The Wharf (Holdings) Limited

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

THE WHARF (HOLDINGS) LIMITED

(incorporated in Hong Kong with limited liability)

Stock Code: 4

DISCLOSEABLE AND CONNECTED TRANSACTIONS

PROPOSED DISPOSAL AND RESTRUCTURING OF INTERESTS IN

PORT OPERATING COMPANIES IN SHEKOU

suspension and resumption of trading

The Board is pleased to announce that, on 14 December 2006, MTL, a 67.94%-owned subsidiary of the Company, entered into the Rationalisation Agreement with CMH, pursuant to which MTLand CMH will form a joint venture to hold their interests in SCT1, SCT2, SCT3 and Land Co. The joint venture will be held as to 30% by the MTL Group and as to 70% by the CMH Group upon Stage 1 Completion.

On the same day,MTL and MTL Shekou, a wholly-owned susidiary of MTL, entered into the Share Purchase Agreement with Swire, P&O, and CMH pursuant to which, if Stage 1 Completion does not take place in accordance with the terms set out in the Rationalisation Agreement on or before 15th March 2007 or such other date as the parties may agree in writing,MTL Shekou shall sell and CMH shall purchase, the MTL Equity Interests. MTL also agreed to guarantee the due performance by MTL Shekou of its obligations contained in the Share Purchase Agreement.

As CMH is a substantial shareholder of MTL, it is a connected person of the Company under the Listing Rules, and the transactions contemplated under MTL Disposal, the Rationalisation Agreement and the Shareholders Agreement (includingthe grant of the Put Option) constitute connected transactions of the Company under the Listing Rules.

Since one or more of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Rationalisation Agreement and the Shareholders Agreement will exceed the 2.5% threshold under Rule 14A.34 of the Listing Rules, the transactions contemplated under the Rationalisation Agreement and the Shareholders Agreement (includingthe grant of the Put Option) will be subject to the reporting, announcement and independent shareholders’ approval requirements under Rule 14A.34 of the Listing Rules. Furthermore, since one or more of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the Rationalisation Agreement and the Shareholders Agreement (includingthe grant of the Put Option) also exceed 5% but are below 25%, such transactions also constitute a discloseable transaction for the Company.

As one or more of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the transactions contemplated under the MTL Disposal will exceed the de minimis level, being 0.1% or HK$1,000,000, under Rule 14A.33(3) of the Listing Rules but below the 2.5% threshold under Rule 14A.34 of the Listing Rules, the transactions contemplated under the MTL Disposalare exempt from the independent shareholders’ approval requirement under Rule 14A.34 of the Listing Rules but will be subject to the reporting and announcement requirements under Rule 14A.34 of the Listing Rules.

According to Chapter 14A of the Listing Rules, the transactions contemplated under the Rationalisation Agreement and the Shareholders Agreement are required to be made conditional upon approval by the independent shareholders of the Company in general meeting. To the best of the Directors’ knowledge, information and belief having made reasonable enquiries, no Shareholder is required to abstain from voting if the Company were to convene a general meeting for the approval of the transactions contemplated under the Rationalisation Agreement and the Shareholders Agreement. As the Company has obtained a written approval from a closely allied group of shareholders of the Company holding in aggregate 1,223,938,662 shares in the Company (representing 50.00001% in nominal value of the Company’s issued shares) having the right to attend and vote at the Company’s general meeting, the Company has applied to the Stock Exchange for a waiver from the requirement to hold general meeting under Rule 14A.35(4) of the Listing Rules.

A circular containing, among other things, details of the Share Purchase Agreement, the Rationalisation Agreement and the Shareholders Agreement, the recommendation of the Independent Board Committee to the independent shareholders of the Company and an opinion letter from the Independent Financial Adviser to the Independent Board Committee and the independent shareholders of the Company will be dispatched to Shareholders as soon as practicable in compliance with the Listing Rules.

Trading in the shares of the Company was suspended from 9:30a.m. on 15 December 2006 at the request of the Company pending the publication of this announcement and application has been made to the Stock Exchange for the resumption of trading of the shares of the Company from 9:30 a.m. on 18 December 2006.

Background

At present, MTL indirectly holds approximately 10% interest in SCT1 and approximately 9.8% interest in SCT2, while the remaining interests in SCT1 and SCT2 are owned by the CMH Group, Swire and P&O. As part of the Group’s strategy to rationalise its port business in Shekou, MTL, a 67.94%-owned subsidiary of the Company, entered into the Rationalisation Agreement to form a new joint venture with CMH, namely Mega SCT. Pursuant to the Rationalisation Agreement, MTL will inject into Mega SCT its 10% interest in SCT1 and 9.8% interest in SCT2, while the CMH Group will inject into Mega SCT its existing interests in SCT1, SCT2, SCT3 and Land Co. and the interests in SCT1 and SCT2 to be acquired from Swire and P&O.

At the same time, MTL, together with MTL Shekou, has entered into the Share Purchase Agreement to dispose its interests in SCT1 and SCT2if Stage 1 Completion does not take place in accordance with the terms stated thereinon or before 15th March 2007 or such other date as the parties may agree in writing. Set out below are the principal terms of the Share Purchase Agreement, the Rationalisation Agreement and the Shareholders Agreement.

Current Shareholding Structure

The diagram below shows the current shareholding structure of SCT1 and SCT2 as of the date of the announcement:

* Certain wholly-owned intermediate holding companies are not shown in the above chart.

RATIONALISATION AGREEMENT

Date

14 December 2006

Parties

MTL, a 67.94%-owned subsidiary of the Company

CMH

Principal terms of theRationalisation Agreement

Pursuant to the Rationalisation Agreement, MTL and CMH have agreed to rationalise and consolidate their respective equity interests in SCT1, SCT2, SCT3 and Land Co. to form a new joint venture company (Mega SCT) whereby Mega SCT will act as the holding company of each of SCT1, SCT2, SCT3 and Land Co.

Subject to satisfaction of the relevant conditions therein, completion of the Rationalisation Agreement will take place in four stages. In consideration of the construction and development of Berths No. 7, 8 and 9 by CMH, MTL’s interest in Mega SCT will gradually decrease from 30% upon Stage 1 Completion to 20% upon Stage 4 Completion.

Stage 1 Completion

For the purpose of Stage 1 Completion, MTL will transfer the MTL Equity Interests, representing approximately 10% indirect interest in SCT1 and approximately 9.8% indirect interest in SCT2, to Mega SCT. In consideration of the transfer of the MTL Equity Interests, the MTL Group will receive 6% interest in Mega SCT.

CMH will inject the following interests into Mega SCT in exchange for 94% interest in Mega SCT:

(1)the CMH Group’s existing 50% interest in SCT1 and 51% interest in SCT2;

(2)the Swire Equity Interests and the P&O Equity Interests to be acquired by CMH under the Share Purchase Agreement; and

(3)the CMH Group’s 100% interests in each of SCT3 and Land Co.

The MTL Group will also purchase from the CMH Group a 24% interest in Mega SCT for a cash consideration of HK$3,168 million payable upon Stage 1 Completion. Such consideration is intended to be funded by MTL’s internal resources and bank borrowings. The consideration was determined and agreed between the parties after arm’s length negotiations by reference to the profits of SCT1 and SCT2 for the year ended 31 December 2005 and the price earning multiples of port operating companies in the market.

Immediately following Stage 1 Completion, Mega SCT will hold a 100% indirect interest in each of SCT1, SCT2, SCT3 and Land Co., and will be owned as to 30% by the MTL Group and 70% by the CMH Group.

CMH and MTL have agreed that SCT3 and Land Co. will be injected into Mega SCT on a debt-free basis. Accordingly, CMH will make an adjustment sum to MTL in the event of SCT3 and Land Co. not being debt free (being the Adjustment Sum) as at the date of Stage 1 Completion.

Conditions for Stage 1 Completion

Stage 1 Completion is conditional upon, amongst other things, the following conditions being satisfied on or before 15th March 2007 or such other date as the parties may agree in writing:

(1)the passing of a resolution by the Shareholders in accordance with the Listing Rules approving the transactions contemplated under the Rationalisation Agreement and the Shareholders’ Agreement; and having obtained all other necessary approvals as required under the Listing Rules;

(2)the passing of a resolution by the shareholders of CMH approving the transactions contemplated under the Rationalisation Agreement and the Shareholders’ Agreement; and having obtained all other necessary approvals as required under the Listing Rules; and

(3)completion of the Swire/P&O Disposal.

Subject to satisfaction of the above conditions, it is currently expected that Stage 1 Completion will take place immediately following the completion of the Swire/P&O Disposal.

Stage 2 Completion

Stage 2 Completion will take place after Berth No. 7 has been completed and become commercially operational. Upon Stage 2 Completion, the MTL Group will transfer a 3% interest in Mega SCT to the CMH Group for a nominal consideration of HK$1 and, if applicable, the payment of the Adjustment Sum by CMH. Immediately after Stage 2 Completion, Mega SCT will be owned as to 27% by the MTL Group and 73% by the CMH Group respectively.

Stage 3 Completion

Stage 3 Completion will take place after Berth No. 8 has been completed and become commercially operational. Upon Stage 3 Completion, the MTL Group will transfer a 2% interest in Mega SCT to the CMH Group for a nominal consideration of HK$1 and, if applicable, the payment of the Adjustment Sum by CMH. Immediately after Stage 3 Completion, Mega SCT will be owned as to 25% by the MTL Group and 75% by the CMH Group.

Stage 4 Completion

The final stage of completion will take place after Berth No. 9 has been completed and become commercially operational. Upon Stage 4 Completion, the MTL Group will transfer a 5% interest in Mega SCT to the CMH Group for a nominal consideration of HK$1 and, if applicable, the payment of the Adjustment Sum by CMH. Immediately after Stage 4 Completion, Mega SCT will be owned as to 20% by the MTL Group and 80% by the CMH Group.

The consideration of the transfer of its interest in Mega SCT by the MTL Group was determined and agreed between the parties after arm’s length negotiations with reference to the obligation of CMH in financing the construction and development costs of Berths No. 7, 8 and 9.

There is no funding commitment from the MTL Group in relation to the Rationalisation.

Progress of construction

Berth No. 7 is expected to be completed by December 2007 and the development of Berths Nos. 8 and 9 will depend on the progress of the construction work and the Group currently expects that such development will be completed by end of December 2009.

Information in relation to each of SCT1, SCT2, SCT3 and Land Co.

SCT1 is principally engaged in the operation of Berths No. 1 and 2 at Jetty III of the Shekou Container Terminals in Shenzhen, the PRC, whereas SCT2 is principally engaged in the operation of Berths No. 3 and 4 at Jetty III of the Shekou Container Terminals.

SCT3 and Land Co. are currently indirect wholly-owned subsidiaries of CMH. The principal business of SCT3 is to construct, develop and operate Berths No. 5, 6, 7, 8 and 9. Berths No. 5 and 6 are in operation, while Berths No. 7, 8 and 9 are still under construction or to be developed. The principal assets of Land Co. are two pieces of land in Shekou with a total area of approximately 180,000 square meters for use by SCT 3.

The following table illustrates the design capacity of each of SCT1, SCT2 and SCT3:

The net asset value and net profits (both before tax and extraordinary items and after tax) of each of SCT1, SCT2, SCT3 and Land Co. for the two years ended 31 December 2004 and 31 December 2005 are as follows:

SCT 1

SCT 2

SCT 3

As SCT3 has not commenced operation until 2005, the information regarding net profits (both before tax and extraordinary items and after tax) for the year ended 31 December 2004 is not available.

The unaudited net asset value of Land Co. for the eleven months ended 30 November 2006 is as follows:

Land Co.

As Land Co. was incorporated in December 2005. It shall commence operation in 2007, the information regarding net profits (both before tax and extraordinary items and after tax) is not available.

Shareholding Structure after Stage 4 Completion

Set out below is the shareholding structure of Mega SCT immediately after Stage 4 Completion (assuming no other changes in the shareholding structure before Stage 4 Completion).

* Certain wholly-owned intermediate holding companies are not shown in the above chart

THE SHARE PURCHASE AGREEMENT

Date

14 December 2006

Parties

Details of MTL Disposal

Pursuant to the Share Purchase Agreement, MTL Shekou and CMH have agreed that (if Stage 1 Completion does not take place in accordance with the terms set out in the Rationalisation Agreement for any reason whatsoever on or before 15th March 2007 or such other date as the parties may agree in writing) MTL Shekou will sell and CMH will purchase, subject to the conditions set out below,the MTL Equity Interests, being (i)all the issued share of MTL BVI, (ii) the shareholder’s loan due to MTL Shekou by MTL BVI and (iii) 1,960 shares in ARH, representing 20% of the total issued shares in the capital of ARH. MTL agreed to guarantee the due performance by MTL Shekou of all the agreements, obligations, commitments and undertakings contained in the Share Purchase Agreement.

The Consideration

The consideration for the MTL Disposal payable by CMH to the MTL Group upon completion of the MTL Disposal is HK$792 million which will be satisfied in cash. The consideration was determined and agreed between the parties after arm’s length negotiations by reference to the profits of SCT1 and SCT2 for the year ended 31 December 2005 and the price earning multiples of port operating companies in the market.

Information in relation to the MTL Equity Interests

The sole asset of MTL BVI is 10% interests in the registered capital of SCT1.

The sole asset of ARH is its 49% interest in the registered capital of SCT2.

Please refer to the paragraph headed “Information in relation to each of SCT1, SCT2, SCT3 and Land Co.” above for the principal businesses of SCT1 and SCT2.

Financial information

The net asset value and net profits (both before tax and extraordinary items and after tax) attributable to the MTL Equity Interests for the two financial years ended 31 December 2004 and 31 December 2005 are as follows:

Financial effect of the MTL Disposal

Taking into account the consideration of the MTL Disposal, it is estimated that, upon completion of the MTL Disposal (in the event of Stage 1 Completion not materializing), the Group will record a gain of not less than HK$500 million in its books in respect of the MTL Disposal.

Conditions

The MTL Disposal is conditional upon:

(1)the passing of a resolution by the shareholders of CMH in accordance with the Listing Rules approving the purchase by CMH of the MTL Equity Interests from MTL Shekou; and

(2)completion of the Swire/P&O Disposal.

Completion of the MTL Disposal will take place on the fifth Business Day after the earlier of (i) date on which Stage 1 Completion fails to take place in accordance with the terms of the Rationalisation Agreement as referred to above; and (ii) 15 March 2007.

Use of Proceeds

The sale proceeds (which would only be receivable by MTL Group in the event of Stage 1 Completion not materialising) would if receivable by MTL Group be intended to be used as general working capital of the MTL Group and repayment of debt.

Other Terms

The consideration of HK$792 million for the MTL Disposal was agreed by the parties on an ex-dividend basis. Accordingly, MTL Shekou would be entitled to its indirect share of distributable profits of by SCT1 and SCT2 accruing up to and including the respective dates of completion of MTL Disposal.

In order to avoid the additional costs to be incurred and time required for ascertaining the amount of distributable profits of SCT1 and SCT2 for the period from 1 January 2006 up to and including the relevant completion dates, the parties have agreed that CMH will pay to MTL Shekou an amount in satisfaction of such dividend entitlement, such amount to be calculated based on the audited profits attributable to MTL for the year ending 31 December 2006.