CAPITAL INJECTION INTO AIR MA

RNS Number : 6277D

Air China Ld

04 December 2009

 

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

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00753)

CONNECTED TRANSACTION:

CAPITAL INJECTION INTO AIR MACAU COMPANY LIMITED

Reference is made to the announcement of the Company dated 1 June 2009 in respect of the proposed capital injection into Air Macau and the capital injection plan approved by the shareholders of Air Macau on 15 April 2009. On 4 December 2009, the Board approved and ratified the Capital Injection as set out in this announcement. As Air Macau is a subsidiary of the Company, and, prior to the implementation of the Capital Injection Plan, SEAP and STDM were substantial shareholders of Air Macau within the meaning of the Hong Kong Listing Rules, SEAP and STDM are therefore connected persons of the Company within the meaning of the Hong Kong Listing Rules. As some of the shareholders of Air Macau chose not to exercise their respective pro-rata right of subscription of the ordinary shares issued by Air Macau under the Capital Injection Plan and the Company proposes to exercise its subscription right via the Capital Injection which would increase the Company's shareholding in Air Macau, the Capital Injection constitutes a connected transaction within the meaning of the Listing Rules. As all of the applicable Percentage Ratios for the Capital Injection exceed 0.1% but are less than 2.5%, the Capital Injection is subject to the reporting and announcement requirements set out under Chapter 14A of the Hong Kong Listing Rules, but is exempt from the independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules. The Board considers the terms of the Capital Injection to be fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

1.    INTRODUCTION

Reference is made to the announcement of the Company dated 1 June 2009 in respect of the proposed capital injection into Air Macau Company Limited ("Air Macau") and the capital injection plan approved by the shareholders of Air Macau on 15 April 2009 (the "Capital Injection Plan").

On 4 December 2009, the Board approved and ratified the Capital Injection as set out in this announcement.

2.    DESCRIPTION OF THE CONNECTED TRANSACTION

Through the Capital Injection, the Company shall contribute MOP158,702,500 (equivalent to approximately HK$154,080,097) to the share capital of Air Macau which shall increase the Company's initial shareholding in Air Macau from approximately 51% (the Company recently purchased 1.25% of the total issued share capital of Air Macau from another shareholder and became the holder of 52.25% of the total issued share capital of Air Macau (the "Recent Share Purchase")) to 80.8625% (excluding the non-voting redeemable preference shares).

Before the Capital Injection, the implementation of the Capital Injection Plan and the Recent Share Purchase, the shareholding structure of Air Macau was as follows:

Shareholders	Number of  Shares	Shareholding  Percentage
CNAC (Macau)	2,040,000	51%
SEAP	800,000	20%
STDM	560,000	14%
Macau Government	200,000	5%
Evergreen Airways	200,000	5%
Other shareholders	200,000	5%
Total	4,000,000	100%

Pursuant to the Capital Injection Plan, the issued share capital of Air Macau was first reduced to MOP1,000,000 (equivalent to approximately HK$970,874). The implementation of the Capital Injection Plan would increase the issued share capital of Air Macau to MOP400,000,000 (equivalent to approximately HK$388,349,515) through the issuance of 1,990,000 ordinary shares and 2,000,000 non-voting redeemable preference shares at a par value of MOP100 per share.

As part of the Capital Injection Plan, the Company shall contribute MOP158,702,500 (equivalent to approximately HK$154,080,097) to the share capital of Air Macau as consideration for the subscription of 1,587,025 ordinary shares of Air Macau. The consideration was determined in accordance with the Capital Injection Plan, which amounts to an aggregate amount of MOP508 million (equivalent to approximately HK$493.2 million) for the financial recovery of Air Macau in view of the financial condition of Air Macau and pursuant to the applicable Macau laws.

In addition, the Company effected the Recent Share Purchase prior to the implementation of the Capital Injection Plan and acquired from some minority shareholders another 1.25% of the total issued share capital of Air Macau after the implementation of the Capital Injection Plan in a total consideration of MOP6,566,278 (equivalent to approximately HK$6,375,027).

As some of the shareholders, whose shareholdings in total amount to approximately 27.5% of the total issued share capital of Air Macau prior to the implementation of the Capital Injection Plan, chose not to contribute to the share capital of Air Macau, the Company's shareholding in Air Macau will increase to 80.8625% (excluding the non-voting redeemable preference shares) following the completion of the Capital Injection.

Upon the completion of the Capital Injection, the shareholding structure of Air Macau (excluding the non-voting redeemable preference shares) is as follows:

Shareholders	Number of  Ordinary Shares	Shareholding  Percentage
CNAC (Macau)	1,617,250	80.8625%
SEAP	2,000	0.1%
STDM	280,000	14%
Macau Government	100,000	5%
Evergreen Airways	500	0.025%
Other shareholders	250	0.0125%
Total	2,000,000	100%

3.    REASONS FOR AND BENEFITS OF THE CAPITAL INJECTION

The Macau Government and the PRC government have been providing financial and policy support for the stability and prosperity of Macau.

The rapid growth of the economy of Macau will further increase the number of travellers to and from Macau. Since the handover of Macau to the PRC, under the continuous promotion, by the Macau Government, of a diversified portfolio of industries including tourism, convention and gaming, the GDP of Macau increased from MOP47.2 billion in 1999 to MOP171.8 billion in 2008 and the number of travellers increased from 7.44 million in 1999 to 30 million in 2008.

With the construction of the Hong Kong - Zhuhai - Macau Bridge, the Macau airport is expected to play a complementary role to the Hong Kong airport. The Capital Injection would further support the Company's investment in Hong Kong and Macau and would further help its consolidation of the shareholding in Air Macau.

4.    OPINION OF THE DIRECTORS

The Board considers the terms of the Capital Injection to be fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

5.    INFORMATION ON the parties

The Company's principal business activity is air passenger, air cargo and airline-related services.

Air Macau is primarily engaged in the provision of air passenger and air cargo services. In recent years, Air Macau has suffered operating losses and the situation worsened in 2008 mainly due to the global financial crisis and the implementation of the direct chartered flights across the Taiwan Strait. The audited annual accounts of Air Macau for the year ended 31 December 2008 reflected a net asset value of approximately MOP-107.3 million (equivalent to approximately HK$-104.2 million).

6.    HONG KONG LISTING RULES IMPLICATIONS

As Air Macau is a subsidiary of the Company, and, prior to the implementation of the Capital Injection Plan, SEAP and STDM were substantial shareholders of Air Macau within the meaning of the Hong Kong Listing Rules, SEAP and STDM are therefore connected persons of the Company within the meaning of the Hong Kong Listing Rules. As some of the shareholders of Air Macau chose not to exercise their respective pro-rata right of subscription of the ordinary shares issued by Air Macau under the Capital Injection Plan and the Company proposes to exercise its subscription right via the Capital Injection which would increase the Company's shareholding in Air Macau, the Capital Injection constitutes a connected transaction within the meaning of the Hong Kong Listing Rules.

As all of the applicable Percentage Ratios for the Capital Injection exceed 0.1% but are less than 2.5%, the Capital Injection is subject to the reporting and announcement requirements set out under Chapter 14A of the Hong Kong Listing Rules, but is exempt from the independent shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

"Board"	the board of Directors of the Company
"Capital Injection"	the subscription of 1,587,025 ordinary shares of Air Macau by the Company for an amount of MOP158,702,500 (equivalent to approximately HK$154,080,097) pursuant to the Capital Injection Plan
"CNAC"	China National Aviation Company Limited, a company incorporated in Hong Kong and a subsidiary of the Company as at the date of this announcement
"CNAC (Macau)"	China National Aviation Corporation (Macau) Company Limited, a wholly owned subsidiary of CNAC
"Company"	Air China Limited, a company incorporated in the People's Republic of China, whose H shares are listed on the Hong Kong Stock Exchange as its primary listing venue and on the Official List of the UK Listing Authority as its secondary listing venue and whose A shares are listed on the Shanghai Stock Exchange
"Directors"	the directors of the Company
"Evergreen Airways"	Evergreen Airways Services (Macau) Ltd.
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Hong Kong Listing Rules"	The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Macau"	the Macau Special Administrative Region of the PRC
"Macau Government"	the government of Macau
"MOP"	Macau Patacas, the lawful currency of Macau
"Percentage Ratios"	the percentage ratios set out in Rule 14.07 of the Hong Kong Listing Rules, i.e. "assets ratio", "profits ratio", "revenue ratio", "consideration ratio" and "equity capital ratio"
"PRC"	the People's Republic of China
"SEAP"	Serviços, Administração e Participações, Limitada, a shareholder of Air Macau
"STDM"	Sociedade de Turismo e Diversões de Macau, SA, a shareholder of Air Macau

By order of the Board

Air China Limited

Huang Bin           Tam Shuit Mui

Joint Company Secretaries

Beijing, 4 December 2009

As at the date of this announcement, the directors of the Company are Mr. Kong Dong, 
Ms. Wang Yinxiang, Mr. Wang Shixiang, Mr. Cao Jianxiong, Mr. Christopher Dale Pratt, 
Mr. Chen Nan Lok, Philip, Mr. Cai Jianjiang, Mr. Fan Cheng, Mr. Hu Hung Lick, Henry*, 
Mr. Zhang Ke*, Mr. Jia Kang* and Mr. Fu Yang*.

* Independent non-executive director of the Company.

Note:     In this announcement, except as otherwise indicated, MOP has been translated into HK$ at the rate of 
HK$1.00 = MOP1.03 for reference purpose only.

 

END

 

 

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