Major Transaction and Continuing Connected Tran...

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announcement.

 
                     DATANG INTERNATIONAL POWER GENERATION CO., LTD.

(a sino-foreign joint stock limited company incorporated in the People's Republic of China)
                              (Stock Code: 00991)


                                     Announcement 
                 Major Transaction and Continuing Connected Transactions


FINANCIAL SERVICES AGREEMENT


The Board announces that on 15 October 2013, the Company and Datang Finance entered into the 
Financial Services Agreement with a term of three years commencing from 1 January 2014 and 
ending on 31 December 2016, pursuant to which Datang Finance agreed to provide the Group 
with deposit services, loan services and other financial services subject to the terms and 
conditions provided therein.

LISTING RULES IMPLICATIONS


As at the date of this announcement, CDC is a controlling Shareholder of the Company which 
together with its subsidiaries, hold a total of approximately 34.71% of the issued share 
capital of the Company. CDC is the controlling shareholder of Datang Finance which holds a 
52.5% interest in Datang Finance. Accordingly, Datang Finance is a connected person of the 
Company and the Financial Services Agreement constitutes continuing connected transactions 
of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the provision of deposit services 
under the Financial Services Agreement is more than 5%, the provision of deposit services 
under the Financial Services Agreement is subject to the reporting, announcement and 
Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules. 
The Company will also disclose the relevant details in its next published annual report 
in accordance with the relevant requirements as set out in Rule 14A.45 of the Listing Rules.

As one of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) 
in relation to the provision of deposit services under the Financial Services Agreement is 
more than 25% but less than 75%, such transaction constitutes a major transaction of the 
Company and is subject to the reporting, announcement and the shareholders' approval 
requirements under Chapter 14 of the Listing Rules.

The loan services to be provided by Datang Finance to the Group will constitute financial 
assistance to be provided by a connected person for the benefit of the Group. As such loan 
services are on normal commercial terms which are similar to or even more favourable than 
those offered by other commercial banks for comparable services in the PRC, and no security 
over the assets of the Group will be granted in respect of the loan services, the loan 
services are exempt under Rule 14A.65(4) of the Listing Rules from all reporting, 
announcement and Independent Shareholders' approval requirements.

The Company expects that each of the applicable percentage ratios (as defined in Rule 14.07 
of the Listing Rules) of the total fees payable by the Company to Datang Finance in respect 
of the provision of other financial services under the Financial Services Agreement will 
fall within the de minimis threshold as stipulated under Rule 14A.33(3) of the Listing 
Rules. The Company will comply with the reporting, announcement and independent 
Shareholders' approval requirements of the Listing Rules if the transaction amount of 
other financial services to be provided by Datang Finance to the Group under the Financial 
Services Agreement exceed the relevant threshold.

A circular containing details of the Financial Services Agreement, a letter from the 
Independent Board Committee of the Company and a letter from the independent financial 
advisor, both advising the terms of the Financial Services Agreement, will be dispatched to 
the shareholders on or before 5 November 2013.


BACKGROUND


On 28 August 2008, the Company and Datang Finance entered into a financial services 
agreement with a term commencing from 1 January 2008 to 31 December 2010. On 26 October 
2010, the Company and Datang Finance entered into a financial services agreement, with a 
term of three years commencing from 1 January 2011 and ending on 31 December 2013. In order
to further enhance the economies of scale of the capital, accelerate capital turnover, save 
financing costs and ensure funds security while maintaining stability of the partnership 
between both parties, the relevant financial services agreement is renewed. On 15 October
2013, the Company and Datang Finance entered into the Financial Services Agreement, with 
a term commencing from 1 January 2014 and ending on 31 December 2016.


FINANCIAL SERVICES AGREEMENT


Date

15 October 2013

Parties

1. the Company; and
2. Datang Finance

Major Terms

1. Datang Finance shall provide the Group with the following major services subject to the 
   terms and conditions provided therein:


   i.   basic services, such as deposit, loans, financial leasing, entrusted loans, bill 
        acceptance and discount, payment and settlement, financial guarantees, financial and 
        financing consultation, and bonds underwriting;

   ii.  conducting unified settlement services for funds according to the instructions of the 
        Group, and the relevant settlement expenses shall be borne by Datang Finance Company;

   iii. conducting comprehensive credit services, including but not limited to loans, discount, 
        guarantees and other forms of financing, with a comprehensive credit limit of RMB24 
        billion at an interest rate not higher than those charged by other domestic financial 
        institutions;

   iv.  consultation and training services in relation to monetary policies, financial market 
        conditions, financing products and cash management;

   v.   the handling fee of the entrusted loans services shall not exceed 0.0006% of the actual 
        principal amount;

   vi.  the savings interest rate of the deposit services are settled according to the interest 
        rates of the PBOC (as at the date of this announcement, the prevailing negotiated deposit 
        interest rate is 1.15% per annum, while the prevailing savings interest rate is 0.35% per 
        annum), with a daily maximum balance of deposits of not more than RMB12 billion;

   vii. provision of other financial services at the request and according to the instructions 
        of the Company subject to obtaining the relevant approvals from the CBRC.

2. Deposit cap: the daily maximum balance of the Group's deposits with Datang Finance for 
   each of the three years ending 31 December 2014, 31 December 2015 and 31 December 2016 is 
   RMB12 billion.

3. Datang Finance has undertaken to adhere to the principles below in providing the 
   aforementioned financial services to the Group:

   i.   the interest rates for the Group's deposits in and for loans to be granted from Datang
        Finance shall be within the permitted bands around the interest rates for deposits and 
        loans as announced by the PBOC, and with reference to the benchmark interest rates as 
        announced by the PBOC, Datang Finance shall accept deposits at interests rates which are 
        not lower than those offered by other domestic financial institutions, and offer loans 
        and other services at lending interest rates which are not higher than those charged by
        other domestic financial institutions for the same type of services.

   ii.  Datang Finance should ensure the stable operation of its funds management system to 
        safeguard the funds, and to monitor the credit risk so as to satisfy the payment needs
        of the Group.

4. The Group, with information of market rates and in view of its own interests, has the 
   unilateral right to determine whether or not to maintain the business relationship with 
   Datang Finance, and may obtain relevant financial services from other financial 
   institutions in addition to those services provided under the Financial Services Agreement 
   in accordance with the actual situations.

5. The effective date and the term of the Financial Services Agreement: the Financial 
   Services Agreement shall become effective when it is duly signed by the respective 
   representatives of the parties and sealed with their respective company chops and upon the 
   approval of the internal authority of each of the parties (including obtaining the approval
   by the Independent Shareholders at the general meeting of the Company). The term of the 
   Financial Services Agreement shall be from 1 January 2014 to 31 December 2016.


Capital Risk Control Measures

1. Datang Finance will ensure the safe and stable operation of the funds management 
   information system, which has undergone the security test in respect of connection to the 
   interface of online commercial banking and has reached the national security standards 
   for commercial banks. The system is equipped with the mode awarded with CA safety 
   certificate to ensure the security of the funds of the Group.

2. Datang Finance will ensure that it is in strict compliance with the risk monitoring 
   indicators for financial institutions issued by the CBRC and that its major regulatory 
   indicators such as gearing ratio, interbank borrowing ratio and liquidity ratio will also 
   comply with the requirements of the CBRC.

3. Any balance in the Group's deposits (after deducting the amount used for making entrusted 
   loans and the loans made to the Group by Datang Finance) will be redeposited into one or 
   more commercial banks in the PRC as interbank deposits.

4. A report on the status of the Group's deposits with Datang Finance will be delivered by 
   Datang Finance to the chief financial officer of the Company before 10 a.m. of each business 
   day to enable the chief financial officer of the Company to monitor and ensure that the 
   daily maximum deposit balance of the Group with Datang Finance does not exceed the cap of 
   RMB12 billion.

5. A copy of every regulatory report submitted by Datang Finance to the CBRC will be provided 
   to and reviewed by the senior management of the Company, including the relevant executive 
   Director(s).

6. The financial statements of Datang Finance for each month will be provided to and reviewed 
   by the senior management of the Company, including the relevant executive director(s), on 
   the fifth working day of the following month.


PROPOSED CAPS


Deposit Services

Pursuant to the financial services agreement entered into between Datang Finance and the 
Company on 26 October 2010, the maximum daily balance of the Group's deposits with Datang 
Finance amounted to RMB6,630 million, RMB6,300 million and RMB5,480 million for the two 
years ended 31 December 2010 and 31 December 2011 and for the nine months ended 30 September
2013, respectively.

In view of the Company's business growth and increase in demand for financial services, 
the Company estimates that the proposed caps in respect of the daily maximum deposit 
balance with Datang Finance is RMB12 billion for each of the three years ending 31 December 
2014, 31 December 2015 and 31 December 2016 after taking into account of the following:

1. As the assets of the Group continue to grow, the amount of deposits will also increase.

2. In order to strengthen the centralised management of funds and monitor the use of funds, 
   the Group will roll out a "funding pool" platform through Datang Finance. Such platform 
   amasses the funds of the Group and enables loans to be granted within the Group by 
   capitalising on the leeway arising from the difference in the time for receipt and payment 
   of funds of the members of the Group, with an aim to support the development of the Group.

3. In respect of the Group's funds settlement business at Datang Finance, settlement expenses
   will be undertaken by Datang Finance.

4. During the term of the agreement, the issuance of short-term debentures, super short-term 
   debentures and non-public debt financing instruments will also enhance the Company's daily
   maximum deposit balance with Datang Finance. 

5. CDC undertakes the following to the CBRC: in the event that Datang Finance is in urgent 
   difficulty in making payment, CDC will raise Datang Finance's capital accordingly based on 
   the actual need.

The Directors (excluding the independent non-executive Directors, whose views will be 
contained in the circular after considering the advice from the independent financial 
advisor) consider that the above proposed caps in respect of the deposit services are fair
and reasonable. 

Loan Services

In view of the fact that the loan services to be provided by Datang Finance to the Group
are on normal commercial terms which are similar to or even more favourable than those 
offered by other commercial banks in the PRC, and that no collateral against the assets of 
the Group will be required in respect of the loan services, the loan services are exempt 
under Rule 14A.65(4) of the Listing Rules from all reporting, announcement and Independent 
Shareholders' approval requirements. As such, no cap has been set for such services. The 
Directors (including the independent non-executive Directors) consider that the loan 
services to be provided under the Financial Services Agreements are fair and reasonable and 
in the interests of the Shareholders as a whole.

Other Services

Apart from the deposit services and the loan services, other financial services which may 
be provided by Datang Finance to the Company mainly include entrusted loans services, 
finance leasing services, bill acceptance and discount services, and so forth.

The other services to be provided under the Financial Services Agreement will be on normal 
commercial terms and on terms similar to or even more favourable than those offered by 
other commercial banks in the PRC. The Directors (including the independent non-executive 
Directors) consider that the other services provided under the Financial Services Agreement 
are fair and reasonable and in the interests of the Shareholders as a whole.

The Company expects that each of the applicable percentage ratios (as defined in Rule 
14.07 of the Listing Rules) of the total fees payable by the Company to Datang Finance 
will fall within the de minimis threshold as stipulated under Rule 14A.33(3) of the 
Listing Rules. The Company will comply with the reporting, announcement and Independent 
Shareholders' approval requirements of the Listing Rules if the transaction amounts of 
the other services to be provided by Datang Finance to the Group under the Financial 
Services Agreement exceed the relevant threshold.

BENEFITS AND REASONS OF ENTERING INTO THE FINANCIAL SERVICES AGREEMENT

By entering into the Financial Services Agreement with Datang Finance, the Company is 
able to secure loans and other financing services at interest rates lower than those in 
the market, which assists in improving the overall standard of fund operation of the 
Company and enhancing the Group's bargaining power of external financing. The entering into 
of the Financial Services Agreement can also enable the Company to secure higher interest 
rates for deposits than those in the market and enjoy payment and settlement services at zero 
rate, thereby increasing interest income on deposits and saving e settlement costs. Meanwhile, 
pursuant to the Financial Services Agreement, the Group can strengthen its funds control 
and accounts management through the funds management platform of Datang Finance, thereby 
further improving the efficiency of fund applications, and mitigating and avoiding 
financial risks.

In view of the above, the Directors (excluding the independent non-executive Directors 
whose views will be contained in the circular after considering the advice from the 
independent financial advisor) believe that the credit risk control measures under the 
Financial Services Agreement are adequate enough to cover the risks involved in depositing 
funds of the Group with Datang Finance and the provision of financial services under the 
Financial Services Agreement are fair and reasonable and in the best interests of the 
Company and the Shareholders as a whole.


INFORMATION RELATING TO THE PARTIES OF THE FINANCIAL SERVICES AGREEMENT


Information of the Group

The Group is principally engaged in the development and operation of power plants, the sale 
of electricity and thermal power, and the repair, testing and maintenance of power equipment
and power-related technical services, with its main service areas being in the PRC.

Information of Datang Finance

Datang Finance is duly established in the PRC as a non-banking financial institution. As at
the date of this announcement, its registered capital is RMB3 billion. The principal 
business of Datang Finance includes the provision of, among others, deposit services, loan 
services, entrusted loan services and entrusted investment services.

Information of CDC

CDC was established on 9 March 2003 with a registered capital of RMB15.394 billion. It is 
principally engaged in the development, investment, construction, operation and management 
of power energy, organization of power (thermal) production and sales; manufacturing, repair
and maintenance of power equipment; power technology development and consultation; power 
engineering, contracting and consultation of environmental power engineering; development 
of new energy as well as development and production of power related coal resources.


LISTING RULES IMPLICATIONS


As at the date of this announcement, CDC is a controlling Shareholder of the Company which 
together with its subsidiaries, hold a total of approximately 34.71% of the issued share 
capital of the Company. CDC is the controlling shareholder of Datang Finance which holds a 
52.5% interest in Datang Finance. Accordingly, Datang Finance is a connected person of the 
Company and the Financial Services Agreement constitutes continuing connected transactions 
of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the provision of deposit services 
under the Financial Services Agreement is more than 5%, the provision of deposit services 
under the Financial Services Agreement is subject to the reporting, announcement and 
Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules. 
The Company will also disclose the relevant details in its next published annual report 
in accordance with the relevant requirements as set out in Rule 14A.45 of the Listing Rules.

As one of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) 
in relation to the provision of deposit services under the Financial Services Agreement is 
more than 25% but less than 75%, the transaction constitutes a major transaction of the 
Company and is subject to the reporting, announcement and the Company's Independent 
Shareholders' approval requirements under Chapter 14 of the Listing Rules.

The loan services to be provided by Datang Finance to the Group will constitute financial 
assistance to be provided by a connected person for the benefit of the Group. As such loan 
services are on normal commercial terms which are similar to or even more favourable than 
those offered by other commercial banks for comparable services in the PRC, and no security 
over the assets of the Group will be granted in respect of the loan services, the loan 
services are exempt under Rule 14A.65(4) of the Listing Rules from all reporting, 
announcement and independent Shareholders' approval requirements.


The Company expects that each of the applicable percentage ratios (as defined in Rule 
14.07 of the Listing Rules) of the total fees payable by the Company to Datang Finance 
in respect of the provision of other financial services under the Financial Services 
Agreement will fall within the de minimis threshold as stipulated under Rule 14A.33(3) of 
the Listing Rules. The Company will comply with the reporting, announcement and independent 
Shareholders' approval requirements of the Listing Rules if the transaction amount of other 
financial services to be provided by Datang Finance to the Group under the Financial 
Services Agreement exceeds the relevant threshold.

None of the Directors has material interests in the Financial Services Agreement.
Connected Directors, including Chen Jinhang, Hu Shengmu and Fang Qinghai, who are principal 
management staff of CDC, and such Directors have abstained from voting at the relevant Board 
meeting for the approval of the Financial Services Agreement in accordance with the 
requirements of the Listing Rules of the Shanghai Stock Exchange.

The Company will hold an EGM to consider and approve the provision of deposit services 
under the Financial Services Agreement. CDC and its associates shall abstain from voting 
at the EGM in approving the provision of deposit services under the Financial Services 
Agreement.


INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISOR


An independent board committee comprising all the independent Directors will be formed to
advise the Independent Shareholders on the terms of the Financial Services Agreement.

The Company will appoint an independent financial advisor to advise the Independent Board 
Committee of the Company and the Independent Shareholders on the terms of the Financial 
Services Agreement. 


DESPATCH OF CIRCULAR


A circular containing details of the Financial Services Agreement, a letter from the 
independent board committee of the Company and a letter from the independent financial 
advisor, both advising the terms of the Financial Services Agreement, will be despatched 
to the Shareholders in accordance with the Listing Rules on or before 5 November 2013.


DEFINITIONS


In this announcement, the following expressions have the meanings set out below unless 
the context otherwise requires: 



"Board"                  the board of Directors

"CBRC"                   China Banking Regulatory Commission 

"CDC"                    China Datang Corporation, a State-owned enterprise established under 
                         the laws of the PRC and is a controlling Shareholder of the Company. 
                         CDC, together with its subsidiaries, hold a total of approximately 
                         34.71% of the issued share capital of the Company as at the date of 
                         this announcement. For details, please refer to "Information relating
                         to the parties"

"Company"                Datang International Power Generation Co., Ltd., a sino-foreign joint
                         stock limited company incorporated in the PRC on 13 December 1994, 
                         whose H Shares are listed on the Stock Exchange and the London Stock 
                         Exchange and whose A Shares are listed on the Shanghai Stock 
                         Exchange. For details, please refer to "Information relating to the 
                         parties"

"connected person"       has the meaning ascribed to it under the Listing Rules

"connected transaction"  has the meaning ascribed to it under the Listing Rules

"Datang Finance"         China Datang Finance Co., Ltd., a subsidiary of CDC

"Director(s)"            the director(s) of the Company

"EGM"                    the extraordinary general meeting of the Company to be held to 
                         consider and approve, among others, the deposit service under the 
                         Financial Services Agreement

"Financial Services      the financial services agreement entered into between the Company 
Agreement"               and Datang Finance on 15 October 2013, particulars of which are set
                         out in this announcement
                       
"Group"                  the Company and its subsidiaries

"Independent 
 Shareholders"           has the meaning ascribed to it under the Listing Rules

"Listing Rules"          The Rules Governing the Listing of Securities on the Stock Exchange

"PBOC"                   the People's Bank of China 

"PRC"                    the People's Republic of China

"RMB"                    Renminbi, the lawful currency of the PRC

"Stock Exchange"         The Stock Exchange of Hong Kong Limited

"%"                      percent



                                                                   By Order of the Board
                                                                         Zhou Gang
                                                                   Secretary to the Board

Beijing, the PRC, 15 October 2013

As at the date of this announcement, the Directors of the Company are:
Chen Jinhang, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Li Gengsheng, Cao Xin, 
Cai Shuwen, Liu Haixia, Guan Tiangang, Dong Heyi*, Ye Yansheng*, Li Hengyuan*, Zhao Jie*,
Jiang Guohua*

* Independent non-executive Directors