Notice of EGM
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to any aspect of this circular or as to the action to be
taken, you should consult a licensed securities dealer, bank manager,
solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in DATANG INTERNATIONAL POWER
GENERATIONCO.,LTD., you should at once hand this circular to the purchaser or
transferee or to the bank, licensed securities dealer or other agent through
whom the sale or transfer was effected for transmission to the purchaser or
transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this circular, make 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 circular.
DATANG INTERNATIONAL POWERGENERATION CO.,LTD.
(asino-foreign joint stock limited company incorporated in the People's Republic of China)
(Stock Code: 991)
DISCLOSEABLE AND CONNECTED TRANSACTION AND
NOTICE OF EXTRAORDINARY GENERAL MEETING
Independent Financial Adviser to the Independent Board Committee and the Independent
Shareholders
Mizuho Securities Asia Limited
A letter from the Board is set out on pages 4 to 9 of this circular. A letter
from the Independent Board Committee is set out on pages 10 to 11 of this
circular. A letter from Mizuho Securities containing its advice to the
Independent Board Committee and the Independent Shareholders is set out on
pages 12 to 16 of this circular.
The Company will convene the EGM at the function room of 5/F, Intercontinental
Hotel, No. 11 Financial Street, Xicheng District, Beijing, the PRC, on 19 April
2010 (Monday) at 11:00 a.m. The notice convening the EGM is set out on pages 27
to 29 of this circular and the relevant notice of attendance and proxy form are
enclosed with this circular. Shareholders who wish to attend the EGM are
required to return the notice of attendance in accordance with the instructions
printed thereon as soon as possible and in any event not later than 29 March
2010.
Completion and return of the proxy form shall not preclude you from attending
and voting in person at the EGM or at any adjourned meetings should you so
wish.
24 February 2010
CONTENTS
Page
DEFINITIONS 1
LETTER FROM THE BOARD 4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE 10
LETTER FROM MIZUHO SECURITIES 12
APPENDIX-GENERAL INFORMATION 17
NOTICE OF EGM 27
DEFINITIONS
In this circular,unless the context otherwise requires,the following expressions have the following
meanings:
"A Share(s)" the domestic ordinary share(s) of the Company with a nominal value
of RMB1.00 each and are listed on the Shanghai Stock Exchange
"Articles of Association" the articles of association of the Company
"Board" the board of Directors of the Company
"CDC" China Datang Corporation, a State-o wned enterprise established
under the laws of the PRC and is a substantial Shareholder of the
Company pursuant to the Listing Rules which owns approximately
36.65% of the issued share capital of the Company as at the Latest
Practicable Date
"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
"Datang Finance Company" China Datang Finance Company Limited
"Directors" the director(s) of the Company
"Duolun Coal Chemical Company" Inner Mongolia Datang International Duolun Coal
Chemical Company Limited, for the purposes of constructing and
operating the Duolun Coal Chemical Project
"Duolun Coal Chemical Project" the project is located in Duolun County in the
Inner Mongolia Autonomous Region. The project uses the brown coal
from the East Unit 2 coal mine of Shengli Coal Mine as raw materials.
It produces polypropylene chemical products with the pulverised coal
gasification technology, the synthetic gas purification technology,
large-scale methanol synthesis technology, the methanol-to-propylene
technology and the propylene polymerisation technology. It is the most
advanced coal chemical project adopting clean, efficient and high value-
added utilisation of coal. This project produces 460,000 tonnes of
polypropylene per year and other by-products
"EGM" the extraordinary general meeting of the Company to be held at the
function room of 5/F, Intercontinental Hotel, No. 11 Financial Street,
Xicheng District, Beijing, the PRC, on 19 April 2010 (Monday) at 11:00 a.m.
to consider and approve, among others, the Revolving Entrusted Loan Agreement
"Energy and Chemical Company" Datang Energy and Chemical Company Limited, a
wholly-owned subsidiary of the Company
"Entrusted Loan" the revolving entrusted loan of a principal amount of
RMB3,000 million
"Entrusted Loan Arrangement" the arrangement where Datang Finance Company is
designated by the Company to act as a lending agent to, inter alia, release
the Entrusted Loan, which are funded by the Company, to Duolun Coal Chemical
Company and to monitor the use and repayment of the Entrusted Loan by Duolun
Coal Chemical Company pursuant to the Revolving Entrusted Loan Agreement
"Group" the Company and its subsidiaries
"H Share(s)" the overseas listed foreign shares of the Company with a nominal
value of RMB1.00 each, which are listed on the Stock Exchange and the London
Stock Exchange
"Hong Kong" the Hong Kong Special Administrative Region of the PRC
"Independent Board Committee" the independent board committee of the Company,
comprising five independent non-executive Directors, and each of them does not
have any material interest in the Revolving Entrusted Loan Agreement
"Independent Shareholders" the shareholders other than the connected persons of
the Company who have material interest in the transaction contemplated under
the Revolving Entrusted Loan Agreement. CDC and its associates are required to
be abstained from voting in approving the Revolving Entrusted Loan Agreement at
the EGM
"Latest Practicable Date" 22 February 2010, being the latest practicable date
prior to the printing of this circular for ascertaining certain information in
this circular
"Listing Rules" the Rules Governing the Listing of Securities on the Stock
Exchange
"London Stock Exchange" The London Stock Exchange Limited
"Mizuho Securities" Mizuho Securities Asia Limited, the independent financial
adviser to the Independent Board Committee and the
Independent Shareholders in respect of the Revo lving
Entrusted Loan Agreement, and a licensed corporation for
types 1 (dealing in securities), 2 (dealing in futures contracts),
4 (advising on securities), 6 (advising on corporate finance)
and 9 (asset management) regulated activities under the SFO
"PRC" the People's Republic of China
"Revolving Entrusted Loan the revolving entrusted loan agreement entered into on 12
Agreement" January 2010 by the Company, Datang Finance Company and Duolun Coal
Chemical Company in respect of the Entrusted Loan Arrangement
"RMB" Renminbi, the lawful currency of the PRC
"SFO" the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
Kong)
"Shareholder(s)" the holder(s) of the Share(s)
"Shares" the ordinary shares of the Company with a nominal value of
RMB1.00 each, comprising domestic Shares and H Shares
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"the East Unit 2 coal mine the East Unit 2 coal mine of Shengli Coal Mine, which
of Shengli Coal Mine" is constructed and operated by Xilinguole Mining
Company. It produces brown coal
"%" per cent.
LETTER FROM THE BOARD
DATANG INTERNATIONAL POWERGENERATIONCO.,LTD.
(a sino-foreign joint stock limited company incorporated in the People's Republic of China)
(Stock Code: 991)
Executive Directors: Office address:
Mr. Cao Jingshan No.9 Guangningbo Street
Mr. Zhou Gang Xicheng District
Beijing, 100140
the PRC
Non-executive Directors:
Mr. Zhai Ruoyu (Chairman)
Mr. Hu Shengmu Principal place of business
Mr. Fang Qinghai in Hong Kong:
Mr. Liu Haixia c/o Stephen Mok & Co.
Ms. Guan Tiangang 21/F, Gloucester Tower
Mr. Su Tiegang The Landmark
Mr. Ye Yonghui 15 Queen's Road Central
Mr. Li Gengsheng Hong Kong
Independentnon-executive Directors:
Mr. Xie Songlin
Mr. Liu Chaoan
Mr. Yu Changchun
Mr. Xia Qing
Mr. Li Hengyuan 24 February 2010
To the Shareholders
Dear Sir or Madam,
DISCLOSEABLE AND CONNECTED TRANSACTION
BACKGROUND
On 12 January 2010, the Company entered into the Revolving Entrusted Loan
Agreement with Datang Finance Company and Duolun Coal Chemical Company in
relation to the provision of a revolving entrusted loan of RMB3,000 million by
the Company to Duolun Coal Chemical Company, in which Datang Finance Company
acts as a lending agent, to replace the advances for the Duolun Coal Chemical
Project provided by the Company to Duolun Coal Chemical Company and to be used
as working capital for the Duolun Coal Chemical Project to ensure its smooth
progress.
As each of the applicable percentage ratios (as defined in Rule 14.07 of the
Listing Rules) for the principal amount of the loans under the Revolving
Entrusted Loan Agreement is more than 5% but less than 25%, the Revolving
Entrusted Loan Agreement constitutes a discloseable transaction of the Company
and is subject to the reporting and announcement requirements under Chapter 14
of the Listing Rules.
As at the Latest Practicable Date, CDC is the controlling shareholder of Datang
Finance Company holding 52.5% of its equity interest. Duolun Coal Chemical
Company is owned as to 60% and 40% by the Company's wholly-owned subsidiary -
Energy and Chemical Company and CDC, respectively. CDC is the controlling
shareholder of the Company, holding approximately 36.65% of the issued share
capital of the Company as at the Latest Practicable Date. Duolun Coal Chemical
Company and Datang Finance Company are therefore connected persons of the
Company under Chapter 14A of the Listing Rules and the Entrusted Loan
Arrangement constitutes a connected transaction of the Company under Rule
14A.13(2) of the Listing Rules.
The purposes of this circular are:-
1) to provide you with further details of the Revolving Entrusted Loan
Agreement;
2) to set out the recommendation of the Independent Board Committee in respect
of the Revolving Entrusted Loan Agreement; and
3) to set out the letter of advice from Mizuho Securities to the Independent
Board Committee and the Independent Shareholders in respect of the Revolving
Entrusted Loan Agreement.
REVOLVING ENTRUSTED LOAN AGREEMENT
Date
On 12 January 2010, the Company entered into the Revolving Entrusted Loan
Agreement with Datang Finance Company and Duolun Coal Chemical Company in
relation to the provision of a revolving entrusted loan of a principal amount
of RMB3,000 million by the Company to Duolun Coal Chemical Company through the
Entrusted Loan Arrangement, in which Datang Finance Company acts as a lending
agent.
Parties
(1) the Company, as the lender;
(2) Datang Finance Company, as the lending agent; and
(3) Duolun Coal Chemical Company, as the borrower.
Major terms of the Revolving Entrusted Loan Agreement
Entrusted Loan Arrangement
Pursuant to the Revolving Entrusted Loan Agreement, Datang Finance Company is
designated by the Company to act as a lending agent to, inter alia, release the
Entrusted Loan, which is funded by the Company, to Duolun Coal Chemical Company
and to monitor the use and repayment of the Entrusted Loan by Duolun Coal
Chemical Company.
Principal amount of the Entrusted Loan
RMB3,000 million.
Provided that the sources and uses of the loans being in compliance with the
requirements of the financial regulators, Duolun Coal Chemical Company can
apply for loans on a continuous basis, regardless of the number of loans and
the amount of each of such loans, during the effective period of the Revolving
Entrusted Loan Agreement provided that the outstanding balance of the principal
amount of the loan under the Revolving Entrusted Loan Agreement does not exceed
the loan limit (RMB3,000 million). However, the sum of the amount of loans
being applied by Duolun Coal Chemical Company and the outstanding balance of
the principal amount of the loan under the Revolving Entrusted Loan Agreement
shall not exceed the loan limit, i.e. RMB3,000 million. In any event, the
Company shall have absolute discretion in deciding whether to grant any loan
under the Revolving Entrusted Loan Agreement to Duolun Coal Chemical Company
upon each of its loan application.
Term
Not less than 30 days and not more than 36 months for each loan term from the
date of entering into the Revolving Entrusted Loan Agreement.
Interest rate
At a floating interest rate, being 10% less than the benchmark interest rate to
be charged by the People's Bank of China at the time of each of the revolving entrusted
loans is made.
Such interest rate is arrived at after arm's length negotiation between the
Company and Duolun Coal Chemical Company after considering the overall
reduction of capital costs to the Group as the accounts of Duolun Coal Chemical
Company (being the controlled subsidiary of Energy and Chemical Company) are
consolidated to the accounts of the Company.
Repayment schedule for the principal of the Entrusted Loan
The repayment schedule for the principal of the Entrusted Loan will be agreed
between the Company and Duolun Coal Chemical Company. However, it shall not be
later than 36 months from the date of entering into the Revolving Entrusted
Loan Agreement.
Payment schedule for the interests of the Entrusted Loan
Interests for the revolving entrusted loan shall be settled by Duolun Coal
Chemical Company on a quarterly basis. The settlement date falls on the
twentieth (20th) day of the last month of each quarter.
Handling charge
The handling charge for the Entrusted Loan under the Revolving Entrusted Loan
Agreement is calculated at 0.025% of the principal amount of the Entrusted Loan
under the Revolving Entrusted Loan Agreement. The Company shall pay such
handling charge in a one-off basis to Datang Finance Company within five
working days when each of the loan under the Revolving Entrusted Loan Agreement
is made.
Such handling charge rate is arrived at after arm's length negotiation between
the Company and Datang Finance Company after taking into account the handling
fees for providing entrusted loan services by Datang Finance Company to member
companies of CDC.
Effective Date
The Revolving Entrusted Loan Agreement shall become effective when it is duly
signed by the parties.
The Revolving Entrusted Loan Agreement is also subject to the approval by the
Independent Shareholders pursuant to the Articles of Association and the Listing Rules.
The Revolving Entrusted Loan Agreement was executed on 12 January 2010 and the
amount of loans granted thereunder amounted to approximately RMB2.3 billion as
at the Latest Practicable Date, which did not exceed the loan limit of RMB3
billion. In the event that the Revolving Entrusted Loan Agreement is not
approved by the Independent Shareholders at the EGM, the parties will enter
into a separate termination agreement to terminate the Revolving Entrusted Loan
Agreement and the Entrusted Loan granted thereunder will be repaid by Duolun
Coal Chemical Company to the Company.
REASONS FOR AND BENEFITS OF ENTERING INTO THE REVOLVING ENTRUSTED LOAN AGREEMENT
In order to improve the turnover of capital at Duolun Coal Chemical Company and
to ensure the smooth progress of the Duolun Coal Chemical Project, the Company
intends to provide a revolving entrusted loan of not more than RMB3,000 million
to Duolun Coal Chemical Company in separate batches according to the
construction progress of the Duolun Coal Chemical Project. Duolun Coal Chemical
Company is in the process of preparing formalities for application for banking
facilities and it plans to repay the principals and the interests of the loans
after the banking facilities are in place. Furthermore, according to the
Revolving Entrusted Loan Agreement, Datang Finance Company shall collect a
handling charge of 0.025% for acting as the lending agent for the Company's
Entrusted Loan, which is lower than the handling charge imposed by other
commercial banks for providing similar services. Therefore, the Company is of
the view that the provision of the Entrusted Loan to Duolun Coal Chemical
Company through Datang Finance Company is beneficial for the support of the
smooth construction of the Duolun Coal Chemical Project and the reduction of
the overall capital costs of the Company.
In view of the above, the Directors (including the independent non-executive
Directors) are of the view that the terms of the Revolving Entrusted Loan
Agreement are fair and reasonable and have been determined on normal commercial
terms and consider that the Entrusted Loan is in the interests of the Company
and the Shareholders as a whole. The terms of the Revolving Entrusted Loan
Agreement were also negotiated on an arm's length basis between all parties
thereto and were determined on normal commercial terms.
DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION
As each of the applicable percentage ratios (as defined in Rule 14.07 of the
Listing Rules) for the principal amount of the loans under the Revolving
Entrusted Loan Agreement is more than 5% but less than 25%, the Revolving
Entrusted Loan Agreement constitutes a discloseable transaction of the Company
and is subject to the reporting and announcement requirements under Chapter 14
of the Listing Rules.
As at the Latest Practicable Date, CDC is the controlling shareholder of Datang
Finance Company holding 52.5% of its equity interest. Duolun Coal Chemical
Company is owned as to 60% and 40% by the Company's wholly-owned subsidiary -
Energy and Chemical Company and CDC, respectively. CDC is the controlling
shareholder of the Company, holding approximately 36.65% of the issued share
capital of the Company as at the Latest Practicable Date. Duolun Coal Chemical
Company and Datang Finance Company are therefore connected persons of the
Company under Chapter 14A of the Listing Rules and the Entrusted Loan
Arrangement constitutes a connected transaction of the Company under Rule
14A.13(2) of the Listing Rules.
As one or more of the applicable percentage ratios (as defined in Rule 14.07 of
the Listing Rules) for the principal amount of loans under the Revolving
Entrusted Loan Agreement is more than 2.5%, the Revolving Entrusted Loan
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 the next published
annual report and accounts of the Company in accordance with the relevant
requirements as set out in Rule 14A.45 of the Listing Rules.
Those Directors who have a material interest in the transaction under the
Revolving Entrusted Loan Agreement (by virtue of being the principal management
staff of CDC) have abstained from voting at the relevant Board meeting for
approval of the transaction.
INFORMATION RELATING TO THE COMPANY
The Company 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 RELATING TO DUOLUN COAL CHEMICAL COMPANY
Duolun Coal Chemical Company is responsible for constructing and operating the
Duolun Coal Chemical Project. The Duolun Coal Chemical Project is located in
Duolun County, Xilinguole League of the Inner Mongolia Autonomous Region. The
project uses the brown coal as raw materials from the East Unit 2 coal mine of
Shengli Coal Mine in Inner Mongolia, which is wholly-owned by the Company. It
produces chemical products with advanced technologies, including pulverised
coal gasification technology, synthetic gas purification technology,
large-scale methanol synthesis technology, methanol- to-propylene technology
and propylene polymerisation technology. This project is expected to produce
460,000 tonnes of polypropylene per year and other by-products.
As at 31 December 2009, Duolun Coal Chemical Company's unaudited total assets
amounted to RMB18.54151 billion; total liabilities amounted to RMB14.51595 billion; and
asset-liability ratio was 78.29%.
INFORMATION RELATING TO DATANG FINANCE COMPANY
Datang Finance Company is duly established in the PRC as a non-banking
financial institution on 10 May 2005. The registered capital of Datang Finance
Company is RMB1,000 million. The principal business of Datang Finance Company
includes the provision of, among others, deposit services, loan services, entrusted
loan services and entrusted investment services.
EGM
The Company will convene the EGM to, among other things, consider and approve
the Revolving Entrusted Loan Agreement. The notice convening the EGM is set out
on pages 27 to 29 of this circular and the relevant notice of attendance and
proxy form are enclosed with this circular. Shareholders and their associates
who have a material interest in the transaction shall abstain from voting in
the EGM. CDC and its associates, holding approximately 36.65% of the issued
share capital of the Company as at the Latest Practicable Date, have to be
abstained from voting in approving the Revolving Entrusted Loan Agreement at
the EGM in accordance with the Listing Rules.
RECOMMENDATION
Your attention is drawn to the letter from the Independent Board Committee as
set out on pages 10 to 11 of this circular which contains its recommendation to
the Independent Shareholders on the terms of the Revolving Entrusted Loan
Agreement. Your attention is also drawn to the letter of advice received from
Mizuho Securities, the independent financial adviser to the Independent Board
Committee and the Independent Shareholders as set out on pages 12 to 16 of this
circular which contains, among others, its advice to the Independent Board
Committee and the Independent Shareholders in relation to the terms of the
Revolving Entrusted Loan Agreement, the casting of votes for or against the
resolution approving the Revolving Entrusted Loan Agreement by poll at the EGM
as well as the principal factors and reasons considered by it in concluding its
advice.
The Directors consider that the transaction under the Revolving Entrusted Loan
Agreement is fair and reasonable and in the interest of the Shareholders and
the Company as a whole and they recommend the Shareholders to vote in favour of
the resolution at the EGM.
Yours faithfully,
By Order of the Board of
Datang International Power Generation Co.,Ltd.
Zhou Gang
Secretary to the Board
LETTE RFROM THE INDEPENDENT BOARD COMMITTEE
DATANG INTERNATIONAL POWERGENERATIONCO.,LTD.
(a sino-foreign joint stock limited company incorporated in the People's Republic of China)
(Stock Code: 991)
office address
No.9 Guangningbo Street
Xicheng District
Beijing, 100140
The PRC
24 February 2010
To the Independent Shareholders
Dear Sir or Madam,
DISCLOSEABLE AND CONNECTED TRANSACTION
We refer to the circular issued by the Company to the Shareholders dated 24
February 2010 (the "Circular") of which this letter forms part. Terms defined
in the Circular shall have the same meanings in this letter unless the context
otherwise requires.
Under the Listing Rules, the transaction contemplated under the Revolving
Entrusted Loan Agreement and the entering into of the Revolving Entrusted Loan
Agreement constitutes a discloseable and connected transaction for the Company,
and is subject to the approval of the Independent Shareholders at the EGM.
We have been appointed as the Independent Board Committee to consider the terms
of the Revolving Entrusted Loan Agreement and to advise the Independent
Shareholders in connection with the Revolving Entrusted Loan Agreement as to
whether, in our opinion, its terms are fair and reasonable and whether the
Revolving Entrusted Loan Agreement is in the interests of the Company and the
Shareholders as a whole. Mizuho Securities has been appointed as the
independent financial adviser to advise us in this respect.
We wish to draw your attention to the letter from the Board and the letter from
Mizuho Securities as set out in the Circular. Having considered the principal
factors and reasons considered by, and the advice of, Mizuho Securities as set
out in its letter of advice, we consider that the Revolving Entrusted Loan
Agreement is on normal commercial terms, and that the Revolving Entrusted Loan
Agreement is in the best interests of the Company and the Shareholders as a
whole.
We also consider that the terms of the Revolving Entrusted Loan Agreement are
fair and reasonable. Accordingly, we recommend the Independent Shareholders to
vote in favour of the ordinary resolution to approve the Revolving Entrusted
Loan Agreement at the EGM.
Yours faithfully,
For and on behalf of the Independent Board Committee
Xie Song lin,Yu Changchun,Liu Chaoan,Xia Qing,Li Hengyuan
Independent non-executive Directors
Datang InternationalPower Generation Co.,Ltd.
LETTER FROM MIZUHO SECURITIES
The following is the text of the letter of advice from Mizuho Securities Asia Limited,the
independent financial adviser to the Independent Board Committee and Independent Shareholders,
in respect of the Revolving Entrusted Loan Agreement,which has been prepared for the purpose
of inclusion inthiscircular.
Mizuho Securities Asia Limited
12th Floor, Chater House,
8 Connaught Road Central, Hong Kong
Tel: 2685-2000 Fax: 2685-2400
24 February 2010
To the Independent Board Committee
and the Independent Shareholders
Datang International Power Generation Co.,Ltd.
Dear Sirs,
DISCLOSEABLE AND CONNECTED TRANSACTION
INTRODUCTION
We refer to our engagement as the independent financial adviser to the
Independent Board Committee and Independent Shareholders in respect of the
Revolving Entrusted Loan Agreement. Further details of the Revolving Entrusted
Loan Agreement are set out in the letter from the Board (the "Letter from the
Board") in the circular of the Company to its Shareholders dated 24 February
2010 (the "Circular"), of which this letter forms part. Capitalised terms used
in this letter shall have the same meanings as those defined in the Circular
unless the context otherwise requires.
On 12 January 2010, the Company entered into the Revolving Entrusted Loan
Agreement with Datang Finance Company and Duolun Coal Chemical Company in
relation to the provision of a revolving entrusted loan of RMB3,000 million by
the Company to Duolun Coal Chemical Company, in which Datang Finance Company
acts as a lending agent, to replace the advances for the Duolun Coal Chemical
Project provided by the Company to Duolun Coal Chemical Company and to be used
as working capital for the Duolun Coal Chemical Project to ensure its smooth
progress.
As at the Latest Practicable Date, CDC is the controlling shareholder of Datang
Finance Company holding 52.5% of its equity interest. Duolun Coal Chemical
Company is owned as to 60% and 40% by the Company's wholly-owned subsidiary -
Energy and Chemical Company and CDC, respectively. CDC is the controlling
shareholder of the Company, holding approximately 36.65% of the issued share
capital of the Company as at the Latest Practicable Date. Duolun Coal Chemical
Company and Datang Finance Company are therefore connected persons of the
Company under Chapter 14A of the Listing Rules and the Entrusted Loan
Arrangement constitutes a connected transaction of the Company under Rule
14A.13(2) of the Listing Rules.
As one or more of the applicable percentage ratios (as defined in Rule 14.07 of
the Listing Rules) for the principal amount of loans under the Revolving
Entrusted Loan Agreement is more than 2.5%, the Revolving Entrusted Loan
Agreement is subject to the reporting, announcement and Independent
Shareholders' approval requirements under Chapter 14A of the Listing Rules.
Our scope of work under this engagement is to assess whether the terms of the
Revolving Entrusted Loan Agreement are fair and reasonable so far as the
Shareholders are concerned, and, from that perspective, whether the Revolving
Entrusted Loan Agreement is in the interests of the Company and the
Shareholders as a whole. It is not within our scope of work to opine on any
other aspects of the Revolving Entrusted Loan Agreement. In addition, it is not
within our terms of reference to comment on the commercial merits of the
Revolving Entrusted Loan Agreement which is the responsibility of the
Directors.
BASIS OF OUR OPINION
In arriving at our opinion, we have relied on the information, opinions and
facts supplied, and representations made to us, by the Directors, advisers and
representatives of the Company (including those contained or referred to in the
Circular). We have also assumed that the information and representations
contained or referred to in the Circular were true and accurate in all respects
at the time they were made and continue to be so at the date of dispatch of the
Circular. We have no reason to doubt the truth, accuracy and completeness of
the information and representations provided to us by the Directors and senior
management of the Company. We have also relied on certain information available
to the public and have assumed such information to be accurate and reliable,
and we have not independently verified the accuracy of such information. We
have been advised by the Directors and believe that no material facts have been
omitted from the Circular.
We consider that we have reviewed sufficient information to reach an informed
view, to justify reliance on the accuracy of the information contained in the
Circular and to provide a reasonable basis for our opinion. We have not,
however, conducted an independent verification of the information nor have we
conducted any form of in-depth investigation into the businesses and affairs or
other prospects of the Company or any of its respective subsidiaries or
associates.
PRINCIPAL FACTORS AND REASONS CONSIDERED
In forming our opinion, we have considered the following principal factors and
reasons:
1. Background
Information relating to the Company
The Company 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 relating to Duolun Coal Chemical Company
Duolun Coal Chemical Company is responsible for constructing and operating the
Duolun Coal Chemical Project. The Duolun Coal Chemical Project is located in
Duolun County, Xilinguole League of the Inner Mongolia Autonomous Region. The
project uses the brown coal as raw materials from the East Unit 2 coal mine of
Shengli Coal Mine in Inner Mongolia, which is wholly-owned by the Company. It
produces chemical products with advanced technologies, including pulverised
coal gasification technology, synthetic gas purification technology,
large-scale methanol synthesis technology, methanol- to-propylene technology
and propylene polymerisation technology. This project is expected to produce
460,000 tonnes of polypropylene per year and other by-products.
As at 31 December 2009, Duolun Coal Chemical Company's unaudited total assets
amounted to RMB18.54151 billion; total liabilities amounted to RMB14.51595 billion;
and asset-liability ratio was 78.29%.
Information relating to Datang Finance Company
Datang Finance Company is duly established in the PRC as a non-banking
financial institution on 10 May 2005. The registered capital of Datang Finance
Company is RMB1,000 million. The principal business of Datang Finance Company
includes the provision of, among others, deposit services, loan services, entrusted
loan services and entrusted investment services.
2. Reasons for and Benefits of Entering into the Revolving Entrusted Loan Agreement
As mentioned in the Letter from the Board, in order to improve the turnover of
capital at Duolun Coal Chemical Company and to ensure the smooth progress of
the Duolun Coal Chemical Project, the Company intends to provide a revolving
entrusted loan of not more than RMB3,000 million to Duolun Coal Chemical
Company in separate batches according to the construction progress of the
Duolun Coal Chemical Project.
We note that Duolun Coal Chemical Company is in the process of preparing for
application for banking facilities. However, it may not be efficient to wait
for the readiness of the banking facilities for the construction of the Duolun
Coal Chemical Project. As the Company is the controlling shareholder of Duolun
Coal Chemical Company and indirectly holds 60% interest in Duolun Coal Chemical
Company as at the Latest Practicable Date, the Directors consider that it would
be in the interest of the Group as a whole to facilitate the smooth progress of
the Duolun Coal Chemical Project. Furthermore, Duolun Coal Chemical Company
plans to repay the principals and the interests of the loans after the banking
facilities are in place. Therefore, the revolving entrusted loan provided by
the Company can serve as a bridging loan before the banking facilities are in
place and can facilitate the smooth progress of the Duolun Coal Chemical
Project. In view of such background, we consider that the Revolving Entrusted
Loan Agreement is in the ordinary and usual course of business of the Company
and is in the interest of the Company and its Shareholders as a whole.
3. Major Terms of the Revolving Entrusted Loan Agreement
Entrusted Loan Arrangement
Pursuant to the Revolving Entrusted Loan Agreement, Datang Finance Company is
designated by the Company to act as a lending agent to, inter alia, release the
Entrusted Loans, which is funded by the Company, to Duolun Coal Chemical
Company and to monitor the use and repayment of the Entrusted Loan by Duolun
Coal Chemical Company.
Principal amount of the Entrusted Loan
RMB3,000 million.
Provided that the sources and uses of the loans being in compliance with the
requirements of the financial regulators, Duolun Coal Chemical Company can
apply for loans on a continuous basis, regardless of the number of loans and
the amount of each of such loans, during the effective period of the Revolving
Entrusted Loan Agreement provided that the outstanding balance of the principal
amount of the loan under the Revolving Entrusted Loan Agreement does not exceed
the loan limit (RMB3,000 million). However, the sum of the amount of loans
being applied by Duolun Coal Chemical Company and the outstanding balance of
the principal amount of the loan under the Revolving Entrusted Loan Agreement
shall not exceed the loan limit, i.e. RMB3,000 million.
We understand that the total investment amount of Duolun Coal Chemical Company
is estimated to be approximately RMB16.20 billion. As disclosed in the Letter
from the Board, the amount of loans granted under the Revolving Entrusted Loan
Agreement as at the Latest Practicable Date was approximately RMB2,300 million.
As the Duolun Coal Chemical Project is still under construction and needs
further funding for working capital, the maximum amount of the revolving
entrusted loan was determined at RMB3,000 million. In view of the above, we
consider that the provision of the revolving entrusted loan with a maximum
amount of RMB3,000 million is reasonably determined.
Term
Not less than 30 days and not more than 36 months for each loan term from the
date of entering into the Revolving Entrusted Loan Agreement.
Interest rate
At a floating interest rate, being 10% less than the benchmark interest rate to
be charged by the People's Bank of China at the time of each of the revolving entrusted
loans is made.
The Company advised us that the average interest rate of the bank borrowings of
the Group in year 2009 was not out of line with the floating interest rate of
the Revolving Entrusted Loan Agreement generally. On this basis and considering
the fact that the Entrusted Loan is intended as short-term financing for Duolun
Coal Chemical Company before it obtains bank financing and that the Group is
the controlling shareholder of Duolun Coal Chemical Company, we consider that
the interest rate under the Revolving Entrusted Loan Agreement is reasonable.
Handling charge
The handling charge for the Entrusted Loan under the Revolving Entrusted Loan
Agreement is calculated at 0.025% of the principal amount of the Entrusted Loan
under the Revolving Entrusted Loan Agreement. The Company shall pay such
handling charge in a one-off basis to Datang Finance Company within five
working days when each of the loan under the Revolving Entrusted Loan Agreement
is made.
The Company advised us that they had designated other banks as lending agents
in relation to the provision of entrusted loans to other companies and the
handling charges for those entrusted loans were higher than 0.025% of the
principal amount of the entrusted loans. Based on this, we consider that the
handling charge for the Entrusted Loan under the Revolving Entrusted Loan
Agreement is not excessive.
OPINION
Having considered the principal factors and reasons described above, we are of
the opinion that the terms of the Revolving Entrusted Loan Agreement are on
normal commercial terms and are fair and reasonable as far as the interests of
the Independent Shareholders are concerned, and, from this perspective, the
Revolving Entrusted Loan Agreement is in the interests of the Company and its
shareholders as a whole. Accordingly, we recommend the Independent Shareholders
to vote in favour of the ordinary resolution to be proposed at the EGM to
approve the Revolving Entrusted Loan Agreement.
Yours faithfully,
For and on behalf of
MIZUHO SECURITIES ASIA LIMITED
Kelvin S.K. Lau
Managing Director
Capital Markets & Corporate Finance
APPENDIX GENERAL INFORMATION
1. RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Listing Rules
for the purpose of giving information with regard to the Company. The Directors
collectively and individually accept full responsibility for the accuracy of
the information contained in this circular and confirm, having made all
reasonable enquiries that to the best of their knowledge and belief, there are
no other facts the omission of which would make any statement in this circular
misleading.
2. DISCLOSURE OF INTERESTS
(a) Directors,supervisors and chief executive of the Company
(i) As at the Latest Practicable Date, save and except Mr. Fang Qinghai, being
a Director, who held 24,000 A shares of the Company, none of the Directors,
supervisors and chief executive of the Company have any interests and short
positions in the shares, underlying shares and/ or debentures (as the case may
be) of the Company or any of its associated corporations (within the meaning of
the SFO) which was required to be notified to the Company and the Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interests and short positions which any such Director, chief executive or
supervisor is taken or deemed to have under such provisions of the SFO) or
which was required to be entered into the register required to be kept by the
Company under section 352 of the SFO or which was otherwise required to be
notified to the Company and the Stock Exchange pursuant to the Model Code for
Securities Transactions by Directors of Listed Issuers in the Listing Rules.
(ii) As at the Latest Practicable Date, none of the Directors, proposed
Directors, supervisors or proposed supervisors of the Company has any direct or
indirect interest in any assets which have since 31 December 2008 (being the
date to which the latest published audited financial statements of the Company
were made up) been acquired or disposed of by or leased to any member of the
Group, or are proposed to be acquired or disposed of by or leased to any member
of the Group.
(b) Substantial Shareholders of the Company
As at the Latest Practicable Date, so far as the Directors are aware, each of
the following persons, not being a Director, chief executive or supervisor of
the Company, had an interest in the Shares which falls to be disclosed to the
Company and the Stock Exchange under the provisions of Divisions 2 and 3 of
Part XV of the SFO:
Percentage to
Number of total issued Percentage to Percentage to
Class of issued ordinary share capital total issued total issued
Name issued Shares shares held of the Company Domestic Shares H Shares
China Datang A shares 3,959,241,160 (L) 33.61% 46.78% -
Corporation H shares 358,680,000 (L) 3.04% - 10.82%(L)
(Note1)
Beijing Energy A shares 1,285,777,280 (L) 10.91% 15.19% -
Investment
(Group) Company
(Note2)
Hebei A shares 1,299,872,927 (L) 11.03% 15.36% -
Construction
Investment
(Group)
Company Limited
(Note3)
Tianjin Jinneng A shares 1,212,012,600 (L) 10.29% 14.32% -
Investment
Company
(Note4)
Barclays PLC H Shares 280,516,802 (L) 2.38% (L) - 8.46%(L)
13,368,000 (S) 0.11% (S) - 0.40%(S)
(L) means long position (S) means short position (P) means lending pool
Notes:
1. Each of Mr. Zhai Rouyu, Mr. Hu Shengmu and Mr. Fang Qinghai, all
non-executive Directors, is an employee of China Datang Corporation.
2. Mr. Liu Haixia and Ms. Guan Tiangang, non-executive Directors, are employees
of Beijing Energy Investment (Group) Company.
3. Each of Mr. Su Tiegang and Mr. Ye Yonghui, both non-executive Directors, is
an employee of Hebei Construction Investment (Group) Company Limited (previously
known as Hebei Construction Investment Company).
4. Mr. Li Gengsheng, a non-executive Director, is an employee of Tianjin
Jinneng Investment Company.
Save as disclosed above and so far as the Directors are aware, as at the Latest
Practicable Date, no other person had an interest or short position in the
Shares or underlying Shares (as the case may be) which would fall to be
disclosed to the Company and the Stock Exchange under the provisions of
Divisions 2 and 3 of Part XV of the SFO.
(c) Substantial shareholders of other members of the Group
As at the Latest Practicable Date, so far as the Directors are aware, each of
the entities set out in the column titled "Shareholders holding 10% or more in
other members of the Group", not being a Director, chief executive or
supervisor of the Company, was directly or indirectly interested in 10% or more
of the nominal value of any class of share capital carrying rights to vote in
all circumstances at general meetings of any member of the Group:
Percentage
shareholding of
Shareholders in
Shareholders holding 10% or more other members of
Other members of the Group in other members of the Group the Group
Inner Mongolia Datang Beijing Jingneng 25%
International Tuoketuo Power International Energy
Generation Company Limited Company Limited
Inner Mongolia Mengdian 15%
Huaneng Thermal Power
Company Limited
Tianjin Datang International Tianjin Jinneng Investment 25%
Panshan Company
Power Generation Company Limited
Shanxi Datang International Tianjin Jinneng Investment 40%
Shentou Company
Power Generation Company Limited
Yunnan Datang International Yunnan Investment Holdings 15%
Honghe Group Company Limited
Power Generation Company Limited
Yunnan Xiaolongtan Mining 10%
Bureau
Gansu Datang International State Power Development 25%
Liancheng Company Limited
Power Generation Company Limited
Gansu Power Investment 20%
Longneng Company Limited
Hebei Datang International Tangshan Construction 20%
Tangshan Investment Company Limited
Thermal Power Company Limited
Yunnan Datang International Nalan Honghezhou Development and 20%
Hydropower Development Company Investment Company Limited
Limited
Jinping County Xinshida 15%
Investment Company Limited
Beijing Huake Power 14%
Engineering and Technology
Company Limited
Yunnan Datang International Beijing State Power Anrong 25%
Lixianjiang Hydropower Power Investment Company
Development Limited
Company Limited
Shanxi Datang International Jinzhou Huafu Power 20%
Yuncheng Investment Company Limited
Power Generation Company Limited
Jiangsu Datang International Nantong State-owned Assets 10%
Lvsigang Investment Holdings Limited
Power Generation Company Limited
China Datang Corporation 35%
Guangdong Datang International Beijing China Power Huaze 12%
Chaozhou Power Generation Company Investment Company Limited
Limited
Fujian Datang International Jinzhou Huafu Power 34%
Ningde Power Generation Company Investment Company Limited
Limited
Mindong Power Investment 10%
Company Limited
Chongqing Datang International Chongqing Hangyun 24.5%
Wulong Hydropower Development Construction
Company Limited Development Company Limited
Chongqing Dingtai Power 24.5%
(Group) Company Limited
Yunnan Datang International Yunnan Wenshan Power 25%
Wenshan Hydropower Development Company Limited
Company Limited
China Hydro-power 15%
Consultancy Group Kunming
Survey and Design Research
Institute
Hebei Datang International Hebei Construction 30%
Wangtan Investment (Group) Company
Power Co., Ltd. Limited
Chongqing Datang International Chongqing City Power 30%
Shizhu Investment Group Company
Power Generation Company Limited
Inner Mongolia Datang Duolun Hydropower 49%
International Duolun Hydropower Generation Company Limited
Multiple Development Company
Limited
Sichuan Datang International Ganzi Gantou Hydropower 20%
Ganzi Hydropower Generation Generation Development
Development Company Limited Company Limited
Chongqing Datang International Chongqing Energy Resources 12%
Pengshui Hydropower Development Investment Group Company
Company Limited
Chongqing Dingtai Power 12%
(Group) Company Limited
Chongqing Tuoyuan Industry 12%
Co., Ltd.
Guizhou Province 12%
Development Investment
Company
Guizhou Wujiang Hydropower 12%
Development Co., Ltd.
Zhejiang Datang International Zhejiang Energy Group Co., 35%
Wushashan Power Generation Ltd.
Company Limited
Ningbo City Power 10%
Development Company
Inner Mongolia Datang Beijing China Power Huaze 49%
International Hohhot Thermal Investment Co., Ltd.
Power Generation Company Limited
Inner Mongolia Datang Beijing Guoneng Zhixin 25%
International Renewable Energy Investment Co., Ltd.
Development Company Limited
Qinghua Tongfang 25%
Environment Co., Ltd.
Duolun Xinyuan Renewable 24%
Resources ., Ltd.
Yunnan Datang International Yunnan Huitai Power 30%
Hengjiang Hydropower Development Generation Co., Ltd.
Company Limited
Inner Mongolia Datang Lu Guiying 16.56%
International
Zhungeer Mining Company Limited
China Energy and Fuel 16%
Company Limited
Chen Shengyi 14%
Inner Mongolia Datang Beijing Jingneng 25%
International Tuoketuo No.2 Power International Energy
Generation Company Limited Company Limited
China Datang Corporation 20%
Inner Mongolia Mengdian 15%
Huaneng
Thermal Power Company
Limited
Hebei Datang International Tangshan Construction and 18%
Fengrun Investment Company Limited
Thermal Power Company Limited
Ningxia Datang International Daba Ningxia Power Generation 35%
Power Generation Company Limited (Group) Company Limited
China Huadian Corporation 20%
Hebei Datang International Tangshan Construction and 16%
Fengrun Investment Company Limited
Thermal Power Company Limited
Shanxi Datang International Linfenhexi Thermal Power 20%
Linfen Thermal Power Company Company Limited
Limited
Hebei Qian'an Thermal Power Beijing State Power Anrong 18%
Company Limited Power Investment Company
Limited
Tangshan Binghe Power Plant 15%
Beijing Guohong Huaan Power 10%
Investment Company Limited
Save as disclosed above in sections 2(a) and (b) as at the Latest Practicable
Date, there was no other person (other than a Director, supervisor or chief
executive of the Company or a member of the Group), who had an interest or
short position in the Shares or underlying Shares which would fall to be
disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV
of the SFO, or who was, directly or indirectly, interested in 10% or more of
the nominal value of any class of share capital carrying rights to vote in all
circumstances at general meetings of any other member of the Group.
3. SERVICE AGREEMENTS
As at the Latest Practicable Date, none of the Directors, proposed directors,
supervisors or proposed supervisors of the Company had any existing or proposed
service contract with any member of the Group (excluding contracts expiring or
determinable by the Company within one year without payment of compensation
(other than statutory compensation).
4. INTEREST IN CONTRACT
As at the Latest Practicable Date, none of the Directors or supervisors of the
Company was materially interested in any contract or arrangement entered into
by any member of the Group, and which was significant in relation to the
business of the Group.
5. MATERIAL CHANGES
The Directors are not aware of any material adverse change in the financial or
trading position of the Group since 31 December 2008, being the date to which
the latest published audited financial statements of the Group were made up.
6. COMPETING INTEREST
As at the Latest Practicable Date, none of the directors of the Company and its
subsidiaries, or their respective associates has interests in the businesses
which compete or are likely to compete, either directly or indirectly, with the
businesses of the Company and its subsidiaries.
7. EXPERT
(a) The following sets out the qualifications of the expert which has given its
opinion or advice as contained in this circular:
Name Qualifications
Mizuho Securities A licensed corporation to engage in types 1 (dealing in
securities), 2 (dealing in futures contracts) 4 (advising
on securities), 6 (advising on corporate finance) and 9
(asset management) regulated activities under the SFO
(b) Mizuho Securities did not have any shareholding, direct or indirect, in any
members of the Group or any rights (whether legally enforceable or not) to
subscribe for or to nominate persons to subscribe for securities in any members
of the Group as at the Latest Practicable Date.
(c) Mizuho Securities does not have any interest, direct or indirect, in any
assets which have been acquired or disposed of by or leased to any members of
the Group, or which are proposed to be acquired or disposed of by or leased to
any members of the Group since 31 December 2008, the date to which the latest
published audited financial statements of the Company were made up.
(d) Mizuho Securities has given and has not withdrawn its written consent to
the issue of this circular with the inclusion of its letter and references to
its name in the form and context in which they are included.
8. LITIGATION
No member of the Company and its subsidiaries is at present engaged in any
litigation or arbitration of material importance to the Company and its
subsidiaries and no litigation or claim of material importance to the Company
and its subsidiaries is known to the Directors or the Company to be pending or
threatened by or against any member of the Company and its subsidiaries.
9. MISCELLANEOUS
(a) The registered address of the Company is No. 482, Guanganmennei Avenue,
Xuanwu District, Beijing, the PRC and the office address of the Company is No.
9 Guangningbo Street, Xicheng District, Beijing, the PRC.
(b) The place of business of the Company in Hong Kong is at c/o Stephen Mok &
Co., 21/F, Gloucester Tower, 15 Queen's Road Central, Hong Kong.
(c) The Hong Kong share registrar and transfer office of the Company is
Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183 Queen's Road East,
Wanchai, Hong Kong.
(d) The secretary to the Board of the Company is Mr. Zhou Gang. Mr. Zhou
graduated from East China Institute of Water Conservancy (currently known as Hehai University), and is a
senior engineer.
10. DOCUMENTS AVAILABLE FOR INSPECTION
A copy of the Revolving Entrusted Loan Agreement, the consent letter and the
letter of advice from Mizuho Securities are available for inspection at the
principal place of business in Hong Kong of the Company at 21/F, Gloucester
Tower, 15 Queen's Road Central, Hong Kong during normal business hours from the
date of this circular up to and including 10 March 2010.
NOTICE OF EGM
DATANG INTERNATIONAL POWERGENERATIONCO.,LTD.
(a sino-foreign joint stock limited company incorporated in the People's Republic of China)
(Stock Code: 991)
NOTICE OF 2010 FIRST EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 2010 first extraordinary general meeting (the
"EGM") of Datang International Power Generation Co., Ltd. (the "Company") will
be held at the function room of 5/F, Intercontinental Hotel, No. 11 Financial
Street, Xicheng District, Beijing, the People's Republic of China (the "PRC")
on 19 April 2010 (Monday) at 11:00 a.m. to consider and, if thought fit, pass
the following resolutions:
ORDINARYRE SOLUTIONS
1. To consider and approve the fund contribution of Datang Energy and Chemical
Company Limited ("Energy and Chemical Company") to establish Inner Mongolia
Datang International Duolun Coal Chemical Company Limited ("Duolun Coal
Chemical Company"), for the purposes of constructing and operating the Duolun
Coal Chemical Project (Note1);
2. To consider and approve the provision of counter-guarantee by the Company
for a loan of Datang International (Hong Kong) Limited ("Hong Kong Company") (Note2);
3. To consider and approve the provision of entrusted loan to Duolun Coal
Chemical Company by China Datang Finance Company Limited under the Revolving
Entrusted Loan Agreement ("Datang Finance Company") (Note3).
CLOSURE OF THE REGISTER OF MEMBERS OF THE COMPANY
Holders of H shares of the Company ("Holders of H shares") should note that,
pursuant to the articles of association of the Company (the "Articles of
Association"), the register of members of the Company will be closed from 21
March 2010 to 19 April 2010 (both dates inclusive), during which period no
transfer of any H shares of the Company will be registered. Holders of H shares
whose names appear on the register of members of the Company on 21 March 2010
are entitled to attend and vote at the EGM. In order to be entitled to the
attendance of the EGM, Holders of H shares are required to deposit the transfer
document together with the relevant share certificates at the H share registrar
of the Company, Computershare Hong Kong Investor Services Limited, at Rooms
1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong
Kong at or before 4:30 p.m. on 19 March 2010.
By Order of the Board
Zhou Gang
Secretary to the Board
Beijing, the PRC
24 February 2010
Notes:
1. Reference is made to the Company's discloseable and connected transaction
announcement dated 17 August 2009 and the circular dated 4 September 2009.
According to the "Investment Agreement on Duolun Coal-based Olefin Project"
("Investment Agreement") entered into between the Company's wholly-owned
subsidiary, Energy and Chemical Company and China Datang Corporation ("CDC") on
14 August 2009, Energy and Chemical Company agreed to contribute RMB3,888
million in the proportion of 60% to the joint investment and establishment of
Duolun Coal Chemical Company with CDC, for the purposes of constructing and
operating the Duolun Coal Chemical Project (as defined in the relevant
circular).
Pursuant to the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited ("Listing Rules"), as Energy and Chemical Company is a
wholly-owned subsidiary of the Company, and CDC is a substantial shareholder of
the Company. CDC is therefore a connected person of the Company under the
Listing Rules. The Investment Agreement for the joint investment and
construction of the Duolun Coal Chemical Project between Energy and Chemical
Company and CDC constitutes a connected transaction of the Company. CDC and its
associates should abstain from voting in respect of this resolution at the EGM.
For details of the Investment Agreement, please refer to the Company's circular
dated 4 September 2009.
2. The board of directors of the Company (the "Board") agreed the Company to
provide a counter-guarantee in respect of a loan not exceeding HK$810 million
borrowed by Hong Kong Company from Bank of China (Hong Kong) Limited. The
counter- guarantee will be provided on a joint-liability basis with an amount
not exceeding HK$810 million. As the asset-to-liability ratio of Hong Kong
Company exceeds 70%, the provision of counter-guarantee by the Company to Hong
Kong Company is required to be proposed to the Company's general meeting for
consideration and approval under the Rules Governing the Listing of Securities
on the Shanghai Stock Exchange and the Articles of Association.
3. The Board agreed that the Company would provide a revolving entrusted loan
of RMB3,000 million to Duolun Coal Chemical Company under the Revolving Entrusted
Loan Agreement (as defined in the circular of the Company dated 24
February 2010) through Datang Finance Company, and that such loan would be
arranged in separate batches according to the construction progress of the
Duolun Coal Chemical Project.
As at the date of this notice, CDC and its subsidiaries held a total of
approximately 36.65% of the issued share capital of the Company and is a
substantial shareholder of the Company, whilst Datang Finance Company is a
subsidiary of CDC. Datang Finance Company is therefore a connected person of
the Company under the Listing Rules. Since CDC owns 40% of equity interest in
Duolun Coal Chemical Company, Duolun Coal Chemical Company is therefore a
connected person of CDC under the Listing Rules. Accordingly, the provision of
the entrusted loan by the Company to Duolun Coal Chemical Company through
Datang Finance Company constitutes a connected transaction of the Company. The
connected transaction is required to be proposed to the Company's general
meeting for consideration and approval under the requirements of the Listing
Rules. CDC and its associates shall abstain from voting in respect of this
resolution at the EGM.
For details of the entrusted loan, please refer to the discloseable and
connected transaction announcement dated 4 February 2010 and the circular
dated 24 February 2010, respectively.
4. Other Matters
(1) Holders of H shares should note that, pursuant to the Articles of
Association, the register of members of the Company will be closed from 21
March 2010 to 19 April 2010 (both dates inclusive), during which period no
transfer of any H shares will be registered. Holders of H shares whose names
appear on the register of members of the Company on 21 March 2010 are entitled
to attend and vote at the EGM.
(2) Each of the Holders of H shares entitled to attend and vote at the EGM, is
entitled to appoint one or more proxies to attend and vote on his/her behalf. A
proxy need not be a shareholder of the Company.
(3) If Holders of H shares have appointed more than one proxy to attend the
EGM, the proxies can only exercise their voting rights by way of poll.
(4) To be valid, Holders of H shares must deliver the proxy form, and if such
proxy is signed by a person on behalf of the appointer pursuant to a power of
attorney or other authority, a notarised copy of that power of attorney or
other authority, to the Company's H share registrar, Computershare Hong Kong
Investor Services Limited of Rooms 1806-1807, 18th Floor, Hopewell Centre,
183 Queen's Road East, Wanchai, Hong Kong, in not less than 24 hours before
the time scheduled for holding the EGM.
(5) Holders of H shares who wish to attend the EGM are required to return the
notice of attendance by hand, post, cable or fax to the Company's office
address on or before 29 March 2010. Completion and return of the notice of
attendance will not preclude a shareholder of the Company from attending and
voting at the EGM in person.
(6) The EGM is expected to last for one hour. Attending shareholders and their
proxies shall be responsible for their own travel and accommodation expenses.
The Company's office address:
No. 9 Guangningbo Street, Xicheng District,
Beijing, the PRC
Postcode: 100140
Telephone: (8610) 8800 8669
Fax: (8610) 8800 8111 or (8610) 8800 8672
As at the date of this notice,the directors of the Company are:
Zhai Ruoyu, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia, Guan
Tiangang, Su Tiegang,YeYonghui, Li Gengsheng, Xie Songlin*, Liu Chaoan*,Yu
Changchun*, Xia Qing* and LiHengyuan*
* Independent non-executive directors
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