January 2005 to be accounted for using the purchase method. Goodwill acquired in a business combination will no longer be amortised but will be subject to impairment tests at least annually in accordance with HKAS 36. Upon the adoption of HKFRS 3, the net carrying amount of goodwill carried on the balance sheet is frozen and will be tested for impairment. Goodwill previously taken directly to reserves will no longer be subject to impairment testing and will not be recognised in the income statement when all or part of the business to which the goodwill relates is disposed of. Accordingly, goodwill previously taken directly to reserves will not impact the income statement in the future upon the adoption of HKAS 36.

 

   Under US GAAP, effective from 1 January 2002, goodwill is: (i) no longer amortised, (ii) assigned to a reporting unit and (iii) tested for impairment at least annually. Prior to 1 January 2002, goodwill was amortised over its estimated useful life, not to exceed 40 years under US GAAP.

 

   (c) Stock compensation

 

   Under HKFRS, it is not required to apply HKFRS 2 to share options granted on or before 7 November 2002 and vesting before 1 January 2005 (the effective date of HKFRS 2). The Company has chosen not to apply HKFRS 2 to share options issued prior to 1 January 2005.

 

   Under US GAAP, effective January 1, 2006 the Company adopted SFAS 123R using the modified prospective approach and accordingly prior periods have not been restated to reflect the impact of SFAS 123R. Under SFAS 123R, stock-based awards granted prior to its adoption will be expensed over the remaining portion of their vesting period, taking into account the estimated forfeiture of options. The fair value options granted was estimated using the Black-Scholes option-pricing model.

 

   Compensation expense resulting from the fair value method may not be representative of compensation expense to be incurred in the year concerned.

 

   (d) The amounts included in the reconciliation show the income tax effects of the differences between HKFRS and US GAAP as described above.

 

   Notes:

 

  1. The translations of Hong Kong dollar amounts into United States dollars are for convenience only and have been made at a rate of HK$7.8 to US$1, the approximate rate of exchange at 31 December 2006. Such translations should not be construed as representations that the Hong Kong dollar amounts could be converted into United States dollars at that or any other rate.

 

  2. One ADS is equivalent to 10 ordinary shares.

 

143

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

3    SHARE CAPITAL

 

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

 

Authorised:

   

550,000,000 AsiaSat Shares

    HK$ 55,000,000
Issued and fully paid:   

390,265,500 AsiaSat Shares

      HK$39,026,550

 

Each of the AsiaSat Shares in issue ranks pari passu in all respects, including dividends, voting and capital.

 

No AsiaSat Shares have been issued since 31 December 2006, being the end of the last financial year of the Company.

 

Other than the AsiaSat Shares in issue, ADSs and Options, the Company has no other outstanding equity securities (including equity related convertible securities or warrants, options, derivatives or subscription rights in respect of any equity share capital, including non-transferable options).

 

The book value per AsiaSat Share as at 31 December 2006 amounted to approximately HK$11.33 per AsiaSat Share.

 

4    RATIO OF EARNINGS TO FIXED CHARGES

 

The Company has no fixed charges.

 

5    INDEBTEDNESS STATEMENT

 

As at the close of business on 31 December 2006, the Group had no outstanding borrowings.

 

Contingencies

 

Under Indian tax regulations, the Group may be subject to Indian income tax on revenues received by the Group in respect of income from the provision of satellite transponder capacity to the Group’s customers for the purposes of those customers carrying on business in India or earning income from any source in India.

 

The Indian tax authorities have assessed the Group for income tax as follows:

 

Assessment year

    Amount HK$
(approximate)		    Amount INR1
(approximate)

1997-98

    20 million    115 million

1998-99

    23 million    141 million

1999-00

    22 million    127 million

2000-01

    14 million    84 million

2001-02

    29 million    171 million

2002-03

    38 million    210 million

2003-04

    50 million    316 million

2004-05

    58 million    330 million
         

Total

    254 million    1,494 million
         
1 Indian Rupee

 

The Group has filed appeals for each of the assessment years 1997-1998 to 2004-2005.

 

144

PART X – FINANCIAL INFORMATION RELATING TO THE GROUP

 

No assessment has yet been made for the 2005-2006 or 2006-2007 assessment years.

 

The Tribunal in an earlier appeal filed against the original assessment for the assessment year 1997-1998 held that the Group is liable for Indian income tax under certain circumstances. The Group does not believe that it is liable for the Indian income tax as held by the Tribunal and has filed an appeal against the Tribunal’s decision. The tax authorities have also filed an appeal against the Tribunal’s decision. Both the appeals have been admitted by the High Court.

 

In order to obtain a stay of recovery proceedings, the Group has made payments as follows and has recorded these payments as an asset on the assumption that the amounts are recoverable:

 

Assessment year

    Amount HK$
(approximate)		    Amount INR1
(approximate)

1997-98

    13 million    78 million

1998-99

    14 million    88 million

1999-00

    11 million    62 million

2000-01

    9 million    50 million

2001-02

    20 million    119 million

2002-03

    27 million    148 million

2003-04

    39 million    226 million

2004-05

    22 million    125 million
         

Total

    155 million    896 million
         
1 Indian Rupee

 

In addition, based on the general principles set forth by the Tribunal, the amount of income taxable in India depends on the payments made by the Group’s customers to the Group for the purpose of those customers carrying on business in India or earning income from any source in India. As such information is proprietary in nature and has not been provided by the Group’s customers, the Group cannot reasonably estimate the taxable income and therefore also cannot estimate the amount of income tax to which the Group may be assessed. Furthermore, as stated above, the Group has filed an appeal against the Tribunal’s decision. The appeal has been admitted by the High Court and is pending before the Court. Accordingly, no provision has been recognised for Indian income tax in the Group’s financial statements.

 

Save as aforesaid or otherwise mentioned in this Scheme Document and apart from intra-group liabilities and normal trade payables, the Group had no other material contingent liabilities or outstanding mortgages, charges, guarantees, loan capital issued and outstanding or agreed to be issued, bank loans and overdrafts or other similar indebtedness as at the close of business on 31 December 2006.

 

6    MATERIAL CHANGES

 

The Directors are not aware of any material change in the financial or trading position or outlook of the Company since 31 December 2006, the date to which the latest audited consolidated financial statements of the Company were made up.

 

145

PART XI – GENERAL INFORMATION

 

1 RESPONSIBILITY STATEMENTS

 

The information in this Scheme Document relating to the Group has been supplied by the Directors. The issue of this Scheme Document has been approved by the Directors, who jointly and severally accept full responsibility for the accuracy of the information contained in this Scheme Document (in relation to information relating to the Group only), and with the exception of any opinion of the Independent Board Committee of the Company relating to the recommendation of the Proposals and the recommendation itself, both as contained in the letter from the Independent Board Committee set out in Part V of this Scheme Document, and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this Scheme Document have been arrived at after due and careful consideration and there are no other facts not contained in this Scheme Document the omission of which would make any of the statements in this Scheme Document misleading.

 

The members of the Independent Board Committee jointly and severally accept full responsibility for the accuracy of the information contained in “Part V – Letter from the Independent Board Committee”, any opinion of the Independent Board Committee relating to the recommendation of the Proposals and the recommendation itself, and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the opinions expressed in this Scheme Document have been arrived at after due and careful consideration and there are no other facts not contained in this Scheme Document the omission of which would make any of the statements in this Scheme Document misleading.

 

The information in this Scheme Document relating to the Offeror, including that relating to CITIC Group and GE Equity, has been supplied by the Offeror Directors. The issue of this Scheme Document has been approved by the Offeror Directors, who jointly and severally accept full responsibility for the accuracy of the information contained in this Scheme Document (other than that relating to the Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the opinions expressed in this Scheme Document have been arrived at after due and careful consideration and there are no other facts (other than those relating to the Group) not contained in this Scheme Document the omission of which would make any of the statements in this Scheme Document misleading.

 

2 MARKET PRICES

 

   AsiaSat Shares are traded on the Stock Exchange.

 

  (a) The table below shows the respective closing prices of AsiaSat Shares on the Stock Exchange: (i) on the last Trading Day of each of the six calendar months during the period commencing six months immediately preceding the date of the Announcement; (ii) on the last Trading Date prior to the date of the Announcement; and (iii) on the Latest Practicable Date.

 

Date

   

Closing price per

AsiaSat Share

     HK$

31 August 2006

    13.30

30 September 2006

    13.00

31 October 2006

    13.50

30 November 2006

    14.32

29 December 2006

    13.98

31 January 2007

    14.00

Pre-Suspension Date

    14.00

Suspension Date

    14.10

28 February 2007

    17.70

Latest Practicable Date

    17.54

 

  (b) The highest and lowest closing prices of AsiaSat Shares recorded on the Stock Exchange, during the period from 13 August 2006 (being the date six months prior to the date of the Announcement) to the Latest Practicable Date, were HK$18.04 on 26 February 2007 and HK$12.52 on 16 August 2006, 17 August 2006 and 18 August 2006, respectively.

 

146

PART XI – GENERAL INFORMATION

 

3 DISCLOSURE OF INTERESTS

 

For the purpose of this paragraph: (i) the “Offer Period” means the period from 13 February 2007 (being the date on which the Company first announced the possibility of an offer by the Offeror which might lead to a privatisation of the Company) to the Effective Date, both dates inclusive; (ii) the “Disclosure Period” means the period beginning from the date which is six months prior to the commencement of the Offer Period and ending with the Latest Practicable Date, both dates inclusive; and (iii) “interested” and “interests” have the same meanings as given to them in the appropriate part of the SFO.

 

  (a) Interests and dealings in AsiaSat Shares

 

  (i) Save as described in this paragraph, as at the Latest Practicable Date, the Offeror, CITIC Group, GEC, Able Star and GE Equity had no interest in AsiaSat Shares. Able Star has a 50 per cent voting interest and 50.5 per cent economic interest in Bowenvale, and Bowenvale owns approximately 68.9 per cent of the AsiaSat Shares currently in issue.

 

  (ii) As at the Latest Practicable Date, the following persons acting in concert with the Offeror, CITIC Group and GEC had the following interests in AsiaSat Shares:

 

AsiaSat Shareholder

   

Number of AsiaSat

Shares held

   

Approximate

percentage of total
issued share capital
of the Company

Bowenvale Limited1

    268,905,000    68.9
 
  ¹ CITIC Group has no direct interest in AsiaSat Shares, but its wholly owned subsidiary Able Star has a 50 per cent. voting interest and 50.5 per cent. economic interest in Bowenvale, and Bowenvale owns approximately 68.9 per cent. of the AsiaSat Shares currently in issue.

 

AsiaSat has outstanding 1,630,000 B Options and 3,202,500 C Options as at the Latest Practicable Date. Each Option, on exercise, will entitle the Optionholder to be allotted one AsiaSat Share. As at the Latest Practicable Date, parties acting in concert with the Offeror, CITIC Group and GEC held in aggregate 300,000 C Options. To the extent that any of the 300,000 Options held by parties acting in concert with the Offeror, CITIC Group and GEC are exercised and converted into AsiaSat Shares prior to the Scheme Record Time, such AsiaSat Shares will form part of the Scheme Shares, but may not be voted at the Court Meeting. The table below sets out details of the Options as at the Latest Practicable Date:

 

Optionholders

    Number of Options
   B Options    C Options

Bowenvale Directors

      

Mr. Mi Zeng Xin (also a director of the Offeror)

    —      100,000

Mr. Ju Wei Min (also a director of the Offeror)

    —      50,000

Mr. Ding Yu Cheng

    —      50,000

Mr. Romain Bausch

    —      100,000

Other employees of the Company, and directors of the Company (other than those named above)

    1,630,000    2,902,500
         

Total

    1,630,000    3,202,500
         

 

Save as disclosed above, there were no outstanding options, warrants, derivatives or other securities issued by AsiaSat that carried a right to subscribe for or which were convertible into AsiaSat Shares and save for Mr. Peter E. Jackson and Mr. William Wade, the executive Directors, who are interested in 163,500 and 5,000 AsiaSat Shares, respectively, no other director or Executive Officer of AsiaSat had any interest in AsiaSat Shares, as at the Latest Practicable Date. Upon the Scheme becoming effective, the Company will be owned as to approximately 31.1 per cent by the Offeror and as to approximately 68.9 per cent by Bowenvale.

 

       During the Disclosure Period, no dealings for value in AsiaSat Shares have taken place by the Directors.

 

       During the Disclosure Period, no dealings for value in AsiaSat Shares have taken place by persons who are deemed to be acting in concert with the Offeror, CITIC Group, GEC, Able Star and GE Equity.

 

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  (iii) Other than the C Options held by each of Mr. Romain Bausch, Mr. Ding Yu Cheng, Mr. Mi Zeng Xin and Mr. Ju Wei Min, none of the Offeror Directors nor any of the directors of CITIC Group, GEC, Able Star and GE Equity had any interest in any AsiaSat Shares or convertible securities, warranties, options or derivatives in respect of the AsiaSat Shares as at the Latest Practicable Date and none of them dealt for value in any AsiaSat Shares or convertible securities, warranties, options or derivatives in respect of AsiaSat Shares during the Disclosure Period.

 

  (iv) None of the Offeror, CITIC Group, GEC, Able Star and GE Equity or any persons acting in concert with any one of them owned or controlled any AsiaSat Shares as at the Latest Practicable Date and none of the Offeror or any persons acting in concert with any one of them dealt for value in any AsiaSat Shares during the Disclosure Period.

 

  (v) As at the Latest Practicable Date, no subsidiary of the Company, pension fund of the Company or of any subsidiary of the Company or adviser to the Company as specified in class (2) of the definition of “associate” under the Takeovers Code (but excluding exempt principle traders) owned or controlled any AsiaSat Shares or convertible securities, warranties, options or derivatives in respect of the AsiaSat Shares or dealt for value in any AsiaSat Shares during the period beginning from the commencement date of the Offer Period and ending with the Latest Practicable Date.

 

  (vi) As at the Latest Practicable Date, no person who had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror, CITIC Group, GEC, Able Star and GE Equity or any person acting in concert with any one of them (or with any person who is an associate of the Company by virtue of classes (1) to (4) of the definition of “associate” under the Takeovers Code)) owned or controlled any AsiaSat Shares or dealt for value in any AsiaSat Shares during the period beginning from the commencement date of the Offer Period and ending with the Latest Practicable Date.

 

  (vii) As at the Latest Practicable Date, no person who had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company (or with any person acting in concert with the Company) owned or controlled any AsiaSat Shares or dealt for value in any AsiaSat Shares during the Disclosure Period.

 

  (viii) No arrangements of the kind referred to in the third paragraph of Note 8 to Rule 22 of the Takeovers Code exist between the Offeror or any person acting in concert with the Offeror, CITIC Group, GEC, Able Star and GE Equity and any other person.

 

  (b) Interests and dealings in the Offeror’s shares

 

  (i) As at the Latest Practicable Date the entire issued share capital of the Offeror comprises two ordinary shares of US$1.00 each. Each of Able Star and GE Equity hold one share of US$1.00 each in the Offeror.

 

  (ii) None of the Directors, the Executive Officers or the Company had any interest in the Offeror’s shares as at the Latest Practicable Date and none of the Directors, the Executive Officers or the Company dealt for value in any such shares during the Disclosure Period.

 

  (c) Other interests

 

  (i) No benefit is or will be paid to any Director or Executive Officer as compensation for loss of office or otherwise in connection with the Scheme.

 

  (ii) No agreement, arrangement or understanding exists:

 

  (a) between any of the Offeror, CITIC Group, GEC, Able Star, GE Equity or parties acting in concert with any one of them and any of the Directors, recent Directors, Executive Officers, shareholders or recent shareholders of AsiaSat; or

 

  (b) between any Director, Executive Officer and any other person,

 

     having any connection with or dependence upon or which is conditional upon the outcome of the Scheme or otherwise in connection with the Scheme.

 

  (iii) No material contract has been entered into by the Offeror in which any Director or Executive Officer has a material personal interest.

 

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PART XI – GENERAL INFORMATION

 

 

  (iv) Save for the service contract of Mr. Peter E. Jackson with Asia Satellite Telecommunications Company Limited, a wholly owned subsidiary of the Company, entered into on 5 June 1996, which continues unless or until terminated by either party, none of the Directors or Executive Officers has a service contract with any member of the Group or associated companies of the Company in force which has been entered into or amended within six months before the date of the Announcement, which are continuous contracts with a notice period of 12 months or more, or which are fixed term contracts with more than 12 months to run irrespective of the notice period.

 

       The current remuneration of Mr. Peter E. Jackson comprises a fixed remuneration of HK$4,363,200 per annum, and a variable remuneration determined according to the following:

 

  (a) if the annual target for a relevant financial year is achieved, 50 per cent of annual basic salary will be paid; and

 

  (b) if achieved above the annual target for a relevant financial year, up to 100 per cent of annual basic salary will be paid.

 

For the financial year ended 31 December 2006, the bonus amount paid to Mr. Peter E. Jackson was HK$2,364,930.

 

  (v) As at the Latest Practicable Date, no irrevocable undertakings have been provided by any party to the Offeror or its concert parties in respect of the Proposals, although Mr. Peter E. Jackson and Mr. William Wade have indicated that they will vote in favour of the resolutions to approve the Proposals at the Meetings in respect of their entire beneficial holdings of AsiaSat Shares.

 

4 MATERIAL CONTRACTS

 

Save for the undertaking for costs dated 13 February 2007 entered into between AsiaSat and the Offeror, neither the Company nor any of its subsidiaries had within the two years prior to the commencement of the Offer Period entered into any contracts which are or may be material, other than in the ordinary course of business carried on or intended to be carried on by the Company or other members of the Group.

 

5 LITIGATION

 

Save as disclosed below, as at the Latest Practicable Date, neither the Company nor any of its subsidiaries 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 of its subsidiaries.

 

There is a litigation action between the Group and the Indian tax authorities over the Company’s liability under Indian tax regulation. The Indian tax authorities have made a claim against the Company on the basis that the Company should be liable to Indian income tax on revenues received in respect of income from the provision of satellite transponder capacity to the Company’s customers for the purposes of those customers carrying on business in India or earning income from any source in India.

 

The Indian tax authorities have assessed the income tax for the Company at approximately HK$58 million for the assessment year 2004-2005 alone and at an accumulated sum of approximately HK$254 million since the assessment year 1997-1998 to the date of this disclosure. No assessment has yet been made for the assessment years 2005-2006 or 2006-2007 assessment years.

 

The Company has filed appeals for each of the assessment years from 1997-1998 to 2004-2005. In an earlier appeal filed against the original assessment for the assessment year 1997-1998, the Income Tax Appellate Tribunal (the “Tribunal”) had ruled that the Company is liable for Indian income tax under certain circumstances. The Company, however, has opposed this decision of the Tribunal and has filed an appeal against the Tribunal’s decision.

 

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6 MISCELLANEOUS

 

  (a) The names and addresses of the Directors appointed by CITIC Group and SES are as follows:

 

Name of Director

   

Address

Mr. Mi Zeng Xin1    W43C Long Cheng Villas, Chang Ping District, Beijing 102208, PRC
Mr. Ju Wei Min1    6/F Capital Mansion, No. 6 Xin Yuan Nan Lu, Beijing 100004, PRC
Mr. Ding Yu Cheng1    Wanshoulu Jia 15 Hao, 1 Qu 2 Haolou, HaidianDistrict, Beijing 100036, PRC
Mr. Ko Fai Wong1    14A, No. 27, Braemar Hill Road, Hong Kong
Mr. Romain Bausch2    49 rue Gaaschtbierg, L-8230 Mamer, Luxembourg
Ms. Cynthia Dickins2    48B, Block 1, 80 Robinson Road, Mid Levels, Hong Kong
Mr. Mark Rigolle2    11 rue Principale, L-6165 Ernster, Grand-Duche de Luxembourg
  1 Appointed by CITIC Group
  2 Appointed by SES

 

  (b) The Directors are Mr. Peter E. Jackson and Mr. William Wade as Executive Directors, Mr. Mi Zeng Xin, Mr. Romain Bausch, Ms. Cynthia Dickins, Mr. Ding Yu Cheng, Mr. Mark Rigolle, Mr. Ju Wei Min and Mr. Ko Fai Wong as Non-executive Directors, and Professor Chen Kwan Yiu Edward, Mr. Sze Tsai To Robert and Mr. James Watkins as Independent Non-executive Directors. The Offeror Directors are Mr. Mi Zeng Xin, Mr. Ronald J. Herman, Jr., Mr. Ju Wei Min, Mr. Ko Fai Wong, Ms. Nancy Ku and Mr. Mark Chen.

 

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PART XI – GENERAL INFORMATION

 

  (c) The names of the directors and the names of the executive officers of CITIC Group and their principal titles are set out below:

 

Name

   

Present Principal Titles

Kong Dan    Chairman
Chang Zhenming    Vice Chairman and President
Wang Chuan    Vice Chairman
Jing Shuping    Executive Director
Larry C. K. Yung    Executive Director
Mi ZengXin    Executive Director and VP
Dou Jianzhong    Executive Director and VP
Li Shilin    Executive Director and VP
Wen Jinping    Executive Director
Wang Jiong    Executive Director and VP
Zhao Jingwen    Executive Director and VP
Chen Xiaoxian    Executive Director and VP
Ju Wei Min    Director and CFO
Luo Ning    Director and Assistant President
Wang Dongming    Director and Assistant President
Sun Yalei    Director and Assistant President
Zhang Jijing    Director and Assistant President
Wang Jianzhi    Director
Sun Xiaowen    Director
Sun Xinguo    Director
Ren Qinxin    Director
Li Kang    Director
Qiu Yiyong    Director
Hong Bo    Director
Xuan Erniu    Director
Xu Yudi    Director
Guo Zhirong    Director
Guo Ketong    Director
Pu Jian    Director

 

  (d) The names of the directors of GEC and their principal titles are set out below:

 

Name

   

Present Principal Titles

Claudio X. Gonzalez    Director
Robert W. Lane    Director
Andrea Jung    Director
Susan Hockfield    Director
Roger S. Penske    Director
Allan G. Lafley    Director
James I. Cash, Jr    Director
Sam Nunn    Director
Ann M. Fudge    Director
Sir William M. Castell    Director
Douglas A. Warner III    Director
Ralph S. Larsen    Director
Robert J. Swieringa    Director
Rochelle B. Lazarus    Director
Jeffrey R. Immelt    Director, Chairman of the Board and Chief Executive Officer
Robert C. Wright    Director, Vice Chairman of the Board and Executive Officer

 

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PART XI – GENERAL INFORMATION

 

  (e) The registered office of the Company is at Canon’s Court, 22 Victoria Street, Hamilton, HM12 Bermuda. The registered address of the Offeror is at the offices of Offshore Incorporations Limited, PO Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.

 

  (f) The address of CITIC Group is Capital Mansion, 6 Xinyuannanlu, Chaoyang District, Beijing 100004, PRC. The address of GEC is 3135 Easton Turnpike, Fairfield, Connecticut 06828, United States.

 

 

(g)

The principal place of business of the Independent Financial Adviser is at 18th Floor, One Pacific Place, 88 Queensway, Hong Kong. The principal place of business of Morgan Stanley is at 30th Floor, Tower III, Exchange Square, 8 Connaught Road, Central, Hong Kong.

 

  (h) In addition to the Offeror’s obligations under Rule 2.3 of the Takeovers Code, the direct expenses incurred by AsiaSat in connection with the Scheme of up to US$3 million (excluding translation fees, and printing and publication costs, which will be reimbursed by the Offeror to the Company in full and do not count towards the cap of US$3 million) will be borne by the Offeror in the event the Proposals do not become unconditional for any reason.

 

  (i) The English text of this Scheme Document, the Forms of Proxy, the Letter to Optionholders and Option Form of Acceptance shall prevail over the Chinese text of such documents.

 

  (j) All announcements in relation to the Proposals will be published as paid announcements in at least one leading English language newspaper and one leading Chinese language newspaper, being in each case a newspaper which is published daily and circulating generally in Hong Kong.

 

7 EXPERTS

 

The following are the qualifications of each of the experts who have been named in this Scheme Document or given their opinion or advice which are contained in this Scheme Document:

 

Name

   

Qualification

CLSA Equity Capital Markets Limited    A corporation licensed under the SFO to conduct Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities.
Morgan Stanley Dean Witter Asia Limited    A company incorporated in Hong Kong, which is licensed for Type 1 (dealing in securities), Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 7 (providing automated services) regulated activities under the SFO, and financial adviser to the Offeror.

 

8 CONSENTS

 

Each of CLSA and Morgan Stanley has given and has not withdrawn its written consent to the issue of this Scheme Document with the inclusion in it of its opinions and/or letters and/or the references to its name and/or opinions and/or letters, in the form and context in which they respectively appear.

 

9 DOCUMENTS AVAILABLE FOR INSPECTION

 

Copies of the following documents will be available for inspection at the principal office of the Company at 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong during normal business hours (9:00 a.m. to 5:00 p.m. Hong Kong time) on any weekday (public holidays excepted) and on the website of the Company (http://www.asiasat.com) until the Effective Date or the date on which the Scheme lapses or is withdrawn, whichever is the earliest:

 

  (a) the memorandum of association and Bye-laws of the Company;

 

  (b) the memorandum and articles of association of the Offeror;

 

  (c) the audited consolidated financial statements of the Group for each of the years ended 31 December 2004, 31 December 2005 and 31 December 2006;

 

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PART XI – GENERAL INFORMATION

 

  (d) the material contracts referred to in paragraph 4 of this Part XI;

 

  (e) the service contract referred to in paragraph 3(c)(iv) of this Part XI;

 

  (f) the letter of recommendation of the Independent Board Committee, the text of which is set out in Part V of this Scheme Document;

 

  (g) the letter from the Independent Financial Adviser, the text of which is set out in Part VI of this Scheme Document; and

 

  (h) the letters of consent referred to in paragraph 8 of this Part XI.

 

Copies of the documents listed above are also available for inspection on the website of the SFC at http://www.sfc.hk.

 

No provision has been made by the Offeror, CITIC Group or GEC for or in connection with the Proposals to grant Scheme Shareholders access to their respective corporate files or to obtain counsel or to provide appraisal services to Scheme Shareholders at the expense of any of such entities.

 

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IN THE SUPREME COURT OF BERMUDA

CIVIL JURISDICTION

(Commercial List)

 

2007: No. 57

 

IN THE MATTER OF

 

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

 

and

 

IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

 

 

SCHEME OF ARRANGEMENT

 

between

 

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

 

and

 

THE HOLDERS OF THE SCHEME SHARES (as defined herein)

 

 

PRELIMINARY

 

 

(A) In this Scheme, unless inconsistent with the subject or context, the following expressions shall bear the meanings respectively set opposite them:

 

“ADSs”

American depositary shares, each representing ownership of ten AsiaSat Shares;

 

“AsiaSat Share(s)”

ordinary share(s) of HK$0.10 each in the issued share capital of the Company;

 

“Bowenvale”

Bowenvale Limited, a company incorporated in the British Virgin Islands with limited liability and which is currently jointly indirectly owned by CITIC Group and SES and which, on completion of the Transfer, will be jointly and indirectly owned by CITIC Group and GECC;

 

“CITIC Group”

CITIC Group, an enterprise established and existing under the laws of the PRC;

 

“Companies Act”

The Companies Act 1981 (as amended) of Bermuda;

 

“Company”

Asia Satellite Telecommunications Holdings Limited, an exempted company incorporated in Bermuda with limited liability;

 

“Court”

the Supreme Court of Bermuda;

 

“Court Meeting”

a meeting of the Scheme Shareholders to be convened at the direction of the Court at which the Scheme (with or without modification) will be voted upon, or any adjournment thereof;

 

“Effective Date”

the date on which this Scheme becomes effective in accordance with paragraph 6 of this Scheme;

 

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PART XII – SCHEME OF ARRANGEMENT

 

“GEC”

General Electric Company, a company incorporated and listed in the United States with a diverse global shareholder base and, to its knowledge, no one shareholder or group owning more than five per cent of the company’s issued shares;

 

“Hong Kong”

The Hong Kong Special Administrative Region of the People’s Republic of China;

 

“Latest Practicable Date”

16 March 2007, being the latest practicable date prior to the printing of the Scheme Document in which the Scheme is contained for the purposes of ascertaining certain information for inclusion therein;

 

“Morgan Stanley”

Morgan Stanley Dean Witter Asia Limited, the financial adviser to the Offeror;

 

“New AsiaSat Shares”

the new ordinary shares of HK$0.10 each in the capital of the Company to be created in accordance with paragraph 1(b) of this Scheme;

 

“Offeror”

AsiaCo Acquisition Ltd. (formerly known as Modernday Limited), a company incorporated in the British Virgin Islands with limited liability;

 

“Proposal”

the proposal for the privatisation of the Company by the Offeror by way of the Scheme;

 

“Register”

the branch and principal registers of members of the Company;

 

“Scheme”

this scheme of arrangement between the Company and the Scheme Shareholders in its present form or with or subject to any modification or addition thereto or condition which the Court may approve or impose;

 

“Scheme Document”

the explanatory document dated 19 March 2007 sent by the Company to the Shareholders in connection with this Scheme;

 

“Scheme Record Time”

4:30 p.m. (Hong Kong time) on Friday, 4 May 2007, or such other date as shall have been announced to the Shareholders, being the record date for determining entitlements of the Shareholders under the Scheme and being the same date as the hearing of the petition to sanction the Scheme;

 

“Scheme Shareholders”

Shareholders (other than Bowenvale) whose names appear on the Register at the Scheme Record Time;

 

“Scheme Shares”

all the AsiaSat Shares (including without limitation all Shares represented by the ADSs) held by the Scheme Shareholders as at the Scheme Record Time;

 

“SES”

SES S.A. (previously SES Global S.A., before a name change in December 2006), a company incorporated in the Grand Duchy of Luxembourg and whose shares are listed on the Luxembourg Stock Exchange and Euronext;

 

“Shareholder(s)”

registered holder(s) of AsiaSat Shares;

 

“Special General Meeting”

a special general meeting of the Company to be held immediately after the Court Meeting to consider and if thought fit, approve, inter alia, the Scheme, or any adjournment thereof;

 

“Stock Exchange”

The Stock Exchange of Hong Kong Limited;

 

“Takeovers Code”

The Hong Kong Code on Takeovers and Mergers;

 

“Transfer”

the transfer of the whole of the legal and beneficial ownership of shares in Bowenvale held indirectly by SES to companies which are wholly indirectly owned by GECC; and

 

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PART XII – SCHEME OF ARRANGEMENT

 

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong.

 

(B) The Company was incorporated on 10 May 1996 in Bermuda under the Companies Act with an authorised share capital of HK$99,999 divided into 999,990 AsiaSat Shares and as at the Latest Practicable Date had an authorised share capital of HK$55,000,000 divided into 550,000,000 AsiaSat Shares of which 390,265,500 AsiaSat Shares had been issued and were fully paid or credited as fully paid.

 

(C) On the Latest Practicable Date the Offeror held no AsiaSat Shares, but Bowenvale and, parties acting or deemed to be acting in concert with the Offeror, CITIC Group or GEC were beneficially interested in 268,905,000 AsiaSat Shares.

 

(D) In consideration of and exchange for the cancellation and extinguishment of each of the Scheme Shares, on the Effective Date all holders of Scheme Shares shall be entitled to receive HK$18.30 in cash for every Scheme Share held.

 

(E) The Offeror and Bowenvale have each agreed to appear by Counsel at the hearing of the petition to sanction this Scheme and to undertake to the Court to be bound thereby and to execute and do and procure to be executed and done all such documents, acts and things as may be necessary or desirable to be executed and done by them for the purpose of giving effect to this Scheme.

 

(F) The primary purpose of this Scheme is that on the Effective Date, all the Scheme Shares should be cancelled and extinguished, the New AsiaSat Shares be created and issued to the Offeror, and that the Company will become wholly-owned by the Offeror as to approximately 31.1 per cent and Bowenvale as to approximately 68.9 per cent

 

 

THE SCHEME

 

 

PART I

 

CANCELLATION AND EXTINGUISHMENT OF THE SCHEME SHARES AND THE CREATION, ALLOTMENT AND ISSUE OF THE NEW ASIASAT SHARES

 

1. On the Effective Date:

 

  (a) the issued share capital of the Company shall be reduced by cancelling and extinguishing the Scheme Shares;

 

  (b) subject to and forthwith upon the reduction of capital referred to in paragraph (a) above taking effect, the entire issued share capital of the Company shall be increased to its former amount by the creation of such number of New AsiaSat Shares as is equal to the number of the Scheme Shares; and

 

  (c) the Company shall apply the amount of the credit arising in its books of account as a result of the reduction of its share capital referred to in paragraph (a) above in paying up in full at par all the New AsiaSat Shares as created under paragraph (b) above which shall be allotted and issued to the Offeror fully paid.

 

PART II

 

CONSIDERATION FOR CANCELLATION AND

EXTINGUISHMENT OF THE SCHEME SHARES

 

2. In consideration of the cancellation and extinguishment of the Scheme Shares pursuant to paragraph 1(a) of this Scheme, the Offeror will pay or cause to be paid to each holder of Scheme Shares as appearing in the Register at the Scheme Record Time, HK$18.30 for every Scheme Share held.

 

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PART XII – SCHEME OF ARRANGEMENT

 

PART III

 

GENERAL

 

3.       (a) Not later than ten days after the Effective Date, the Offeror shall send or cause to be sent to the Scheme Shareholders (as appearing in the Register at the Scheme Record Time) cheques in respect of the sums payable to such Scheme Shareholders pursuant to paragraph 2 of this Scheme.

 

 

(b)

Unless indicated otherwise in writing to the branch share registrar of the Company in Hong Kong, (being Computershare Hong Kong Investor Services Limited of Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong) all such cheques shall be sent through the post (by airmail where appropriate) in pre-paid envelopes addressed to such Scheme Shareholders as follows:

 

  (i) in the case of each sole Scheme Shareholder, the registered address of such Scheme Shareholder as appearing in the Register as at the Scheme Record Time; or

 

  (ii) in the case of joint Scheme Shareholders, the registered address as appearing in the Register as at the Scheme Record Time of the joint Scheme Shareholder whose name then stands first in the Register in respect of the relevant joint holding.

 

  (c) All cheques shall be made payable to the order of the person or persons to whom, in accordance with the provisions of paragraph 3(b) of this Scheme, the envelope containing the same is addressed and the encashment of any such cheque shall be a good discharge to the Company and the Offeror for the moneys expressed to be represented thereby.

 

  (d) All cheques shall be posted at the risk of the addressee and other persons entitled thereto and the Company, the Offeror and any other persons involved in the Scheme shall not be liable for any loss or delay in transmission.

 

  (e) On or after the day being six calendar months after the posting of the cheques pursuant to paragraph 3(b) of this Scheme, the Offeror shall have the right to cancel or countermand payment of any such cheque which has not then been cashed or has been returned uncashed, and shall place all monies represented thereby in a deposit account in the Company’s name with a licensed bank in Hong Kong selected by the Company. The Company shall hold such monies on trust for those entitled under the terms of this Scheme until the expiry of six years from the Effective Date and shall prior to such date make payments thereout of the sums payable pursuant to paragraph 2 of this Scheme to persons who satisfy the Company that they are respectively entitled thereto, provided that the cheques referred to in paragraph 3(b) of this Scheme of which they are payees have not been cashed. No payments made by the Company hereunder shall include any interest accrued on the sums to which the respective persons are entitled pursuant to paragraph 2 of this Scheme. The Company shall exercise its absolute discretion in determining whether or not it is satisfied that any person is so entitled, and a certificate of the Company to the effect that any particular person is so entitled or not so entitled, as the case may be, shall be conclusive and binding upon all persons claiming an interest in the relevant monies.

 

  (f) On the expiry of six years from the Effective Date, the Offeror (or any successor company thereto) shall be released from any further obligation to make any payments under this Scheme and the Company shall thereafter transfer to the Offeror the balance (if any) of the sums standing to the credit of the deposit account referred to in paragraph 3(e) of this Scheme including accrued interest (if any) subject, if applicable, to the deduction of interest tax or any withholding or other tax or any other deduction required by law and subject also to the deduction of any expenses.

 

  (g) The preceding sub-paragraphs of this paragraph 3 shall take effect subject to any prohibition or condition imposed by law.

 

4. As from the Effective Date, all certificates representing the Scheme Shares shall cease to have effect as documents or evidence of title and every holder thereof shall be bound, on the request of the Company, to deliver up to the Company the certificate(s) in respect of its, his or her entire holding of Scheme Shares.

 

5. All mandates or other instructions to the Company in force at 9.00 a.m. in Hong Kong on the Effective Date in relation to the Scheme Shares (including elections for the payment of dividends by way of scrip) shall cease to be valid as effective mandates or instructions.

 

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PART XII – SCHEME OF ARRANGEMENT

 

6. This Scheme shall become effective as soon as a copy of the Order of the Court sanctioning this Scheme under section 99 of the Companies Act shall have been delivered to the Registrar of Companies in Bermuda for registration.

 

7. The Company and the Offeror may jointly consent for and on behalf of all concerned to any modification(s) of or addition(s) to this Scheme or to any condition(s) which the Court may see fit to approve or impose.

 

8. Unless this Scheme shall have become effective on or before 30 June 2007, (or such later date, if any, as the Offeror and the Company may agree and the Court may allow), this Scheme shall lapse. Any extension to such later date shall not be beyond 31 October 2007.

 

9. The direct expenses incurred by the Company in connection with the Scheme of up to US$3 million (in addition to translation fees, and printing and publication expenses, which will be reimbursed by the Offeror to the Company in full and do not count towards the cap of US$3 million) will be borne by the Offeror in the event the Proposals do not become unconditional for any reason.

 

Dated 19 March 2007

 

158

PART XIII – NOTICE OF COURT MEETING

 

IN THE SUPREME COURT OF BERMUDA, CIVIL JURISDICTION

 

2007: No. 57

 

IN THE MATTER OF

 

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

 

and

 

IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

 

 

NOTICE OF COURT MEETING

 

 

NOTICE IS HEREBY GIVEN that, by an Order dated 15 March 2007 (the “Order”) made in the above matter, the Court has directed Asia Satellite Telecommunications Holdings Limited (the “Company”) to convene a meeting (the “Court Meeting”) of the Scheme Shareholders (as defined in the Scheme mentioned below), for the purpose of considering and, if thought fit, approving (with or without modification(s)) a scheme of arrangement (the “Scheme”) proposed to be made between the Company and the Scheme Shareholders and that such Court Meeting will be held at 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong on Tuesday, 24 April 2007 at 10.00 a.m. (Hong Kong time) at which place and time all the Scheme Shareholders are requested to attend.

 

A copy of the Scheme and a copy of the explanatory statement required to be furnished pursuant to section 100 of the Companies Act of Bermuda are incorporated in the printed document despatched to the Scheme Shareholders (the “Document”) of which this Notice forms part. A copy of the Document can also be obtained by Scheme Shareholders from the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong SAR during normal working hours on any day (other than a Saturday, Sunday or public holiday in Hong Kong or Bermuda (as the case may be)) prior to 31 October 2007.

 

The Scheme Shareholders may vote in person at the Court Meeting or they may appoint another person, whether a member of the Company or not, as their proxy to attend and vote in their stead. A pink Form of Proxy for use at the Court Meeting is enclosed with the Document.

 

In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s), and for this purpose seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint shareholding.

 

It is requested that forms appointing proxies be lodged with Computershare Hong Kong Investor Services Limited, the branch share registrar and transfer office of the Company in Hong Kong, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong SAR, not later than 48 hours before the time appointed for the Court Meeting, but if the forms are not so lodged they may be handed to the chairman of the Court Meeting at the Court Meeting. Completion and return of the Form of Proxy shall not preclude a Scheme Shareholder from attending and voting in person at the Court Meeting and, in such event, the Form of Proxy shall be deemed to have been revoked.

 

By the Order, the Court has appointed Mr. Peter E. Jackson, a director of the Company, or failing him, Mr. William Wade, also a director of the Company, or failing him, any other person who is a director of the Company as at the date of the Order to act as the chairman of the Court Meeting and the Court has also directed the chairman of the Court Meeting to report the result thereof to the Court.

 

The Scheme will be subject to the subsequent approval of the Court as set out in the explanatory statement contained in the Document.

 

Dated this 19 day of March 2007

 

Conyers Dill & Pearman

Clarendon House

2 Church Street

Hamilton HM11

Bermuda

 

Attorneys for the Company

 

159

PART XIV – NOTICE OF SPECIAL GENERAL MEETING

 

ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

(incorporated in Bermuda with limited liability)

(Stock Code: 1135)

 

NOTICE IS HEREBY GIVEN that a Special General Meeting of Asia Satellite Telecommunications Holdings Limited (the “Company”) will be held at 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong on Tuesday, 24 April 2007 at 10:30 a.m. (or so soon thereafter as the meeting of the Scheme Shareholders (as defined in the Scheme set out in the printed document despatched to the Scheme Shareholders of which this Notice forms part), convened pursuant to the direction of the Supreme Court of Bermuda for the same place and day shall have been concluded or concluded after any adjournment of such meeting) for the purpose of considering and, if thought fit, passing the following resolution which will be proposed as a Special Resolution, with or without modification:

 

SPECIAL RESOLUTION

 

“THAT

 

(a) the scheme of arrangement dated 19 March 2007 (the “Scheme”) between the Company and the holders of the Scheme Shares (as defined in the Scheme) in the form of the print thereof which has been produced to this meeting and for the purposes of identification signed by the chairman of this meeting, subject to any modifications, additions or conditions as may be approved or imposed by the Supreme Court of Bermuda, be and is hereby approved;

 

(b) for the purpose of giving effect to the Scheme, on the Effective Date (as defined in the Scheme):

 

  (i) the authorised and issued share capital of the Company be reduced by cancelling and extinguishing the Scheme Shares;

 

  (ii) subject to and forthwith upon the said reduction of share capital taking effect, the issued share capital of the Company shall be increased to its former amount by the creation of such number of New AsiaSat Shares (as defined in the Scheme) as is equal to the number of Scheme Shares cancelled pursuant to sub-paragraph (i) above;

 

  (iii) the Company shall apply the credit arising in its books of account as a result of the reduction of capital referred to in such sub-paragraph (i) above in paying up in full at par the New AsiaSat Shares which shall be allotted and issued credited to the Offeror (as defined in the Scheme) as fully paid; and

 

(c) the directors of the Company be and are hereby authorised to do all acts and things necessary or desirable in connection with the implementation of the Scheme, including (without limitation) the giving, on behalf of the Company, of consent to any modification of, or addition to, the Scheme, which the Supreme Court of Bermuda may see fit to impose.”

 

Dated: 19 March 2007

 

Registered office

 

Canon’s Court

22 Victoria Street

Hamilton HM12

Bermuda

 

Principal place of business in Hong Kong:

 

17/F, The Lee Gardens

33 Hysan Avenue

Causeway Bay

Hong Kong

 

  

By Order of the Board

Asia Satellite Telecommunications

Holdings Limited

Sue Yeung

Company Secretary

 

160

PART XIV – NOTICE OF SPECIAL GENERAL MEETING

 

Notes:

 

(i) A member entitled to attend and vote at the Special General Meeting is entitled to appoint one or more proxies to attend and, on a poll, to vote instead of him. A proxy need not be a member of the Company.

 

(ii) A white Form of Proxy for use at the Special General Meeting is enclosed.

 

(iii) To be valid, the white Form of Proxy for the Special General Meeting, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof, must be deposited with Computershare Hong Kong Investor Services Limited, the branch share registrar and transfer office of the Company in Hong Kong, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Special General Meeting or any adjournment thereof. Completion and return of the Form of Proxy will not preclude a member from attending the Special General Meeting and voting in person if he so wishes. In the event that a member attends the Special General Meeting after having lodged the Form of Proxy, his Form of Proxy will be deemed to have been revoked.

 

(iv) In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s) and, for this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding.

 

(v) The register of members will be closed from 4:30 p.m. on Friday, 20 April 2007 to Tuesday, 24 April 2007 (both dates inclusive) during which period no transfer of shares will be registered. In order to be entitled to attend and vote at the Special General Meeting, all transfer forms accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar and transfer office in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not later than 4:30 p.m. on Friday, 20 April 2007.

 

161

APPENDIX 1 – SAMPLE LETTER TO OPTIONHOLDERS

 

The following is a sample of the Letter to Optionholders being sent to the relevant Optionholders in connection with the Option Proposal.

 

THIS LETTER IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

 

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

 

The making of the Option Proposal (as defined in the Scheme Document) to persons located or with a registered address in jurisdictions outside Hong Kong may be prohibited or affected by the laws of the relevant jurisdictions. If you are a citizen or resident or national of or located in a jurisdiction outside Hong Kong, you should inform yourself about and observe any applicable legal requirements. It is your responsibility if you wish to accept the Option Proposal to satisfy yourself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consent which may be required or the compliance with other necessary formalities or legal requirements and the payment of any taxes due in respect of such jurisdiction.

 

Unless the context otherwise requires, terms used in this letter shall bear the same meanings as defined in the scheme document dated 19 March 2007 (the “Scheme Document”) issued by the Company and the Offeror accompanying this letter.

 

This letter should be read in conjunction with the accompanying Scheme Document and form of acceptance and cancellation (the “Form of Acceptance”).

 

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this letter, 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 letter.

 

Information for US Optionholders

 

The Option Proposal and the Possible MGO Option Offer described in the Scheme Document relate to the securities of a Bermuda company that is also subject to the laws and regulations of Hong Kong, the jurisdiction of its primary trading market. It is important that US Optionholders understand that the Option Proposal and the Possible MGO Option Offer are subject to disclosure requirements in Hong Kong that are quite different from those in the United States.

 

To the extent the offers referred to in this document are being made into the United States, they are being made directly by the Offeror. References in this document to offers being made by Morgan Stanley on behalf of the Offeror should be construed accordingly.

 

I-1

APPENDIX 1 – SAMPLE LETTER TO OPTIONHOLDERS

 

MORGAN STANLEY DEAN WITTER ASIA LIMITED

 

LOGO

 

Financial Adviser to AsiaCo Acquisition Ltd.

 

19 March 2007

 

Dear Optionholder,

 

Proposed privatisation of Asia Satellite Telecommunications Holdings Limited by

AsiaCo Acquisition Ltd. by way of a scheme of arrangement

under Section 99 of the Companies Act 1981 of Bermuda

at the Share Offer Price of HK$18.30 per Scheme Share

and the Option Proposal

 

On 13 February 2007 the Company and the Offeror jointly announced the proposed privatisation of the Company by way of a scheme of arrangement under Section 99 of the Companies Act, and that the Offeror will make an Option Proposal to the Optionholders of Outstanding Options subject to and conditional upon the Scheme becoming effective and binding.

 

This letter explains the actions available to you for you to take in relation to your outstanding Options. You are advised to refer to the Scheme Document when considering them.

 

Your attention is also drawn to the Rules of the Share Option Scheme, and in particular paragraph 8.5 of the Rules of the Share Option Scheme.

 

COURSES OF ACTION AVAILABLE TO OPTIONHOLDERS

 

(1) To the extent any of your Options is not exercised on or prior to the Scheme Record Time, you may accept the Option Proposal in accordance with its terms, as set out below and in the Scheme Document, by allowing such unexercised Options to lapse at the Effective Date and elect on the enclosed Form of Acceptance, by not later than the Effective Date (or such later time as may be notified to you by Morgan Stanley on behalf of the Offeror), to receive the Option Offer Price.

 

(2) You may exercise all or any of your Options at any time from the date of this letter until the earlier of (i) two calendar months after the date of the notice of the Court Meeting (being the same date as this letter), and (ii) the date on which the Scheme is sanctioned by the Supreme Court, but the exercise of the Options as described above shall be conditional upon the Scheme becoming effective. Any AsiaSat Shares issued as a result of the exercise of your Options on or prior to the Scheme Record Time will be subject to and eligible to participate in the Scheme.

 

   This means that once you have exercised your Options on or prior to the Scheme Record Time, you will be entitled to receive, in relation to the Options exercised, in accordance with the terms of the Share Proposal:

 

for each Scheme Share

    HK$ 18.30 in cash

 

     If you elect to exercise your Options you must send a cheque for your exercise monies if you wish to exercise. If you elect to send a cheque, the cheque (for the total of your outstanding Options multiplied by the exercise price of HK$17.48 for each Outstanding B Option and HK$14.35 for each Outstanding C Option per AsiaSat Share) should be made payable to ‘Asia Satellite Telecommunications Company Limited’.

 

   Please refer to the Scheme Document for details of the Share Proposal to privatise the Company and the Scheme.

 

(3) Do nothing, in which case, if the Scheme becomes effective, your Options will lapse and determine on the Effective Date.

 

Each Option you hold is independent and you should make a separate decision for each one.

 

I-2

APPENDIX 1 – SAMPLE LETTER TO OPTIONHOLDERS

 

Optionholders should note that under the Rules of the Share Option Scheme, and in particular paragraph 8.5:

 

(i) Optionholders have the right to exercise Options up to two calendar months after the date of despatch of the Scheme Document or the date of the sanction of the Scheme by the Supreme Court, whichever is the earlier;

 

(ii) Optionholders who exercise their Options prior to the Voting Record Time will be Scheme Shareholders who may vote on the Scheme, provided they are not concert parties of the Offeror; and

 

(iii) Optionholders who exercise their Options after the Voting Record Time may do so until the Scheme Record Time, but will only be able to do so subject to the terms of the Scheme and conditional upon the Scheme being sanctioned by the Supreme Court, and will therefore be bound by the Scheme.

 

For further details, please refer to the remaining sections of this letter, the Scheme Document and the Rules of the Share Option Scheme.

 

Morgan Stanley, the Offeror’s financial adviser, is satisfied that sufficient financial resources are available to the Offeror for the implementation of the Share Proposal and the Option Proposal.

 

IF THE SCHEME DOES NOT BECOME EFFECTIVE

 

If the Scheme does not become effective, the Share Proposal and the Option Proposal will lapse and:

 

(1) to the extent you have any Options not exercised, these will remain unaffected and will be exercisable during their relevant exercise periods pursuant to the terms of the Share Option Scheme; and

 

(2) any AsiaSat Shares allotted and issued to you on exercise of your Options will not be cancelled.

 

TERMS OF THE OPTION PROPOSAL

 

On behalf of the Offeror, Morgan Stanley is making an offer, which is conditional upon the Scheme becoming effective and binding, to you pursuant to the terms of the Share Option Scheme. Each Optionholder who accepts the Option Proposal and lodges the Form of Acceptance by the prescribed deadline will be entitled to the Option Offer Price as follows:

 

For each Outstanding B Option

    HK$ 0.82 in cash

For each Outstanding C Option

    HK$ 3.95 in cash

 

The Option Offer Price represents the “see-through” price of the Options, being the amount by which the value of the Share Offer Price exceeds the exercise price of the Options.

 

The Option Proposal is conditional upon the Share Proposal becoming effective and binding. The Conditions of the Share Proposal are set out in “Part VIII – Explanatory Statement” of the Scheme Document.

 

Your attention is drawn to the letter from the Independent Board Committee to the Scheme Shareholders and the Optionholders set out in Part V of the Scheme Document and the letter from the Independent Financial Adviser to the Independent Board Committee set out in Part VI of the Scheme Document which contain the recommendations of the Independent Board Committee and of the Independent Financial Adviser, respectively, in relation to the Scheme and the Option Proposal.

 

GENERAL TERMS AND CONDITIONS

 

(i) The delivery of the Form of Acceptance, duly signed, may if the Offeror determines it appropriate, be as effective as if it were duly completed and received notwithstanding that it is not completed or received strictly in accordance with the Form of Acceptance and this letter, including the date specified for receipt.

 

(ii) By completing the Form of Acceptance in respect of a particular Option you irrevocably elect to authorise the Offeror to send to you, or procure the sending to you of, the cash to which you are entitled at your own risk.

 

I-3

APPENDIX 1 – SAMPLE LETTER TO OPTIONHOLDERS

 

OUTSTANDING OPTIONS HELD AS AT THE LATEST PRACTICABLE DATE

 

Information on the Options held by you as at the Latest Practicable Date is available from the Company Secretary of the Company. If there is any exercise of your Options after the Latest Practicable Date you may accept the Option Proposal only in respect of such outstanding Options which remain unexercised as at the Scheme Record Time.

 

LAPSED OPTIONS

 

Please note that nothing in this letter or the Scheme Document serves to extend the life of an Option which lapses, or has already lapsed, under the Rules of the Share Option Scheme. You cannot exercise or accept the Option Proposal in respect of an Option which has lapsed.

 

INDEPENDENT FINANCIAL ADVICE

 

The information provided in this letter is intended to give you factual details on which to base your decision as to the action you wish to take.

 

If you are in any doubt as to any aspect of this document or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

 

DECLARATION

 

By returning the Form of Acceptance you thereby:

 

(i) confirm that each Option in respect of which you make an election is valid and subsisting free from all liens, mortgages and third party interests of any nature whatsoever and you acknowledge that any Option certificate in respect of such Option shall become void once that Option has been exercised or cancelled pursuant to your decisions shown on the Form of Acceptance;

 

(ii) confirm that the decisions which you have made on the Form of Acceptance cannot be withdrawn or altered;

 

(iii) authorise the Company, the Offeror, jointly and severally, and any director or officer of the Company or the Offeror or any agent of such person to do all acts and things and to execute any document as may be necessary or desirable to give effect to or in consequence of the elections and acceptances you have made on the Form of Acceptance, and you hereby undertake to execute any further assurance that may be required in respect of such elections and acceptances;

 

(iv) undertake to confirm and ratify any action properly or lawfully taken on your behalf by any attorney appointed by or pursuant to the Form of Acceptance; and

 

(v) confirm you have read, understood and agreed to the Option Proposal, the terms and conditions set out in this letter and the Form of Acceptance, and that you have received the Scheme Document and this letter.

 

GENERAL

 

(i) All communications, notices, Forms of Acceptance, cheques, certificates and other documents of any nature to be delivered by or sent to or from Optionholders will be delivered by or sent to or from them, or their designated agents, at their risk, and none of Morgan Stanley, the Offeror or the Company accepts any liability for any loss or any other liabilities whatsoever which may arise as a result.

 

(ii) The provisions set out in the Form of Acceptance form part of the terms of the Option Proposal.

 

(iii) The Option Proposal and all acceptances will be governed by and construed in accordance with the laws of Hong Kong.

 

(iv) Due execution of the Form of Acceptance in respect of the Option Proposal will constitute an authority to Morgan Stanley, the Offeror, any Offeror Director or their respective agents to complete and execute on behalf of the accepting Optionholder any document and to do any other act that may be necessary or expedient for the purpose of vesting in the Offeror, or such persons as the Offeror shall direct, all rights of the Optionholders in respect of the Options which are the subject of such acceptance.

 

I-4

APPENDIX 1 – SAMPLE LETTER TO OPTIONHOLDERS

 

ACTION TO BE TAKEN

 

You should return the duly completed Form of Acceptance to the Company Secretary of the Company at, 17/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong (marked “AsiaSat Option Proposal”) to be received by no later than Monday, 7 May 2007. If you do not complete a Form of Acceptance, subject to and conditional upon the Scheme becoming effective, your Options will lapse and determine.

 

Before forwarding the Form of Acceptance to the Company Secretary of the Company, please ensure that you have signed the Form of Acceptance and that your signature has been witnessed.

 

As stated above, the Option Proposal is conditional upon the Scheme becoming effective and binding. Unless the Scheme becomes effective and binding, and therefore the Option Proposal becomes unconditional, on or before 30 June 2007 (or such later date as the Company and the Offeror may agree and as the Supreme Court may allow, but in any event no later than 31 October 2007), the Option Proposal will lapse.

 

Assuming the Option Proposal becomes unconditional on 7 May 2007 (Bermuda time) cheques for the Option Offer Price are expected to be despatched on or before 17 May 2007.

 

No acknowledgment of receipt of any Form of Acceptance will be given.

 

Yours faithfully

 

for and on behalf of

Morgan Stanley Dean Witter Asia Limited

Edward King

Managing Director

 

I-5

APPENDIX 2 – DEFINITIONS

 

In this Scheme Document (other than the Scheme in Part XII and notices of the Meetings in Part XIII and Part XIV), the following words and expressions shall have the following meanings, unless the context otherwise requires:

 

“30-day Average Pre-Announcement ADS Price”

US$17.93 per ADS being the average closing price per ADS as quoted on the NYSE over the 30 Trading Days prior to the date of the Announcement

 

“30-day Average Pre-Announcement Price”

HK$13.84 per AsiaSat Share, being the average closing price of AsiaSat Shares as quoted on the Stock Exchange over the 30 Trading Days prior to the date of the Announcement

 

“Able Star”

Able Star Associates Limited, a wholly owned subsidiary of CITIC Group

 

“acting in concert”

has the meaning given in the Takeovers Code, and “concert party” or “concert parties” shall be construed accordingly

 

“ADS(s)”

American Depositary Share(s), each representing ownership of ten AsiaSat Shares, which are listed on the NYSE

 

“ADS Deposit Agreement”

the Amended and Restated Deposit Agreement, dated as of 28 September 2001, among AsiaSat, the ADS Depositary and ADS Holders, governing the ADSs

 

“ADS Depositary”

The Bank of New York, as depositary under the ADS Deposit Agreement

 

“ADS Holders”

holders of ADSs from time to time

 

“ADS Voting Instruction Card”

the white voting instruction card for use by ADS Holders to provide instructions as to how to vote the AsiaSat Shares underlying their ADSs in connection with the Court Meeting and the Special General Meeting

 

“Announcement”

the announcement dated 13 February 2007 issued jointly by the Company and the Offeror relating, among other things, to the Proposals

 

“Announcement Date”

13 February 2007, the date of the Announcement

 

“AsiaSat” or “Company”

Asia Satellite Telecommunications Holdings Limited, an exempted company incorporated in Bermuda with limited liability, whose ordinary shares are currently listed on the Stock Exchange and in the form of ADSs on the NYSE

 

“AsiaSat Group” or “Group”

the Company and its subsidiaries

 

“AsiaSat Securities”

AsiaSat Shares and ADSs

 

“AsiaSat Share(s)”

ordinary share(s) of HK$0.10 each in the issued share capital of the Company

 

“AsiaSat Shareholders”

registered holders of AsiaSat Shares (including without limitation ADS Holders, unless the context requires otherwise)

 

“associate(s)”

has the meaning given in the Takeovers Code

 

“Auspicious Colour”

Auspicious Colour Limited, a company incorporated in Hong Kong, which is an indirect wholly owned subsidiary of the Company and holder of non domestic television programme service licences granted by the Hong Kong Broadcasting Authority

 

“Authorisation Condition”

the condition to the Scheme which requires all Authorisations required for the implementation of the Proposals and the Scheme having been obtained

 

“Authorisations”

all necessary authorisations, registrations, filings, rulings, consents, permissions, approvals, waivers or exemptions required from any

 

II-1

APPENDIX 2 – DEFINITIONS

 

 

Relevant Authorities or other third parties which are necessary in connection with the Share Proposal or for the implementation of the Scheme

 

“B Option(s)”

tranche B options granted under the Share Option Scheme and outstanding (being as at the Latest Practicable Date, 1,630,000 B Options conferring rights to subscribe for 1,630,000 AsiaSat Shares at a price of HK$17.48 per AsiaSat Share)

 

“Beneficial Owner”

any beneficial owner of AsiaSat Shares

 

“Board”

the Board of Directors of the Company

 

“Bowenvale”

Bowenvale Limited, a company incorporated in the British Virgin Islands with limited liability and which is currently jointly indirectly owned by CITIC Group and SES and which, on completion of the Transfer pursuant to the Exchange Transaction, will be jointly and indirectly owned by CITIC Group and GECC

 

“Business Day”

a day on which the Stock Exchange is open for the business of dealing in securities

 

“C Option(s)”

tranche C options granted under the Share Option Scheme and outstanding (being as at the Latest Practicable Date, 3,202,500 C Options conferring rights to subscribe for 3,202,500 AsiaSat Shares at a price of HK$14.35 per AsiaSat Share)

 

“CCASS”

the Central Clearing and Settlement System established and operated by HKSCC

 

“CITIC Group”

CITIC Group, an enterprise established and existing under the laws of the PRC

 

“Companies Act”

the Companies Act 1981 (as amended) of Bermuda

 

“Conditions”

the conditions (or any of them) to which the Share Proposal is subject, which are set out in the Explanatory Statement in Part VIII of this Scheme Document

 

“connected person”

has the meaning given in the Listing Rules

 

“Consent Condition”

the condition to the Scheme which requires all necessary third parties consents which are required under contractual obligations of the Company, which are material in the context of the Group as a whole, having been obtained

 

“Court Meeting”

a meeting of the Scheme Shareholders to be convened at the direction of the Supreme Court at which the Scheme will be voted upon, notice of which is set out in Part XIII of this Scheme Document, and any adjournment of such meeting

 

“Director(s)”

director(s) of the Company

 

“EBITDA”

earnings before interest, tax, depreciation and amortisation

 

“Effective Date”

the date on which the Scheme, if approved and sanctioned by the Supreme Court, becomes effective in accordance with its terms, which is the date on which a copy of the Supreme Court order sanctioning the Scheme is delivered to the Registrar of Companies in Bermuda for registration, and which is expected to be 7 May 2007 (Bermuda time)

 

“Exchange Act”

US Securities and Exchange Act of 1934, as amended, including the related rules and regulations promulgated under it

 

II-2

APPENDIX 2 – DEFINITIONS

 

“Exchange Rate”

as to any day, the noon buying rates in New York in US$ for cable transfers payable in HK$ as certified by the Federal Reserve Bank of New York

 

“Exchange Transaction”

the proposed redemption by SES of GECC’s entire indirect holding of SES shares (of approximately 19 per cent of the issued share capital of SES) in exchange for shares of a new company holding a number of assets, including SES’s entire interest in Bowenvale

 

“Executive”

the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

 

“Executive Officer(s)”

executive officer(s) of the Company

 

“Explanatory Statement”

the explanatory statement set out in Part VIII of this Scheme Document issued in compliance with Section 100 of the Companies Act

 

“Federal Reserve Board”

the Board of Governors of the US Federal Reserve System

 

“Form(s) of Proxy”

either or both of the pink form of proxy for use at the Court Meeting and the white form of proxy for use at the Special General Meeting which accompany this document, as the context requires

 

“Formal MGO Documentation”

the formal offer documentation in respect of the Possible MGO Offers

 

“Further Authorisation Condition”

the condition to the Scheme which requires all Authorisations required for the implementation of the Share Proposal remaining in full force and effect without variation, and all necessary statutory or regulatory obligations in all relevant jurisdictions having been complied with and no requirement having been imposed by any Relevant Authorities, or is in addition to the requirements expressly so provided for, in relevant laws, rules, regulations or codes, which is material in the context of the Group as a whole, in each case as aforesaid up to and at the time when the Scheme becomes effective

 

“GE Entities”

three entities established and wholly owned by SES International Holdings, Inc., a Delaware corporation which is currently a subsidiary of SES, but which, upon the completion of the Exchange Transaction, will be renamed GE International Holdings Inc., and will be directly wholly owned by the GECC Parties

 

“GE Equity”

GE Capital Equity Investments, Inc., a company incorporated in the United States and a wholly owned subsidiary of GECC

 

“GEC”

General Electric Company, a company incorporated and listed in the United States with a diverse global shareholder base and, to its knowledge, no one shareholder or group owning more than five per cent of the company’s issued shares

 

“GECC”

General Electric Capital Corporation, a company incorporated in the United States and an indirect wholly owned subsidiary of GEC

 

“GECC Parties”

GE CFE Luxembourg S.à r.l., a company with limited liability organised under the laws of the Grand Duchy of Luxembourg, and GE Capital Equity Holdings Inc., a Delaware corporation each of which are wholly owned subsidiaries of GECC

 

“HK$”, “Hong Kong dollar” and “HK cents”

Hong Kong dollars and cents respectively, the lawful currency of Hong Kong

 

“HKFRS”

Hong Kong Financial Reporting Standards, including all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants

 

“HKSCC”

Hong Kong Securities Clearing Company Limited

 

II-3

APPENDIX 2 – DEFINITIONS

 

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

 

“Hong Kong Broadcasting Authority”

the statutory body that regulates sound broadcasters in Hong Kong

 

“Independent Board Committee”

the independent committee of the Board established for the purpose of advising the Scheme Shareholders in relation to the Share Proposal and Optionholders in relation to the Option Proposal, and in relation to the Possible MGO Offers (if made), and comprising the three Independent Non-executive Directors of the Company, being Professor Chen Kwan Yiu Edward, Mr. Sze Tsai To Robert and Mr. James Watkins

 

“Independent Financial Adviser” or “CLSA”

CLSA Equity Capital Markets Limited, a licensed corporation under the SFO for Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities and the independent financial adviser to the Independent Board Committee appointed pursuant to Rule 2.1 of the Takeovers Code in connection with the Proposals

 

“Investor Participant”

a person admitted to participate in CCASS as an investor participant

 

“Latest Practicable Date”

16 March 2007, being the latest practicable date prior to the printing of this Scheme Document for the purposes of ascertaining certain information for inclusion therein

 

“Letter to Optionholders”

the letter setting out the terms and conditions of the Option Proposal being sent to the relevant Optionholders and substantially in the form set out in Appendix 1

 

“Licensees”

Auspicious Colour and Skywave TV Company

 

“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

 

“MAE Condition”

the Condition which requires that since the date of the Scheme Document, no event having occurred in relation to any satellite whether under construction or in service and owned and/or operated by any member of the Group (such as, without limitation, technical failure or launch failure, satellite defects, destruction and damage that may result in total or partial loss or incorrect orbital placement or prevent proper commercial operation) which has a material adverse effect on the business, assets, financial or trading position or prospects of the AsiaSat Group taken as a whole

 

“Meeting(s)”

the Court Meeting and the Special General Meeting or either of them, as the case may be

 

“Morgan Stanley”

Morgan Stanley Dean Witter Asia Limited, a company incorporated in Hong Kong, which is licensed for Type 1 (dealing in securities), Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 7 (providing automated services) regulated activities under the SFO, and financial adviser to the Offeror

 

“New AsiaSat Shares”

new AsiaSat Shares to be issued to the Offeror pursuant to the Scheme, and being the same in number as the number of Scheme Shares

 

“New Skies Satellites”

New Skies Satellites Holdings Ltd.

 

“Notice”

the notice to be provided by OFTA in respect of section 7(P) of the Telecommunications Ordinance as described in “Part IX – The Possible MGO Offers”

 

“NYSE”

the New York Stock Exchange

 

II-4

APPENDIX 2 – DEFINITIONS

 

“Offer Prices”

means the Share Offer Price, the Option Offer Price, the Possible MGO Share Offer Price and the Possible MGO Option Offer Price

 

“Offeror”

AsiaCo Acquisition Ltd. (formerly named Modernday Limited), a company incorporated in the British Virgin Islands with limited liability, registered number 1373477, and owned by Able Star and GE Equity

 

“Offeror Board”

the board of Offeror Directors

 

“Offeror Director(s)”

director(s) of the Offeror

 

“OFTA”

the Office of the Telecommunications Authority, Hong Kong

 

“Option(s)”

B Options and C Options

 

“Option Form of Acceptance”

the form of acceptance despatched to Optionholders in connection with the Option Proposal

 

“Option Offer Price”

HK$0.82 per B Option and HK$3.95 per C Option, the cancellation price payable in cash by the Offeror to the Optionholders pursuant to the Option Proposal

 

“Option Proposal”

the proposal to Optionholders for cancellation of all Outstanding Options in conjunction with the Scheme

 

“Optionholder(s)”

holder(s) of one or more Options

 

“Other CCASS Participant”

a broker, custodian, nominee or other relevant person who is, or has deposited AsiaSat Shares with, a CCASS participant

 

“Outstanding B Options”

B Options not exercised as at the Scheme Record Time

 

“Outstanding C Options”

C Options not exercised as at the Scheme Record Time

 

“Outstanding Options”

Options not exercised as at the Scheme Record Time

 

“Possible MGO Offers”

the Possible MGO Shares Offer and the Possible MGO Option Offer

 

“Possible MGO Option Offer”

the offer to Optionholders for cancellation of all Options in conjunction with the Possible MGO Share Offer (if made)

 

“Possible MGO Option Offer Price”

HK$0.01 per B Option, and HK$1.65 per C Option, the cancellation price payable in cash by the Offeror to the Optionholders pursuant to the Possible MGO Option Proposal

 

“Possible MGO Share Offer”

the general offer by the Offeror for AsiaSat Shares (including without limitation in the form of ADSs) not held by the Offeror and parties acting in concert with it, to be made upon completion of the Transfer

 

“Possible MGO Share Offer Price”

HK$16.00 per Possible MGO Share

 

“Possible MGO Shares”

AsiaSat Shares (including without limitation in the form of ADSs) other than AsiaSat Shares held by the Offeror and its concert parties

 

“PRC”

the People’s Republic of China

 

“Pre-Suspension Date”

8 February 2007, the last full Trading Day prior to the date of the Announcement

 

“Proposals”

the Share Proposal and the Option Proposal

 

“Registered Owner”

a registered owner of AsiaSat Shares (including without limitation a nominee, trustee, depositary or any other authorised custodian or third party)

 

“Registrar”

Computershare Hong Kong Investor Services Limited, being the branch share registrar of the Company in Hong Kong

 

II-5

APPENDIX 2 – DEFINITIONS

 

“Relevant Authorities”

any relevant governments, governmental, quasi-governmental, supranational, statutory or regulatory bodies, courts, trade agencies or professional associations in any jurisdiction or any other persons or bodies with whom any member of the Group has entered into contractual arrangements or with whom any such company is bound

 

“Review Period”

1 January 2005 to the Pre-Suspension Date

 

“Rules of the Share Option Scheme”

the rules of the Share Option Scheme

 

“Scheme”

the scheme of arrangement under Section 99 of the Companies Act set out in Part XII of this Scheme Document, with or subject to any modifications or additions or condition(s) approved or imposed by the Supreme Court and agreed to by the Company and the Offeror, involving, among other matters, the cancellation of all the Scheme Shares and the issue of the New AsiaSat Shares to the Offeror

 

“Scheme Document”

this document, including each of the letters, statements, appendices and notices in it, as may be amended or supplemented from time to time

 

“Scheme Record Time”

4.30 p.m. (Hong Kong time) on 4 May 2007 or such other time and date as shall have been announced to the AsiaSat Shareholders, being the record date for determining entitlements of the AsiaSat Shareholders under the Scheme and under the Option Proposal

 

“Scheme Shareholder(s)”

AsiaSat Shareholder(s) (including without limitation ADS Holders, unless the context requires otherwise) other than Bowenvale

 

“Scheme Share(s)”

AsiaSat Shares held by the Scheme Shareholders (including without limitation ADS Holders) as at the Scheme Record Time

 

“SEC”

the US Securities and Exchange Commission

 

“SES”

SES S.A. (previously SES Global S.A., before a name change in December 2006), a company incorporated in the Grand Duchy of Luxembourg and the shares of which are listed on the Luxembourg Stock Exchange and Euronext

 

“SFC”

the Securities and Futures Commission of Hong Kong

 

“SFO”

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

 

“Shareholders’ Agreement”

an agreement between CITIC Group, SES and certain of their respective subsidiaries (which hold shares in Bowenvale on behalf of CITIC Group and SES ), executed on 10 December 1998 and amended by a deed of adherence and amendment agreement on 9 November 2004, which governs the manner in which CITIC Group and SES indirectly hold shares in Bowenvale and the manner in which Bowenvale holds the AsiaSat Shares

 

“Share Offer Price”

HK$18.30 per Scheme Share, the cancellation price payable in cash by the Offeror to the Scheme Shareholders under the Scheme as proposed as part of the Share Proposal

 

“Share Option Scheme”

the share option scheme adopted by the Company on 25 January 2002 and as it may from time to time be amended or supplemented

 

“Share Proposal”

the proposal to Scheme Shareholders for the cancellation of all Scheme Shares (including those underlying the ADSs) pursuant to the Scheme and for the issue of the New AsiaSat Shares to the Offeror pursuant to the Scheme

 

“Share Redemption Agreement”

the share redemption agreement dated 13 February 2007 between SES, GE CFE Luxembourg S.à r.l., GE Capital Equity Holdings Inc. and GECC pursuant to which the Exchange Transaction is effected

 

II-6

APPENDIX 2 – DEFINITIONS

 

“SIH”

SES International Holdings Inc, a subsidiary of SES

 

“Skywave TV Company”

Skywave TV Company Limited, a company incorporated in Hong Kong, which is an indirect subsidiary of the Company and holder of non domestic television programme service licences granted by the Hong Kong Broadcasting Authority

 

“Special General Meeting”

the special general meeting of the Company to be held to consider and approve, among other matters, the Share Proposal, notice of which is set out in Part XIV of this Scheme Document, and any adjournment of such meeting

 

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

 

“Supreme Court”

the Supreme Court of Bermuda

 

“Suspension Date”

9 February 2007, the date on which AsiaSat Shares were suspended from trading prior to the Announcement

 

“Takeovers Code”

the Hong Kong Code on Takeovers and Mergers

 

“Telecommunications Ordinance”

the Telecommunications Ordinance (Chapter 106) of Hong Kong

 

“Trading Day”

a day on which the Stock Exchange is open for trading in securities

 

“Transfer”

the transfer of the whole of the legal and beneficial ownership of shares in Bowenvale held indirectly by SES to companies which are wholly and indirectly owned by GECC

 

“United States” or “US”

the United States of America, its territories and possessions, any State of the United States, and the District of Columbia

 

“US Business Day”

a day (other than Saturdays, Sundays and public holidays in the United States) on which US banks are open for business

 

“US GAAP”

generally accepted accounting principles in the United States

 

“US$” or “US dollars” and “US cents”

United States dollars and cents, respectively, the lawful currency of the United States

 

“Voting Record Time”

4.30 p.m. on Friday, 20 April 2007

 

All references in this Scheme Document to times and dates are references to Hong Kong times and dates other than references to the expected dates of the Supreme Court hearings to sanction the Scheme and the Effective Date, which are references to the relevant times and dates in Bermuda. Bermuda time is 12 hours behind Hong Kong time. For the period from Sunday, 8 April 2007 to Sunday, 28 October 2007, Bermuda time is 11 hours behind Hong Kong time. For the period from Sunday, 11 March 2007 to Sunday, 4 November 2007. New York time is 12 hours behind Hong Kong time.

 

For the purpose of this Scheme Document, unless otherwise stated, the amounts in US$ have been converted at HK$/US$ 7.8108/1.000, being the Exchange Rate on the Latest Practicable Date.

 

II-7

EX-99.5 6 dex995.htm SHAREHOLDERS' AGREEMENT Shareholders' Agreement

Exhibit 99.5

Dated 29 March 2007

ABLE STAR ASSOCIATES LIMITED

and

GE PACIFIC-1 HOLDINGS, INC.

and

GE PACIFIC-2 HOLDINGS, INC.

and

GE PACIFIC-3 HOLDINGS, INC.

and

BOWENVALE LIMITED

and

CITIC GROUP

and

GENERAL ELECTRIC COMPANY

SHAREHOLDERS’ AGREEMENT

relating to BOWENVALE LIMITED

LOGO

10th Floor, Alexandra House

Chater Road

Hong Kong

Telephone (852) 2842 4888

Facsimile (852) 2810 8133/2810 1695

Ref KMTM/JAIC

This Agreement is made the 29 day of March 2007

Between:

 

(1) ABLE STAR ASSOCIATES LIMITED a company incorporated in the British Virgin Islands the registered office of which is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (“Able Star”);

 

(2) GE PACIFIC-1 HOLDINGS, INC., a company incorporated in the United States the registered office of which is situated at 2711 Centerville Road, Suite 400, Wilmington, DE 19808, United States of America (“GE Pacific-1”), and formerly named Pacific-1 Holdings, Inc.;

 

(3) GE PACIFIC-2 HOLDINGS, INC., a company incorporated in the United States the registered office of which is situated at 2711 Centerville Road, Suite 400, Wilmington, DE 19808, United States of America (“GE Pacific-2”), and formerly named Pacific-2 Holdings, Inc.;

 

(4) GE PACIFIC-3 HOLDINGS, INC., a company incorporated in the United States the registered office of which is situated at 2711 Centerville Road, Suite 400, Wilmington, DE 19808, United States of America (“GE Pacific-3”), and formerly named Pacific-3 Holdings, Inc.;

 

(5) BOWENVALE LIMITED, a company incorporated in the British Virgin Islands the registered office of which is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (the “Company”);

 

(6) CITIC GROUP, an enterprise organised and existing under the laws of the People’s Republic of China, and having its registered office at Capital Mansion, 6 Xinyuan Nan Road, Chaoyang District, Beijing, 100004, People’s Republic of China (“CITIC”); and

 

(7) GENERAL ELECTRIC COMPANY, a company incorporated in the State of New York, United States and its address is at 3135 Easton Turnpike, Fairfield, Connecticut 06828, United States of America (“GEC”).

Whereas:

 

(A) The Company was incorporated in the British Virgin Islands on 28 March 1996 and at the date hereof has an authorised share capital of HK$26,890,500 divided into 268,905,000 ordinary shares of HK$0.10 each.

 

(B) Pursuant to the Exchange Transaction (as defined below) of even date, GECC agreed with SES S.A. (“SES”) to acquire indirectly 133,107,975 ‘Y’ Ordinary Shares from a wholly owned subsidiary of SES.

 

(C) Upon the completion of the Exchange Transaction, the GE Entities will hold 133,107,975 Shares in aggregate (GE Pacific-1 will hold 6,655,399 Shares, GE Pacific-2 will hold 6,655,399 Shares, GE Pacific-3 will hold 119,797,177 Shares) representing 49.5 per cent. of the issued shares of the Company and Able Star will hold 135,797,025 Shares, representing 50.5 per cent. of the issued shares of the Company.

 

(D) The Company’s only asset is a shareholding of 268,905,000 ordinary shares of AsiaSat.

 

(E)

The parties (other than the Company) have agreed that their respective rights and obligations (whether direct or indirect) in respect of the Company and in respect of AsiaSat shall be regulated by the provisions of this Agreement and the Memorandum and Articles

 

1

 

and the Company has agreed with the other parties to comply with such of the matters herein contained as relate to the Company and to its holding of shares in AsiaSat.

 

(F) Bidco will be merged (by way of amalgamation, merger, transfer or otherwise) with the Company after completion of the Privatisation.

 

1 Interpretation

 

1.1 In this Agreement (including the Recitals), unless the context otherwise requires, the following words and expressions shall have the following meanings:

“acting in concert” has the same meaning as in the Code;

“affiliate” means, with respect to any person, any person that directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such person, provided that no person shall be an affiliate of CITIC merely by virtue of being owned or controlled by the PRC or the government thereof;

“agreed terms” means in relation to any document such document in the terms agreed between the parties and signed by the parties for the purposes of identification;

“AsiaSat” means Asia Satellite Telecommunications Holdings Limited, a company incorporated with limited liability in Bermuda and as at the date of this Agreement listed on the Stock Exchange and the NYSE;

“AsiaSat Board” means the board of directors of AsiaSat;

“AsiaSat Director” means a director of AsiaSat;

“AsiaSat Shares” means shares in the issued share capital of AsiaSat;

“AsiaSat Voting Rights” means the voting rights for the time being and from time to time conferred by AsiaSat Shares and references to “the Company’s AsiaSat Voting Rights” are references to the voting rights conferred by the AsiaSat Shares held by the Company for the time being and from time to time;

“Associate” means, in relation to any person, any body corporate or other entity of or in relation to which such person or any of its subsidiaries owns or controls (directly or indirectly) 20 per cent. or more of the voting share capital (or equivalent right of ownership) or is entitled (directly or indirectly) to 20 per cent. or more of the net profits and/or net assets;

“Attributable AsiaSat Shares” means, in relation to a Class, those AsiaSat Shares which are attributable to such Class;

“Bidco” means AsiaCo Acquisition Ltd. (formerly named Modernday Limited), a company incorporated in the British Virgin Islands on 19 December 2006 with registered number 1373477;

“Bidco Shareholders Agreement” means the shareholders agreement in respect of Bidco entered into between Bidco, CITIC, GEC, GECC and Able Star dated 13 February 2007;

“Board” means the board of directors of the Company;

“business day” means a day (other than a Saturday or a Sunday) on which banks are ordinarily open for business in Hong Kong;

 

2

“Class” means any of the three classes of issued Shares in the Company (the ‘X’ Ordinary Shares, the ‘Y’ Ordinary Shares and the Special Shares) authorised after the adoption of the Memorandum and Articles by the Company pursuant to Clause 3.3.4 or, as the context requires, the holders of the Shares of the relevant class;

“Completion Date” means the date on which the Exchange Transaction completes;

“Code” means the Hong Kong Code on Takeovers and Mergers (as amended from time to time and as construed and administered by the Executive and/or the Panel (each as defined in the Code));

“control”, “is controlled by”, “under common control with” and similar expressions means, in relation to a party, where a person (or persons acting in concert) acquires or agrees to acquire or has options over direct or indirect control (1) of the affairs of that party, or (2) over more than 50 per cent. of the total voting rights conferred by all the issued shares in the capital of that party which are ordinarily exercisable in general meeting or (3) of the composition of the main board of directors of a party;

“Cooperation Agreement” means the cooperation agreement in respect of the Privatisation entered into between CITIC Group, Able Star, GECC and GE Capital Equity Investments, Inc. dated 13 February 2007;

“Director” means a director of the Company;

“Disposal” includes making any sale, assignment, exchange, transfer or other dealing with, or creating any Encumbrance, or granting any option or right or beneficial interest whatsoever, or any agreement for any of the same and “to Dispose” shall be construed accordingly;

“Encumbrance” means any claim, charge, mortgage, security, pledge, lien, option, equity, power of sale or hypothecation;

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended;

“Exchange Transaction” means the redemption by SES of GECC’s entire holding of SES shares (representing approximately 19 per cent. of the issued share capital of SES) in exchange for shares in a new company holding a number of assets, including SES’s entire holding of ‘Y’ Ordinary Shares;

“GECC” means General Electric Capital Corporation, a company incorporated in the United States of America and wholly owned by GEC, and which wholly owns indirectly each of the GE Entities;

“GE Entities” means GE Pacific-1, GE Pacific-2 and GE Pacific-3, and “GE Entity” means any one of them;

“holding company” means in relation to any body corporate or other entity, any person of or in relation to which such body corporate or other entity is a subsidiary;

“Listing” means an initial public offering and listing of all or a majority the AsiaSat Shares on a recognised stock exchange or an over the counter market;

“Listing Rules” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (as amended from time to time);

 

3

“Memorandum and Articles” means the memorandum and articles of association in the agreed terms as set out in Schedule 3 and to be adopted by the Company pursuant to Clause 3.3.1;

“NYSE” means The New York Stock Exchange;

“parties” means the parties to this Agreement and “party” means any one of them;

“PRC” means The People’s Republic of China;

“Privatisation” means the potential acquisition, through a voluntary or mandatory offer or a scheme of arrangement, of all the issued shares of AsiaSat not already held by the Company, which is to be conducted jointly by or on behalf of CITIC and GECC through Bidco;

“Privatisation Completion Date” means the date on which the Privatisation completes;

“Qualifying Subsidiary” means in relation to CITIC or GEC, a subsidiary thereof in relation to which CITIC or GEC (as the case may be):

 

  (a) owns (directly or indirectly) 100 per cent. of the voting share capital (or equivalent right of ownership); and

 

  (b) is entitled (directly or indirectly) to 100 per cent. of the net profits and net assets;

“Record Date” means, in relation to any dividend or other right from time to time conferred by, or accrued or accruing with respect to, any AsiaSat Shares, the date on or as of which entitlement to such dividend or other right is fixed, as between holders of AsiaSat Shares (by reference to the AsiaSat Shares respectively held by them on that date);

“Reorganisation” means, with respect to any company, any issue of shares of such company by way of capitalisation of profits or reserves or rights and any consolidation or sub-division or reduction of capital or other reconstruction or adjustment relating to the share capital of such company (or any shares or securities derived therefrom) and any other amalgamation or reconstruction affecting the share capital of such company (or any shares, stock or securities derived therefrom);

“SES” means SES S.A. (previously SES Global S.A., before a name change in December 2006), a company incorporated in the Grand Duchy of Luxembourg and the shares of which are listed on the Luxembourg Stock Exchange and Euronext;

“SFO” means the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

“Shares” means shares of HK$0.10 in the capital of the Company;

“Shareholders” means the ‘X’ Shareholder(s) and/or the ‘Y’ Shareholder(s) and/or the Special Shareholder(s) from time to time and as the context requires;

“Shareholders Entitled” means, in relation to any dividend or other right from time to time conferred by, or accrued or accruing with respect to, any AsiaSat Shares held by the Company, the relevant Shareholders entitled to the same on a “pass-through” or “attribution” basis as determined in accordance with Clause 8 and/or (as appropriate) Schedule 1;

“Special Share” means the 2,689,050 special shares in the issued share capital of the Company;

 

4

“Special Shareholder” means Able Star or any Qualifying Subsidiary of CITIC which holds Special Shares from time to time;

“Stock Exchange” means The Stock Exchange of Hong Kong Limited;

“subsidiary” means in relation to any person, any body corporate or other entity directly or indirectly controlled by such person, for which purpose “control” means either ownership of more than 50 per cent. of the voting share capital (or equivalent right of ownership) of such body corporate or other entity or power to direct its policies and management whether by contract or otherwise;

“Unresolved Matter” has the meaning given in Clauses 5.8 and 7.3.2;

“‘X’ Director” means any Director appointed by the ‘X’ Shareholder(s) pursuant to Clause 5.2.1;

“‘X’ Ordinary Shares” means ‘X’ ordinary shares in the issued share capital of the Company and designated as such pursuant to the Memorandum and Articles;

“‘X’ Shareholder” means Able Star or any Qualifying Subsidiary of CITIC which holds ‘X’ Ordinary Shares from time to time;

“‘Y’ Director” means any Director appointed by the ‘Y’ Shareholder(s) pursuant to Clause 5.2.1;

“‘Y’ Ordinary Shares” means ‘Y’ ordinary shares in the issued share capital of the Company and designated as such pursuant to the Memorandum and Articles; and

“‘Y’ Shareholder” means the GE Entities or any Qualifying Subsidiary of GEC which holds ‘Y’ Ordinary Shares from time to time;

 

1.2 unless the context otherwise requires, any reference to a statutory provision shall include such provision as from time to time modified or re-enacted or consolidated so far as such modification or re-enactment or consolidation applies or is capable of applying to any transaction entered into hereunder;

 

1.3 references to Recitals, Clauses, Schedules and Paragraphs are to recitals, Clauses, schedules and paragraphs of this Agreement;

 

1.4 references to “the other Shareholder” means Able Star or the GE Entities (collectively), as the context requires;

 

1.5 references to documents being “in the agreed terms” are to the form of the draft or final or executed version thereof signed for identification by the GE Entities and Able Star with such alterations as may be agreed between the GE Entities and Able Star but such documents in the agreed terms do not form part of this Agreement;

 

1.6 the headings are for convenience only and shall not affect the interpretation hereof; and

 

1.7 unless the context otherwise requires, words importing the singular only shall include the plural and vice versa and references to natural persons shall include bodies corporate.

 

5

2 Effectiveness

 

2.1 Effective from completion of the Exchange Transaction

This Agreement is effective from, and is conditional upon, the completion of the Exchange Transaction. GEC shall cause the GE Entities to execute and deliver this Agreement promptly following the completion of the Exchange Transaction.

 

2.2 Lapse of Agreement

If the Exchange Transaction is terminated or otherwise lapses, whether by its terms or by agreement of the parties thereto or otherwise, this Agreement shall lapse and the parties shall have no claims whatsoever against each other in respect of any matter arising from or relating to this Agreement except that Clause 18 (Confidentiality) shall remain in full force and effect.

 

3 Structure of the Company

 

3.1 Merger with Bidco

The parties shall procure that as soon as is reasonably practicable after completion of the Privatisation, Bidco shall be merged (whether by way of amalgamation, merger, transfer or otherwise) with the Company, and Bidco’s interest in AsiaSat shall be transferred to the Company.

 

3.2 Meeting of the Board

On or promptly following the Completion Date, the Company shall procure the holding of a meeting of the Board and the passing of the following resolutions (if and to the extent such resolutions have not already been passed):

 

  3.2.1 approving the transfer of 133,107,975 ‘Y’ Ordinary Shares in aggregate from SES Global Holding AG to the GE Entities (as to 6,655,399 ‘Y’ Ordinary Shares to GE Pacific-1, as to 6,655,399 ‘Y’ Ordinary Shares to GE Pacfic-2 and as to 119,797,177 ‘Y’ Ordinary Shares to GE Pacific-3) and the registration of each of GE Pacific-1, GE Pacific-2 and GE Pacific-3 as a member of the Company in respect of such Shares;

 

  3.2.2 convening a meeting of the Shareholders of the Company for the purposes referred to in Clause 3.3, or to promptly circulate Shareholders’ written resolutions to the Shareholders to effect the matters referred to in Clause 3.3.

 

3.3 Meeting of the Shareholders of the Company

Upon the calling of the meeting of the Shareholders of the Company under Clause 3.2, or circulation of the Shareholders’ written resolutions (as the case may be), the Shareholders shall give consents to short notice in respect of such meeting and shall attend and vote thereat in favour of resolutions (in such form as shall have been previously approved by the Shareholders) or promptly execute the Shareholders’ written resolutions (as applicable):

 

  3.3.1 adopting the Memorandum and Articles in substitution for the existing memorandum and articles of association of the Company; and

 

  3.3.2

approving the changes (if any) to the ‘X’ Directors, the removal of the ‘Y’ Directors nominated by SES S.A. or SES Global Holding AG and the appointment of the ‘Y’

 

6

 

Directors and the Company secretary (if any) as set out in Clauses 5.2.3, 5.2.4 and 5.9.2 respectively.

 

3.4 Capital Structure of the Company: three separate classes

The rights and interests of the Shareholders in the assets of the Company (and, specifically, in the AsiaSat Shares held by the Company for the time being and from time to time) will derive from their respective holdings of Shares in the Company. The Shareholders agree that each Class shall be entitled to the specific rights provided for in this Agreement and in the Memorandum and Articles.

 

4 Single Purpose Collective Shareholding Vehicle

 

4.1 All interests in AsiaSat held through the Company

None of the parties and their respective subsidiaries or Associates will, except with the written consent of GEC and CITIC or as a result of the Privatisation or any mandatory offer for AsiaSat made in accordance with the provisions of Clauses 9.2.5 or 14.1, at any time during the continuance of this Agreement, acquire or hold any interest in any AsiaSat Shares other than AsiaSat Shares held from time to time by the Company. All interests in AsiaSat Shares (other than any held by Bidco) of the parties and/or their respective subsidiaries and Associates shall be held through the Company, except for any such shares that are held for the account of a pension fund or other third party in accordance with the provisions of Clause 20.

 

4.2 Single purpose company

The parties agree that the sole purpose and objective of the Company is to hold AsiaSat Shares and the Company shall have no other assets and no business interests of any other nature whatsoever unless otherwise agreed between the Shareholders.

 

4.3 Company’s issued share capital to mirror the Company’s underlying holding of AsiaSat Shares

 

  4.3.1 To assist ready identification of attributable underlying interests in AsiaSat Shares and for general administrative convenience, the parties agree that:

 

  (a) the issued share capital of the Company should (so far as possible) mirror exactly (in terms of the number of Shares in issue) the number of AsiaSat Shares held by the Company for the time being and from time to time; and

 

  (b) the issued shares of each separate Class should also (so far as possible) mirror exactly (in terms of the number of Shares of the relevant Class in issue) the AsiaSat Shares which are attributable to such Class for the time being and from time to time.

 

4.4 Manner in which Class rights to be exercised

All class rights conferred by Shares of any particular Class shall be exercisable from time to time by written notice given to the Company signed by or on behalf of the respective Shareholder. Such class rights include:

 

  4.4.1 the right to appoint Directors pursuant to Clause 5.2 and to nominate the Company’s chairman and deputy chairman on a rotating basis pursuant to Clause 5.3;

 

7

  4.4.2 the right to decide how the Company’s AsiaSat Voting Rights should be exercised from time to time with respect to its Attributable AsiaSat Shares in accordance with Clause 7;

 

  4.4.3 the right to dividends and other rights accruing on or with respect to its Attributable AsiaSat Shares in accordance with Clause 8; and

 

  4.4.4 the right to nominate AsiaSat Directors and certain AsiaSat officers in accordance with Clause 6.

 

4.5 Company not to be deemed a mere trustee

All AsiaSat Shares held by the Company for the time being and from time to time are and shall be assets of the Company. Nothing in this Agreement shall constitute the Company a trustee of any AsiaSat Shares for or on behalf of any of the Shareholders or any other party.

 

5 Management and Direction of the Company

 

5.1 Implementation of this Agreement

The business and affairs of the Company shall be managed by the Board. However, the principal function of the Board shall be to give effect to the provisions and underlying intent of this Agreement. Subject always to legal and/or fiduciary duties of the individual Directors, each Shareholder shall be responsible to the other(s) for ensuring that those Directors appointed by it shall conduct themselves (and generally exercise their rights, powers and discretions as Directors) accordingly.

 

5.2 The Board of the Company

 

  5.2.1 At all times whilst this Agreement remains in force the parties shall procure that the number of Directors shall be at least six (6) and up to eight (8) and that (subject as otherwise expressly provided herein) each of Able Star (in its capacity as an ‘X’ Shareholder) and collectively the GE Entities (in their collective capacity as ‘Y’ Shareholder) shall be entitled to appoint and to remove up to four (4) Directors.

 

  5.2.2 Each of Able Star and collectively the GE Entities shall be entitled to remove any Director it has appointed pursuant to this Clause 5.2 and to appoint another Director in place of the Director so removed provided that the relevant ‘X’ Shareholder or ‘Y’ Shareholder who removes a Director in this way shall be exclusively responsible for (and shall indemnify the Company against) any resulting or consequential claims for compensation on the part of such Director.

 

  5.2.3 Able Star shall notify the GE Entities and the Company prior to the Completion Date of changes (if any) to be made to the existing four ‘X’ Directors.

 

  5.2.4 The GE Entities shall notify Able Star and the Company prior to the Completion Date of the names of its first four ‘Y’ Directors.

 

5.3 The chairman and deputy chairman of the Company

 

  5.3.1 The right to nominate the chairman of the Company (who shall be both a Director of the Company and an AsiaSat Director) will rotate on a bi-annual basis (with effect from 1 January in successive periods) between the ‘X’ Shareholders and the ‘Y’ Shareholders in that order, subject to the provisions of Clause 5.3.2 below.

 

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  5.3.2 With effect from the Completion Date, the chairman of the Company shall be Mr. Mi Zeng Xin, an ‘X’ Director. Such chairman shall be deemed to have been nominated by the ‘X’ Shareholder and shall hold such office until 31 December 2008.

 

  5.3.3 The right to nominate the deputy chairman (who shall be both a Director of the Company and an AsiaSat Director) from time to time shall be the right of the Class which will have the right to nominate the next chairman of the Company after the expiry of the two year period then current for the purposes of Clause 5.3.1.

 

  5.3.4 With effect from the Completion Date the deputy chairman of the Company shall be Mr. Ronald J. Herman, Jr., a ‘Y’ Director. Such deputy chairman shall be deemed to have been nominated by the ‘Y’ Shareholder and shall hold such office until 31 December 2008.

 

5.4 Board meetings

 

  5.4.1 Without prejudice to Clause 5.7, any Director or the secretary (on the requirement of a Director) may convene a meeting of the Board at any time provided that each Director is given at least seven (7) day’s notice of the time, date, place and agenda of such meeting unless all Directors agree to waive such notice. The agenda shall specify in reasonable detail the matters to be discussed at the relevant meeting and shall be accompanied by any relevant papers for discussion at such meeting. Unless otherwise first agreed in writing by the Shareholders, all meetings of the Board shall be held in Hong Kong.

 

  5.4.2 Subject to Clause 5.6, the quorum for any meeting of the Board shall be two (2) Directors, one of whom shall be an ‘X’ Director and one of whom shall be a ‘Y’ Director.

 

  5.4.3 Decisions of the Board shall be by unanimous vote of those Directors present. The chairman and deputy chairman of the Board shall each have a vote as a Director, but neither shall have an additional casting vote.

 

  5.4.4 Minutes of each meeting of the Board shall be sent to each Director as soon as practicable after the holding of each meeting.

 

  5.4.5 A resolution in writing or by facsimile signed or approved by facsimile by all the Directors shall be as valid and effective as if it had been duly passed at a meeting of the Board duly convened and held.

 

  5.4.6 Board meetings may be held by conference telephone or other means of telecommunications.

 

  5.4.7 Any Director may appoint an alternate to represent him at meetings of the Board which he is unable to attend who shall be counted towards a quorum of the meeting of Directors and particulars of such appointment shall be delivered to the secretary of the Company.

 

5.5 Shareholder meetings

 

  5.5.1 The Shareholders agree that the ‘X’ Ordinary Shares and ‘Y’ Ordinary Shares carry equal voting rights and Special Shares shall carry no voting rights.

 

  5.5.2

Each of the ‘X’ Shareholders and the ‘Y’ Shareholders shall be responsible to the other for ensuring that all voting rights conferred by the ‘X’ Ordinary and ‘Y’ Ordinary Shares shall be exercised in a manner consistent in all respects with the

 

9

 

provisions and underlying intent of this Agreement and generally so as (so far as may be necessary or desirable) to give effect to this Agreement. In particular, the ‘X’ Shareholders and the ‘Y’ Shareholders shall procure the passing of any and all such Shareholder resolutions as may be necessary or desirable from time to time in order to effect or approve all relevant dividends and/or other distributions, and all issues and redemptions of Shares, contemplated to be paid or made from time to time in accordance with this Agreement.

 

  5.5.3 Subject to Clause 5.6, the quorum for any meeting of the Shareholders shall be two (2) Shareholders, one of whom shall be an ‘X’ Shareholder and one of whom shall be a ‘Y’ Shareholder.

 

5.6 Absence of a quorum

In the event that any meeting of the Shareholders or of the Board is frustrated by the absence of a quorum by reason of the absence of an ‘X’ Shareholder or a ‘Y’ Shareholder or one or more Directors, as the case may be, such meeting may be reconvened by the ‘X’ Shareholder or ‘Y’ Shareholder or Directors, as the case may be, who were present at such meeting at such time and place as they think fit provided that not less than 15 days’ notice of such reconvened meeting shall be given to the ‘X’ Shareholders or ‘Y’ Shareholders or the Directors, as the case may be, which notice shall contain particulars of the matters to be discussed at such meeting and the ‘X’ Shareholder or ‘Y’ Shareholder or Directors, as the case may be, present at such reconvened meeting shall be deemed a quorum provided that at least two Directors or an ‘X’ Shareholder or a ‘Y’ Shareholder, as the case may be, are present and, subject to Clause 14 (Undertakings by GEC and CITIC), shall be free to pass such resolutions as they shall think fit regarding the subject matter for which the meeting in question was convened.

 

5.7 AsiaSat Board business

The ‘X’ Shareholders and ‘Y’ Shareholders shall cooperate with a view to ensuring that a Board meeting will be convened and held prior to every AsiaSat Board meeting to discuss the matters requiring discussion at the AsiaSat Board meeting. Subject always to legal and/or fiduciary duties of the individual AsiaSat Directors, each ‘X’ Shareholder and ‘Y’ Shareholder shall use all reasonable endeavours to ensure that those AsiaSat Directors appointed by it shall vote at the AsiaSat Board in accordance with the agreement or understanding reached at the earlier Board meeting (the proceedings of which shall be conducted in accordance with Clause 5).

 

5.8 Unresolved Matters

 

  5.8.1 If at a duly convened meeting of the Board or at a duly convened meeting of the ‘X’ Shareholders and ‘Y’ Shareholders, the Directors or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) are unable to pass a valid and binding resolution in respect of a matter relating to the business of the Company required to be resolved by the Board or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) (an “Unresolved Matter”), another meeting of the Board or the ‘X’ Shareholders and ‘Y’ Shareholders shall be convened within seven days from the first meeting to discuss the Unresolved Matter, at which meeting the Directors or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) shall respectively use all reasonable endeavours in good faith to agree on a resolution of such Unresolved Matter.

 

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  5.8.2 If a quorum is not achieved at the reconvened meeting or if the Directors or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) are still unable to pass a valid and binding resolution in respect of the Unresolved Matter at the reconvened meeting or if the Unresolved Matter is one which relates to a decision on how the Company’s AsiaSat Voting Rights are to be exercised (a “Voting Matter”), either the ‘X’ Shareholders or the ‘Y’ Shareholders shall refer the Unresolved Matter by written notice to each of the nominated representatives from time to time appointed by each of CITIC and GEC as initially appointed under Clause 5.8.5 and thereafter notified to the other party with specific reference to this Clause (“Nominated Representative”) (such notice shall be served at the same address as CITIC and GEC in accordance with Clause 23 (Notices)) with a view to arranging a meeting between the two Nominated Representatives as soon as practicable (and in respect of a Voting Matter within 5 business days of the Voting Matter being deemed an Unresolved Matter in accordance with Clause 7.3.2), who shall negotiate in good faith to agree on a resolution of the Unresolved Matter.

 

  5.8.3 If the Board or ‘X’ Shareholders and ‘Y’ Shareholders remain unable to pass a valid and binding resolution on the Unresolved Matter for more than five (5) business days from the date on which the Unresolved Matter was first referred by notice to the Nominated Representatives referred to in Clause 5.8.2 or such other period as the Parties may agree in writing, then the provisions of Clause 19 (Duration and Termination) shall be applicable.

 

  5.8.4 The provisions of this Clause 5.8 shall not apply in respect of matters covered by Clause 14 (Undertakings by GEC and CITIC).

 

  5.8.5 With effect from the Completion Date, the Nominated Representative of CITIC is Mr. Mi Zeng Xin and the Nominated Representative of GEC is Mr. Ronald J. Herman, Jr.

 

5.9 Secretary and auditors

 

  5.9.1 The Company secretary (if any) and the Company’s auditors will be appointed, as necessary from time to time, by resolution of the Board. The ‘X’ Shareholders and ‘Y’ Shareholders shall together have a right to request in writing that the Company effects a change in the Company secretary or the Company’s auditors.

 

  5.9.2 With effect from the Completion Date, the Company secretary (if any) shall (as the Shareholders shall procure) be such person whose name shall be notified by GEC and CITIC jointly to the Company at least three business days prior to the Completion Date.

 

  5.9.3 Unless otherwise mutually agreed by the ‘X’ Shareholders and ‘Y’ Shareholders, PricewaterhouseCoopers shall remain the auditors of the Company.

 

5.10 Register of members

The register of members of the Company shall be maintained in such place as the Shareholders shall agree from time to time.

 

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6 Nomination of AsiaSat Directors, Chairman, Deputy Chairman, Chief Executive Officer, Deputy Chief Executive Officer and Chief Financial Officer

 

6.1 Appointment of certain AsiaSat Directors by the Company

The Company and the Shareholders (so far as they are able) shall procure the holding of a meeting of the AsiaSat Board, as soon as practicable after the Completion Date, for the purpose of the replacing any ‘X’ Directors in accordance with the changes notified pursuant to Clause 5.2.3 and the ‘Y’ Directors to be named pursuant to Clause 5.2.4 to the AsiaSat Board, the appointment of the chairman and deputy chairman of the Company named pursuant to Clauses 5.3.2 and 5.3.4 as the chairman and deputy chairman respectively of AsiaSat and the Company and the Shareholders shall procure that immediately following such meeting of the AsiaSat Board and for as long as this Agreement shall remain in force the AsiaSat Board shall comprise the four (4) individuals who are the ‘X’ Directors, the four (4) individuals who are the ‘Y’ Directors, and (for so long as AsiaSat remains listed on the Stock Exchange) two (2) executive directors being the Chief Executive Officer and the Deputy Chief Executive Officer and three (3) independent non-executive directors. In the event AsiaSat becomes a private company, the Shareholders shall discuss whether, and if so how many, executive directors and independent non-executive directors shall be appointed to the AsiaSat Board.

 

6.2 Rights and ability of the Company to procure the appointment and/or removal of AsiaSat Directors

 

  6.2.1 The Company shall exercise its AsiaSat Voting Rights, and all other rights available to it from time to time deriving from its holding of AsiaSat Shares, to procure (so far as it is able) that all of the Directors from time to time shall be appointed to or removed from the AsiaSat Board in accordance with Clause 6.2.

 

  6.2.2 Where an ‘X’ Shareholder or a ‘Y’ Shareholder exercises its right under Clause 5.2.2 to remove a Director and appoint a replacement Director, the Company and the Shareholders shall procure (so far as they are able) that the Director so removed shall also be removed from the AsiaSat Board and that the replacement Director be appointed to the AsiaSat Board, subject always to Clause 6.3.

 

6.3 Responsibilities of the ‘X’ and ‘Y’ Shareholders with respect to their own nominated appointees

Whenever an AsiaSat Director is removed from the AsiaSat Board pursuant to Clause 6.2.2, the relevant ‘X’ Shareholder or ‘Y’ Shareholder which appointed such removed AsiaSat Director shall indemnify the other Shareholders and AsiaSat against any costs, claims or losses arising from any resulting or consequential claims for compensation on the part of such AsiaSat Director.

 

6.4 Nomination of the AsiaSat chairman and deputy chairman

The Company shall make representations to the AsiaSat Board from time to time requesting that the AsiaSat Board shall appoint the Company’s chairman as chairman of the AsiaSat Board and the Company’s deputy chairman as deputy chairman of the AsiaSat Board. It is the intention of the Shareholders that the same individuals should be chairman and deputy chairman of both boards subject to this being acceptable to the AsiaSat Board from time to time.

 

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6.5 Nomination of AsiaSat Chief Executive Officer, Deputy Chief Executive Officer and Chief Financial Officer

 

  6.5.1 The Company shall make representations to the AsiaSat Board from time to time requesting that the AsiaSat Board shall appoint persons nominated by mutual consent of CITIC and GEC and notified to the Company to be AsiaSat’s Chief Executive Officer and Deputy Chief Executive Officer (both of whom shall be directors of AsiaSat).

 

  6.5.2 The Company shall make representations to the AsiaSat Board from time to time requesting that the AsiaSat Board shall appoint the person nominated by mutual consent of CITIC and GEC and notified to the Company to be AsiaSat’s Chief Financial Officer.

 

7 Exercise of the AsiaSat Voting Rights by the Company

 

7.1 Company to obtain instructions from Shareholders

On each relevant occasion when the Company’s AsiaSat Voting Rights are to be, or may be, exercised, the Company shall notify each of the ‘X’ Shareholders and ‘Y’ Shareholders of the requirement for a decision on voting rights as soon as practicable after the Company becomes aware that a resolution is to be proposed at a meeting of AsiaSat shareholders (or any relevant class of AsiaSat shareholders). The Company shall provide each of the ‘X’ Shareholders and ‘Y’ Shareholders with copies of the notice of meeting together with all circulars and other materials provided by AsiaSat to the Company in respect of the meeting.

 

7.2 Shareholders to give unequivocal statement of intention

 

  7.2.1 Following each notification referred to in Clause 7.1, each of the ‘X’ Shareholders and ‘Y’ Shareholders shall communicate its wishes to the Company in writing in accordance with Clause 7.2.3 no later than 5:00 p.m. Hong Kong time on the fourth business day prior to the date of the relevant meeting (or such later time and/or date as practicable after receipt of the notification or as the ‘X’ and ‘Y’ Shareholders may agree in any particular case).

 

  7.2.2 In this regard, each of the ‘X’ Shareholders (as a Class) and ‘Y’ Shareholders (as a Class) must express one wish only. It is not permissible to express different wishes with respect to different Attributable AsiaSat Shares of such Shareholder and anything other than an unequivocal statement of intention with respect to all the Attributable AsiaSat Shares of the relevant Shareholder will be disregarded by the Company so that the relevant Shareholder will be treated as having failed to communicate its wishes for the purpose of Clause 7.3.2.

 

  7.2.3 On any relevant occasion, the wish expressed by any Shareholder under Clause 7.2.1 shall be one (but not more) of the following:

 

  (a) to vote in favour of the relevant resolution;

 

  (b) to vote against the relevant resolution;

 

  (c) to abstain from voting; or

 

  (d) to grant a discretionary proxy to the chairman of the meeting.

 

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7.3 Company’s exercise of the AsiaSat Voting Rights

 

  7.3.1 Where the wishes expressed by the ‘X’ Shareholders and ‘Y’ Shareholders pursuant to Clause 7.2 in respect of a particular resolution are the same, the Company shall exercise its AsiaSat Voting Rights in its entirety in relation to such resolution in accordance with the common wish of the ‘X’ Shareholders and ‘Y’ Shareholders.

 

  7.3.2 Subject to Clause 14, where the wishes expressed by the ‘X’ Shareholders and ‘Y’ Shareholders pursuant to Clause 7.2 for a particular resolution are not the same or where a Shareholder fails to communicate its wishes to the Company by 5:00 p.m. Hong Kong time on the fourth business day prior to the date of the relevant meeting (or such other time and/or date which is as early as is reasonably practicable after receipt of the notification or as the ‘X’ Shareholders and ‘Y’ Shareholders may agree in writing in any particular case), the matter shall be treated as an Unresolved Matter and dealt with pursuant to the provisions of Clauses 5.8.2 and 5.8.3.

 

  7.3.3 Subject always to the Listing Rules and there being no objection from the Stock Exchange, where any notification provided pursuant to Clause 7.1 contains a proposal for a resolution the subject of which is or includes a transaction which is a connected transaction (as such term is defined in the Listing Rules), the Company shall abstain from casting the votes attaching to the Attributable AsiaSat Shares of an ‘X’ Shareholder or a ‘Y’ Shareholder who is a “connected person” for the purpose of the Listing Rules, as the case may be, but the Company shall cast its votes in respect of the other ‘X’ Shareholder or ‘Y’ Shareholder’s Attributable AsiaSat Shares in accordance with such ‘X’ Shareholder or ‘Y’ Shareholder’s wish, as the case may be, as expressed in accordance with Clause 7.2. For the avoidance of doubt, in such circumstances the Company shall not exercise the votes attaching to Attributable AsiaSat Shares of the Special Shareholder, but shall abstain from casting such votes.

 

  7.3.4 Any failure on the part of a Shareholder to communicate its wish to the Company will be treated as an expression of intention to abstain from voting for the purpose of the Company exercising its AsiaSat Voting Rights pursuant to Clause 7.3.2 or Clause 7.3.3.

 

  7.3.5 The provisions of Clauses 7.3.2 and 7.3.3 shall not apply in respect of any of the matters set out in Clause 14 and the Company shall, if appropriate, vote its AsiaSat Voting Rights so as to give effect to the provisions of such Clause.

 

7.4 Votes to be cast so as to give effect to this Agreement

It is an overriding requirement that the Company’s AsiaSat Voting Rights shall at all times (and from time to time) be exercised as necessary, desirable and/or appropriate to give effect to the express provisions and intent of this Agreement (including specifically, but without limitation, the objective and intentions underlying the rights of the respective Classes of ‘X’ Ordinary Shares and ‘Y’ Ordinary Shares to nominate AsiaSat Directors as set out in Clause 6 and the provisions of Clause 14).

 

7.5 Shareholders to consult

The Shareholders shall consult on a regular basis throughout the continuance of this Agreement with respect to their investment in AsiaSat and with a view to establishing and

 

14

maintaining policies with respect to the Company’s ownership interest in AsiaSat (and the voting rights conferred by such ownership interest).

 

7.6 General offers for AsiaSat

Notwithstanding the provisions and procedures contained in Clauses 7.1 to 7.5 above, if any general offer (other than in connection with the Privatisation) is made for AsiaSat then unless the ‘X’ and ‘Y’ Shareholders agree otherwise, the ‘X’ and ‘Y’ Shareholders shall procure that the Company will not accept such offer in respect of any of the AsiaSat Shares held by it.

 

8 Pass through of Dividends and Other Rights accruing on or with respect to Attributable AsiaSat Shares

 

8.1 Cash dividend receipts to be passed through to Shareholders of the relevant Class

 

  8.1.1 As soon as practicable after the payment to the Company of any cash dividend on or with respect to any AsiaSat Shares, the Company shall distribute the relevant dividend to the Shareholders Entitled.

 

  8.1.2 The general applicability of Clause 8.1.1 is subject to any decision of the Board from time to time pursuant to Clause 17.3.3 providing for dividends to be retained by the Company to cover ongoing expenses.

 

  8.1.3 Any one or more Classes may elect from time to time to postpone distribution of any amounts otherwise due to such Class under Clause 8.1.1. Such postponement shall not in any way affect the ultimate entitlement of such Class to the amounts which would otherwise have been distributed to it.

 

  8.1.4 Each distribution by the Company pursuant to Clause 8.1.1 shall be made by way of dividend paid by the Company or in such other manner as the Company and the Shareholders may agree in any particular case.

 

  8.1.5 If the Company is required at any time under applicable laws to make any deduction or withholding from any such distribution, the relevant distribution shall be made net of the applicable deduction or withholding and the Company shall remit to the appropriate revenue authority or other person all amounts required to be so remitted with respect to the amount so deducted or withheld. This Clause 8.1.5 is subject in all respects to Clause 8.1.3.

 

8.2 Other rights accruing on or with respect to Attributable AsiaSat Shares

All rights and entitlements, other than to cash dividend payments and voting rights, accruing from time to time on or with respect to any AsiaSat Shares held by the Company, shall belong to the Shareholders Entitled. These rights and entitlements include:

 

  8.2.1 distributions in kind;

 

  8.2.2 entitlements to bonus shares arising under other reorganisations of AsiaSat’s issued share capital;

 

  8.2.3 scrip dividend elections and other alternatives; and

 

  8.2.4 rights to subscribe further AsiaSat Shares or any other securities of AsiaSat.

 

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Schedule 1 sets out the basis on which such rights and entitlements will be passed through to, or otherwise made available to, or exercised at the direction of, the relevant Class of Shareholders.

 

8.3 Entitlements of Classes

Except as specifically otherwise provided for elsewhere in this Agreement, all dividends and other entitlements conferred by, or accrued or accruing with respect to, any of the Company’s AsiaSat Shares shall be passed through or (as appropriate) allocated and attributed to each Class in proportion to the Shareholders’ respective shareholdings in the Company.

 

8.4 Liability for taxation

 

  8.4.1 If and to the extent that the Company incurs any liability for taxation as a result of, or in connection with, the receipt of any dividend or other distribution (whether in cash or in kind), or in relation to any other right from time to time conferred by or accrued or accruing, on or with respect to any AsiaSat Shares held by the Company, the relevant liability for taxation shall be attributed to the Shareholders Entitled in proportion to the Shareholders’ respective shareholdings in the Company.

 

  8.4.2 The Company shall arrange for any such liability to taxation to be discharged out of the assets concerned and shall account to the Shareholders Entitled on a “net” basis. All the preceding provisions of this Clause 8 and the provisions of Schedule 1 shall be construed accordingly.

 

9 Disposal of Shares in the Company

 

9.1 No Disposal of Shares in the Company

Except as contemplated by Clauses 9.2 and 9.4 each of the Shareholders undertakes that except with the consent of the other Shareholders or in accordance with the provisions of Clauses 7.6 and 9, no Shareholder shall:

 

  9.1.1 sell, transfer or otherwise Dispose of any of such Shares (or any legal or beneficial interest therein);

 

  9.1.2 enter into any agreement in respect of the votes attached to Shares; or

 

  9.1.3 agree, whether or not subject to any condition precedent or subsequent, to do any of the foregoing.

 

9.2 Permitted Disposals of Shares in the Company

 

  9.2.1 The Shareholders undertake that they will not Dispose of all or any part of their Shares, other than to a Qualifying Subsidiary of CITIC (in respect of Able Star) or GEC (in respect of the GE Entities), during the period ending on the third anniversary of the Completion Date, subject always to compliance by such Qualifying Subsidiary with the provisions of Clause 9.3 and Clause 24.3(c).

 

  9.2.2 Subject to Clause 9.2.4, each Shareholder shall be entitled, after the third anniversary of the Completion Date, to Dispose of all or any part of its holding of Shares subject to the prior written consent of (in the case of the ‘X’ Shareholder(s) or the Special Shareholder) the ‘Y’ Shareholder(s) or (in the case of the ‘Y’ Shareholder) the ‘X’ Shareholder(s), such consent not to be unreasonably withheld.

 

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  9.2.3 A Shareholder’s failure to give its consent to any Disposal by the other Shareholder pursuant to Clause 9.2.2 shall be unreasonable, if prior to any such Disposal, the Shareholder proposing to make such Disposal (the “Offeror”) shall have:

 

  (a) offered the Shares proposed to be Disposed to (in the case of the ‘X’ Shareholder(s) or the Special Shareholder) the ‘Y’ Shareholder(s) or (in the case of the ‘Y’ Shareholder(s)) the ‘X’ Shareholder(s), (the “Offeree”), (in a notice setting out the consideration (in cash) of such proposed Disposal and all material terms and conditions of such Disposal (the “Notice”)) at the same cash price as that in the proposed Disposal and on terms no less favourable than those of the proposed Disposal, and the Offeror receives from the Offeree a written response to the Notice accepting the terms of the Disposal within five Business Days of the date of the Notice; and

 

  (b) demonstrated to the reasonable satisfaction of the other Shareholder that there are no reasonably likely risks to AsiaSat’s ability to (and if reasonably requested in the circumstances put in place arrangements to protect AsiaSat from any reasonably likely risks to AsiaSat’s ability to):

 

  (i) maintain its satellite licences and satellite orbital slots with substantially the same scope, coverage and authorisation provided as provided prior to such Disposal; and

 

  (ii) carry on the business of provision of satellite transponder capacity substantially as carried on prior to such Disposal in the PRC,

in each case resulting as a consequence of such Disposal.

 

  9.2.4 No Shareholder (the “Transferor”) may make any Disposal pursuant to Clause 9.2.2 if such Disposal triggers or would trigger an obligation on any other Shareholder (the “Potential Offerors”) and/or any party acting in concert with it to make a general offer for AsiaSat, unless (i) the Potential Offerors have given their prior written consent to the Disposal, such consent not to be unreasonably withheld, and (ii) the Transferor agrees to indemnify the Potential Offerors for all consequences including costs incurred by them in respect of the general offer.

 

  9.2.5 It shall be reasonable for a Potential Offeror to withhold its consent under Clause 9.2.4 on the grounds of, without limitation, costs and expenses, reputation risk or sell down risk.

 

9.3 Qualifying Subsidiaries

 

  9.3.1 If any Shareholder that is a Qualifying Subsidiary is about to or will cease to be a Qualifying Subsidiary it must, before ceasing to be a Qualifying Subsidiary, ensure that its interest in all and not part only of the Shares in which it is interested shall be effectively transferred to GEC or CITIC (as the case may be) or to another Qualifying Subsidiary.

 

  9.3.2

CITIC and GEC may agree from time to time (on a case by case basis) that any subsidiary of any of CITIC and GEC should be deemed to be and should be treated as a Qualifying Subsidiary, as the case may be, for the purposes of this Agreement. Any such agreement shall specify the terms on which it is made and given (including any minimum level of ownership and/or control which CITIC or GEC, as the case may be, is required to maintain in such subsidiary) and, in the

 

17

 

event of any failure to comply with such conditions at any time, the relevant entity shall (for the avoidance of doubt) be deemed to have ceased to be a Qualifying Subsidiary, as the case may be.

 

  9.3.3 Any request by CITIC or GEC, as the case may be, that any of its subsidiaries be treated as a Qualifying Subsidiary for the purposes of this Agreement (a “Request”) shall not be unreasonably refused by the other. The agreement of the other to any such Request shall not be unreasonably withheld or delayed.

 

10 Disposal of AsiaSat Shares

 

10.1 No Disposal of AsiaSat Shares by the Company

Subject to Clauses 10.2 and 10.3, the Company shall not:

 

  10.1.1 sell, transfer or otherwise Dispose of any of its AsiaSat Shares (or any legal or beneficial interest therein);

 

  10.1.2 enter into any agreement in respect of the votes attached to the AsiaSat Shares; or

 

  10.1.3 agree, whether or not subject to any condition precedent or subsequent, to do any of the foregoing,

and for the avoidance of doubt, the Shareholders further undertake that they shall take all necessary steps to procure that the Company shall not do any of the foregoing in respect of the AsiaSat Shares.

 

10.2 Permitted Disposals of AsiaSat Shares by the Company at the instruction of Able Star

After the Completion Date, Able Star may, with the prior written consent of the GE Entities, such consent not to be unreasonably withheld, from time to time direct the Company to Dispose of all or a part of Able Star’s Attributable AsiaSat Shares provided always that any such Disposal of AsiaSat Shares by the Company shall be effected in accordance with the provisions of this Clause 10.2 and Clause 11.

 

10.3 Permitted Disposals of AsiaSat Shares by the Company at the instruction of the GE Entities

After the Completion Date, the GE Entities may, with the prior written consent of CITIC, such consent not to be unreasonably withheld, from time to time direct the Company to Dispose of all or a part of the GE Entities’ Attributable AsiaSat Shares provided always that any such Disposal of AsiaSat Shares by the Company shall be effected in accordance with the provisions of this Clause 10.3 and Clause 11.

11 Adjustments to Rights to Procure Appointments etc.

 

11.1

If, pursuant to the terms of this Agreement, as a result of Disposals of Shares or AsiaSat Shares, the holding of Shares or Attributable AsiaSat Shares by Able Star or the GE Entities is decreased (“Disposition”), the parties agree that they will enter into such amendments to this Agreement (or if this Agreement would be terminated as a result of such Disposition, such other arrangements or agreements as appropriate), relating to the new relationship between the parties as a consequence of the Disposition and their respective rights and ability to influence the governance, management and direction of the Company and AsiaSat through their direct or indirect shareholdings in the Company and

 

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AsiaSat, including but without limitation with respect to, the nomination of the directors and officers of the Company and AsiaSat, any consent requirements for transactions by or events or occurrences affecting AsiaSat and any other negative protections for a party (e.g., tag along rights, drag along rights, quorum requirements, etc.), in each case that are equitable to reflect the proportionate interest of a party in the Company or AsiaSat after such Disposition.

 

11.2 If, pursuant to the terms of this Agreement, as a result of acquisitions of Shares or AsiaSat Shares, Able Star’s holding of Shares or Attributable AsiaSat Shares is increased (an “Acquisition”), the parties agree that they will enter into such amendments to this Agreement (or if this Agreement would be terminated as a result of such Acquisition, such other arrangements or agreements as appropriate), relating to the new relationship between the parties as a consequence of the Acquisition and their respective rights and ability to influence the governance, management and direction of the Company and AsiaSat through their direct or indirect shareholdings in the Company and AsiaSat, including but without limitation with respect to, the nomination of the directors and officers of the Company and AsiaSat, any consent requirements for transactions by or events or occurrences affecting AsiaSat and any other negative protections for a party (e.g., tag along rights, drag along rights, quorum requirements, etc.), in each case that are equitable to reflect the proportionate interest of the parties in the Company or AsiaSat after such Acquisition.

 

12 Listing and Registration Rights

 

12.1 Listing

The Shareholders and the Company agree that:

 

  12.1.1 at any time after the third anniversary of the Privatisation Completion Date, each Shareholder shall have a right to request the Company to undertake and implement a Listing. Such request shall be in writing notified to all parties and set out the details of:

 

  (i) the proposed size of the initial public offering, and

 

  (ii) the proposed stock exchange or over-the-counter market on which the Listing is to be conducted;

 

  12.1.2 they shall use their reasonable endeavours to agree the matters set out in Clauses 12.1.1(i) and 12.1.1(ii) prior to effecting such Listing and shall use their reasonable endeavours to cooperate with and assist AsiaSat with the Listing;

 

  12.1.3 in the absence of any material adverse change in the business of AsiaSat and its subsidiaries as a whole, the number of AsiaSat Shares to be offered in and held in public hands (as defined in the Listing Rules) as a result of such Listing shall not exceed 33 per cent. of the issued share capital of AsiaSat immediately after such Listing, unless the Shareholders otherwise agree in writing; and

 

  12.1.4 all the voting and economic interests in AsiaSat of the parties and their respective subsidiaries and Associates shall be held by the Company or another corporate entity jointly owned by CITIC and GEC at the time of, and after the Listing and shall, unless otherwise agreed in writing between CITIC and GEC, remain in the following proportions:

 

  (i) CITIC/GEC—50/50 voting interest; and

 

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  (ii) CITIC/GEC—50.5/49.5 economic interest;

both prior to and after the Listing.

 

12.2 Where Listing is to result in a Listing of AsiaSat Shares (in the form of American Depositary Shares or otherwise), the parties shall enter into a registration rights agreement (a “Registration Rights Agreement”) on customary terms which will provide the parties (other than the Company) with equal registration rights (on terms to be agreed) in respect of the AsiaSat Shares after the Listing provided that the parties (other than the Company) shall have the right to sell AsiaSat Shares in the same proportion as they own AsiaSat Shares at the same time (unless CITIC or GEC otherwise agree in advance) and that the exercise of any such registration right does not result in any of the Shareholders or their affiliates having to make a mandatory general offer for AsiaSat;

 

12.3 The Company and each of the other parties will cooperate with each other and AsiaSat in connection with any exercise by a Shareholder of its rights under a Registration Rights Agreement and take any other actions necessary or appropriate to ensure that the Company and AsiaSat are able to comply with their obligations under the Registration Rights Agreement in connection with such exercise.

 

13 Purchase of Additional AsiaSat Shares by the Shareholders and their Respective Affiliates

 

13.1 General offer for AsiaSat by Shareholders

Subject to Clause 13.3 and to any mandatory offer resulting from permitted Disposals under Clause 9.4, none of the Shareholders or any of their subsidiaries or Associates shall make a general offer for AsiaSat without the prior written consent of the other Shareholders.

 

13.2 Ability to jointly acquire further AsiaSat Shares through the Company

 

  13.2.1 If at any time during the continuation of this Agreement any of the Shareholders (or any of their respective subsidiaries or Associates) wishes to acquire further AsiaSat Shares, the relevant Shareholder shall notify the Company and the other Shareholders stating (among other things) the number of AsiaSat Shares wished to be acquired and the basis on which it is proposed that such acquisition be effected and funded through the Company.

 

  13.2.2 Such notification shall be treated as a request (a “Purchase Request”) to the Company and to the other Shareholders to arrange for such further AsiaSat Shares to be acquired through the Company in accordance with the provisions of this Clause 13.

 

  13.2.3 Following receipt of a Purchase Request, the other Shareholders shall decide whether or not to agree to such Purchase Request. The Company shall only be obliged to comply with a Purchase Request if the other Shareholders so agree, in their sole discretion.

 

  13.2.4 If and whenever the Shareholders agree to a Purchase Request, the Company shall (and the Shareholders shall cooperate to procure that the Company shall) take all necessary steps to comply with such Purchase Request.

 

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13.3 Ability for CITIC to Acquire Further AsiaSat Shares through the Company

After the third anniversary of the Completion Date, CITIC may, with the consent of GEC, such consent not to be unreasonably withheld, require the Company to acquire further AsiaSat Shares, whether from a third party, the public market (including through a general offer) or AsiaSat, in accordance with the provisions of this Clause 13 and subject always to the provisions of Clause 11. Upon a request by CITIC to the Company to acquire further AsiaSat Shares pursuant to the foregoing sentence, the Company shall, and GEC shall cooperate with CITIC and Able Star to cause the Company to, take such actions as are necessary or appropriate to effectuate such acquisition. It shall be reasonable for GEC to withhold its consent to the acquisition by CITIC of further AsiaSat Shares unless CITIC has:

 

  (i) shown to GEC’s reasonable satisfaction that the acquisition will be beneficial to the growth of AsiaSat’s business; and

 

  (ii) has made good faith efforts to discuss other alternative structures with GEC and AsiaSat.

 

13.4 Bases on which further AsiaSat Shares may be acquired through the Company

Any acquisition by the Company of further AsiaSat Shares agreed to by the Shareholders pursuant to Clause 13.2 shall be effected by way of each acquiring Shareholder (or any of its Qualifying Subsidiaries), and any acquisition of further AsiaSat Shares under Clause 13.3 shall be effected by way of Able Star (or its Qualifying Subsidiary), subscribing for additional ‘X’ Ordinary Shares or ‘Y’ Ordinary Shares, as the case may be. The aggregate number of additional Shares shall equal the number of further AsiaSat Shares to be acquired by the Company (and on the basis that the proceeds of subscription be applied by the Company in purchasing or subscribing for further AsiaSat Shares following which such further AsiaSat Shares will be attributable to the Class allocated to such acquiring Shareholder).

 

13.5 Terms of acquisition of further AsiaSat Shares

Any agreement reached between the Shareholders pursuant to Clause 13.2 or decision made by CITIC pursuant to Clause 13.3 for the acquisition of further AsiaSat Shares by the Company shall contain the full basis on which the relevant AsiaSat Shares are to be acquired, the source of funds and any applicable changes to the issued share capital of the Company and (if necessary or appropriate) to this Agreement.

 

13.6 Costs and expenses

All costs and expenses (including, if and to the extent applicable but without limitation, broker’s commission, Stock Exchange transaction levy, stamp duty and any legal costs) incurred by the Company in connection with any acquisition of further AsiaSat Shares pursuant to:

 

  13.6.1 Clause 13.2 shall be shared by the Shareholders in proportion to their shareholdings in the Company; and

 

  13.6.2 Clause 13.3 shall be borne by CITIC and/or Able Star.

 

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14 Undertakings by GEC and CITIC

 

14.1 Mutual Undertakings

Each of the ‘X’ Shareholder(s) and ‘Y’ Shareholder(s) hereby covenants that without the prior written consent of the other ‘Shareholder (which in the case of the ‘X’ Shareholder(s) means the ‘Y’ Shareholder(s) and in the case of the ‘Y’ Shareholder(s) means the ‘X’ Shareholder(s) and the Special Shareholders), as the case may be, it shall not take any action or participate in any action or scheme which will facilitate or give rise to the occurrence of any of the following events, except where such events result from or arise in connection with a Disposal or Acquisition by CITIC or GEC pursuant to the provisions of Clauses 9.2, 10.2, 10.3 or 13.3 or the Privatisation (“Excepted Events”), each of the ‘X’ Shareholder(s) and ‘Y’ Shareholder(s) shall do and procure any Director appointed or nominated by such Shareholder pursuant to Clause 5 and who is a member of the AsiaSat Board to do all acts which are reasonably within its power (subject in the case of any Director, to his fiduciary duties as a member of the AsiaSat Board) to prevent any of the following events, other than Excepted Events, from occurring, in each case with respect to the Company and AsiaSat:

 

  14.1.1 the alteration, including through purchase or issuance, of the share capital of the Company or AsiaSat (save for the exercise of employee share options, the issue of bonus shares and scrip dividends);

 

  14.1.2 the amendment in any manner to the Memorandum and Articles of the Company or of AsiaSat;

 

  14.1.3 any dilution of a Shareholder’s attributable shareholding of AsiaSat Shares (save for the exercise of employee share options and scrip dividends); and

 

  14.1.4 the withdrawal of listing of AsiaSat Shares from the Stock Exchange or the NYSE.

 

14.2 Notwithstanding the provisions of Clause 14.1, nothing contained in Clause 14.1 shall require any Shareholder to expend any funds or take, or refrain from taking, directly or indirectly, any action with respect to the conduct of such Shareholder’s respective business or assets.

 

15 The Hong Kong Takeovers Code

 

15.1 Potential implications of the Code with respect to arrangements between the Shareholders, the Qualifying Subsidiaries and the Company

 

  15.1.1 Future transactions in AsiaSat Shares or Shares by or between any one or more of the Company, the other parties, the Shareholders, the Qualifying Subsidiaries or a person acting in concert with any of them may have implications under the Code. The parties shall consider and, if practicable, consult with each other with respect to the Code implications of such future transactions as and when any such transaction is (or may be) proposed to be entered into.

 

  15.1.2 The Shareholders acknowledge that the transfers of AsiaSat Shares or Shares contemplated herein may have implications under the Code and without limiting the generality of Clause 15.1.1, the Shareholders shall discuss in good faith such alternatives acceptable to the Shareholders in light of the implications under the Code, including the dissolution of the Company and the termination of this Agreement.

 

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15.2 None of the Shareholders shall enter into any arrangements which result in the other Shareholders or the Company being deemed for the purposes of the Code to be acting in concert with any party holding, or proposing to acquire, any AsiaSat Shares other than any Qualifying Subsidiary of the relevant Shareholder which holds Shares in the Company.

 

15.3 None of the foregoing shall prohibit any Disposal or Acquisition by a Shareholder of Shares in the Company or AsiaSat Shares pursuant to Clauses 9.2, 10.2, 10.3 or 13.3.

 

15.4 If any Acquisition by Able Star gives rise to an obligation to make a mandatory offer under the Code, CITIC and/or Able Star shall be responsible for making such offer on a basis which does not require the participation of any other Shareholder. CITIC and/or Able Star shall hold GEC and its Qualifying Subsidiaries harmless in relation thereto.

 

15.5 Without prejudice to Clause 15.4, no party or its concert party(ies) may take any action which by its or their actions triggers or would trigger an obligation on any other party (or a person acting in concert with such party) to make a mandatory offer under the Code, and each party shall hold the other parties harmless from all consequences including any costs and expenses incurred as a result of triggering a mandatory offer obligation.

 

15.6 Any party (or a person acting in concert with such party) which takes any action which triggers or would trigger an obligation on such party to make a mandatory offer under the Code shall be responsible for all actions, the costs and expenses of making and implementing the offer and all costs and expenses of restoring the public float requirements of AsiaSat in the event the offer fails to obtain a level of acceptances which entitles the offeror and its concert parties to exercise rights of compulsory acquisition of all outstanding securities of AsiaSat.

 

16 Compliance Matters

 

16.1 Obligations under and in relation to the SFO

 

  16.1.1 Each of the parties (other than the Company) shall ensure that it and any Qualifying Subsidiary which holds Shares duly complies with all its obligations arising from time to time under the SFO with respect to AsiaSat Shares in which it is interested for the purposes of the SFO. In order to assist the other Shareholders to comply with such obligations, each Shareholder shall make available to the other Shareholders from time to time, all information with respect to its own circumstances as such Shareholder is (or should reasonably be) aware is relevant to obligations of the other Shareholders under the SFO.

 

  16.1.2 Each of the parties (other than the Company) shall cooperate to procure that the Company duly complies with all its obligations arising under the SFO from time to time.

 

16.2 Disclosure obligations under the Code and the Exchange Act

Each of the parties (other than the Company) shall cooperate to procure that the Company duly complies with all its obligations arising under the Listing Rules, the Code and the Exchange Act from time to time to disclose interests and/or dealings in AsiaSat Shares.

 

16.3 Obligations under and in relation to the Listing Rules, NYSE rules etc.

 

  16.3.1 Each Shareholder shall ensure that it duly complies with all its obligations arising from time to time under the Listing Rules, the Code, the SFO and/or any rules of the NYSE and/or the Exchange Act with respect to AsiaSat.

 

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  16.3.2 Each of the parties (other than the Company shall cooperate to procure that the Company and AsiaSat duly complies with all their respective obligations arising under the Listing Rules, the Code, the SFO and/or any rules of the NYSE and/or the Exchange Act from time to time with respect to AsiaSat.

 

16.4 Each of the parties shall cooperate to ensure that AsiaSat complies with applicable legal requirements.

 

17 Funding Future and Ongoing Expenses

 

17.1 Future acquisitions of AsiaSat Shares

 

  17.1.1 If the Company is to acquire further AsiaSat Shares at a future date, these additional AsiaSat Shares will be acquired either:

 

  (a) pursuant to the exercise of rights offered with respect to existing AsiaSat Shares already held by the Company pursuant to and in accordance with Clause 8 and Schedule 1; or

 

  (b) pursuant to Clause 13.2 or Clause 13.3, in each case with (among other things) an agreed basis for the provision to the Company of any relevant funds required to effect the acquisition of such AsiaSat Shares.

 

  17.1.2 In either of the above cases, all funds required by the Company to acquire such additional AsiaSat Shares will be provided to the Company by the relevant Shareholders as provided in Clause 13.4 or Schedule 1 and the relevant AsiaSat Shares will be attributed as and when they are acquired.

 

17.2 Administrative and general expenses

All administrative and general expenses (being expenses not specifically provided for under any of the other provisions of this Agreement) of the Company shall be funded by each Class in proportion to the Shareholders’ respective shareholdings in the Company on an annual basis by reference to such shareholdings on the Completion Date and on each anniversary thereof. Such administrative and general expenses include annual audit fees and registration fees as well as any other costs necessary for the continuance of the Company and its holding of AsiaSat Shares as contemplated by this Agreement.

 

17.3 Provision of Funding

 

  17.3.1 The Shareholders shall be responsible for ensuring that the Company has sufficient funds available to it from time to time to meet its administrative and general expenses referred to in Clause 17.2.

 

  17.3.2 Such funds shall be made available to the Company in proportion to the Shareholders’ respective shareholdings in the Company and:

 

  (a) in such form (which may include subscription for non-voting deferred shares of negligible nominal value) as will ensure that such funds form part of the Company’s general assets; or

 

  (b)

if (and provided that) all amounts so made available to the Company are duly made available by the Shareholders in proportion to the Shareholders’ respective shareholdings in the Company and on the same terms, in the form of loans carrying the right of repayment (and having such other terms

 

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including, if appropriate, as to interest as may be agreed by the Shareholders from time to time).

 

  17.3.3 The Board may from time to time resolve to retain out of sums which would otherwise fall to be distributed to the Classes pursuant to Clause 8, such reasonable amounts as may be necessary to meet foreseeable future expenses likely to be incurred by the Company. Any amount so retained out of amounts which would otherwise have been distributed to Shareholders of any Class shall be deemed to be held by the Company on account of future obligations of the Shareholders under this Clause 17.3.

 

18 Confidentiality

 

18.1 General confidentiality obligations

All communications between the parties and AsiaSat and/or any of them and all information and other materials supplied to or received by any of them from any other which is either marked “confidential” or by its nature intended to be for the knowledge of the recipient alone, and all information concerning the business transactions and the financial arrangements of any such party with any person with whom it is in a confidential relationship with regard to the matter in question coming to the knowledge of the recipient shall be kept confidential by the recipient unless or until the recipient party can reasonably demonstrate that any such communication, information and material is, or the relevant part of it is, in the public domain through no fault of its own or has been independently developed by it or given to it by a third party with no obligation of confidentiality.

 

18.2 Further measures to ensure confidentiality

Each of the parties (other than the Company) shall (without prejudice to the generality of Clause 18.1) use all reasonable endeavours to procure the observance of the above-mentioned restrictions by the Company and shall take all reasonable steps to minimise the risk of disclosure of confidential information, by ensuring that only they themselves and such of their employees and directors and advisers whose duties will require them to possess any of such information shall have access thereto, and shall be instructed to treat the same as confidential.

 

18.3 Mandatory public statements

None of the preceding provisions of this Clause 18 shall prohibit any party from making any public statement or disclosing information which would otherwise be required to be kept confidential if and to the extent so required:

 

  18.3.1 by law, or by any court of competent jurisdiction, or by a government agency; or

 

  18.3.2 under the Exchange Act or the SFO or by the Listing Rules, the Code or the rules or regulations (whether or not having the force of law) of the Stock Exchange, the NYSE and/or any other stock exchange on which its, or any of its associates’ or affiliates’ shares or debt securities are quoted or by any relevant securities regulatory authority or body,

provided that any party required or proposing to make any such disclosure shall, to the maximum extent reasonably practicable, consult with the other parties (other than the Company), as the case may be, with a view to such disclosure, so far as possible, being limited to matters, and otherwise made in a form, acceptable to them.

 

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18.4 Disclosure to Associates

Notwithstanding Clause 18.1, CITIC and GEC may at any time disclose confidential information and communications to their respective Associates and/or affiliates for the purpose solely of assisting or furthering the business of AsiaSat provided that CITIC and GEC, as applicable, shall procure that any such Associates or affiliates shall treat such information as confidential.

 

18.5 Limits on the use of confidential information

Each of the parties (other than the Company) hereby agrees that it will not use confidential information obtained as a shareholder in the Company, an indirect shareholder in AsiaSat, or directly or indirectly through its nominees or appointees to the board of directors or management of AsiaSat or the Company, to appropriate business opportunities at the expense or to the detriment of AsiaSat.

 

18.6 Disclosure to certain financial institutions

Nothing in this Clause 18 shall restrict the ability of a Shareholder to disclose to any financial institutions with a view to obtaining funds to it in relation to its shareholding in the Company such information concerning the Company and the contents of this Agreement as such Shareholder shall reasonably consider necessary and appropriate.

 

19 Duration and Termination

 

19.1 Except as otherwise provided herein, this Agreement shall continue in full force and effect until the earlier of the following events:

 

  19.1.1 the parties (other than the Company) agree in writing to terminate this Agreement; or

 

  19.1.2 an effective resolution is passed or a binding order is made for the winding up of the Company,

provided, however, that this Agreement shall cease to have effect as regards any Shareholder who ceases to hold any Shares save for any provisions hereof which are expressed to continue in force thereafter.

 

19.2 Either CITIC or GEC may terminate this Agreement by seven (7) days’ notice in writing to the other parties if a matter remains unresolved as provided in Clause 5.8.3.

 

19.3 In the event of termination of this Agreement and notwithstanding such termination, the parties agree to procure the transfer or distribution of each Shareholder’s Attributable AsiaSat Shares to such Shareholder (or as it may direct).

 

19.4 Prior to effecting such transfer or distribution of AsiaSat Shares in accordance with Clause 19.3, the Company shall exercise the AsiaSat Voting Rights attaching to each of the ‘X’ Shareholder’s and the ‘Y’ Shareholder’s Attributable AsiaSat Shares in accordance with the wishes of the relevant ‘X’ Shareholder or ‘Y’ Shareholder expressed in accordance with Clause 7.2.1 and the AsiaSat Voting Rights attaching to the Special Shareholder’s Attributable AsiaSat Shares shall not be exercised by the Company.

 

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20 Restrictions on the Shareholders

 

20.1 Restrictions

Each of CITIC and GEC agrees for the benefit of the other (which also takes such benefit for and on behalf of the Company and its affiliates) that, subject to the provisions of Clauses 20.2, 20.3 and 20.4, it will not and will procure that none of its Associates and affiliates will in any Relevant Capacity during the continuance of this Agreement directly or indirectly carry on any business which is of the same or similar type to the Business nor be concerned in any such business save through the holding or being interested in not more than 5 per cent. of the outstanding share capital of a company the shares of which are listed on any recognised stock exchange.

 

20.2 Reasonableness of Restrictions

CITIC and GEC agree that they consider that the restrictions contained in this Clause 20 are no greater than is reasonable and necessary for the protection of the interests of the Company and each other but if any such restriction shall be held to be void but would be valid if deleted in part or reduced in application, such restriction shall apply with such deletion or modification as may be necessary to make it valid and enforceable.

 

20.3 Interpretation

The following terms shall have the following meanings respectively in this Clause 20:

 

  20.3.1 “Business” means the provision of satellite transponder capacity from satellites positioned between the orbital slots of 50E to 150E;

 

  20.3.2 “Relevant Capacity” means for its own account or for that of any person, firm or company (other than the Company) and whether through the medium of any company controlled by it (for which purpose there shall be aggregated with its shareholding or ability to exercise control the shares held or control exercised by any person connected with the relevant Shareholder) or as principal, partner, consultant or agent.

 

20.4 Exceptions to Restrictions

 

  20.4.1 The restrictions contained in this Clause 20 shall not apply to:

 

  (i) the provision of financial services to a third party by a party, and/or its affiliates and/or Associates, including without limitation capital markets activity, debt or equity financing, leasing, default recovery activities, securities activity, insurance or any other financial services activities;

 

  (ii) any investments made or managed on behalf of a third party by a party, and/or its affiliates and/or Associates;

 

  (iii) any investments made on behalf of a party’s pension funds; and

 

  (iv) any investment in relation to which the Business is only incidental to the entity and/or business invested in (the “Investee”) (that is, where less than 10 per cent. of the revenues of the Investee relates to the Business);

and provided that if an Associate that is not an affiliate breaches the restrictions in Clause 20.1, the party which is related to the Associate in breach shall be given by the other parties a reasonable opportunity to cure the breach and shall have no liability for breach so long as such party (1) attempts using all reasonable efforts in

 

27

good faith to cure the breach, (2) provides no assistance to the Associate in connection with or related to the Business, and (3) is not otherwise in breach.

 

  20.4.2 A party (other than the Company) shall be entitled to waive any breach or prospective breach by another party (other than its own Associate or affiliate) and such other party’s Associates and affiliates of the provisions of Clause 20.1 after consultation with AsiaSat.

 

21 Arrangements with AsiaSat

 

21.1 Subject to the provisions of Clause 21.2 below, each of CITIC and GEC agrees for the benefit of the other (which also takes such benefit on behalf of the Company and its subsidiaries) that it will not and will procure that none of its subsidiaries and Associates will during the continuance of this Agreement enter into any agreement or arrangement with AsiaSat (or any of its subsidiaries or Associates) without the prior written approval of CITIC (in the case of GEC and its subsidiaries and Associates) or GEC (in the case of CITIC and its subsidiaries and Associates).

 

21.2 The restrictions contained in Clause 21.1 above shall not apply to:

 

  21.2.1 any transaction or arrangement between (i) AsiaSat and/or its subsidiaries and Associates, and (ii) the Company and/or Bidco; and

 

  21.2.2 any pre-existing transaction or arrangement on arm’s length terms between (i) AsiaSat and/or its subsidiaries and Associates, and (ii) CITIC and/or its affiliates and which has been disclosed by AsiaSat in its annual reports or public announcements prior to the date of this Agreement.

 

22 Tax Status

CITIC shall cooperate with GEC at GEC’s request to enable the Company to elect to be classified as a partnership for US federal tax purposes, provided that GEC promptly provides CITIC with all relevant information prior to such election, that all costs and liabilities incurred by AsiaSat, the Company and/or CITIC in giving such cooperation or making such election (as the case may be) will be reimbursed promptly and in full by GEC and that such cooperation and such election shall not increase the tax burden of any of AsiaSat, the Company and/or CITIC and shall not otherwise be prejudicial to the interests of any of them.

 

23 Notices

All notices, statements, demands, requirements or other communications and documents required or permitted to be given, served or delivered to any party under this Agreement (a “Communication”) shall be in writing in the English language and shall be either delivered by hand (including, without limitation, delivery by courier) or sent by prepaid certified or registered mail (airmail in the case of all international Communications), with return receipt requested, to that party at its address stated below or sent by facsimile machine to its facsimile number stated below or sent by e-mail to its e-mail address as stated below or to such other address or facsimile number or e-mail address as that party may from time to time have notified the other party as being its address or facsimile number or e-mail address for the purposes of this Agreement to the exclusion of all previously applicable addresses and facsimile numbers and e-mail addresses. A Communication once given, served or delivered shall be irrevocable without the consent of the recipient which may be

 

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given or withheld in its absolute discretion. A Communication shall be deemed to have been given, served or delivered:

 

23.1 if delivered by hand (including, without limitation, delivery by courier), upon delivery;

 

23.2 if sent by mail, upon proof of receipt;

 

23.3 if sent by facsimile machine, one hour after its transmission if such time is during business hours in the place of its receipt or, if it is not, on the opening of business on the next succeeding business day in the place of its receipt subject, if sent by facsimile machine transmission, to its having in fact been received in legible form; and

 

23.4 if sent by e-mail, provided the e-mail is clearly stated in the subject line and at the top of the e-mail message to be notice under this Agreement, upon confirmation of receipt of the e-mail by the intended recipient (a read receipt will not suffice for this purpose).

 

23.5 The addresses, facsimile numbers and e-mail addresses of the parties are as follows:

In the case of GEC and the GE Entities at:

33rd Floor

One Exchange Square

Central

Hong Kong

 

Fax:    + 852 2100 6733
Attention:    Mr. Michael Hosokawa
E-mail:    generalcounsel.equity@ge.com

In the case of CITIC at:

Capital Mansion

6 Xinyuan Nanlu

Chaoyang District

Beijing 100004

China

 

Fax:    (861) 6466 1186
Attention:    Mr. Guan Yi
E-mail:    guanyi@citic.com
with a copy to:    Mr. Kenneth Ko, Room 2118, Hutchison House, 10 Harcourt Road, Hong Kong (fax number: (852) 2861 1901, e-mail kenko@citicua.com)

In the case of the Company at:

Room 2118, Hutchison House

10 Harcourt Road

Hong Kong

 

Fax:    (852) 2861 1901
Attention:    Mr. Kenneth Ko (Ko Fai Wong)
E-mail:    kenko@citicua.com

 

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In the case of Able Star at:

Room 2118, Hutchison House

10 Harcourt Road

Hong Kong

 

Fax:    (852) 2861 1901
Attention:    Mr. Kenneth Ko (Ko Fai Wong)
E-mail:    kenko@citicua.com

 

24 Miscellaneous

 

24.1 Costs

Each party shall bear the costs and expenses incurred by it in connection with the preparation, negotiation and execution of this Agreement and all other agreements and documents referred to in this Agreement.

 

24.2 Conflict with Memorandum and Articles

In the event of any ambiguity or discrepancy between the provisions of this Agreement and the Memorandum and Articles, it is the intention that the provisions of this Agreement shall prevail and accordingly the parties shall exercise all voting and other rights and powers available to them so as to give effect to the provisions of this Agreement and shall further, if necessary, procure any required amendment to the Memorandum and Articles.

 

24.3 Assignment and adherence

 

  (a) This Agreement shall be binding on the parties hereto and their respective successors and assigns.

 

  (b) None of the parties hereto shall be entitled to assign this Agreement or any of its rights or obligations under this Agreement.

 

  (c) As a condition to any Qualifying Subsidiary becoming a Shareholder pursuant to Clause 9.2, the transferring Shareholder shall procure that such Qualifying Subsidiary adheres to this Agreement by executing (and delivering to the other parties to this Agreement) a deed of adherence substantially in the form set out in Schedule 2.

 

24.4 Time of the essence

Time shall be of the essence as regards the provisions of this Agreement, both as regards the times and periods mentioned in this Agreement and as regards any times or periods which may, by agreement between the parties, be substituted for them.

 

24.5 Entire agreement - amendments to be in writing

This Agreement (including the Schedules) together with the other written documents and agreements entered into on the date of this Agreement or on the Completion Date constitute the entire agreement between the parties and save as otherwise expressly provided no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless made in writing specifically referring to this Agreement and duly signed by or on behalf of the parties hereto.

 

30

24.6 Remedies

No remedy conferred by any of the provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedy.

 

24.7 Equitable relief

Without prejudice to any other rights or remedies which may be available to any party, each of the Shareholders acknowledges that damages would not be an adequate remedy for any breach on its part of obligations incumbent on it under this Agreement and, accordingly, that the other Shareholders shall be entitled to the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of any such obligations by it and that no proof of special damages shall be necessary for the enforcement of this Agreement.

 

24.8 Severance

If any provision of this Agreement or part thereof is rendered void, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

24.9 No partnership

Nothing in this Agreement shall be deemed to constitute a partnership between the parties hereto nor constitute any party the agent of any other party for any purpose.

 

24.10 Third parties

This Agreement does not create any right under the Contracts (Rights of Third Parties) Act 1999 which is enforceable by any person who is not a party to it.

 

24.11 Parties to effect Agreement

Each of the parties to this Agreement shall cooperate with the others and shall execute and deliver to the others such other instruments and documents and take such other action as may reasonably be requested from time to time in order to carry out, evidence and confirm their respective rights and the intended purpose of this Agreement.

 

24.12 GEC

GEC shall procure the observance of the provisions of this Agreement by its subsidiaries, affiliates and Associates.

 

25 Governing Law

This Agreement and the documents to be entered into pursuant to it shall be governed by and construed in accordance with English law.

 

31

26 Arbitration

 

26.1 Any dispute or difference arising out of, in connection with or relating to (in each such case, in any manner whatsoever) this Agreement, including a dispute as to the validity or existence of this Agreement or this Clause 26, shall be referred to, and finally resolved by means of, arbitration in accordance with the provisions of this Clause 26.

 

26.2 Any arbitration commenced pursuant to this Clause 26:

 

  26.2.1 shall be conducted in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (the “UNCITRAL Rules”) then in effect as modified by the provisions of this Clause 26;

 

  26.2.2 shall have its seat in Hong Kong where, unless otherwise directed by the arbitral tribunal, all hearings in the arbitration shall take place;

 

  26.2.3 shall be conducted in the English language; and

 

  26.2.4 shall be administered by the Hong Kong International Arbitration Centre (“HKIAC”), which shall act as the appointing authority.

 

26.3 The arbitration shall be carried out by an arbitral tribunal consisting of three arbitrators appointed as follows:

 

  26.3.1 the party or parties initiating arbitration shall (if more than one, jointly) appoint an arbitrator in its or their notice of arbitration in accordance with the provisions of Articles 3 and 7 of the UNCITRAL Rules as modified by this Clause 26;

 

  26.3.2 the party or parties responding to the notice of arbitration shall (if more than one, jointly) appoint an arbitrator in accordance with the provisions of Articles 3 and 7 of the UNCITRAL Rules as modified by this Clause 26;

 

  26.3.3 the third arbitrator who shall act as the chairman of the arbitral tribunal shall be appointed by the two arbitrators appointed by or on behalf of the parties (the “Party Arbitrators”) within a period of 10 Business Days from the date of the appointment or the confirmation of the appointment of the second Party Arbitrator; and

 

  26.3.4 in default of the appointment of any arbitrator for any reason whatsoever, the relevant arbitrator(s) shall be appointed by the HKIAC within 10 Business Days in accordance with the provisions of Article 7 of the UNCITRAL Rules (as modified hereby).

 

26.4 Each party unconditionally and irrevocably submits to the jurisdiction of the courts of Hong Kong for the purposes of:

 

  26.4.1 any proceeding for attachment, injunction or any other interim or conservatory measure in aid of any arbitral proceeding commenced under Clause 26; and

 

  26.4.2 any proceeding arising out of or relating to the enforcement of any arbitral award or procedural order of any arbitral tribunal duly constituted under this Clause 26;

but for such purposes and to such extent only.

 

26.5

Where disputes arise under this Agreement, under the Bidco Shareholders Agreement and under the Cooperation Agreement which, in the absolute discretion of the first panel of arbitrators to be appointed in any of the disputes, are so closely connected that it is expedient for them to be resolved in the same proceedings, that panel of arbitrators shall

 

32

have the power to order that the proceedings to resolve that dispute shall be consolidated with those to resolve any of the other disputes (whether or not proceedings to resolve those other disputes have yet been instituted), provided that no date for the final hearing of the first arbitration has been fixed.

 

27 Appointment of Process Agent

 

27.1

Each of the GE Entities and GEC irrevocably appoints GE Asia of 33rd Floor, One Exchange Square, Central, Hong Kong (for the attention of Mr. Michael Hosokawa) or its other principal place of business in Hong Kong as its agent to accept service of process in Hong Kong in any legal action or proceedings arising out of or in connection with this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the GE Entities or GEC. If such process agent ceases to be able to act as such or to have an address in Hong Kong, each of GEC and the GE Entities irrevocably agrees to appoint a new process agent in Hong Kong acceptable to the other parties and to deliver to other parties within 14 days a copy of a written acceptance of appointment by the process agent.

 

27.2 Each of CITIC, Able Star and the Company irrevocably appoints CITIC United Asia Investments Ltd. of Rm 2118, Hutchison House, 10 Harcourt Road, Hong Kong (for the attention of Mr. Kenneth Ko) or its other principal place of business in Hong Kong as its agent to accept service of process in Hong Kong in any legal action or proceedings arising out of or in connection with this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by CITIC, Able Star or the Company. If such process agent ceases to be able to act as such or to have an address in Hong Kong, each of CITIC, Able Star and the Company irrevocably agrees to appoint a new process agent in Hong Kong acceptable to the other parties and to deliver to other parties within 14 days a copy of a written acceptance of appointment by the process agent.

 

27.3 Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law.

In witness whereof this Agreement has been duly executed.

 

SIGNED by

ABLE STAR ASSOCIATES LIMITED

/s/ MI ZENG XIN
   
Duly authorised:
Name: MI ZENG XIN
Position: DIRECTOR

 

33

SIGNED by

GE PACIFIC-1 HOLDINGS, INC.

/s/ JOHN W. CAMPO, JR.
   
Duly authorised:
Name: JOHN W. CAMPO, JR.
Position: MANAGING DIRECTOR

 

SIGNED by

GE PACIFIC-2 HOLDINGS, INC.

/s/ JOHN W. CAMPO, JR.
   
Duly authorised:
Name: JOHN W. CAMPO, JR.
Position: MANAGING DIRECTOR

 

SIGNED by

GE PACIFIC-3 HOLDINGS, INC.

/s/ JOHN W. CAMPO, JR.
   
Duly authorised:
Name: JOHN W. CAMPO, JR.
Position: MANAGING DIRECTOR

 

SIGNED by

CITIC GROUP

/s/ MI ZENG XIN
   
Duly authorised:
Name: MI ZENG XIN
Position: VICE PRESIDENT

 

34

SIGNED by

GENERAL ELECTRIC COMPANY

/s/ J. KEITH MORGAN
   
Duly authorised:
Name: J. KEITH MORGAN
Position: VICE PRESIDENT

 

SIGNED by

BOWENVALE LIMITED

    
/s/ RONALD J. HERMAN, JR.     /S/ KENNETH KO
           
Duly authorised:    

Name: RONALD J. HERMAN, JR.

Position: DIRECTOR

    

KENNETH KO (KO FAI WONG)

DIRECTOR

 

35

SCHEDULE 1

Basis on which certain rights accruing on or with respect to

Attributable AsiaSat Shares are to be passed through to,

or otherwise made available to, or exercised at the direction of,

the relevant Class of Shareholders

 

36

SCHEDULE 2

Form of Deed of Adherence

 

37

SCHEDULE 3

Memorandum and Articles

 

38

INDEX

 

1    Interpretation    2
2    Effectiveness    6
3    Structure of the Company    6
4    Single Purpose Collective Shareholding Vehicle    7
5    Management and Direction of the Company    8
6    Nomination of AsiaSat Directors, Chairman, Deputy Chairman, Chief Executive Officer, Deputy Chief Executive Officer and Chief Financial Officer    12
7    Exercise of the AsiaSat Voting Rights by the Company    13
8    Pass through of Dividends and Other Rights accruing on or with respect to Attributable AsiaSat Shares    15
9    Disposal of Shares in the Company    16
10    Disposal of AsiaSat Shares    18
11    Adjustments to Rights to Procure Appointments etc.    18
12    Listing and Registration Rights    19
13    Purchase of Additional AsiaSat Shares by the Shareholders and their Respective Affiliates    20
14    Undertakings by GEC and CITIC    22
15    The Hong Kong Takeovers Code    22
16    Compliance Matters    23
17    Funding Future and Ongoing Expenses    24
18    Confidentiality    25
19    Duration and Termination    26
20    Restrictions on the Shareholders    27
21    Arrangements with AsiaSat    28
22    Tax Status    28

 

i

23    Notices    28
24    Miscellaneous    30
25    Governing Law    31
26    Arbitration    32
27    Appointment of Process Agent    33

Schedule 1 – Basis on which certain rights accruing on or with respect to Attributable AsiaSat Shares are to be passed through to, or otherwise made available to, or exercised at the direction of, the relevant Class of Shareholders

Schedule 2 – Form of Deed of Adherence

Schedule 3 – Memorandum and Articles

 

ii

EX-99.6 7 dex996.htm LETTER AGREEMENT Letter Agreement

Exhibit 99.6

[GE LOGO]

General Electric Capital Corporation

13 February 2007

Confidential

 

Mr. Mi Zengxin    cc.    Mr Romain Bausch
Executive Director & Vice President       President & CEO
CITIC Group       SES S.A.
Capital Mansion       L-6815 Chateau de Betzdorf
6 Xinyuannanlu       Betzdorf
Chaoyang District       Luxembourg
Beijing 100004 China      

Dear Mr. Mi:

We, General Electric Capital Corporation, a wholly owned subsidiary of General Electric Company, (“GECC”, together with General Electric Company (“GEC”) and their respective affiliates, “GE”), write to confirm our agreement to the matters set out in this letter.

We have discussed with you the transaction being negotiated between GE and SES S.A. (previously SES Global S.A. and, together with its subsidiaries, “SES”) by which GE’s holding of shares in SES S.A. would be exchanged for shares in a new company (“GE Shareholder”) holding assets that would include the beneficial and legal ownership of all of SES’s shares in Bowenvale Limited (“Bowenvale”), being 133,107,975 Y Ordinary Shares designated as such and of HK$0.10 each in the total issued share capital of Bowenvale (the “Shares”). This transaction (the “SES-GE Transaction”) requires the prior consent of CITIC Group and its subsidiary Able Star Associates Limited (“Able Star”) (both together with other subsidiaries of CITIC Group, “CITIC”) in respect of the contemplated transfer of the Shares by SES to GE Shareholder (which may involve multiple internal SES transfers). On completion of the SES-GE Transaction (“SES-GE Completion”), GE Shareholder would be wholly owned by a GEC subsidiary and would hold the Shares.

As discussed, GE would accept the terms of the Shareholders’ Agreement relating to Bowenvale dated 10 December 1998, as amended by the Deed of Adherence and Amendment No.1 dated 9 November 2004, (the “1998 Shareholders’ Agreement”), with the changes described in appendix 1 attached to this letter (the “Appendix 1”), and GECC and GE Shareholder, and CITIC Group and Able Star, and GEC for certain purposes will enter into an amended and restated shareholders’ agreement reflecting these changes (the “New Shareholders’ Agreement”), the substantive provisions of which will take effect from the closing of the SES-GE Transaction.

Since the SES-GE Transaction would, in the determination of the Hong Kong Securities and Futures Commission’s Takeovers Executive, trigger a mandatory general offer for Asia Satellite Telecommunications Holdings Limited (“AsiaSat”), you have invited us to consider a joint privatisation of AsiaSat to be implemented by way of a general offer or a scheme of arrangement of AsiaSat. Accordingly, you have asked that we confirm, and we hereby confirm, that GE would participate with CITIC in a potential privatisation of AsiaSat on terms

set out in the draft announcement attached to this letter (the “Announcement”) (the “CITIC-GE Offer”), to be initiated at around the same time as the SES-GE Transaction is announced, with any modification as may be agreed between CITIC and GE. As an alternative, if CITIC informs us that it would prefer, we would also be willing to participate in a privatisation at the time the SES-GE Transaction is completed, on terms to be agreed.

By signing below,

 

•  

SES hereby:

 

  (i) requests that CITIC Group and Able Star consent to the transfer (which may be preceded by multiple internal SES transfers) to GE Shareholder of the Shares, subject to acquisition by GE of the beneficial and legal ownership of the entire share capital of GE Shareholder on SES-GE Completion;

 

  (ii) requests that CITIC Group and Able Star release SES S.A., SES Global Holding AG, and any other relevant SES entity, and their respective employees, officers and directors, from their obligations under the 1998 Shareholders’ Agreement and all and any prior breaches or claims in respect of the 1998 Shareholders’ Agreement or otherwise with effect from the acquisition by GE of the beneficial and legal ownership of the entire share capital of GE Shareholder on the SES-GE Completion;

 

  (iii) consents, and undertakes to procure its subsidiaries to exercise their rights as shareholder to cause Bowenvale to consent, to any CITIC-GE Offer on terms that are the same in all material respects to those set out in the Announcement (which offer will be conditional on, amongst other things, SES-GE Completion), including any ancillary actions required to effect such offer, in accordance with Clauses 14 and 16 and other relevant provisions of the 1998 Shareholders’ Agreement, subject only to the signing of the agreement between GE and SES which provides for the transfer of the Shares from SES to GE Shareholder in the SES-GE Transaction (the “SES-GE Transaction Agreement”); and

 

  (iv) releases CITIC Group, Able Star and any other relevant CITIC entity, and their respective employees, officers and directors, from their obligations under the 1998 Shareholders’ Agreement and all and any prior breaches or claims in respect of the 1998 Shareholders’ Agreement or otherwise with effect from the acquisition by GE of the beneficial and legal ownership of the entire share capital of GE Shareholder on SES-GE Completion (save that prior to the SES-GE Completion, CITIC Group, Able Star and any other relevant CITIC entity may enter into such conditional agreements as are required to implement the CITIC-GE Offer and any ancillary actions in relation thereto without such acts constituting a breach of the 1998 Shareholders’ Agreement).

 

•  

Subject to SES’ consents and undertakings in paragraph (iii) above becoming wholly unconditional and the release of the Announcement for publication on the website of the Stock Exchange of Hong Kong Limited (which release shall be promptly confirmed in writing (by e-mail) to SES (Attn: John Purvis) and its Hong Kong legal advisers, Herbert Smith (Attn: Ashley Alder), by CITIC Group (Kenneth Ko) or its Hong Kong legal advisers, Linklaters (Teresa Ma or Samantha Thompson)), CITIC Group and Able Star hereby consent and release, and agree to exercise their rights as

 

shareholder to cause Bowenvale to consent and release (in accordance with Clause 9 of the 1998 Shareholders’ Agreement and other relevant provisions of the 1998 Shareholders’ Agreement), on the terms requested by SES in items (i) and (ii) above. We and Able Star also agree to notify SES promptly of any actual material revision to the terms of the CITIC-GE Offer (including, without limitation, to the offer price) as set out in the Announcement.

 

•  

For this CITIC Group and Able Star consent and release, SES S.A. or any of its subsidiaries including SES Global Holding AG shall pay HK$100,000,000 in cash to CITIC upon the closing of the SES-GE Transaction and the acquisition by GE of the beneficial and legal ownership of the entire share capital of GE Shareholder.

 

•  

SES acknowledges and agrees that CITIC Group’s and Able Star’s obligations to consult AsiaSat under Article 21.4 of the 1998 Shareholders’ Agreement are deemed to have been fully satisfied.

 

•  

The parties (the “Parties”) to the 1998 Shareholders’ Agreement agree that the 1998 Shareholders’ Agreement (other than Clause 19 (Confidentiality)) shall be terminated in its entirety and shall cease to have effect as from SES-GE Completion. Further, other than in respect of liabilities and claims (if any) under Clause 19 (Confidentiality) of the 1998 Shareholders’ Agreement, without prejudice to any of the provisions of this letter, the Parties shall, subject to SES-GE Completion, be released from all (if any) liabilities and claims under or in connection with the 1998 Shareholders’ Agreement (including without limitation in respect of any antecedent breaches) and, subject to SES-GE Completion, no claim under the 1998 Shareholders’ Agreement shall be brought by any Party against any of the other Parties arising as from SES-GE Completion.

 

•  

The sequence of events relating to signing of the SES-GE Transaction Agreement and the publication of the Announcement shall be as set out in appendix 2 to this letter.

No change to any part of the Appendix 1 shall require the consent of SES.

The provisions of this letter shall be governed by English law.

Any dispute, controversy or claim arising out of or relating to this letter, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as at present in force and as may be amended by the rest of this clause. The appointing authority shall be the Hong Kong International Arbitration Centre (“HKIAC”). The place of arbitration shall be in Hong Kong at the HKIAC. Any such arbitration shall be administered by HKIAC in accordance with HKIAC Procedures for Arbitration in force at the date of this agreement including such additions to the UNCITRAL Arbitration Rules as are therein contained. There shall be three arbitrators. When three arbitrators have been appointed, the award is given by a majority decision. If there be no majority, the award shall be made by the Chairman of the arbitral tribunal alone. The language to be used in the arbitral proceedings shall be English.

We shall keep and we ask that you please keep this information confidential until the SES-GE Transaction is announced, provided always that we and SES shall all keep any and all information relating to any CITIC-GE Offer confidential until any CITIC-GE Offer is announced, to the extent of the information announced by the offeror, in each case save as is required to be disclosed by law, the Securities and Futures Commission of Hong Kong, the Stock Exchange of Hong Kong Limited or any regulatory or governmental authority or court of competent jurisdiction.

This letter may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any party may enter into this letter by executing any such counterpart.

Thank you very much for your assistance in helping GE and SES complete this important transaction. We look forward to working with you, through Bowenvale and Bidco, to help AsiaSat succeed.

Sincerely yours,

 

General Electric Capital Corporation
By  

/s/ Ronald J. Herman, Jr.

Name:   Ronald J. Herman, Jr.
Title:   Vice President
Date:  

Attachments

Agreed to and consent given on the terms of this letter by each of:

 

SES S.A.
By  

/s/ Romain Bausch

Name:   Romain Bausch
Title:   President & CEO
Date:  
By  

/s/ Mark Rigolle

Name:   Mark Rigolle
Title:   EVP & CFO
Date:  
SES Global Holding AG
By  

/s/ Romain Bausch

Name:   Romain Bausch
Title:  
Date:  
CITIC Group
By  

/s/ Mi Zengxin

Name:   Mi Zengxin
Title:   Executive Director & Vice President
Date:  
Able Star Associates Limited
By  

/s/ Kenneth Ko Fai Wong

Name:   Kenneth Ko Fai Wong
Title:   Director
Date:  

 

Bowenvale Limited      
By   

/s/ Romain Bausch

           and           By  

/s/ Kenneth Ko Fai Wong

Name:    Romain Bausch     Name:   Kenneth Ko Fai Wong
Title:    Director     Title:   Director
Date:        Date:  
EX-99.7 8 dex997.htm CO-OPERATION AGREEMENT Co-operation Agreement

Exhibit 99.7

Dated February 2007

CITIC GROUP

and

ABLE STAR ASSOCIATES LIMITED

and

GENERAL ELECTRIC CAPITAL CORPORATION

and

GE CAPITAL EQUITY INVESTMENTS, INC.

CO-OPERATION AGREEMENT

Linklaters

10th Floor Alexandra House

Chater Road

Hong Kong

Telephone (852) 2810 4888

Facsimile (852) 2810 8133

Ref. L–123032

Table of Contents

 

Contents    Page
1    Interpretation    2
2    Joint Announcement    5
3    Implementation and Documentation    5
4    The SES-GE Transaction    6
5    Regulatory Matters    6
6    Shareholders’ Agreements    7
7    Amalgamation of Bowenvale and Bidco    7
8    Appointment of advisers and costs    7
9    Costs of Privatisation    8
10    Termination    9
11    Confidentiality    9
12    Legal Effect    9
13    Miscellaneous    9
14    Notices    10
15    Governing Law and Jurisdiction    10
16    Arbitration    11
Schedule 1 Form of Joint Announcement    14
Schedule 2 Form of Bidco Shareholders’ Agreement    15

 

1

THIS AGREEMENT is made on February 2007 between:

 

(1) CITIC GROUP, an enterprise established under the laws of the People’s Republic of China whose registered office is at Capital Mansion, 6 Xinyuan Nan Road, Chaoyang District, Beijing 100004, People’s Republic of China (“CITIC Topco”);

 

(2) ABLE STAR ASSOCIATES LIMITED, a company incorporated in the British Virgin Islands whose registered address is at PO Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (“CITIC Shareholder” and, together with CITIC Topco, the “CITIC Parties”);

 

(3) GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated in the United States with offices at 260 Long Ridge Road, Stamford, CT 06927, United States (“GE Topco”); and

 

(4) GE CAPITAL EQUITY INVESTMENTS, INC., a company incorporated in the United States with offices at 201 Merritt 7, PO Box 5201, Norwalk, CT 06856, United States (“GE Shareholder” and, together with GE Topco, the “GE Parties”),

each a “Party” and together the “Parties”.

WHEREAS:

 

(A) The GE Shareholder and the CITIC Shareholder have incorporated a new entity, Bidco, through which to privatise AsiaSat for cash consideration, either by way of a scheme of arrangement of AsiaSat to cancel all AsiaSat Shares and AsiaSat ADSs or by way of a voluntary general offer for the entire issued share capital of AsiaSat and AsiaSat ADSs, in each case other than in respect of AsiaSat Shares already held by Bowenvale. It is also proposed that Bidco will make an offer to acquire and cancel AsiaSat Options, subject to completion of the proposed privatisation.

 

(B) Approximately 68.9% of the AsiaSat Shares are currently owned by Bowenvale. Bowenvale is currently jointly owned by the CITIC Shareholder and SES Holding. GE Shareholder proposes to acquire SES’s entire interest in Bowenvale under the terms of the SES-GE Transaction.

 

(C) It has been determined by the Executive that the implementation of the SES-GE Transaction would result in an obligation to make a mandatory general offer for AsiaSat in accordance with Rule 26 of the Code.

 

(D) In consideration of the time and expenses in progressing the proposed privatisation referred to above, the Parties agree to conduct the proposed privatisation of AsiaSat on the terms set out in this Agreement.

 

1 Interpretation

 

1.1 In this Agreement:

“AsiaSat” means the Asia Satellite Telecommunications Holdings Limited;

“AsiaSat ADSs” means AsiaSat’s American Depository Shares currently issued, outstanding and listed on the New York Stock Exchange;

“AsiaSat Options” means options to acquire AsiaSat Shares pursuant to AsiaSat’s share option scheme;

 

2

“AsiaSat Shareholders” means holders of AsiaSat Shares;

“AsiaSat Shares” means the whole of the issued share capital of AsiaSat, comprised of ordinary shares of HK$0.10 each;

“Bidco” means Modernday Limited, a company incorporated in the British Virgin Islands whose registered address is at PO Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands;

“Bidco Shareholders Agreement” means the shareholders agreement to be entered into substantially in the form attached as Schedule 2;

“Bowenvale” means Bowenvale Limited, a company incorporated in the British Virgin Islands whose registered address is at PO Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands;

“Bowenvale Shareholders Agreement” means the shareholders agreement relating to Bowenvale to be entered into between Bowenvale, the CITIC Parties and the GE Parties and General Electric Company (for certain purposes);

“Broadcasting Authority” means the Hong Kong Broadcasting Authority (established under the Broadcasting Authority Ordinance (Chapter 391 of the laws of Hong Kong);

“Business Day” means a day which is not a Saturday, a Sunday or a public holiday in Hong Kong or New York;

“Clearances” means all consents, clearances, permissions and waivers as may be necessary, and all filings and waiting periods as may be necessary, from or under the laws, regulations or practices applied by any relevant authority in connection with the implementation of the Proposed Transaction, and references to Clearances having been satisfied shall be construed as meaning that the foregoing have been obtained on terms satisfactory to Bidco;

“Code” means the Hong Kong Code on Takeovers and Mergers;

“Confidentiality Agreement” means the confidentiality agreement entered into between CITIC Shareholder and GE Shareholder on 5 January 2007;

“Group” means, in relation to each Party, that entity, its subsidiaries, subsidiary undertakings and holding companies and the subsidiaries and subsidiary undertakings of any such holding company;

“Executive” means the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director;

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

“Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China;

“Joint Announcement” means the joint announcement of the Proposed Transaction to be issued by AsiaSat and Bidco and CITIC Topco and GE Topco under the Code, substantially in the form set out in Schedule 1;

“Joint Expenses” means the costs and expenses of the professional advisers appointed pursuant to Clause 8 and other third parties engaged by or on behalf of Bidco and any other costs or expenses of Bidco incurred in connection with the Proposed Transaction;

 

3

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;

“MGO” means the mandatory general offer for AsiaSat described in Recital (C);

“Offer Documents” means the documents to be despatched to (among others) AsiaSat Shareholders pursuant to which the offer for the Offer Shares under the Proposed Transaction would be made (whether by means of the Scheme or otherwise) to holders of AsiaSat Options to acquire and cancel such options, announcements of results of the Proposed Transaction and all (if any) other announcements, filings and other documents necessary and appropriate for the implementation of the Proposed Transaction;

“Offer Shares” means AsiaSat Shares other than AsiaSat Shares held by Bowenvale;

“OFTA” means the Office of the Telecommunications Authority of Hong Kong;

“Privatisation” means the proposed privatisation of AsiaSat and the offer for AsiaSat Options by Bidco as described in Recital (A) including the provision or arrangement of financing in respect of such privatisation and offer, the making of any relevant regulatory filings and ancillary matters;

“Proposed Transaction” means the proposed privatisation of AsiaSat and the offer for AsiaSat Options by Bidco as described in Recital (A), including the MGO, the provision or arrangement of financing in respect of such privatisation and offer, the making of any relevant regulatory filings and ancillary matters;

“Scheme” means the scheme of arrangement under section 99 of the Bermuda Companies Act pursuant to which it is intended to implement the Privatisation;

“SEC” means the U.S. Securities and Exchange Commission;

“SES” means SES S.A. and its subsidiaries;

“SES-GE Transaction” means the proposed transaction between affiliates of GE Topco and SES entailing the redemption by SES of the former’s entire holding of approximately 19% of the issued share capital of SES in exchange for shares in a company holding certain assets (which include SES’s entire shareholding in Bowenvale);

“SES Holding” means SES Holding AG, a subsidiary of SES;

“SFC” means the Securities and Futures Commission of Hong Kong;

“Stock Exchange” means The Stock Exchange of Hong Kong Limited;

“Transfer” means the acquisition of the legal and beneficial ownership of SES’s stake in Bowenvale by GE Topco or a member of its Group;

“Working Hours” means 9.00 a.m. to 5.00 p.m. on a Business Day.

 

1.2 Subordinate legislation

References to a statutory provision include any subordinate legislation made from time to time under that provision.

 

1.3 Modification etc. of statutes

References to a statute or statutory provision include that statute or provision as from time to time modified or re-enacted or consolidated whether before or after the date of this Agreement so far as such modification or re-enactment or consolidation applies or is capable of applying to any transactions entered into in accordance with this Agreement

 

4

and (so far as liability thereunder may exist or can arise) shall include also any past statute or statutory provision (as from time to time modified or re-enacted or consolidated) which such provision has directly or indirectly replaced provided that nothing in this Clause 1.3 shall operate to increase the liability of any party beyond that which would have existed had this Clause 1.3 been omitted.

 

1.4 Clauses etc.

References to this Agreement include the Recitals and Schedules to it and this Agreement as from time to time amended and references to Clauses and Schedules are to clauses of and schedules to this Agreement.

 

1.5 Headings

Headings shall be ignored in construing this Agreement.

 

1.6 Time of day

References to time of day are to Hong Kong time.

 

1.7 References to persons

References to persons shall include bodies corporate, partnerships and unincorporated associations.

 

1.8 “acting in concert”, “concert parties”, “control” and “offer”

When used in this Agreement, “acting in concert”, “concert parties”, “control” and “offer” shall be construed in accordance with the Code.

 

2 Joint Announcement

 

2.1 The Parties shall procure the release of the Joint Announcement on the date of this Agreement or on such other date as may be agreed by the Parties in light of all relevant circumstances.

 

2.2 The GE Parties shall procure the signing of the SES-GE Transaction documentation prior to the release of the Joint Announcement for publication.

 

3 Implementation and Documentation

 

3.1 The CITIC Parties and the GE Parties undertake to each other to implement, insofar as they are able, the Proposed Transaction. Accordingly, each Party agrees to use all reasonable endeavours to, and to procure that its Group and its directors and its relevant professional advisers assist it to, prepare all such documents and take all such steps as are necessary or desirable in connection with implementation of the Proposed Transaction and for the purposes of obtaining all Clearances.

 

3.2

The CITIC Parties and the GE Parties agree that any significant matter relating to the Proposed Transaction (including the approval of any material document relating thereto prior to its execution and/or release, and the structure of the Proposed Transaction), shall be discussed and a course of action agreed upon between CITIC Topco (for itself and CITIC Shareholder) and GE Topco (for itself and GE Shareholder) acting in good faith as soon as possible (taking into account relevant regulatory requirements on timing) after such matter being raised by any Party with the other Parties. In particular, any change to the terms and/or conditions of the Proposed Transaction (to the extent permissible under

 

5

 

the Code) shall be discussed in good faith between CITIC Topco (for itself and CITIC Shareholder) and GE Topco (for itself and GE Shareholder) and shall be subject to their prior written consent.

 

3.3 Each of CITIC Topco and GE Topco shall, and shall procure that CITIC Shareholder and GE Shareholder respectively shall use their rights as shareholders of Bidco to, co-ordinate the preparation, approval, execution, filing and/or despatch of the Offer Documents in accordance with the requirements of the Code, the SFC, the Stock Exchange, the SEC, the Bermuda Companies Act and (if relevant) the Bermudan courts.

 

3.4 Each Party agrees promptly to share all information it acquires relevant to AsiaSat and/or the Proposed Transaction with all other Parties.

 

4 The SES-GE Transaction

 

4.1 The CITIC Parties and the GE Parties agree that the completion of the Proposed Transaction shall be conditional upon the Transfer pursuant to the SES-GE Transaction.

 

4.2 GE Topco and its Group shall proceed with the SES-GE Transaction in good faith and, provided that the meetings of eligible AsiaSat Shareholders to approve the Scheme (the “Scheme Meetings”) take place prior to 30 March 2007, shall use reasonable efforts to ensure that the SES-GE Transaction does not complete until after the Scheme Meetings have taken place. It is understood however that completion of the SES-GE Transaction shall not be conditional upon completion of the Proposed Transaction.

 

4.3 If the MGO is triggered and required to be implemented by the SFC, Bidco shall be the entity used to implement the MGO.

 

5 Regulatory Matters

 

5.1 The CITIC Parties and the GE Parties agree to procure that Bidco will as a matter of urgency and, in any event, within 10 days of the date of the Joint Announcement:

 

  (i) approach the OFTA to obtain the OFTA’s written confirmation that it has no objections to the Proposed Transaction, or similar comfort; and

 

  (ii) approach the Broadcasting Authority to obtain the Broadcasting Authority’s written confirmation that it has no objections to the Proposed Transaction, or similar comfort.

 

5.2 Prior to publication of the Joint Announcement, neither GE Topco nor any member of its Group nor any of their advisers or representatives shall approach any of the Executive, the Stock Exchange, OFTA, the Broadcasting Authority, the SEC or any other governmental or regulatory authority in relation to the Proposed Transaction without having first consulted in good faith with CITIC Topco and given CITIC Topco the opportunity to join in the consultation, approach, correspondence or other contact with such governmental or regulatory authority.

 

5.3 Prior to publication of the Joint Announcement, neither CITIC Topco nor any member of its Group nor any of their advisers or representatives shall approach any of the Executive, the Stock Exchange, OFTA, the Broadcasting Authority, the SEC or any other governmental or regulatory authority in relation to the Proposed Transaction without having first consulted in good faith with GE Topco and given GE Topco the opportunity to join in the consultation, approach, correspondence or other contact with such governmental or regulatory authority.

 

6

6 Shareholders’ Agreements

 

6.1 As soon as reasonably practicable, each of the CITIC Parties and the GE Parties and General Electric Company (for certain purposes) shall enter into a conditional shareholders’ agreement in respect of Bowenvale the form of which is substantially agreed and shall be finalised by the Parties within five Business Days from the date of publication of the Joint Announcement in the newspapers in Hong Kong which, subject to the completion of the Transfer pursuant to the SES-GE Transaction and together with the memorandum and articles of association of Bowenvale (and such other documents as are ancillary thereto) the form of which are substantially agreed and shall be finalised by the Parties within five Business Days from the date of publication of the Joint Announcement in the newspapers in Hong Kong, shall implement the arrangements as to the ownership and operation of Bowenvale by the CITIC Shareholder and the GE Shareholder.

 

6.2 The terms of the participation of each of the Parties in Bidco and any of their connected companies forming part of the structure for implementing the Proposed Transaction shall be governed by a shareholders agreement substantially in the form attached as Schedule 2 to be entered into between each of the CITIC Parties and the GE Parties and General Electric Company (for certain purposes) prior to announcement of the SES-GE Transaction, together with the memorandum and articles of association of Bidco (and such other documents as are ancillary thereto) the form of which are substantially agreed and shall be finalised by the Parties within five Business Days from the date of publication of the Joint Announcement in the newspapers in Hong Kong, shall implement the arrangements as to the ownership and operation by the CITIC Shareholder and the GE Shareholder of Bidco and, subject to the Scheme becoming effective, AsiaSat. For the avoidance of doubt, the documents to be entered into in respect of Bidco in accordance with this Clause 6.2 shall reflect a shareholding structure (both as to voting rights and economic rights) which is the same in material respects as that of Bowenvale.

 

7 Amalgamation of Bowenvale and Bidco

The CITIC Parties and the GE Parties agree to use their reasonable endeavours to procure that all the respective interests of Bidco and Bowenvale in AsiaSat Shares are amalgamated (whether by way of legal amalgamation, merger, exchange transaction or otherwise) in a manner to be discussed and agreed upon in good faith by CITIC Shareholder and GE Shareholder. For the avoidance of doubt, the provisions of this Clause 7 shall apply irrespective of whether the Scheme and/or the MGO proceed to a successful completion. In addition, the amalgamation contemplated by this Clause 7 shall occur without prejudice to the obligations of the General Electric Company under the Shareholders’ Agreements referred to in Clauses 6.1 and 6.2.

 

8 Appointment of advisers and costs

 

8.1 The appointment of financial, legal and any other professional advisers to act for the Parties or Bidco in connection with the Proposed Transaction (including, for the avoidance of doubt, in relation to the MGO) shall be made jointly by the CITIC Parties and the GE Parties and all costs and expenses incurred in connection therewith (the “Joint Expenses”) shall, subject to Clause 8.5, be shared equally between CITIC Shareholder and GE Shareholder or for the account of Bidco as CITIC Shareholder and GE Shareholder shall agree.

 

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8.2 Joint Expenses will include those of Linklaters and Weil Gotshal & Manges LLP with regard to the Proposed Transaction (and, for the avoidance of doubt, not with regard to the SES-GE Transaction) and the reasonable costs and expenses of Freshfields Bruckhaus Deringer in respect of advice given with regard to the Proposed Transaction (and, for the avoidance of doubt, not with regard to the SES-GE Transaction) to Bidco, and the CITIC Parties and the GE Parties jointly.

 

8.3 The costs of any professional advisers appointed by any Party to act for such Party individually shall be borne by that Party.

 

8.4 The Parties agree that as regards the Proposed Transaction:

 

  8.4.1 Morgan Stanley Dean Witter Asia Limited (based in Hong Kong) will act as financial adviser to Bidco;

 

  8.4.2 Linklaters will act as advisers as to Hong Kong, English and New York law to Bidco; and

 

  8.4.3 Appleby, Hunter and Bailhache will act as advisers as to Bermuda law and as to British Virgin Islands law.

 

8.5 If the Proposed Transaction does not complete (by virtue of the Scheme not becoming effective, or any offer not becoming or being declared wholly unconditional or, in the case of the MGO, valid acceptances in respect of ninety per cent. of the Offer Shares not being received) and this Agreement terminates in accordance with Clause 9, the Joint Expenses shall be borne by CITIC Shareholder and GE Shareholder equally; and if the Transaction successfully completes, Bidco shall bear such of the Joint Expenses as it may lawfully bear.

 

8.6 The final Joint Expenses shall be as agreed between CITIC Shareholder and GE Shareholder and the relevant advisers.

 

9 Costs of Privatisation

 

9.1 Any costs and expenses incurred by Bidco arising directly or indirectly as a result of or in connection with the Privatisation shall be borne equally by CITIC Shareholder and GE Shareholder and shall be reimbursed to Bidco on demand.

 

9.2 If the Privatisation is implemented otherwise than by way of the Scheme and Bidco:

 

  9.2.1 fails to achieve over 90 per cent. acceptances in respect of the Disinterested Shares, and

 

  9.2.2 this results in AsiaSat breaching the Minimum Public Float Requirement,

CITIC Shareholder and GE Shareholder shall be responsible for and shall bear the costs of, placing down 50.5 per cent. of the AsiaSat Shares and 49.5 per cent. of the AsiaSat Shares respectively required to be sold to the Public to enable AsiaSat to restore the Minimum Public Float Requirement.

 

9.3 For the purposes of this Clause 9:

“Disinterested Shares” means the AsiaSat Shares that are not held by Bidco and its concert parties (as defined in the Code);

 

8

“Minimum Public Float Requirement” means the minimum number of shares of a company listed on the main board of the Stock Exchange which must be held by the public as set out in Listing Rule 8.08(1)(a) of the Listing Rules; and

“Public” has the meaning ascribed to it in the Listing Rules.

 

10 Termination

 

10.1 This Agreement shall terminate on the earlier of the date on which:

 

  10.1.1 CITIC Topco and GE Topco agree in writing that this Agreement shall terminate; or

 

  10.1.2 the termination of the SES-GE Transaction.

 

10.2 Termination shall be without prejudice to the rights of the Parties that may have arisen prior to termination. Clauses 8 and 10 to 15 shall survive termination.

 

11 Confidentiality

The CITIC Shareholder and the GE Shareholder acknowledge that they are bound by the provisions of the Confidentiality Agreement, which shall also apply to the existence and terms of this Agreement.

 

12 Legal Effect

 

12.1 If the Proposed Transaction does not proceed, without prejudice to any other right or remedy which each Party may have, each Party acknowledges and agrees that damages may not be an adequate remedy for any breach by it of the provisions of this Agreement and that each Party shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of any such provision by another Party or its concert parties.

 

12.2 Nothing in this Agreement and no action taken by this Agreement shall constitute a partnership, association, joint venture or other co-operative entity between any of the Parties.

 

12.3 No Party shall owe any other Party any duty of care or any fiduciary or equitable duties under this Agreement save as otherwise agreed in writing.

 

12.4 The obligations of the CITIC Parties and the GE Parties as between them under this Agreement shall be several and not joint or joint and several. The obligations of CITIC Topco and CITIC Shareholder under this Agreement shall be joint. The obligations of GE Topco and GE Shareholder under this Agreement shall be joint.

 

13 Miscellaneous

 

13.1 This Agreement is personal to the Parties and shall not be capable of assignment.

 

13.2 This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same Agreement. Any Party may enter into this Agreement by signing any such counterpart.

 

13.3 No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the Parties.

 

9

13.4 If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair:

 

  13.4.1 the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement;

 

  13.4.2 the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Agreement.

 

14 Notices

 

14.1 A notice under this Agreement shall only be effective if it is in writing. Any notice must be given either by fax or be delivered by hand or by courier. Notice may also be given by e-mail if it is stated to constitute notice and the addressee acknowledges receipt.

 

14.2 Notices under this Agreement shall be sent to the relevant Party at its address or number and for the attention of the individual set out below:

 

Party and title of individual

    Address   Facsimile no and e-mail address:

CITIC Topco and CITIC Shareholder

 

 

FAO: Mr Kenneth Ko

    Rm 2118
Hutchison House
10 Harcourt Road
Hong Kong		   + 852 2861 1901
kenko@citicua.com

GE Topco and GE Shareholder

 

 

FAO: Mr Michael Hosokawa

    33rd Floor
One Exchange Square
Central
Hong Kong		   + 852 2100 6733
general
counsel.equity@ge.com

Provided that a Party may change its notice details on giving notice to the other Parties of the change in accordance with this Clause 14.

 

14.3 Any notice given under this Agreement shall, in the absence of earlier receipt, be deemed to have been duly given as follows:

 

  14.3.1 if delivered personally, on delivery;

 

  14.3.2 if sent by facsimile or e-mail, when sent (with receipt confirmed); and

 

  14.3.3 if sent by courier, on delivery.

 

14.4 Any notice given under this Agreement outside Working Hours in the place to which it is addressed shall be deemed not to have been given until the next period of Working Hours in such place.

 

14.5 Any notice given under this Agreement to one CITIC Party or one GE Party shall be deemed to be given to the other CITIC Party or the other GE Party respectively.

 

15 Governing Law and Jurisdiction

 

15.1 This Agreement shall be governed by and construed in accordance with the laws of England.

 

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16 Arbitration

 

16.1 Any dispute or difference arising out of, in connection with or relating to (in each such case, in any manner whatsoever) this Agreement, including a dispute as to the validity or existence of this Agreement or this Clause 16, shall be referred to, and finally resolved by means of, arbitration in accordance with the provisions of this Clause 16.

 

16.2 Any arbitration commenced pursuant to this Clause 16:

 

  16.2.1 shall be conducted in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (the “UNCITRAL Rules”) then in effect as modified by the provisions of this Clause 16;

 

  16.2.2 shall have its seat in Hong Kong where, all hearings in the arbitration shall take place;

 

  16.2.3 shall be conducted in the English language; and

 

  16.2.4 shall be administered by the Hong Kong International Arbitration Centre (“HKIAC”), which shall act as the appointing authority.

 

16.3 The arbitration shall be carried out by an arbitral tribunal consisting of three arbitrators appointed as follows:

 

  16.3.1 the party or parties initiating arbitration shall (if more than one, jointly) appoint an arbitrator in its or their notice of arbitration in accordance with the provisions of Articles 3 and 7 of the UNCITRAL Rules as modified by this Clause 16;

 

  16.3.2 the party or parties responding to the notice of arbitration shall (if more than one, jointly) appoint an arbitrator in accordance with the provisions of Articles 3 and 7 of the UNCITRAL Rules as modified by this Clause 16;

 

  16.3.3 the third arbitrator who shall act as the chairman of the arbitral tribunal shall be appointed by the two arbitrators appointed by or on behalf of the parties (the “Party Arbitrators”) within a period of 10 Business Days from the date of the appointment or the confirmation of the appointment of the second Party Arbitrator; and

 

  16.3.4 in default of the appointment of any arbitrator for any reason whatsoever, the relevant arbitrator(s) shall be appointed by the HKIAC within 10 Business Days in accordance with the provisions of Article 7 of the UNCITRAL Rules (as modified hereby).

 

16.4 Each Party unconditionally and irrevocably submits to the jurisdiction of the courts of Hong Kong for the purposes of:

 

  16.4.1 any proceeding for attachment, injunction or any other interim or conservatory measure in aid of any arbitral proceeding commenced under Clause 16; and

 

  16.4.2 any proceeding arising out of or relating to the enforcement of any arbitral award or procedural order of any arbitral tribunal duly constituted under this Clause 16;

but for such purposes and to such extent only.

 

16.5

Where disputes arise under this Agreement, under the Bidco Shareholders Agreement and under the Bowenvale Shareholders Agreement which, in the absolute discretion of the first panel of arbitrators to be appointed in any of the disputes, are so closely connected that it is expedient for them to be resolved in the same proceedings, that panel of arbitrators shall

 

11

 

have the power to order that the proceedings to resolve that dispute shall be consolidated with those to resolve any of the other disputes (whether or not proceedings to resolve those other disputes have yet been instituted), provided that no date for the final hearing of the first arbitration has been fixed.

 

16.6 Each of the CITIC Parties agrees that the process by which any legal proceedings in Hong Kong are begun may be served on it by being delivered to CITIC United Asia Investments Ltd. of Rm 2118, Hutchison House, 10 Harcourt Road, Hong Kong (for the attention of Mr Kenneth Ko) or its other principal place of business in Hong Kong. If the above process agent ceases to have a place of business in Hong Kong, the CITIC Parties shall forthwith appoint a further person in Hong Kong to accept service of process on its behalf in Hong Kong and notify the GE Parties of such appointment. Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

 

16.7

Each of the GE Parties agrees that the process by which any legal proceedings in Hong Kong are begun may be served on it by being delivered to GE Asia of 33rd Floor, One Exchange Square, Central, Hong Kong (for the attention of Mr Michael Hosokawa) or its other principal place of business in Hong Kong. If the above process agent ceases to have a place of business in Hong Kong, the GE Parties shall forthwith appoint a further person in Hong Kong to accept service of process on its behalf in Hong Kong and notify the CITIC Parties of such appointment. Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

 

12

In witness whereof this Agreement has been duly executed on the date which first appears on page 1 above.

 

EXECUTED by   )
/s/ Mi Zeng Xin   )
on behalf of   )
CITIC GROUP   )

 

EXECUTED by   )
/s/ Ko Fai Wang   )
on behalf of   )
ABLE STAR ASSOCIATES   )
LIMITED   )

 

EXECUTED by   )
/s/ Ronald J. Herman   )
on behalf of   )
GENERAL ELECTRIC CAPITAL   )
CORPORATION   )

 

EXECUTED by   )
/s/ Ronald J. Herman   )
on behalf of   )
GE CAPITAL EQUITY   )
INVESTMENTS, INC.   )

 

13

EX-99.8 9 dex998.htm SHAREHOLDERS' AGREEMENT Shareholders' Agreement

Exhibit 99.8

Dated 13 February 2007

CITIC GROUP

and

GE CAPITAL EQUITY INVESTMENTS, INC.

and

ASIACO ACQUISITION LTD.*

and

ABLE STAR ASSOCIATES LIMITED

and

GENERAL ELECTRIC COMPANY

SHAREHOLDERS’ AGREEMENT

relating to ASIACO ACQUISITION LTD.*

(*undergoing a change of name from Modernday Limited)

Linklaters

10th Floor, Alexandra House

Chater Road

Hong Kong

Telephone (852) 2842 4888

Facsimile (852) 2810 8133/2810 1695

Ref KMTM/SJT

This Agreement is made the 13 day of February 2007

Between:

 

(1) GE CAPITAL EQUITY INVESTMENTS, INC., a company incorporated in the United States with its offices at 201 Merritt 7, PO Box 5201, Norwalk, CT 06856, United States (“GE Equity”);

 

(2) ABLE STAR ASSOCIATES LIMITED a company incorporated in the British Virgin Islands the registered office of which is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (“Able Star”);

 

(3) ASIACO ACQUISITION LTD., (undergoing a change of name from Modernday Limited), company number 1373477, a company incorporated in the British Virgin Islands the registered office of which is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (the “Company”);

 

(4) GENERAL ELECTRIC COMPANY, a company incorporated in the State of New York, United States and its address is at 3135 Easton Turnpike, Fairfield, Connecticut 06828, United States of America (“GEC”); and

 

(5) CITIC GROUP, an enterprise organised and existing under the laws of the People’s Republic of China, and having its registered office at Capital Mansion, 6 Xinyuan Nan Road, Chaoyang District, Beijing, 100004, People’s Republic of China (“CITIC”).

Whereas:

 

(A) The Company was incorporated in the British Virgin Islands on 19 December 2006 and at the date hereof has an authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1.00 each, of which two shares have been issued.

 

(B) GE Equity, a wholly owned subsidiary of GEC, and Able Star, a wholly owned subsidiary of CITIC, currently each hold 50 per cent. of the issued shares of the Company.

 

(C) The Company has been established for the sole purposes and objectives of effecting the Privatisation (as defined below) and holding shares in AsiaSat. The Company will be merged (by way of amalgamation, merger, transfer or otherwise) with JVCo after completion of the Privatisation.

 

(D) Upon the completion of the Privatisation, GE Equity (or a wholly owned subsidiary) and Able Star will hold 49.5 per cent. and 50.5 per cent. respectively of the Shares of the Company.

 

(E) The parties (other than the Company) have agreed that their respective rights and obligations (whether direct or indirect) in respect of the Company and in respect of AsiaSat shall be regulated by the provisions of this Agreement and the Memorandum and Articles and the Company has agreed with the other parties to comply with such of the matters herein contained as relate to the Company and to its holding of shares in AsiaSat.

 

(F) GE Equity is a wholly owned subsidiary of GEC and GEC is a party to this Agreement in part to procure and guarantee GE Equity’s performance of its obligations under this Agreement.

 

(G) Able Star is a wholly owned subsidiary of CITIC and CITIC is a party to this Agreement in part to procure and guarantee Able Star’s performance of its obligations under this Agreement.

 

1

1 Interpretation

 

1.1 In this Agreement (including the Recitals), unless the context otherwise requires, the following words and expressions shall have the following meanings:

“acting in concert” has the same meaning as in the Code;

“affiliate” means, with respect to any person, any person that directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such person, provided that no person shall be an affiliate of CITIC merely by virtue of being owned or controlled by the PRC or the government thereof;

“agreed terms” means in relation to any document such document in the terms agreed between the parties and signed by the parties for the purposes of identification;

“AsiaSat” means Asia Satellite Telecommunications Holdings Limited, a company incorporated with limited liability in Bermuda and as at the date of this Agreement listed on the Stock Exchange and the NYSE;

“AsiaSat Board” means the board of directors of AsiaSat;

“AsiaSat Director” means a director of AsiaSat;

“AsiaSat Shares” means shares in the issued share capital of AsiaSat;

“AsiaSat Voting Rights” means the voting rights for the time being and from time to time conferred by AsiaSat Shares and references to “the Company’s AsiaSat Voting Rights” are references to the voting rights conferred by the AsiaSat Shares held by the Company for the time being and from time to time;

“Associate” means, in relation to any person, any body corporate or other entity of or in relation to which such Shareholder or any of its subsidiaries owns or controls (directly or indirectly) 20 per cent. or more of the voting share capital (or equivalent right of ownership) or is entitled (directly or indirectly) to 20 per cent. or more of the net profits and/or net assets;

“Attributable AsiaSat Shares” means, in relation to a Class, those AsiaSat Shares which are attributable to such Class;

“Board” means the board of directors of the Company;

“business day” means a day (other than a Saturday or a Sunday) on which banks are ordinarily open for business in Hong Kong;

“Class” means any of the three classes of issued Shares in the Company (the ‘X’ Ordinary Shares, the ‘Y’ Ordinary Shares and the Special Shares) authorised after the adoption of the Memorandum and Articles by the Company pursuant to Clause 3.2.4 or, as the context requires, the holders of the Shares of the relevant class;

“Completion Date” means the date on which the Privatisation completes;

“Code” means the Hong Kong Code on Takeovers and Mergers (as amended from time to time and as construed and administered by the Executive and/or the Panel (each as defined in the Code));

“control” “is controlled by”, “under common control with” and similar expressions means, in relation to a party, where a person (or persons acting in concert) acquires or agrees to acquire or has options over direct or indirect control (1) of the affairs of that party,

 

2

or (2) over more than 50 per cent. of the total voting rights conferred by all the issued shares in the capital of that party which are ordinarily exercisable in general meeting or (3) of the composition of the main board of directors of a party;

“Cooperation Agreement” means the cooperation agreement in respect of the Privatisation to be entered into between CITIC Group, Able Star, General Electric Capital Corporation and GE Equity on the same date as this Agreement;

“Director” means a director of the Company;

“Disposal” includes making any sale, assignment, exchange, transfer or other dealing with, or creating any Encumbrance, or granting any option or right or beneficial interest whatsoever, or any agreement for any of the same and “to Dispose” shall be construed accordingly;

“EBITDA” means earnings before interest, taxes, depreciation and amortization on a consolidated basis;

“Encumbrance” means any claim, charge, mortgage, security, pledge, lien, option, equity, power of sale or hypothecation;

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended;

“Exchange Transaction” means the redemption by SES of GECC’s entire holding of SES shares (representing approximately 19 per cent. of the issued share capital of SES) in exchange for shares in a new company holding a number of assets, including SES’s entire holding of ‘Y’ ordinary shares in JVCo;

“Fair Market Value” means the fair market value of AsiaSat as determined by appraisal by an independent expert of recognized, international standing, appointed by agreement of the Shareholders, or, in the absence of agreement, by the chair of the Hong Kong International Arbitration Centre, in respect of the time when a Put Option or Call Option (as applicable) is exercised and without reference to the circumstances giving rising to such Put Option or Call Option or exercise of such option;

“GECC” means General Electric Capital Corporation, company incorporated in the United States with offices at 260 Long Ridge Road, Stamford, CT 06927, United States;

“holding company” means in relation to any body corporate or other entity, any person of or in relation to which such body corporate or other entity is a subsidiary;

“JVCo” means Bowenvale Limited, a company incorporated in the British Virgin Islands on 28 March 1996 with registered number 180391;

“JVCo Shareholders Agreement” means the shareholders agreement in respect of JVCo to be entered into between CITIC, GEC, GECC and Able Star;

“Listing” means an initial public offering and listing of all or a majority the AsiaSat Shares on a recognised stock exchange or an over the counter market;

“Listing Rules” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (as amended from time to time);

“Memorandum and Articles” means the memorandum and articles of association in a form to be agreed between the Parties within five Business Days from the date of publication of the joint announcement of the Privatisation by the Company and AsiaSat and to be adopted by the Company pursuant to Clause 3.2;

 

3

“Minimum Price” means the product of EBITDA in aggregate, over the preceding four fiscal quarters, multiplied by the multiple to EBITDA (being the average of EBITDA over the four fiscal quarters ending on 31 December 2006) represented by the final price offered for AsiaSat Shares and options in the Privatisation;

“NYSE” means The New York Stock Exchange;

“parties” means the parties to this Agreement and “party” means any one of them;

“PRC” means The People’s Republic of China;

“Privatisation” means the potential acquisition, through a voluntary or mandatory offer or a scheme of arrangement, of all the issued shares of AsiaSat not already held by JVCo, which is to be conducted jointly by or on behalf of CITIC and GE Equity through the Company;

“Qualifying Subsidiary” means in relation to CITIC or GEC, a subsidiary thereof in relation to which CITIC or GEC (as the case may be):

 

  (a) owns (directly or indirectly) 100 per cent. of the voting share capital (or equivalent right of ownership); and

 

  (b) is entitled (directly or indirectly) to 100 per cent. of the net profits and net assets;

“Record Date” means, in relation to any dividend or other right from time to time conferred by, or accrued or accruing with respect to, any AsiaSat Shares, the date on or as of which entitlement to such dividend or other right is fixed, as between holders of AsiaSat Shares (by reference to the AsiaSat Shares respectively held by them on that date);

“Reorganisation” means, with respect to any company, any issue of shares of such company by way of capitalisation of profits or reserves or rights and any consolidation or sub-division or reduction of capital or other reconstruction or adjustment relating to the share capital of such company (or any shares or securities derived therefrom) and any other amalgamation or reconstruction affecting the share capital of such company (or any shares, stock or securities derived therefrom);

“SFO” means the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

“Shares” means shares of HK$0.10 in the capital of the Company;

“Shareholders” means the ‘X’ Shareholder(s) and/or the ‘Y’ Shareholder(s) and/or the Special Shareholder(s) from time to time and as the context requires;

“Shareholders Entitled” means, in relation to any dividend or other right from time to time conferred by, or accrued or accruing with respect to, any AsiaSat Shares held by the Company, the relevant Shareholders entitled to the same on a “pass-through” or “attribution” basis as determined in accordance with Clause 8 and/or (as appropriate) Schedule 1;

“Special Share” means the special shares in the issued share capital of the Company and as designated as such pursuant to Clause 3.2;

“Special Shareholder” means Able Star or any Qualifying Subsidiary of CITIC which holds Special Shares from time to time;

“Stock Exchange” means The Stock Exchange of Hong Kong Limited;

 

4

“subsidiary” means in relation to any person, any body corporate or other entity directly or indirectly controlled by such person, for which purpose “control” means either ownership of more than 50 per cent. of the voting share capital (or equivalent right of ownership) of such body corporate or other entity or power to direct its policies and management whether by contract or otherwise;

“Unresolved Matter” has the meaning given in Clauses 5.8 and 7.3.2;

“‘X’ Director” means any Director appointed by the ‘X’ Shareholder pursuant to Clause 5.2.1;

“‘X’ Ordinary Shares” means ‘X’ ordinary shares in the issued share capital of the Company and designated as such pursuant to Clause 3.2;

“‘X’ Shareholder” means Able Star or any Qualifying Subsidiary of CITIC which holds ‘X’ Ordinary Shares from time to time;

“‘Y’ Director” means any Director appointed by the ‘Y’ Shareholder pursuant to Clause 5.2.1;

“‘Y’ Ordinary Shares” means ‘Y’ ordinary shares in the issued share capital of the Company and designated as such pursuant to Clause 3.2; and

“‘Y’ Shareholder” means GE Equity or any Qualifying Subsidiary of GEC which holds ‘Y’ Ordinary Shares from time to time;

 

1.2 unless the context otherwise requires, any reference to a statutory provision shall include such provision as from time to time modified or re-enacted or consolidated so far as such modification or re-enactment or consolidation applies or is capable of applying to any transaction entered into hereunder;

 

1.3 references to Recitals, Clauses, Schedules and Paragraphs are to recitals, Clauses, schedules and paragraphs of this Agreement;

 

1.4 references to “the other Shareholder” means Able Star or GE Equity, as the context requires;

 

1.5 references to documents being “in the agreed terms” are to the form of the draft or final or executed version thereof signed for identification by GE Equity and Able Star with such alterations as may be agreed between GE Equity and Able Star but such documents in the agreed terms do not form part of this Agreement;

 

1.6 the headings are for convenience only and shall not affect the interpretation hereof; and

 

1.7 unless the context otherwise requires, words importing the singular only shall include the plural and vice versa and references to natural persons shall include bodies corporate.

 

2 Conditions

If the Privatisation does not become wholly unconditional, fails or otherwise lapses, whether by its terms or by agreement of the parties thereto or otherwise, this Agreement shall lapse and the parties shall have no claims whatsoever against each other in respect of any matter arising from or relating to this Agreement except that Clause 18 (Confidentiality) shall remain in full force and effect.

 

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3 Structure of the Company

 

3.1 Merger with JVCo

The parties shall procure that as soon as is reasonably practicable after the Completion Date, the Company shall be merged (whether by way of amalgamation, merger, transfer or otherwise) with JVCo, and the Company’s interest in AsiaSat shall be transferred to JVCo.

 

3.2 Resolutions of the Shareholders of the Company

On and with effect from the Completion Date the Shareholders shall pass by way of written resolutions (in such form as shall have been previously approved by the Shareholders), resolutions:

 

  3.2.1 adopting the Memorandum and Articles in substitution for the existing memorandum and articles of association of the Company;

 

  3.2.2 approving the increase in the authorised share capital of the Company (the “New Share Capital”) so that there shall be one Share created for each one AsiaSat Share held by the Company, and the designation of 49.5 per cent. (rounded down to the nearest Share) of the New Share Capital as ‘X’ Ordinary Shares, 49.5 per cent. (rounded down to the nearest Share) as ‘Y’ Ordinary Shares (rounded down to the nearest Share) and one per cent. of the New Share Capital as Special Shares (rounded up to the nearest Share);

 

  3.2.3 approving the granting to and the exercise by the Directors of any and all powers of the Company to allot and issue the ‘X’ Ordinary Shares to the ‘X’ Shareholder, the ‘Y’ Ordinary Shares to the ‘Y’ Shareholder and the Special Shares to the Special Shareholder;

 

  3.2.4 approving, immediately following the allotment and issue of the ‘X’ Ordinary Shares, ‘Y’ Ordinary Shares and the Special Shares in accordance with Clause 3.2.3 above, the two issued shares of a par value of US$1.00 (each a “US$ Denominated Share”) currently held as to one US$ Denominated Share by Able Star and as to the other US$ Denominated Share by GE Equity be repurchased by the Company at par value, with funds lawfully available therefor, and each of Able Star and GE Equity respectively consenting to the repurchase of the US$ Denominated Share held by it;

 

  3.2.5 approving, immediately following the repurchase of two US$ Denominated Shares in accordance with Clause 3.2.4 above, the authorised share capital of the Company be reduced by the cancellation of 50,000 shares of a par value of US$1.00 each; and

 

  3.2.6 approving the changes (if any) to the ‘X’ Directors, the changes (if any) to the ‘Y’ Directors nominated and the appointment of the Company secretary (if any) as set out in Clauses 5.2.3, 5.2.4 and 5.9.2 respectively.

 

3.3 Meeting of the Board

On the Completion Date, the Company shall procure the holding of a meeting of the Board and the passing of the following resolutions:

 

  3.3.1 approving the allotment and issue of the ‘X’ Ordinary Shares to the ‘X’ Shareholder, the ‘Y’ Ordinary Shares to the ‘Y’ Shareholder and the Special Shares to the Special Shareholder, in each case at an issue price of HK$0.10 per share;

 

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  3.3.2 the two US$ Denominated Shares currently held as to one US$ Denominated Share by Able Star and as to the other US$ Denominated Share by GE Equity be repurchased by the Company at par value, with funds lawfully available therefore, provided that the Directors are satisfied, on reasonable grounds, that immediately after the acquisition of the two US$ Denominated Shares, the value of the Company’s assets will nonetheless exceed its liabilities and the Company will be able to pay its debts as and when they fall due.

 

3.4 Capital Structure of the Company: three separate classes

The rights and interests of the Shareholders in the assets of the Company (and, specifically, in the AsiaSat Shares held by the Company from time to time) will derive from their respective holdings of Shares in the Company. The Shareholders agree that:

 

  3.4.1 the share capital of the Company shall, immediately after the passing of the resolutions referred to in Clause 3.2 above, be divided into three separate classes, ‘X’ Ordinary Shares, ‘Y’ Ordinary Shares and Special Shares;

 

  3.4.2 each Class shall be allotted and issued to the Shareholders in accordance with Clause 3.2 and Clause 3.3 above; and

 

  3.4.3 each Class shall be entitled to the specific rights provided for in this Agreement and in the Memorandum and Articles.

 

4 Single Purpose Collective Shareholding Vehicle

 

4.1 All interests in AsiaSat held through the Company

Subject to the AsiaSat Shares held by JVCo as of the date of this Agreement, none of the parties and their respective subsidiaries or Associates will, except with the written consent of GE Equity and CITIC or as a result of the Privatisation or any other mandatory offer for AsiaSat made in accordance with the provisions of Clauses 9.2.5 or 14.1, at any time during the continuance of this Agreement, acquire or hold any interest in any AsiaSat Shares other than AsiaSat Shares held from time to time by the Company. All interests in AsiaSat Shares (other than any held by JVCo) of the parties and/or their respective subsidiaries and Associates shall be held through the Company, except for any such shares that are held for the account of a pension fund or other third party.

 

4.2 Limited purpose company

The parties agree that the sole purposes and objectives of the Company are to effect the Privatisation and to hold AsiaSat Shares and the Company shall have no other assets and no business interests of any other nature whatsoever unless otherwise agreed between the Shareholders.

 

4.3 Company’s issued share capital to mirror the Company’s underlying holding of AsiaSat Shares

 

  4.3.1 To assist ready identification of attributable underlying interests in AsiaSat Shares and for general administrative convenience, the parties agree that:

 

  (a) the issued share capital of the Company should (so far as possible) mirror exactly (in terms of the number of Shares in issue) the number of AsiaSat Shares held by the Company for the time being and from time to time; and

 

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  (b) the issued shares of each separate Class should also (so far as possible) mirror exactly (in terms of the number of Shares of the relevant Class in issue) the AsiaSat Shares which are attributable to such Class for the time being and from time to time.

 

4.4 Manner in which Class rights to be exercised

All class rights conferred by Shares of any particular Class shall be exercisable from time to time by written notice given to the Company signed by or on behalf of the respective Shareholder. Such class rights include:

 

  4.4.1 the right to appoint Directors pursuant to Clause 5.2 and to nominate the Company’s chairman and deputy chairman on a rotating basis pursuant to Clause 5.3;

 

  4.4.2 the right to decide how the Company’s AsiaSat Voting Rights should be exercised from time to time with respect to its Attributable AsiaSat Shares in accordance with Clause 7;

 

  4.4.3 the right to dividends and other rights accruing on or with respect to its Attributable AsiaSat Shares in accordance with Clause 8; and

 

  4.4.4 the right to nominate AsiaSat Directors and certain AsiaSat officers in accordance with Clause 6.

 

4.5 Company not to be deemed a mere trustee

All AsiaSat Shares held by the Company for the time being and from time to time are and shall be assets of the Company. Nothing in this Agreement shall constitute the Company a trustee of any AsiaSat Shares for or on behalf of any of the Shareholders or any other party.

 

5 Management and Direction of the Company

 

5.1 Implementation of this Agreement

The business and affairs of the Company shall be managed by the Board. However, the principal function of the Board shall be to give effect to the provisions and underlying intent of this Agreement. Subject always to legal and/or fiduciary duties of the individual Directors, each Shareholder shall be responsible to the other for ensuring that those Directors appointed by it shall conduct themselves (and generally exercise their rights, powers and discretions as Directors) accordingly.

 

5.2 The Board of the Company

 

  5.2.1 At all times whilst this Agreement remains in force the parties shall procure that the number of Directors shall be at least six (6) and that (subject as otherwise expressly provided herein) each of Able Star (in its capacity as an ‘X’ Shareholder) and GE Equity (in its capacity as a ‘Y’ Shareholder) shall be entitled to appoint and to remove up to three (3) Directors.

 

  5.2.2 Each of Able Star and GE Equity shall be entitled to remove any Director it has appointed pursuant to this Clause 5.2 and to appoint another Director in place of the Director so removed provided that the relevant ‘X’ Shareholder or ‘Y’ Shareholder who removes a Director in this way shall be exclusively responsible for (and shall indemnify the Company against) any resulting or consequential claims for compensation on the part of such Director.

 

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  5.2.3 Able Star shall notify GE Equity and the Company at least three business days prior to the Completion Date of changes (if any) to be made to the existing three ‘X’ Directors.

 

  5.2.4 GE Equity shall notify Able Star and the Company at least three business days prior to the Completion Date of changes (if any) to be made to the existing three ‘Y’ Directors.

 

5.3 The chairman and deputy chairman of the Company

 

  5.3.1 The right to nominate the chairman of the Company (who shall be both a Director of the Company and an AsiaSat Director) will rotate on a bi-annual basis (with effect from 1 January in successive periods) between the ‘X’ Shareholders and the ‘Y’ Shareholders in that order, subject to the provisions of Clause 5.3.2 below.

 

  5.3.2 With effect from the Completion Date, the chairman of the Company shall be the person, who will be an ‘X’ Director and whose name shall be notified by Able Star to GE Equity and the Company at least three business days prior to the Completion Date. Such chairman shall be deemed to have been nominated by the ‘X’ Shareholder and shall hold such office until 31 December 2008.

 

  5.3.3 The right to nominate the deputy chairman (who shall be both a Director of the Company and an AsiaSat Director) from time to time shall be the right of the Class which will have the right to nominate the next chairman of the Company after the expiry of the two year period then current for the purposes of Clause 5.3.1.

 

  5.3.4 With effect from the Completion Date the deputy chairman of the Company shall be the person, who will be a ‘Y’ Director and whose name shall be notified by GE Equity to Able Star and the Company at least three business days prior to the Completion Date. Such deputy chairman shall be deemed to have been nominated by the ‘Y’ Shareholder and shall hold such office until 31 December 2008.

 

5.4 Board meetings

 

  5.4.1 Without prejudice to Clause 5.7, any Director or the secretary (on the requirement of a Director) may convene a meeting of the Board at any time provided that each Director is given at least seven (7) day’s notice of the time, date, place and agenda of such meeting unless all Directors agree to waive such notice. The agenda shall specify in reasonable detail the matters to be discussed at the relevant meeting and shall be accompanied by any relevant papers for discussion at such meeting. Unless otherwise first agreed in writing by the Shareholders, all meetings of the Board shall be held in Hong Kong.

 

  5.4.2 Subject to Clause 5.6, the quorum for any meeting of the Board shall be two (2) Directors, one of whom shall be an ‘X’ Director and one of whom shall be a ‘Y’ Director.

 

  5.4.3 Decisions of the Board shall be by unanimous vote of those Directors present. The chairman and deputy chairman of the Board shall each have a vote as a Director, but neither shall have an additional casting vote.

 

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  5.4.4 Minutes of each meeting of the Board shall be sent to each Director as soon as practicable after the holding of each meeting.

 

  5.4.5 A resolution in writing or by facsimile signed or approved by facsimile by all the Directors shall be as valid and effective as if it had been duly passed at a meeting of the Board duly convened and held.

 

  5.4.6 Board meetings may be held by conference telephone or other means of telecommunications.

 

  5.4.7 Any Director may appoint an alternate to represent him at meetings of the Board which he is unable to attend who shall be counted towards a quorum of the meeting of Directors and particulars of such appointment shall be delivered to the secretary of the Company.

 

5.5 Shareholder meetings

 

  5.5.1 The Shareholders agree that the ‘X’ Ordinary Shares and ‘Y’ Ordinary Shares carry equal voting rights and Special Shares shall carry no voting rights.

 

  5.5.2 Each of the ‘X’ Shareholders and the ‘Y’ Shareholders shall be responsible to the other for ensuring that all voting rights conferred by the ‘X’ Ordinary and ‘Y’ Ordinary Shares shall be exercised in a manner consistent in all respects with the provisions and underlying intent of this Agreement and generally so as (so far as may be necessary or desirable) to give effect to this Agreement. In particular, the ‘X’ Shareholders and the ‘Y’ Shareholders shall procure the passing of any and all such Shareholder resolutions as may be necessary or desirable from time to time in order to effect or approve all relevant dividends and/or other distributions, and all issues and redemptions of Shares, contemplated to be paid or made from time to time in accordance with this Agreement.

 

  5.5.3 Subject to Clause 5.6, the quorum for any meeting of the Shareholders shall be two (2) Shareholders, one of whom shall be an ‘X’ Shareholder and one of whom shall be a ‘Y’ Shareholder.

 

5.6 Absence of a quorum

In the event that any meeting of the Shareholders or of the Board is frustrated by the absence of a quorum by reason of the absence of an ‘X’ Shareholder or a ‘Y’ Shareholder or one or more Directors, as the case may be, such meeting may be reconvened by the ‘X’ Shareholder or ‘Y’ Shareholder or Directors, as the case may be, who were present at such meeting at such time and place as they think fit provided that not less than 15 days’ notice of such reconvened meeting shall be given to the ‘X’ Shareholders or ‘Y’ Shareholders or the Directors, as the case may be, which notice shall contain particulars of the matters to be discussed at such meeting and the ‘X’ Shareholder or ‘Y’ Shareholder or Directors, as the case may be, present at such reconvened meeting shall be deemed a quorum provided that at least two Directors or an ‘X’ Shareholder or a ‘Y’ Shareholder, as the case may be, are present and, subject to Clause 14 (Undertakings by GEC and CITIC), shall be free to pass such resolutions as they shall think fit regarding the subject matter for which the meeting in question was convened.

 

5.7 AsiaSat Board business

The ‘X’ Shareholders and ‘Y’ Shareholders shall cooperate with a view to ensuring that a Board meeting will be convened and held prior to every AsiaSat Board meeting to discuss

 

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the matters requiring discussion at the AsiaSat Board meeting. Subject always to legal and/or fiduciary duties of the individual AsiaSat Directors, each ‘X’ Shareholder and ‘Y’ Shareholder shall use all reasonable endeavours to ensure that those AsiaSat Directors appointed by it shall vote at the AsiaSat Board in accordance with the agreement or understanding reached at the earlier Board meeting (the proceedings of which shall be conducted in accordance with Clause 5).

 

5.8 Unresolved Matters

 

  5.8.1 If at a duly convened meeting of the Board or at a duly convened meeting of the ‘X’ Shareholders and ‘Y’ Shareholders, the Directors or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) are unable to pass a valid and binding resolution in respect of a matter relating to the business of the Company required to be resolved by the Board or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) (an “Unresolved Matter”), another meeting of the Board or the ‘X’ Shareholders and ‘Y’ Shareholders shall be convened within seven days from the first meeting to discuss the Unresolved Matter, at which meeting the Directors or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) shall respectively use all reasonable endeavours in good faith to agree on a resolution of such Unresolved Matter.

 

  5.8.2 If a quorum is not achieved at the reconvened meeting or if the Directors or the ‘X’ Shareholders and ‘Y’ Shareholders (as the case may be) are still unable to pass a valid and binding resolution in respect of the Unresolved Matter at the reconvened meeting or if the Unresolved Matter is one which relates to a decision on how the Company’s AsiaSat Voting Rights are to be exercised (a “Voting Matter”), either the ‘X’ Shareholders or the ‘Y’ Shareholders shall refer the Unresolved Matter by written notice to each of the nominated representatives from time to time appointed by each of Able Star and GE Equity as initially appointed under Clause 5.8.5 and thereafter notified to the other party with specific reference to this Clause (“Nominated Representative”) (such notice shall be served at the same address as Able Star and GE Equity in accordance with Clause 25 (Notices)) with a view to arranging a meeting between the two Nominated Representatives as soon as practicable (and in respect of a Voting Matter within 5 business days of the Voting Matter being deemed an Unresolved Matter in accordance with Clause 7.3.2), who shall negotiate in good faith to agree on a resolution of the Unresolved Matter.

 

  5.8.3 If the Board or ‘X’ Shareholders and ‘Y’ Shareholders remain unable to pass a valid and binding resolution on the Unresolved Matter for more than five (5) business days from the date on which the Unresolved Matter was first referred by notice to the Nominated Representatives referred to in Clause 5.8.2 or such other period as the Parties may agree in writing, then the provisions of Clause 19 shall be applicable.

 

  5.8.4 The provisions of this Clause 5.8 shall not apply in respect of matters covered by Clause 14.

 

  5.8.5 With effect from the Completion Date, the Nominated Representative of Able Star is Mr Mi Zeng Xin and the Nominated Representative of GE Equity is Mr Ronald J. Herman, Jr.

 

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5.9 Secretary and auditors

 

  5.9.1 The Company secretary (if any) and the Company’s auditors will be appointed, as necessary from time to time, by resolution of the Board. The ‘X’ Shareholders and ‘Y’ Shareholders shall together have a right to request in writing that the Company effects a change in the Company secretary or the Company’s auditors.

 

  5.9.2 With effect from the Completion Date, the Company secretary (if any) shall (as the Shareholders shall procure) be such person whose name shall be notified by GE Equity and Able Star jointly to the Company at least three business days prior to the Completion Date.

 

  5.9.3 Unless otherwise mutually agreed by the ‘X’ Shareholders and ‘Y’ Shareholders, PricewaterhouseCoopers shall be appointed as the auditors of the Company within a reasonable time after the Completion Date.

 

5.10 Register of members

The register of members of the Company shall be maintained in such place as the Shareholders shall agree from time to time.

 

6 Nomination of AsiaSat Directors, Chairman, Deputy Chairman, Chief Executive Officer, Deputy Chief Executive Officer and Chief Financial Officer

 

6.1 Appointment of certain AsiaSat Directors by the Company

The Company and the Shareholders (so far as they are able) shall procure the holding of a meeting of the AsiaSat Board, as soon as practicable after the Completion Date, for the purpose of the replacing any ‘X’ Directors or ‘Y’ Directors in accordance with the changes notified pursuant to Clause 5.2.3 and Clause 5.2.4, respectively, to the AsiaSat Board, the appointment of the chairman and deputy chairman of the Company to be named pursuant to Clauses 5.3.2 and 5.3.4 as the chairman and deputy chairman respectively of AsiaSat and the Company. The Shareholders shall procure that immediately following such meeting of the AsiaSat Board and for as long as this Agreement shall remain in force the AsiaSat Board shall comprise the three (3) individuals who are the ‘X’ Directors or who are appointed by the ‘X’ Shareholder (as the case may be), the three (3) individuals who are the ‘Y’ Directors or who are appointed by the ‘Y’ Shareholder (as the case may be), two (2) executive directors being the Chief Executive Officer and the Deputy Chief Executive Officer and (for so long as AsiaSat remains listed on the Stock Exchange) three (3) independent non-executive directors.

 

6.2 Rights and ability of the Company to procure the appointment and/or removal of AsiaSat Directors

 

  6.2.1 The Company shall exercise its AsiaSat Voting Rights, and all other rights available to it from time to time deriving from its holding of AsiaSat Shares, to procure (so far as it is able) that all of the Directors from time to time shall be appointed to or removed from the AsiaSat Board in accordance with Clause 6.2.

 

  6.2.2 Where an ‘X’ Shareholder or a ‘Y’ Shareholder exercises its right under Clause 5.2.2 to remove a Director and appoint a replacement Director, the Company and the Shareholders shall procure (so far as they are able) that the Director so removed shall also be removed from the AsiaSat Board and that the replacement Director be appointed to the AsiaSat Board, subject always to Clause 6.3.

 

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6.3 Responsibilities of the ‘X’ and ‘Y’ Shareholders with respect to their own nominated appointees

Whenever an AsiaSat Director is removed from the AsiaSat Board pursuant to Clause 6.2.2, the relevant ‘X’ Shareholder or ‘Y’ Shareholder which appointed such removed AsiaSat Director shall indemnify the other Shareholders and AsiaSat against any costs, claims or losses arising from any resulting or consequential claims for compensation on the part of such AsiaSat Director.

 

6.4 Nomination of the AsiaSat chairman and deputy chairman

The Company shall make representations to the AsiaSat Board from time to time requesting that the AsiaSat Board shall appoint the Company’s chairman as chairman of the AsiaSat Board and the Company’s deputy chairman as deputy chairman of the AsiaSat Board. It is the intention of the Shareholders that the same individuals should be chairman and deputy chairman of board of the Company, JVCo and subject to this being acceptable to the AsiaSat Board from time to time.

 

6.5 Nomination of AsiaSat Chief Executive Officer, Deputy Chief Executive Officer and Chief Financial Officer

 

  6.5.1 The Company shall make representations to the AsiaSat Board from time to time requesting that the AsiaSat Board shall appoint persons nominated by mutual consent of Able Star and GE Equity and notified to the Company to be AsiaSat’s Chief Executive Officer and Deputy Chief Executive Officer (both of whom shall be directors of AsiaSat).

 

  6.5.2 The Company shall make representations to the AsiaSat Board from time to time requesting that the AsiaSat Board shall appoint the person nominated by mutual consent of Able Star and GE Equity and notified to the Company to be AsiaSat’s Chief Financial Officer.

 

6.6 JVCo Agreement shall take precedence

In the event of any ambiguity or discrepancy between the application of the provisions of this Clause 6 and clause 6 of the JVCo Shareholders’ Agreement, it is the intention that clause 6 of the JVCo Shareholders’ Agreement shall prevail for so long as the JVCo Shareholders’ Agreement is in force.

 

7 Exercise of the AsiaSat Voting Rights by the Company

 

7.1 Company to obtain instructions from Shareholders

On each relevant occasion when the Company’s AsiaSat Voting Rights are to be, or may be, exercised, the Company shall notify each of the ‘X’ Shareholders and ‘Y’ Shareholders of the requirement for a decision on voting rights as soon as practicable after the Company becomes aware that a resolution is to be proposed at a meeting of AsiaSat shareholders (or any relevant class of AsiaSat shareholders). The Company shall provide each of the ‘X’ Shareholders and ‘Y’ Shareholders with copies of the notice of meeting together with all circulars and other materials provided by AsiaSat to the Company in respect of the meeting.

 

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7.2 Shareholders to give unequivocal statement of intention

 

  7.2.1 Following each notification referred to in Clause 7.1, each of the ‘X’ Shareholders and ‘Y’ Shareholders shall communicate its wishes to the Company in writing in accordance with Clause 7.2.3 no later than 5:00 p.m. Hong Kong time on the fourth business day prior to the date of the relevant meeting (or such later time and/or date as practicable after receipt of the notification or as the ‘X’ and ‘Y’ Shareholders may agree in any particular case).

 

  7.2.2 In this regard, each of the ‘X’ Shareholders (as a Class) and ‘Y’ Shareholders (as a Class) must express one wish only. It is not permissible to express different wishes with respect to different Attributable AsiaSat Shares of such Shareholder and anything other than an unequivocal statement of intention with respect to all the Attributable AsiaSat Shares of the relevant Shareholder will be disregarded by the Company so that the relevant Shareholder will be treated as having failed to communicate its wishes for the purpose of Clause 7.3.2.

 

  7.2.3 On any relevant occasion, the wish expressed by any Shareholder under Clause 7.2.1 shall be one (but not more) of the following:

 

  (a) to vote in favour of the relevant resolution;

 

  (b) to vote against the relevant resolution;

 

  (c) to abstain from voting; or

 

  (d) to grant a discretionary proxy to the chairman of the meeting.

 

7.3 Company’s exercise of the AsiaSat Voting Rights

 

  7.3.1 Where the wishes expressed by the ‘X’ Shareholders and ‘Y’ Shareholders pursuant to Clause 7.2 in respect of a particular resolution are the same, the Company shall exercise its AsiaSat Voting Rights in its entirety in relation to such resolution in accordance with the common wish of the ‘X’ Shareholders and ‘Y’ Shareholders.

 

  7.3.2 Subject to Clause 14, where the wishes expressed by the ‘X’ Shareholders and ‘Y’ Shareholders pursuant to Clause 7.2 for a particular resolution are not the same or where a Shareholder fails to communicate its wishes to the Company by 5:00 p.m. Hong Kong time on the tenth business day prior to the date of the relevant meeting (or such other time and/or date which is as early as is reasonably practicable after receipt of the notification or as the ‘X’ Shareholders and ‘Y’ Shareholders may agree in writing in any particular case), the matter shall be treated as an Unresolved Matter and dealt with pursuant to the provisions of Clauses 5.8.2 and 5.8.3.

 

  7.3.3

Subject always to the Listing Rules and there being no objection from the Stock Exchange, where any notification provided pursuant to Clause 7.1 contains a proposal for a resolution the subject of which is or includes a transaction which is a connected transaction (as such term is defined in the Listing Rules), the Company shall abstain from casting the votes attaching to the Attributable AsiaSat Shares of an ‘X’ Shareholder or a ‘Y’ Shareholder who is a “connected person” for the purpose of the Listing Rules, as the case may be, but the Company shall cast its votes in respect of the other ‘X’ Shareholder or ‘Y’ Shareholder’s Attributable AsiaSat Shares in accordance with such ‘X’ Shareholder or ‘Y’ Shareholder’s wish,

 

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as the case may be, as expressed in accordance with Clause 7.2. For the avoidance of doubt, in such circumstances the Company shall not exercise the votes attaching to Attributable AsiaSat Shares of the Special Shareholder, but shall abstain from casting such votes.

 

  7.3.4 Any failure on the part of a Shareholder to communicate its wish to the Company will be treated as an expression of intention to abstain from voting for the purpose of the Company exercising its AsiaSat Voting Rights pursuant to Clause 7.3.2 or Clause 7.3.3.

 

  7.3.5 The provisions of Clauses 7.3.2 and 7.3.3 shall not apply in respect of any of the matters set out in Clause 14 and the Company shall, if appropriate, vote its AsiaSat Voting Rights so as to give effect to the provisions of such Clause.

 

7.4 Votes to be cast so as to give effect to this Agreement

It is an overriding requirement that the Company’s AsiaSat Voting Rights shall at all times (and from time to time) be exercised as necessary, desirable and/or appropriate to give effect to the express provisions and intent of this Agreement (including specifically, but without limitation, the objective and intentions underlying the rights of the respective Classes of ‘X’ Ordinary Shares and ‘Y’ Ordinary Shares to nominate AsiaSat Directors as set out in Clause 6 and the provisions of Clause 14).

 

7.5 Shareholders to consult

The Shareholders shall consult on a regular basis throughout the continuance of this Agreement with respect to their investment in AsiaSat and with a view to establishing and maintaining policies with respect to the Company’s ownership interest in AsiaSat (and the voting rights conferred by such ownership interest).

 

7.6 General offers for AsiaSat

Notwithstanding the provisions and procedures contained in Clauses 7.1 to 7.5 above, if any general offer (other than in connection with the Privatisation) is made for AsiaSat then unless the ‘X’ and ‘Y’ Shareholders agree otherwise, the ‘X’ and ‘Y’ Shareholders shall procure that the Company will not accept such offer in respect of any of the AsiaSat Shares held by it.

 

8 Pass through of Dividends and Other Rights accruing on or with respect to Attributable AsiaSat Shares

 

8.1 Cash dividend receipts to be passed through to Shareholders of the relevant Class

 

  8.1.1 As soon as practicable after the payment to the Company of any cash dividend on or with respect to any AsiaSat Shares, the Company shall distribute the relevant dividend to the Shareholders Entitled.

 

  8.1.2 The general applicability of Clause 8.1.1 is subject to any decision of the Board from time to time pursuant to Clause 17.3.3 providing for dividends to be retained by the Company to cover ongoing expenses.

 

  8.1.3 Any one or more Classes may elect from time to time to postpone distribution of any amounts otherwise due to such Class under Clause 8.1.1. Such postponement shall not in any way affect the ultimate entitlement of such Class to the amounts which would otherwise have been distributed to it.

 

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  8.1.4 Each distribution by the Company pursuant to Clause 8.1.1 shall be made by way of dividend paid by the Company or in such other manner as the Company and the Shareholders may agree in any particular case.

 

  8.1.5 If the Company is required at any time under applicable laws to make any deduction or withholding from any such distribution, the relevant distribution shall be made net of the applicable deduction or withholding and the Company shall remit to the appropriate revenue authority or other person all amounts required to be so remitted with respect to the amount so deducted or withheld. This Clause 8.1.5 is subject in all respects to Clause 8.1.3.

 

8.2 Other rights accruing on or with respect to Attributable AsiaSat Shares

All rights and entitlements, other than to cash dividend payments and voting rights, accruing from time to time on or with respect to any AsiaSat Shares held by the Company, shall belong to the Shareholders Entitled. These rights and entitlements include:

 

  8.2.1 distributions in kind;

 

  8.2.2 entitlements to bonus shares arising under other reorganisations of AsiaSat’s issued share capital;

 

  8.2.3 scrip dividend elections and other alternatives; and

 

  8.2.4 rights to subscribe further AsiaSat Shares or any other securities of AsiaSat.

Schedule 1 sets out the basis on which such rights and entitlements will be passed through to, or otherwise made available to, or exercised at the direction of, the relevant Class of Shareholders.

 

8.3 Entitlements of Classes

Except as specifically otherwise provided for elsewhere in this Agreement, all dividends and other entitlements conferred by, or accrued or accruing with respect to, any of the Company’s AsiaSat Shares shall be passed through or (as appropriate) allocated and attributed to each Class in proportion to the Shareholders’ respective shareholdings in the Company.

 

8.4 Liability for taxation

 

  8.4.1 If and to the extent that the Company incurs any liability for taxation as a result of, or in connection with, the receipt of any dividend or other distribution (whether in cash or in kind), or in relation to any other right from time to time conferred by or accrued or accruing, on or with respect to any AsiaSat Shares held by the Company, the relevant liability for taxation shall be attributed to the Shareholders Entitled in proportion to the Shareholders’ respective shareholdings in the Company.

 

  8.4.2 The Company shall arrange for any such liability to taxation to be discharged out of the assets concerned and shall account to the Shareholders Entitled on a “net” basis. All the preceding provisions of this Clause 8 and the provisions of Schedule 1 shall be construed accordingly.

 

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9 Disposal of Shares in the Company

 

9.1 No Disposal of Shares in the Company

Except as contemplated by Clauses 9.2 and 9.4 each of the Shareholders undertakes that except with the consent of the other Shareholders or in accordance with the provisions of Clauses 7.6 and 9, no Shareholder shall:

 

  9.1.1 sell, transfer or otherwise Dispose of any of such Shares (or any legal or beneficial interest therein);

 

  9.1.2 enter into any agreement in respect of the votes attached to Shares; or

 

  9.1.3 agree, whether or not subject to any condition precedent or subsequent, to do any of the foregoing.

 

9.2 Permitted Disposals of Shares in the Company

 

  9.2.1 The Shareholders undertake that they will not Dispose of all or any part of their Shares, other than to a Qualifying Subsidiary of CITIC (in respect of Able Star) or GEC (in respect of GE Equity), during the period ending on the third anniversary of the Completion Date, subject always to compliance by such Qualifying Subsidiary with the provisions of Clause 9.3 and Clause 26.3(c).

 

  9.2.2 Each Shareholder shall be entitled, after the third anniversary of the Completion Date, to Dispose of all or any part of its holding of Shares subject to the prior written consent of (in the case of the X Shareholder or the Special Shareholder) the Y Shareholder or (in the case of the Y Shareholder) the X Shareholder, such consent not to be unreasonably withheld.

 

  9.2.3 A Shareholder’s failure to give its consent to any Disposal by the other Shareholder pursuant to Clause 9.2.2 shall be unreasonable, if prior to any such Disposal, the Shareholder proposing to make such Disposal (the “Offeror”) shall have:

 

  (a) offered the Shares proposed to be Disposed to (in the case of the X Shareholder or the Special Shareholder) the Y Shareholder or (in the case of the Y Shareholder) the X Shareholder, (the “Offeree”), (in a notice setting out the consideration (in cash) of such proposed Disposal and all material terms and conditions of such Disposal (the “Notice”)) at the same cash price as that in the proposed Disposal and on terms no less favourable than those of the proposed Disposal, and the Offeror receives from the Offeree a written response to the Notice accepting the terms of the Disposal within five Business Days of the date of the Notice; and

 

  (b) demonstrated to the reasonable satisfaction of the other Shareholders that there are no reasonably likely risks to AsiaSat’s ability to (and if reasonably requested in the circumstances put in place arrangements to protect AsiaSat from any reasonably likely risks to AsiaSat’s ability to):

 

  (i) maintain its satellite licences and satellite orbital slots with substantially the same scope, coverage and authorization provided as provided prior to such Disposal; and

 

  (ii) carry on the business of provision of satellite transponder capacity substantially as carried on prior to such disposal in the PRC,

in each case resulting as a consequence of such Disposal.

 

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  9.2.4 No Shareholder (the “Transferor”) may make any Disposal pursuant to Clause 9.2.2 if such Disposal triggers or would trigger an obligation on any other Shareholder and/or any party acting in concert with such other Shareholder (the “Potential Offerors”) to make a general offer for AsiaSat, unless (i) the Potential Offerors have given their prior written consent to the Disposal, such consent not to be unreasonably withheld, and (ii) the Transferor agrees to indemnify the Potential Offerors for all consequences including costs incurred by them in respect of the general offer.

 

  9.2.5 It shall be reasonable for a Potential Offeror to withhold its consent under Clause 9.2.4 on the grounds of, without limitation, costs and expenses, reputation risk or sell down risk.

 

9.3 Qualifying Subsidiaries

 

  9.3.1 If any Shareholder that is a Qualifying Subsidiary is about to or will cease to be a Qualifying Subsidiary it must, before ceasing to be a Qualifying Subsidiary, ensure that its interest in all and not part only of the Shares in which it is interested shall be effectively transferred to GE Equity or Able Star (as the case may be) or to another Qualifying Subsidiary.

 

  9.3.2 Able Star and GE Equity may agree from time to time (on a case by case basis) that any subsidiary of any of CITIC and GEC should be deemed to be and should be treated as a Qualifying Subsidiary, as the case may be, for the purposes of this Agreement. Any such agreement shall specify the terms on which it is made and given (including any minimum level of ownership and/or control which CITIC or GEC, as the case may be, is required to maintain in such subsidiary) and, in the event of any failure to comply with such conditions at any time, the relevant entity shall (for the avoidance of doubt) be deemed to have ceased to be a Qualifying Subsidiary, as the case may be.

 

  9.3.3 Any request by CITIC or GEC, as the case may be, that any of its subsidiaries be treated as a Qualifying Subsidiary for the purposes of this Agreement (a “Request”) shall not be unreasonably refused by the other. The agreement of the other to any such Request shall not be unreasonably withheld or delayed.

 

10 Disposal of AsiaSat Shares

 

10.1 No Disposal of AsiaSat Shares by the Company

Subject to Clauses 10.2 and 10.3, the Company shall not:

 

  10.1.1 sell, transfer or otherwise Dispose of any of its AsiaSat Shares (or any legal or beneficial interest therein);

 

  10.1.2 enter into any agreement in respect of the votes attached to the AsiaSat Shares; or

 

  10.1.3 agree, whether or not subject to any condition precedent or subsequent, to do any of the foregoing,

and for the avoidance of doubt, the Shareholders further undertake that they shall take all necessary steps to procure that the Company shall not do any of the foregoing in respect of the AsiaSat Shares.

 

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10.2 Permitted Disposals of AsiaSat Shares by the Company at the instruction of Able Star

After the Completion Date, Able Star may, with the prior written consent of GE Equity, such consent not to be unreasonably withheld (as provided in Clause 10.2.2), from time to time direct the Company to Dispose of all or a part of Able Star’s Attributable AsiaSat Shares provided always that any such Disposal of AsiaSat Shares by the Company shall be effected in accordance with the provisions of this Clause 10.2 and Clause 11.

 

10.3 Permitted Disposals of AsiaSat Shares by the Company at the instruction of GE Equity

After the Completion Date, GE Equity may, with the prior written consent of Able Star, such consent not to be unreasonably withheld (as provided in Clause 10.3.2), from time to time direct the Company to Dispose of all or a part of GE Equity’s Attributable AsiaSat Shares provided always that any such Disposal of AsiaSat Shares by the Company shall be effected in accordance with the provisions of this Clause 10.3 and Clause 11.

 

11 Adjustments to Rights to Procure Appointments etc.

 

11.1 If, pursuant to the terms of this Agreement, as a result of Disposals of Shares or AsiaSat Shares, the holding of Shares or Attributable AsiaSat Shares by Able Star or GE Equity is decreased (“Disposition”), the parties agree that they will enter into such amendments to this Agreement (or if this Agreement would be terminated as a result of such Disposition, such other arrangements or agreements as appropriate), relating to the new relationship between the parties as a consequence of the Disposition and their respective rights and ability to influence the governance, management and direction of the Company and AsiaSat through their direct or indirect shareholdings in the Company and AsiaSat, including but without limitation with respect to, the nomination of the directors and officers of the Company and AsiaSat, any consent requirements for transactions by or events or occurrences affecting AsiaSat and any other negative protections for a party (e.g., tag along rights, drag along rights, quorum requirements, etc.), in each case that are equitable to reflect the proportionate interest of a party in the Company or AsiaSat after such Disposition.

 

11.2 If, pursuant to the terms of this Agreement, as a result of acquisitions of Shares or AsiaSat Shares, Able Star’s or GE Equity’s holding of Shares or Attributable AsiaSat Shares is increased (an “Acquisition”), the parties agree that they will enter into such amendments to this Agreement (or if this Agreement would be terminated as a result of such Acquisition, such other arrangements or agreements as appropriate), relating to the new relationship between the parties as a consequence of the Acquisition and their respective rights and ability to influence the governance, management and direction of the Company and AsiaSat through their direct or indirect shareholdings in the Company and AsiaSat, including but without limitation with respect to, the nomination of the directors and officers of the Company and AsiaSat, any consent requirements for transactions by or events or occurrences affecting AsiaSat and any other negative protections for a party (e.g., tag along rights, drag along rights, quorum requirements, etc.), in each case that are equitable to reflect the proportionate interest of the parties in the Company or AsiaSat after such Acquisition.

 

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12 Listing and Registration Rights

 

12.1 Listing

The Shareholders and the Company agree that:

 

  12.1.1 at any time after the third anniversary of the date of completion of the Privatisation, a each Shareholder shall have a right to request the Company to undertake and implement a Listing. Such request shall be in writing notified to all parties and set out the details of:

 

  (i) the proposed size of the initial public offering, and

 

  (ii) the proposed stock exchange or over-the-counter market on which the Listing is to be conducted;

 

  12.1.2 they shall use their reasonable endeavours to agree the matters set out in Clauses 12.1.1(i) and 12.1.1(ii) prior to effecting such Listing and shall use their reasonable endeavours to cooperate with and assist AsiaSat with the Listing;

 

  12.1.3 in the absence of any material adverse change in the business of AsiaSat and its subsidiaries as a whole, the number of AsiaSat Shares to be offered in and held in public hands (as defined in the Listing Rules) as a result of such Listing shall not exceed 33 per cent. of the issued share capital of AsiaSat immediately after such Listing, unless the Shareholders otherwise agree in writing; and

 

  12.1.4 all the voting and economic interests in AsiaSat of the parties and their respective subsidiaries and Associates shall be held by the Company or another corporate entity jointly owned by Able Star and GE Equity at the time of, and after the Listing and shall, unless otherwise agreed in writing between Able Star and GE Equity, remain in the following proportions:

 

  (i) Able Star/GE Equity - 50/50 voting interest; and

 

  (ii) Able Star/GE Equity - 50.5/49.5 economic interest;

both prior to and after the Listing.

 

12.2 Where Listing is to result in a Listing of AsiaSat Shares (in the form of American Depositary Shares or otherwise), the parties shall enter into a registration rights agreement (a “Registration Rights Agreement”) on customary terms which will provide the parties (other than the Company) with equal registration rights (on terms to be agreed) in respect of the AsiaSat Shares after the Listing provided that the parties (other than the Company) shall have the right to sell AsiaSat Shares in the same proportion as they own such AsiaSat Shares at the same time (unless Able Star or GE Equity otherwise agree in advance) and that the exercise of any such registration right does not result in any of the Shareholders or their affiliates having to make a mandatory general offer for AsiaSat.

 

12.3 The Company and each of the other parties will cooperate with each other and AsiaSat in connection with any exercise by a Shareholder of its rights under a Registration Rights Agreement and take any other actions necessary or appropriate to ensure that the Company and AsiaSat are able to comply with their obligations under the Registration Rights Agreement in connection with such exercise.

 

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13 Purchase of Additional AsiaSat Shares by the Shareholders and their Respective Affiliates

 

13.1 General offer for AsiaSat by Shareholders

Subject to Clause 13.3 and to any mandatory offer resulting from permitted Disposals under Clause 9.4, none of the Shareholders or any of their subsidiaries or Associates shall make a general offer for AsiaSat without the prior written consent of the other Shareholders.

 

13.2 Ability to jointly acquire further AsiaSat Shares through the Company

 

  13.2.1 If at any time during the continuation of this Agreement any of the Shareholders (or any of their respective subsidiaries or Associates) wishes to acquire further AsiaSat Shares, the relevant Shareholder shall notify the Company and the other Shareholders stating (among other things) the number of AsiaSat Shares wished to be acquired and the basis on which it is proposed that such acquisition be effected and funded through the Company.

 

  13.2.2 Such notification shall be treated as a request (a “Purchase Request”) to the Company and to the other Shareholders to arrange for such further AsiaSat Shares to be acquired through the Company in accordance with the provisions of this Clause 13.

 

  13.2.3 Following receipt of a Purchase Request, the other Shareholders shall decide whether or not to agree to such Purchase Request. The Company shall only be obliged to comply with a Purchase Request if the other Shareholders so agree, in their sole discretion.

 

  13.2.4 If and whenever the Shareholders agree to a Purchase Request, the Company shall (and the Shareholders shall cooperate to procure that the Company shall) take all necessary steps to comply with such Purchase Request.

 

13.3 Ability for Able Star to Acquire Further AsiaSat Shares through the Company

After the third anniversary of the Completion Date, Able Star may, with the consent of GE Equity, such consent not to be unreasonably withheld, require the Company to acquire further AsiaSat Shares, whether from a third party, the public market (including through a general offer) or AsiaSat, in accordance with the provisions of this Clause 13 and subject always to the provisions of Clause 11. Upon a request by Able Star to the Company to acquire further AsiaSat Shares pursuant to the foregoing sentence, the Company shall, and GE Equity shall cooperate with Able Star to cause the Company to, take such actions as are necessary or appropriate to effectuate such acquisition. It shall be reasonable for GE Equity to withhold its consent to the acquisition by Able Star of further AsiaSat Shares unless Able Star has:

 

  (i) shown to GE Equity’s reasonable satisfaction that the acquisition will be beneficial to the growth of AsiaSat’s business; and

 

  (ii) has made good faith efforts to discuss other alternative structures with GE Equity and AsiaSat.

 

13.4 Bases on which further AsiaSat Shares may be acquired through the Company

Any acquisition by the Company of further AsiaSat Shares agreed to by the Shareholders pursuant to Clause 13.2 shall be effected by way of each acquiring Shareholder (or any of

 

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its Qualifying Subsidiaries), and any acquisition of further AsiaSat Shares under Clause 13.3 shall be effected by way of Able Star (or its Qualifying Subsidiary), subscribing for additional ‘X’ Ordinary Shares or ‘Y’ Ordinary Shares, as the case may be. The aggregate number of additional Shares shall equal the number of further AsiaSat Shares to be acquired by the Company (and on the basis that the proceeds of subscription be applied by the Company in purchasing or subscribing for further AsiaSat Shares following which such further AsiaSat Shares will be attributable to the Class allocated to such acquiring Shareholder).

 

13.5 Terms of acquisition of further AsiaSat Shares

Any agreement reached between the Shareholders pursuant to Clause 13.2 or decision made by Able Star pursuant to Clause 13.3 for the acquisition of further AsiaSat Shares by the Company shall contain the full basis on which the relevant AsiaSat Shares are to be acquired, the source of funds and any applicable changes to the issued share capital of the Company and (if necessary or appropriate) to this Agreement.

 

13.6 Costs and expenses

All costs and expenses (including, if and to the extent applicable but without limitation, broker’s commission, Stock Exchange transaction levy, stamp duty and any legal costs) incurred by the Company in connection with any acquisition of further AsiaSat Shares pursuant to:

 

  13.6.1 Clause 13.2 shall be shared by the Shareholders in proportion to their shareholdings in the Company; and

 

  13.6.2 Clause 13.3 shall be borne by Able Star.

 

14 Undertakings by GEC and CITIC

 

14.1 Mutual Undertakings

Each of the ‘X’ Shareholder and ‘Y’ Shareholder hereby covenants that without the prior written consent of the other ‘X’ or ‘Y’ Shareholder, as the case may be, it shall not take any action or participate in any action or scheme which will facilitate or give rise to the occurrence of any of the following events, except where such events result from or arise in connection with a Disposal or Acquisition by Able Star or GE Equity pursuant to the provisions of Clauses 9.2, 10.2, 10.3 or 13.3 or the Privatisation (“Excepted Events”), each of the ‘X’ Shareholder and ‘Y’ Shareholder shall do and procure any Director appointed or nominated by such Shareholder pursuant to Clause 5 and who is a member of the AsiaSat Board to do all acts which are reasonably within its power (subject in the case of any Director, to his fiduciary duties as a member of the AsiaSat Board) to prevent any of the following events, other than Excepted Events, from occurring, in each case with respect to the Company and AsiaSat:

 

  14.1.1 the alteration, including through purchase or issuance, of the share capital of the Company or AsiaSat (save for the exercise of employee share options, the issue of bonus shares and scrip dividends);

 

  14.1.2 the amendment in any manner to the Memorandum and Articles of the Company or of AsiaSat;

 

  14.1.3 any dilution of a Shareholder’s attributable shareholding of AsiaSat Shares (save for the exercise of employee share options and scrip dividends); and

 

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  14.1.4 the withdrawal of listing of AsiaSat Shares from the Stock Exchange or the NYSE.

 

14.2 Notwithstanding the provisions of Clause 14.1, nothing contained in Clause 14.1 shall require any Shareholder to expend any funds or take, or refrain from taking, directly or indirectly, any action with respect to the conduct of such Shareholder’s respective business or assets.

 

15 The Hong Kong Takeovers Code

 

15.1 Potential implications of the Code with respect to arrangements between the Shareholders, the Qualifying Subsidiaries and the Company

 

  15.1.1 Future transactions in AsiaSat Shares or Shares by or between any one or more of the Company, the other parties, the Shareholders, the Qualifying Subsidiaries or a person acting in concert with any of them may have implications under the Code. The parties shall consider and, if practicable, consult with each other with respect to the Code implications of such future transactions as and when any such transaction is (or may be) proposed to be entered into.

 

  15.1.2 The Shareholders acknowledge that the transfers of AsiaSat Shares or Shares contemplated herein may have implications under the Code and without limiting the generality of Clause 15.1.1, the Shareholders shall discuss in good faith such alternatives acceptable to the Shareholders in light of the implications under the Code, including the dissolution of the Company and the termination of this Agreement.

 

15.2 None of the Shareholders shall enter into any arrangements which result in the other Shareholders or the Company being deemed for the purposes of the Code to be acting in concert with any party holding, or proposing to acquire, any AsiaSat Shares other than any Qualifying Subsidiary of the relevant Shareholder which holds Shares in the Company.

 

15.3 None of the foregoing shall prohibit any Disposal or Acquisition by a Shareholder of Shares in the Company or AsiaSat Shares pursuant to Clauses 9.2, 10.2, 10.3 or 13.3.

 

15.4 If any Acquisition by Able Star gives rise to an obligation to make a mandatory offer under the Code, Able Star shall be responsible for making such offer on a basis which does not require the participation of any other Shareholder. Able Star shall hold GE Equity and its affiliates harmless in relation thereto.

 

15.5 Without prejudice to Clause 15.4, no party or its concert party(ies) may take any action which by its or their actions triggers or would trigger an obligation on any other party (or a person acting in concert with such party) to make a mandatory offer under the Code, and each party shall hold the other parties harmless from all consequences including any costs and expenses incurred as a result of triggering a mandatory offer obligation.

 

15.6 Any party (or a person acting in concert with such party) which takes any action which triggers or would trigger an obligation on such party to make a mandatory offer under the Code shall be responsible for all actions, the costs and expenses of making and implementing the offer and all costs and expenses of restoring the public float requirements of AsiaSat in the event the offer fails to obtain a level of acceptances which entitles the offeror and its concert parties to exercise rights of compulsory acquisition of all outstanding securities of AsiaSat.

 

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16 Compliance Matters

 

16.1 Obligations under and in relation to the SFO

 

  16.1.1 Each of the parties (other than the Company) shall ensure that it and any Qualifying Subsidiary which holds Shares duly complies with all its obligations arising from time to time under the SFO with respect to AsiaSat Shares in which it is interested for the purposes of the SFO. In order to assist the other Shareholders to comply with such obligations, each Shareholder shall make available to the other Shareholders from time to time, all information with respect to its own circumstances as such Shareholder is (or should reasonably be) aware is relevant to obligations of the other Shareholders under the SFO.

 

  16.1.2 Each of the parties (other than the Company) shall cooperate to procure that the Company duly complies with all its obligations arising under the SFO from time to time.

 

16.2 Disclosure obligations under the Code and the Exchange Act

Each of the parties (other than the Company) shall cooperate to procure that the Company duly complies with all its obligations arising under the Listing Rules, the Code and the Exchange Act from time to time to disclose interests and/or dealings in AsiaSat Shares.

 

16.3 Obligations under and in relation to the Listing Rules, NYSE rules etc.

 

  16.3.1 Each Shareholder shall ensure that it duly complies with all its obligations arising from time to time under the Listing Rules, the Code, the SFO and/or any rules of the NYSE and/or the Exchange Act with respect to AsiaSat.

 

  16.3.2 Each of the parties (other than the Company shall cooperate to procure that the Company and AsiaSat duly complies with all their respective obligations arising under the Listing Rules, the Code, the SFO and/or any rules of the NYSE and/or the Exchange Act from time to time with respect to AsiaSat.

 

16.4 Each of the parties shall cooperate to ensure that AsiaSat complies with applicable legal requirements.

 

17 Funding Future and Ongoing Expenses

 

17.1 Future acquisitions of AsiaSat Shares

 

  17.1.1 If the Company is to acquire further AsiaSat Shares at a future date, these additional AsiaSat Shares will be acquired either:

 

  (a) pursuant to the exercise of rights offered with respect to existing AsiaSat Shares already held by the Company pursuant to and in accordance with Clause 8 and Schedule 1; or

 

  (b) pursuant to Clause 13.2 or Clause 13.3, in each case with (among other things) an agreed basis for the provision to the Company of any relevant funds required to effect the acquisition of such AsiaSat Shares.

 

  17.1.2 In either of the above cases, all funds required by the Company to acquire such additional AsiaSat Shares will be provided to the Company by the relevant Shareholders as provided in Clause 13.4 or Schedule 1 and the relevant AsiaSat Shares will be attributed as and when they are acquired.

 

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17.2 Administrative and general expenses

All administrative and general expenses (being expenses not specifically provided for under any of the other provisions of this Agreement) of the Company shall be funded by each Class in proportion to the Shareholders’ respective shareholdings in the Company on an annual basis by reference to such shareholdings on the Completion Date and on each anniversary thereof. Such administrative and general expenses include annual audit fees and registration fees as well as any other costs necessary for the continuance of the Company and its holding of AsiaSat Shares as contemplated by this Agreement.

 

17.3 Provision of Funding

 

  17.3.1 The Shareholders shall be responsible for ensuring that the Company has sufficient funds available to it from time to time to meet its administrative and general expenses referred to in Clause 17.2.

 

  17.3.2 Such funds shall be made available to the Company in proportion to the Shareholders’ respective shareholdings in the Company and:

 

  (a) in such form (which may include subscription for non-voting deferred shares of negligible nominal value) as will ensure that such funds form part of the Company’s general assets; or

 

  (b) if (and provided that) all amounts so made available to the Company are duly made available by the Shareholders in proportion to the Shareholders’ respective shareholdings in the Company and on the same terms, in the form of loans carrying the right of repayment (and having such other terms including, if appropriate, as to interest as may be agreed by the Shareholders from time to time).

 

  17.3.3 The Board may from time to time resolve to retain out of sums which would otherwise fall to be distributed to the Classes pursuant to Clause 8, such reasonable amounts as may be necessary to meet foreseeable future expenses likely to be incurred by the Company. Any amount so retained out of amounts which would otherwise have been distributed to Shareholders of any Class shall be deemed to be held by the Company on account of future obligations of the Shareholders under this Clause 17.3.

 

18 Confidentiality

 

18.1 General confidentiality obligations

All communications between the parties and AsiaSat and/or any of them and all information and other materials supplied to or received by any of them from any other which is either marked “confidential” or by its nature intended to be for the knowledge of the recipient alone, and all information concerning the business transactions and the financial arrangements of any such party with any person with whom it is in a confidential relationship with regard to the matter in question coming to the knowledge of the recipient shall be kept confidential by the recipient unless or until the recipient party can reasonably demonstrate that any such communication, information and material is, or the relevant part of it is, in the public domain through no fault of its own or has been independently developed by it or given to it by a third party with no obligation of confidentiality.

 

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18.2 Further measures to ensure confidentiality

Each of the parties (other than the Company) shall (without prejudice to the generality of Clause 18.1) use all reasonable endeavours to procure the observance of the above-mentioned restrictions by the Company and shall take all reasonable steps to minimise the risk of disclosure of confidential information, by ensuring that only they themselves and such of their employees and directors and advisers whose duties will require them to possess any of such information shall have access thereto, and shall be instructed to treat the same as confidential.

 

18.3 Mandatory public statements

None of the preceding provisions of this Clause 18 shall prohibit any party from making any public statement or disclosing information which would otherwise be required to be kept confidential if and to the extent so required:

 

  18.3.1 by law, or by any court of competent jurisdiction; or

 

  18.3.2 under the Exchange Act or the SFO or by the Listing Rules, the Code or the rules or regulations (whether or not having the force of law) of the Stock Exchange, the NYSE and/or any other stock exchange on which its, or any of its associates’ or affiliates’ shares or debt securities are quoted or by any relevant securities regulatory authority or body,

provided that any party required or proposing to make any such disclosure shall, to the maximum extent reasonably practicable, consult with the other parties (other than the Company), as the case may be, with a view to such disclosure, so far as possible, being limited to matters, and otherwise made in a form, acceptable to them.

 

18.4 Disclosure to Associates

Notwithstanding Clause 18.1, Able Star and GE Equity may at any time disclose confidential information and communications to their respective Associates and/or affiliates for the purpose solely of assisting or furthering the business of AsiaSat provided that Able Star and GE Equity, as applicable, shall procure that any such Associates or affiliates shall treat such information as confidential.

 

18.5 Limits on the use of confidential information

Each of the parties (other than the Company) hereby agrees that it will not use confidential information obtained as a shareholder in the Company, an indirect shareholder in AsiaSat, or directly or indirectly through its nominees or appointees to the board of directors or management of AsiaSat or the Company, to appropriate business opportunities at the expense or to the detriment of AsiaSat.

 

18.6 Disclosure to certain financial institutions

Nothing in this Clause 18 shall restrict the ability of a Shareholder to disclose to any financial institutions with a view to obtaining funds to it in relation to its shareholding in the Company such information concerning the Company and the contents of this Agreement as such Shareholder shall reasonably consider necessary and appropriate.

 

19 Duration and Termination

Except as otherwise provided herein, this Agreement shall continue in full force and effect until the earlier of the following events:

 

19.1 the parties (other than the Company) agree in writing to terminate this Agreement; or

 

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19.2 an effective resolution is passed or a binding order is made for the winding up of the Company,

provided, however, that this Agreement shall cease to have effect as regards any Shareholder who ceases to hold any Shares save for any provisions hereof which are expressed to continue in force thereafter.

 

19.3 Either Able Star or GE Equity may terminate this Agreement by seven (7) days’ notice in writing to the other parties if a matter remains unresolved as provided in Clause 5.8.3.

 

19.4 In the event of termination of this Agreement and notwithstanding such termination, the parties agree to procure the transfer or distribution of each Shareholder’s Attributable AsiaSat Shares to such Shareholder (or as it may direct).

 

19.5 Prior to effecting such transfer or distribution of AsiaSat Shares in accordance with Clause 19.4, the Company shall exercise the AsiaSat Voting Rights attaching to each of the ‘X’ Shareholder’s and the ‘Y’ Shareholder’s Attributable AsiaSat Shares in accordance with the wishes of the relevant ‘X’ Shareholder or ‘Y’ Shareholder expressed in accordance with Clause 7.2.1 and the AsiaSat Voting Rights attaching to the Special Shareholder’s Attributable AsiaSat Shares shall not be exercised by the Company.

 

20 Restrictions on the Shareholders

 

20.1 Restrictions

Each of CITIC and GEC agrees for the benefit of the other (which also takes such benefit for and on behalf of the Company and its affiliates) that, subject to the provisions of Clauses 20.2, 20.3 and 20.4, it will not and will procure that none of its subsidiaries and Associates will in any Relevant Capacity during the continuance of this Agreement directly or indirectly carry on any business which is of the same or similar type to the Business nor be concerned in any such business save through the holding or being interested in not more than 5 per cent. of the outstanding share capital of a company the shares of which are listed on any recognised stock exchange.

 

20.2 Reasonableness of Restrictions

CITIC and GEC agree that they consider that the restrictions contained in this Clause 20 are no greater than is reasonable and necessary for the protection of the interests of the Company and each other but if any such restriction shall be held to be void but would be valid if deleted in part or reduced in application, such restriction shall apply with such deletion or modification as may be necessary to make it valid and enforceable.

 

20.3 Interpretation

The following terms shall have the following meanings respectively in this Clause 20:

 

  20.3.1 Business means the provision of satellite transponder capacity from satellites positioned between the orbital slots of 50E to 150E;

 

  20.3.2 Relevant Capacity means for its own account or for that of any person, firm or company (other than the Company) and whether through the medium of any company controlled by it (for which purpose there shall be aggregated with its shareholding or ability to exercise control the shares held or control exercised by any person connected with the relevant Shareholder) or as principal, partner, consultant or agent.

 

27

  20.3.3 A party (other than the Company) shall be entitled to waive any breach or prospective breach by another party (other than its own subsidiary) and such other party’s subsidiaries of the provisions of Clause 20.1 after consultation with AsiaSat.

 

20.4 Exceptions to Restrictions

The restrictions contained in this Clause 20 shall not apply to:

 

  20.4.1 the provision of financial services to a third party by a party, and/or its subsidiaries and/or Associates, including without limitation capital markets activity, debt or equity financing, leasing, default recovery activities, securities activity, insurance or any other financial services activities;

 

  20.4.2 any investments made or managed on behalf of a third party by a party, and/or its subsidiaries and/or Associates;

 

  20.4.3 any investments made on behalf of a party’s pension funds; and

 

  20.4.4 any acquisition in which the Business is only incidental to the acquired entity and/or business (that is, where less than 10 per cent. of the revenues of the acquired entity and/or business relates to the Business).

 

21 Arrangements with AsiaSat

 

21.1 Subject to the provisions of Clause 21.2 below, each of CITIC and GEC agrees for the benefit of the other (which also takes such benefit on behalf of the Company and its subsidiaries) that it will not and will procure that none of its subsidiaries and Associates will during the continuance of this Agreement enter into any agreement or arrangement with AsiaSat (or any of its subsidiaries or Associates without the prior written approval of CITIC (in the case of GEC and its subsidiaries and Associates) or GEC (in the case of CITIC and its subsidiaries and Associates).

 

21.2 The restrictions contained in Clause 21.1 above shall not apply to:

 

  21.2.1 any transaction or arrangement between (i) AsiaSat and/or its subsidiaries and Associates, and (ii) the Company and/or JVCo; and

 

  21.2.2 any pre-existing transaction or arrangement on arm’s length terms between (i) AsiaSat and/or its subsidiaries and Associates, and (ii) CITIC and/or its affiliates and which has been disclosed to GEC at the date of this Agreement.

 

22 Options

 

22.1 Put Option

Able Star hereby grants to GE Equity the option (the “Put Option”) to sell all of its Shares to Able Star (the “Put Option Shares”) in accordance with Clause 23.

 

22.2 Call Option

GE Equity hereby grants to Able Star the option (the “Call Option”) to purchase all or part of the Shares held by GE Equity (the “Call Option Shares”) in accordance with Clause 23.

 

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23 Exercise of the Options

 

23.1 Exercise

 

  23.1.1 GE Equity may only exercise the Put Option in accordance with Clause 23.2, and provided that the exercise of the Put Option will not require any mandatory general offer by any person for AsiaSat Shares under applicable law or regulatory requirements.

 

  23.1.2 Able Star may only exercise the Call Option in accordance with Clause 23.3, and provided that the exercise of the Call Option will not require any mandatory general offer by any person for AsiaSat Shares under applicable law or regulatory requirements.

 

23.2 Put Option Notice

 

  23.2.1 GE Equity may deliver to Able Star a notice (a “Put Option Notice”) at any time during the period which is within 30 days of GE Equity first becoming aware of, or the occurrence of (whichever is later), one of the following events (a “Put Option Event”):

 

  (i) a change in the control of Able Star or CITIC; and

 

  (ii) a serious violation of law or regulation by Able Star or CITIC or a subsidiary or an Associate in a matter which, in a material respect, relates to AsiaSat or CITIC’s Attributable AsiaSat Shares that will or may reasonably be expected to harm the prospects or reputation of AsiaSat.

 

  23.2.2 A Put Option Notice shall specify:

 

  (i) the relevant Put Option Event and details giving rise to it;

 

  (ii) the settlement date for the Put Option (which shall not be more than 30 days from the date of the Put Option Notice (the “Put Option Notice Date”));

 

  (iii) the exercise price for the Put Option as calculated in accordance with Clause 23.4 (the “Put Option Exercise Price”); and

 

  (iv) the Put Option Notice Date.

 

  23.2.3 A Put Option Notice, once delivered, may not be withdrawn.

 

  23.2.4 A Put Option Notice may not be delivered (and, if so delivered, shall not be valid) if it fails to comply with Clauses 23.2.1 and 23.2.2. above.

 

23.3 Call Option Notice

 

  23.3.1 Able Star may deliver to GE Equity a notice (a “Call Option Notice”) at any time during the period which is within 30 days of Able Star first becoming aware of, or the occurrence of (whichever is later), one of the following events (a “Call Option Event”):

 

  (i) a change in the control of GE Equity or GEC; and

 

  (ii) a serious violation of law or regulation by GE Equity or any other subsidiary or Associate of GEC in a matter which relates, in a material respect, to AsiaSat or GE Equity’s Attributable AsiaSat Shares that will or may reasonably be expected to harm the prospects or reputation of AsiaSat.

 

29

  23.3.2 Any Call Option Notice shall specify:

 

  (i) the relevant Call Option Event and details giving rise to it;

 

  (ii) the settlement date for the Call Option (which shall not be more than 30 days from the date of the Call Option Notice (the “Call Option Notice Date”));

 

  (iii) the exercise price for the Call Option as calculated in accordance with Clause 23.4 (the “Call Option Exercise Price”); and

 

  (iv) the date of the Call Option Notice Date.

 

  23.3.3 A Call Option Notice, once delivered, may not be withdrawn.

 

  23.3.4 A Call Option Notice may not be delivered (and, if so delivered, shall not be valid) if it fails to comply with Clauses 23.2.1 and 23.3.2.

 

23.4 Exercise Price

 

  23.4.1 Subject to Clauses 23.4.2 and 23.4.3 below, the Put Option Exercise Price and the Call Option Exercise Price will be the product of:

the Fair Market Value multiplied by the percentage to the total number of shares in the issued share capital of AsiaSat which the Put Option Shares or the Call Option Shares (respectively) represent,

subject to any Minimum Price applicable on the Put Option Notice Date or Call Option Notice Date (as the case may be). Able Star shall have the right to request that the Minimum Price (if any) be determined by a firm of independent public accountants in the event of any exercise of the Call Option and, GE Equity shall have the right to request that the Minimum Price (if any) be determined by a firm of independent public accountants in the event of any exercise of the Put Option.

 

  23.4.2 In the event of any circumstance set out in Clause 23.2.1(ii) arising, the Put Option Exercise Price will be increased by 5 per cent.

 

  23.4.3 In the event of any circumstance set out in Clause 23.3.1(ii) arising, the Call Option Exercise Price will be increased by 5 per cent.

 

24 Tax Status

Able Star shall cooperate with GE Equity at GE Equity’s request to enable the Company to elect to be classified as a partnership for US federal tax purposes, provided that GE Equity promptly provides Able Star with all relevant information prior to such election, that all costs and liabilities incurred by AsiaSat, the Company and/or Able Star in giving such cooperation or making such election (as the case may be) will be reimbursed promptly and in full by GE Equity and that such cooperation and such election shall not increase the tax burden of any of AsiaSat, the Company and/or Able Star and shall not otherwise be prejudicial to the interests of any of them.

 

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25 Notices

All notices, statements, demands, requirements or other communications and documents required or permitted to be given, served or delivered to any party under this Agreement (a Communication) shall be in writing in the English language and shall be either delivered by hand (including, without limitation, delivery by courier) or sent by prepaid certified or registered mail (airmail in the case of all international Communications), with return receipt requested, to that party at its address stated below or sent by facsimile machine to its facsimile number stated below or sent by e-mail to its e-mail address as stated below or to such other address or facsimile number or e-mail address as that party may from time to time have notified the other party as being its address or facsimile number or e-mail address for the purposes of this Agreement to the exclusion of all previously applicable addresses and facsimile numbers and e-mail addresses. A Communication once given, served or delivered shall be irrevocable without the consent of the recipient which may be given or withheld in its absolute discretion. A Communication shall be deemed to have been given, served or delivered:

 

25.1 if delivered by hand (including, without limitation, delivery by courier), upon delivery;

 

25.2 if sent by mail, upon proof of receipt;

 

25.3 if sent by facsimile machine, one hour after its transmission if such time is during business hours in the place of its receipt or, if it is not, on the opening of business on the next succeeding business day in the place of its receipt subject, if sent by facsimile machine transmission, to its having in fact been received in legible form; and

 

25.4 if sent by e-mail, provided the e-mail is clearly stated in the subject line and at the top of the e-mail message to be notice under this Agreement, upon confirmation of receipt of the e-mail by the intended recipient (a read receipt will not suffice for this purpose).

 

25.5 The addresses, facsimile numbers and e-mail addresses of the parties are as follows:

In the case of GEC and GE Equity at:

33rd Floor

One Exchange Square

Central

Hong Kong

 

Fax:    + 852 2100 6733
Attention:    Michael Hosokawa
E-mail:    generalcounsel.equity@ge.com

In the case of CITIC at:

Capital Mansion

6 Xinyuan Nanlu

Chaoyang District

Beijing 100004

China

 

Fax:    (861) 6466 1186
Attention:    Mr Mi Zeng Xin
E-mail:    kenko@citicua.com

 

31

with a copy to: Kenneth Ko, Room 2118, Hutchison House, 10 Harcourt Road, Hong Kong (fax number: (852) 2861 1901, e-mail: kenko@citicua.com)

In the case of the Company at:

Room 2118, Hutchison House

10 Harcourt Road

Hong Kong

 

Fax:    (852) 2861 1901
Attention:    Mr Mi Zeng Xin
E-mail:    kenko@citicua.com
Copied to: Kenneth Ko (at the same address, fax number and e-mail address)

In the case of Able Star at:

Room 2118, Hutchison House

10 Harcourt Road

Hong Kong

 

Fax:    (852) 2861 1901
Attention:    Mr Mi Zeng Xin
E-mail:    kenko@citicua.com.hk
Copied to: Kenneth Ko (at the same address, fax number and e-mail address)

 

26 Miscellaneous

 

26.1 Costs

Each party shall bear the costs and expenses incurred by it in connection with the preparation, negotiation and execution of this Agreement and all other agreements and documents referred to in this Agreement.

 

26.2 Conflict with Memorandum and Articles

In the event of any ambiguity or discrepancy between the provisions of this Agreement and the Memorandum and Articles, it is the intention that the provisions of this Agreement shall prevail and accordingly the parties shall exercise all voting and other rights and powers available to them so as to give effect to the provisions of this Agreement and shall further, if necessary, procure any required amendment to the Memorandum and Articles.

 

26.3 Assignment and adherence

 

  (a) This Agreement shall be binding on the parties hereto and their respective successors and assigns.

 

  (b) None of the parties hereto shall be entitled to assign this Agreement or any of its rights or obligations under this Agreement.

 

  (c) As a condition to any Qualifying Subsidiary becoming a Shareholder pursuant to Clause 9.2, the transferring Shareholder shall procure that such Qualifying Subsidiary adheres to this Agreement by executing (and delivering to the other parties to this Agreement) a deed of adherence substantially in the form set out in Schedule 2.

 

32

26.4 Time of the essence

Time shall be of the essence as regards the provisions of this Agreement, both as regards the times and periods mentioned in this Agreement and as regards any times or periods which may, by agreement between the parties, be substituted for them.

 

26.5 Entire agreement - amendments to be in writing

This Agreement (including the Schedules) together with the other written documents and agreements entered into on the date of this Agreement or on the Completion Date constitute the entire agreement between the parties and save as otherwise expressly provided no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless made in writing specifically referring to this Agreement and duly signed by or on behalf of the parties hereto.

 

26.6 Remedies

No remedy conferred by any of the provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedy.

 

26.7 Equitable relief

Without prejudice to any other rights or remedies which may be available to any party, each of the Shareholders acknowledges that damages would not be an adequate remedy for any breach on its part of obligations incumbent on it under this Agreement and, accordingly, that the other Shareholders shall be entitled to the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of any such obligations by it and that no proof of special damages shall be necessary for the enforcement of this Agreement.

 

26.8 Severance

If any provision of this Agreement or part thereof is rendered void, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

26.9 No partnership

Nothing in this Agreement shall be deemed to constitute a partnership between the parties hereto nor constitute any party the agent of any other party for any purpose.

 

26.10 Third parties

This Agreement does not create any right under the Contracts (Rights of Third Parties) Act 1999 which is enforceable by any person who is not a party to it.

 

26.11 Parties to effect Agreement

Each of the parties to this Agreement shall cooperate with the others and shall execute and deliver to the others such other instruments and documents and take such other action as may reasonably be requested from time to time in order to carry out, evidence and confirm their respective rights and the intended purpose of this Agreement.

 

33

26.12 GEC and CITIC

GEC shall procure the observance of the provisions of this Agreement by its subsidiaries, affiliates and Associates. CITIC shall procure the observance of the provisions of this Agreement by its subsidiaries, affiliates and Associates.

 

27 Governing Law

This Agreement and the documents to be entered into pursuant to it shall be governed by and construed in accordance with English law.

 

28 Arbitration

 

28.1 Any dispute or difference arising out of, in connection with or relating to (in each such case, in any manner whatsoever) this Agreement, including a dispute as to the validity or existence of this Agreement or this Clause 28, shall be referred to, and finally resolved by means of, arbitration in accordance with the provisions of this Clause 28.

 

28.2 Any arbitration commenced pursuant to this Clause 28:

 

  28.2.1 shall be conducted in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (the “UNCITRAL Rules”) then in effect as modified by the provisions of this Clause 28;

 

  28.2.2 shall have its seat in Hong Kong where, unless otherwise directed by the arbitral tribunal, all hearings in the arbitration shall take place;

 

  28.2.3 shall be conducted in the English language; and

 

  28.2.4 shall be administered by the Hong Kong International Arbitration Centre (“HKIAC”), which shall act as the appointing authority.

 

28.3 The arbitration shall be carried out by an arbitral tribunal consisting of three arbitrators appointed as follows:

 

  28.3.1 the party or parties initiating arbitration shall (if more than one, jointly) appoint an arbitrator in its or their notice of arbitration in accordance with the provisions of Articles 3 and 7 of the UNCITRAL Rules as modified by this Clause 28;

 

  28.3.2 the party or parties responding to the notice of arbitration shall (if more than one, jointly) appoint an arbitrator in accordance with the provisions of Articles 3 and 7 of the UNCITRAL Rules as modified by this Clause 28;

 

  28.3.3 the third arbitrator who shall act as the chairman of the arbitral tribunal shall be appointed by the two arbitrators appointed by or on behalf of the parties (the “Party Arbitrators”) within a period of 10 Business Days from the date of the appointment or the confirmation of the appointment of the second Party Arbitrator; and

 

  28.3.4 in default of the appointment of any arbitrator for any reason whatsoever, the relevant arbitrator(s) shall be appointed by the HKIAC within 10 Business Days in accordance with the provisions of Article 7 of the UNCITRAL Rules (as modified hereby).

 

28.4 Each party unconditionally and irrevocably submits to the jurisdiction of the courts of Hong Kong for the purposes of:

 

  28.4.1 any proceeding for attachment, injunction or any other interim or conservatory measure in aid of any arbitral proceeding commenced under Clause 28; and

 

34

  28.4.2 any proceeding arising out of or relating to the enforcement of any arbitral award or procedural order of any arbitral tribunal duly constituted under this Clause 28;

but for such purposes and to such extent only.

 

28.5 Where disputes arise under this Agreement, under the JVCo Shareholders Agreement and under the Cooperation Agreement which, in the absolute discretion of the first panel of arbitrators to be appointed in any of the disputes, are so closely connected that it is expedient for them to be resolved in the same proceedings, that panel of arbitrators shall have the power to order that the proceedings to resolve that dispute shall be consolidated with those to resolve any of the other disputes (whether or not proceedings to resolve those other disputes have yet been instituted), provided that no date for the final hearing of the first arbitration has been fixed.

 

29 Appointment of Process Agent

 

29.1

Each of GECC and GEC irrevocably appoints GE Asia of 33rd Floor, One Exchange Square, Central, Hong Kong (for the attention of Mr Michael Hosokawa) or its other principal place of business in Hong Kong as its agent to accept service of process in Hong Kong in any legal action or proceedings arising out of or in connection with this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by GECC or GEC. If such process agent ceases to be able to act as such or to have an address in Hong Kong, each of GEC and GECC irrevocably agrees to appoint a new process agent in Hong Kong acceptable to the other parties and to deliver to other parties within 14 days a copy of a written acceptance of appointment by the process agent.

 

29.2 Each of CITIC, Able Star and the Company irrevocably appoints CITIC United Asia Investments Ltd. of Rm 2118, Hutchison House, 10 Harcourt Road, Hong Kong (for the attention of Mr Kenneth Ko) or its other principal place of business in Hong Kong as its agent to accept service of process in Hong Kong in any legal action or proceedings arising out of or in connection with this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by CITIC, Able Star or the Company. If such process agent ceases to be able to act as such or to have an address in Hong Kong, each of CITIC, Able Star and the Company irrevocably agrees to appoint a new process agent in Hong Kong acceptable to the other parties and to deliver to other parties within 14 days a copy of a written acceptance of appointment by the process agent.

 

29.3 Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law.

 

30 GEC Guarantee and CITIC Group Guarantee

 

30.1 GEC hereby unconditionally and irrevocably guarantees to CITIC, Able Star and the Company (the “Beneficiaries”), in consideration of the entry into this Agreement by such parties, the due and punctual performance and observance by GE Equity of all its obligations under and in connection with this Agreement and all other agreements entered into pursuant to this Agreement (“Ancillary Agreements”).

 

35

  30.2 The undertakings of GEC in this Clause 30 are continuing undertakings and shall remain in force and effect until all GE Equity’s obligations under and in connection with this Agreement and all Ancillary Agreements have been fulfilled or shall have expired.

 

  30.3 GEC shall not be released from its obligations under this Clause 30 in any circumstance (notwithstanding anything which but for this provision would release a guarantor or would affect any of its liabilities) other than compliance in full by GE Equity of all its obligations under and in connection with this Agreement and all Ancillary Agreements.

 

  30.4 The obligations of GEC under this Clause 30 shall be as primary obligator and not merely as surety and no time or other indulgence given by the Beneficiaries to GE Equity nor any neglect, failure or forbearance on the part of any of the Beneficiaries to enforce the performance or observance of any of the obligations of this Agreement or any of the Ancillary Agreements shall in any way lessen or affect the liability of GEC and, the obligations of GEC in this Clause 30 shall not be affected or lessened by any amendment or variation of (however fundamental) or replacement of this Agreement or any of the Ancillary Agreements or any insolvency or similar proceedings affecting GE Equity.

 

  30.5 CITIC guarantees Able Star’s obligations under this Agreement in the same terms and on the same basis as GEC guarantees GE Equity’s obligations pursuant to Clauses 30.1 to 30.4 above, mutatis mutandis.

 

  30.6 The parties’ rights under this Clause 30 are cumulative, and are in addition to the parties’ rights under general law, such as the right to sue any party and the right to seek injunctive relief against any party.

In witness whereof this Agreement has been duly executed.

 

SIGNED by
GE CAPITAL EQUITY INVESTMENTS, INC.

/s/ John W. Campo

Duly authorised:
Name:   JOHN W CAMPO
Position:   MANAGING DIRECTOR
SIGNED by
ABLE STAR ASSOCIATES LIMITED

/s/ Ko Fai Wong

Duly authorised:
Name:   KO FAI WONG
Position:   DIRECTOR

 

36

SIGNED by
CITIC GROUP

/s/ Mi Zeng Xin

Duly authorised:
Name:   MI ZENG XIN
Position:   VICE PRESIDENT
SIGNED by
GENERAL ELECTRIC COMPANY

/s/ Michael A. Gaudino

Duly authorised:
Name:   MICHAEL A. GAUDINO
Position:   VICE PRESIDENT
SIGNED by
MODERNDAY LIMITED (undergoing a change of name to AsiaCo Acquisition Ltd.)

/s/ Ko Fai Wong

Duly authorised:
Name:   KO FAI WONG
Position:   DIRECTOR

 

37

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