Continuing Connected Transactions & EGM Notice

RNS Number : 8428R

Air China Ld

10 November 2011

 



THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ACTION

If you are in doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Air China Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker 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 disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

AIR CHINA LIMITED

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

(Stock Code: 753)

CONTINUING CONNECTED TRANSACTIONS AND

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent financial adviser

to the Independent Board Committee and the Independent Shareholders

CHINA MERCHANTS SECURITIES (HK) CO., LTD.

A letter from the Board is set out on pages 4 to 10 of this circular.

A letter from the Independent Board Committee, containing its advice to the Independent Shareholders, is set out on pages 11 to 12 of this circular.

A letter from China Merchants Securities, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders in connection with the Transactions and the relevant annual caps is set out on pages 13 to 21 of this circular.

10 November 2011

CONTENTS

Page                 

DEFINITIONS................................................................................................................... 1

LETTER FROM THE BOARD............................................................................................... 4

I....... CONTINUING CONNECTED TRANSACTIONS WITH AIR CHINA
　CARGO......................................................................................................... 4

II...... EGM................................................................................................................. 8

III..... REVISED PROXY FORM..................................................................................... 9

IV..... ADDITIONAL INFORMATION............................................................................ 9

LETTER FROM THE INDEPENDENT BOARD COMMITTEE............................................... 11

LETTER FROM CHINA MERCHANTS SECURITIES.......................................................... 13

APPENDIX I      -... GENERAL INFORMATION.............................................................. 22

APPENDIX II     -... SUPPLEMENTAL NOTICE OF EXTRAORDINARY

　GENERAL MEETING..................................................................... 26

- i -

DEFINITIONS

In this circular, the following terms have the meanings set out below, unless the context requires otherwise:

"Air China Cargo"                              Air China Cargo Co., Ltd., a company with limited liability incorporated under the laws of the PRC and with

51% of its registered capital owned by the Company as at the Latest Practicable Date

"Board"                                            the board of Directors

"Cathay Pacific"                                Cathay Pacific Airways Limited, a company incorporated in Hong Kong and listed on the Hong Kong Stock Exchange, the principal activity of which is the operation of scheduled airline services

"China Merchants Securities"              China Merchants Securities (HK) Co., Limited, a corporation licensed to conduct Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) of the regulated activities under the Securities and Futures Ordinance (Cap. 571), the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the Transactions and the relevant annual caps

"Company"                                       Air China Limited, a company incorporated in the PRC, 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

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

"EGM"                                             the extraordinary general meeting of the Company to be held on 25 November 2011 to consider, and if thought fit, approve the Transactions (including the relevant annual caps). Please refer to the EGM Notice and the supplemental EGM notice in Appendix II to this circular for details

"EGM Notice"                                   the notice of the EGM dated 10 October 2011 which sets out the resolution to be considered by the Shareholders at the EGM

"Framework Agreement"                    the framework agreement entered into between the Company and Air China Cargo dated 27 October 2011 in respect of the Transactions

"Group"                                            the Company and its subsidiaries

"Hong Kong Stock Exchange"             The Stock Exchange of Hong Kong Limited

"Independent Board Committee"          a board committee comprising Mr. Fu Yang, Mr. Li Shuang, Mr. Han Fangming and Mr. Yang Yuzhong, all being the independent non-executive Directors

"Independent Shareholder(s)"              the Shareholder(s) of the Company other than Cathay Pacific and its associates

"Latest Practicable Date"                    7 November 2011, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

"Listing Rules"                                  The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

"Original Proxy Form"                       the form of proxy dispatched together with the EGM Notice dated 10 October 2011, which is superseded by the Revised Proxy Form enclosed with this circular

"Percentage Ratios"                           the percentage ratios set out in Rule 14.07 of the Listing Rules, i.e. "assets ratio", "profits ratio", "revenue ratio", "consideration ratio" and "equity capital ratio"

"PRC"                                             the People's Republic of China excluding, for the purpose of this circular only, Hong Kong, Macau and Taiwan

"Revised Proxy Form"                       the revised form of proxy enclosed with this circular, which supersedes the Original Proxy Form

"RMB"                                             Renminbi, the lawful currency of the PRC

"Shareholder(s)"                                shareholder(s) of the Company

"Transactions"                                  the continuing connected transactions contemplated under the Framework Agreement between the Company and Air China Cargo in relation to the provision of bellyhold space, ground support and aircraft maintenance engineering, as well as other services between Air China Cargo and the Group

LETTER FROM THE BOARD

AIR CHINA LIMITED

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

(Stock Code: 753)

Non-executive Directors:

Mr. Kong Dong

Ms. Wang Yinxiang Mr. Cao Jianxiong Mr. Sun Yude

Mr. Christopher Dale Pratt

Mr. Ian Sai Cheung Shiu

Executive Directors:

Mr. Cai Jianjiang

Mr. Fan Cheng

Independent non-executive Directors:

Mr. Fu Yang

Mr. Li Shuang

Mr. Han Fangming

Mr. Yang Yuzhong

Registered office:

9th Floor, Blue Sky Mansion

28 Tianzhu Road, Zone A Tianzhu Airport Industrial Zone Shunyi District

Beijing

PRC

Principal place of business in Hong Kong:

5th Floor, CNAC House

12 Tung Fai Road

Hong Kong International Airport

Hong Kong

10 November 2011

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS AND

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

I.     CONTINUING CONNECTED TRANSACTIONS WITH AIR CHINA CARGO

1.     Introduction

Reference is made to the circular of the Company dated 8 April 2010 and the announcement of the Company dated 29 March 2011 in relation to, among other things, the Transactions. In anticipation of the expiry of the existing arrangements between the Company

and Air China Cargo, on 27 October 2011, the Board approved the Transactions. The Company will seek Independent Shareholders' approval of the Transactions and the relevant annual caps for the years ending 31 December 2011, 2012 and 2013 in accordance with the Listing Rules.

2.     The Transactions

Parties and Connection of the Parties

The Company is the only national flag carrier of China and a member of the Star Alliance, the world's largest airline alliance. The Company's principal business activity is air passenger, air cargo and airline-related services.

Air China Cargo is a subsidiary and connected person of the Company. The principal activity of Air China Cargo is the operation of cargo airline services. Cathay Pacific, a substantial Shareholder, holds 25% of the equity interest in Air China Cargo and is a connected person of the Company. Mr. Fan Cheng is a director of Cathay Pacific as well as a director of Air China Cargo.

Description of the Transactions

Pursuant to the Framework Agreement, the Group (apart from Air China Cargo) will provide the following services to Air China Cargo:

(1)   the provision of bellyhold space of the passenger aircrafts operated by the Company; (2) ground support and aircraft maintenance engineering, including, among others, the

repair and maintenance of aircrafts and engines; and

(3)   other services to Air China Cargo including, among others, labour management and import and export agency services.

Air China Cargo will provide the following services to the Group (apart from Air China

Cargo):

(1)  ground support including, among others, cargo and mail ground loading and unloading and security inspection services; and

(2)   other services provided to the Group (apart from Air China Cargo).

The consideration of specific continuing connected transactions under the Framework

Agreement shall be agreed between the Company and Air China Cargo on a case-by-case basis.

The term of the Framework Agreement is three years, ending on 31 December 2013, which is renewable unless being terminated by either party to the Framework Agreement.

Reasons for and Benefits of the Transactions

The Directors believe that it is in the best interest of the Company to enter into the Transactions because Air China Cargo, being a company having engaged in air cargo business for a long time, has a profound understanding of and extensive experience in the air cargo business and the air cargo industry, and therefore possesses certain advantages in promoting the Company's air cargo business with access to the Company's bellyhold space. In addition, as the Company and Air China Cargo both have significant presence in Beijing, the aircraft related services such as ground support and aircraft maintenance engineering services could be easily accessible and thereby generate revenue and benefit for the Company with low additional cost. The long-time successful cooperative relationship between the Company and Air China Cargo is able to provide streamlined and efficient cooperation and transaction between the Company and Air China Cargo.

Historical Amounts and Proposed Caps

The actual aggregate amount paid by Air China Cargo to the Company for the years ended31 December 2008, 2009 and 2010 was approximately RMB3.3 billion, RMB2.7 billion and RMB3.9 billion, respectively. The actual aggregate amount paid by the Company to Air China Cargo for the years ended 31 December 2008, 2009 and 2010 was nil, nil and nil, respectively.

It is proposed that for the years ending 31 December 2011, 2012 and 2013, the annual caps for the aggregate amount payable by Air China Cargo to the Company shall be RMB5.6 billion, RMB6.3 billion and RMB7.7 billion, respectively. The annual caps for the aggregate amount payable by the Company to Air China Cargo for the years ending 31 December 2011,2012 and 2013 are proposed to be RMB46.0 million, RMB46.0 million and RMB46.0 million, respectively.

	Historical Figures				Future Caps
Transactions	Actual annual amount for the year ended 31 December 2008	Actual annual amount for the year ended 31 December 2009	Actual annual amount for the year ended 31 December 2010	Annual cap for the year ending 31 December 2011	Annual cap for the year ending 31 December 2012	Annual cap for the year ending 31 December 2013
Amount paid/payable by Air China Cargo to the Company	RMB3.3 billion	RMB2.7 billion	RMB3.9 billion	RMB5.6  billion	RMB6.3 billion	RMB7.7 billion
Amount paid/payable by the Company to Air China Cargo	nil	nil	nil	RMB46.0 million	RMB46.0 million	RMB46.0 million

Basis for such Caps

In arriving at the above annual caps, the Directors have considered the historical transaction amount and the expected growth of such Transactions.

The bellyhold cargo space for Air China Cargo will increase along with the expansion of the fleet of the Company. As a result of the rapid business expansion of the Company in the past three years, the total number of passenger aircraft of the Company increased from 250 in2009 to 268 in 2010, and reached 275 as at 30 June 2011. The fleet of the Company is expected to expand at an annual rate of approximately 10% to 15% from 2011 to 2013.

As the aviation fuel prices continue to rise, the unit air transportation price is expected to rise in the future. Meanwhile, Air China Cargo is further integrating its businesses and increasing its transportation capacity. As such, based on the historical figures set out above, it is expected that the aggregate amount payable by Air China Cargo to the Company for the year ending 31 December 2011 will not exceed RMB5.6 billion and will increase at an annual rate of 12% to 25% thereafter.

In arriving at the estimated aggregate amount payable by the Company to Air China Cargo for the years ending 31 December 2011, 2012 and 2013, the Company also considered, among other things, potential additional services to the provided by Air China Cargo to the Company, such as ground support services and lease of properties. For the nine months ended 30 September 2011, the unaudited historical amounts paid by Air China Cargo to the Company was approximately RMB3.1 billion. The Company expects that approximately RMB380.0 million will be payable by Air China Cargo to the Company in 2011 since 25 November 2011, the date on which the Framework Agreement, if approved on the EGM, becomes effective. In view of the air cargo industry practice and the market trend of 2011, the freight traffic and the revenue arising from the sale of bellyhold space for the fourth quarter of 2011 are expected to be higher than each of the first three quarters of 2011 as a result of the Christmas and New Year seasonal effect. Hence, in arriving at the proposed annual caps on the amount payable by Air China Cargo to the Company for the year ending 31 December 2011, the Directors believe that reserving certain buffer would be necessary to respond to any sudden increase in the demand for the services contemplated under the Framework Agreement in the fourth quarter of 2011.

3.     Listing Rules Implications

As the highest of the applicable Percentage Ratios of the Transactions under the Framework Agreement between the Company and Air China Cargo, on an annual basis, is higher than 5.0%, the Transactions fall under Rule 14A.17 of the Listing Rules and constitute non-exempt continuing connected transactions which are subject to the announcement, reporting and Independent Shareholders' approval requirements set out under Chapter 14A of the Listing Rules.

The Independent Board Committee has been formed to advise the Independent Shareholders on the Transactions and the relevant annual caps. China Merchants Securities has been appointed as the independent financial adviser of the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

The Transactions and the relevant annual caps will be considered, and if thought fit, approved at the EGM. Voting will be by poll and Cathay Pacific, being a substantial shareholder of the Company and Air China Cargo, together with its associates, will abstain from voting.

4.     PRC Law Implications

Pursuant to the Listing Rules of the Shanghai Stock Exchange, the Transactions shall be disclosed in a timely fashion.

5.     Recommendation of the Board

The Directors (including the independent non-executive Directors) consider that the Transactions have been conducted on normal commercial terms or on terms no less favourable than those available to independent third parties and were entered into on a continuing and regular basis and in the ordinary and usual course of business of the Company, are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and that the relevant annual caps for the future years ending 31 December 2011, 2012 and 2013 for the Transactions are fair and reasonable.

The Board recommends that Shareholders vote to approve the Transactions and the relevant annual caps at the EGM.

II.    EGM

Reference is made to the EGM Notice dated 10 October 2011. Set out on pages 26 to 27 of this circular is a supplemental notice of the EGM. At the EGM, which will be held as originally scheduled, an ordinary resolution will be proposed to consider and, if thought fit, to approve, the Transactions and the relevant annual caps described under Part I of this letter in addition to the other resolution set out in the EGM Notice. The resolutions will be voted by poll.

Pursuant to Rule 14A.54 of the Listing Rules, any connected person and any Shareholder and their associates with a material interest in the Transactions are required to abstain from voting on the relevant resolution at the EGM. As at the Latest Practicable Date, Cathay Pacific, being a substantial Shareholder of the Company and Air China Cargo, together with its associates, will abstain from voting on the Transactions and the relevant annual caps at the EGM.

Please refer to the EGM Notice for details in respect of the other resolution to be passed at the EGM, eligibility to attend the EGM, registration procedures, closure of register of members and other relevant matters.

III. REVISED PROXY FORM

As a result of the additional proposed resolution subsequent to the dispatch of the EGM Notice, the Original Proxy Form sent together with the EGM Notice does not contain the proposed resolution in respect of the Transactions and the relevant annual caps as set out in this circular. In this connection, a Revised Proxy Form is enclosed with this circular. The Original Proxy Form is superseded by this Revised Proxy Form. You are requested to complete and return the Revised Proxy Form in accordance with the instructions printed thereon.

A Shareholder who has not lodged the Original Proxy Form dispatched together with the EGM Notice in accordance with the instructions printed thereon is requested to lodge the Revised Proxy Form if he or she wishes to appoint proxies to attend the EGM on his or her behalf. In this case, the Original Proxy Form should not be lodged.

A Shareholder who has already lodged the Original Proxy Form in accordance with the instructions printed thereon should note that:

(i)    if no Revised Proxy Form is lodged in accordance with the instructions printed thereon, the Original Proxy Form, if correctly completed, will be treated as a valid proxy form lodged by such shareholder;

(ii)    if the Revised Proxy Form is lodged in accordance with the instructions printed thereon, the Revised Proxy Form, if correctly completed, will be treated as a valid proxy form lodged by the Shareholder and will revoke and supersede the Original Proxy Form previously lodged by such shareholder;

(iii) if the Revised Proxy Form is lodged after the closing time set out in the EGM Notice and in the Revised Proxy Form enclosed with this circular, the Revised Proxy Form will be invalid. However, it will revoke the Original Proxy Form previously lodged by the Shareholder, and any vote that may be cast by the purported proxy (whether appointed under the Original Proxy Form or the Revised Proxy Form) will not be counted in any poll which may be taken on a proposed resolution.

Accordingly, Shareholders are advised not to lodge the Revised Proxy Form after the specified closing time. If such Shareholders wish to vote at the EGM, they will have to attend in person and vote at the EGM themselves.

IV.   ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee set out on pages 11 to 12 of this circular which contains its recommendation to the Independent Shareholders as to the voting at the EGM regarding the Transactions and the relevant annual caps.

Your attention is also drawn to the letter from China Merchants Securities set out on pages 13 to 21 of this circular, which contains, among others, its advice to the Independent Board Committee and the Independent Shareholders in relation to the Transactions and the relevant annual caps as well as the principal factors and reasons considered by it in concluding its advice. Additional information is also set out in the appendices to this circular for your information.

By Order of the Board
 Kong Dong

Chairman

Beijing, the PRC

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

AIR CHINA LIMITED

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

(Stock Code: 753)

Independent Board Committee:

Mr. Fu Yang

Mr. Li Shuang

Mr. Han Fangming

Mr. Yang Yuzhong

10 November 2011

To the Independent Shareholders

Dear Sir or Madam,

THE TRANSACTIONS

We refer to the circular dated 10 November 2011 (the "Circular") issued by the Company to its Shareholders of which this letter forms a part. Terms defined in the Circular shall have the same meanings when used in this letter, unless the context otherwise requires.

On 27 October 2011, the Company entered into the Transactions, and set out the relevant annual caps for the years ending 31 December 2011, 2012 and 2013. The Transactions are subject to the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Listing Rules. The Transactions and the relevant annual caps are subject to the approval by the Independent Shareholders to be sought at the EGM.

The terms and the reasons for the Transactions are summarised in the Letter from the Board set out on pages 4 to 10 of the Circular.

The Independent Board Committee was formed to make a recommendation to the Independent Shareholders as to whether, in its view, (i) the terms of the Transactions are fair and reasonable so far as the Independent Shareholders are concerned and (ii) the relevant annual caps are fairly and reasonably determined. China Merchants Securities has been appointed as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

As your Independent Board Committee, we have discussed with the management of the Company the reasons for the Transactions, their terms and the basis upon which their terms have been determined. We have also considered the key factors taken into account by China Merchants Securities in arriving at its opinion regarding the Transactions as set out in the letter from China Merchants Securities on pages 13 to 21 of the Circular, which we urge you to read carefully.

The Independent Board Committee, after taking into account, amongst other things, the advice of China Merchants Securities, considers the terms of the Transactions to be in the best interest of the Company and to be fair and reasonable so far as the Independent Shareholders are concerned. The Independent Board Committee also considers the Transactions to be carried out in the usual and ordinary course of business, on normal commercial terms and the relevant annual caps for the Transactions to be fair and reasonable. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the relevant ordinary resolution set out in the supplemental notice of the EGM.

Yours faithfully,

Independent Board Committee

Mr. Fu Yang Independent non- executive Director

Mr. Li Shuang Independent non- executive Director

Mr. Han Fangming Independent non- executive Director

Mr. Yang Yuzhong Independent non- executive Director

LETTER FROM CHINA MERCHANTS SECURITIES

The following is the text of a letter of advice from China Merchants Securities to the Independent Board Committee and the Independent Shareholders in respect of the Transactions, which has been prepared for the purpose of inclusion in this circular.

CHINA MERCHANTS SECURITIES (HK) CO., LTD.	48th Floor
	One Exchange Square
	Central
	Hong Kong
	10 November 2011

To:   The Independent Board Committee and the Independent Shareholders

of Air China Limited

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our engagement as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transactions and the relevant annual caps contemplated thereunder, particulars of which are set out in the letter from the Board (the "Letter from the Board") contained in this circular dated 10 November 2011 (the "Circular") issued by the Company, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless otherwise defined.

As set out in the Letter from the Board, reference is made to the circular dated 8 April

2010 and the announcements dated 29 March 2011 and 27 October 2011 issued by the Company in relation to, among other things, the Transactions. In anticipation of the expiry of the existing arrangements between the Company and Air China Cargo, on 27 October 2011, the Board approved the Transactions. The Company will seek Independent Shareholders' approval of the Transactions and the relevant annual caps for the three years ending 31 December 2011, 2012 and 2013 in accordance with the Listing Rules.

As the highest of the applicable Percentage Ratios of the Transactions under the Framework Agreement between the Company and Air China Cargo, on an annual basis, is higher than 5.0%, the Transactions fall under Rule 14A.17 of the Listing Rules and constitute non-exempt continuing connected transactions which are subject to the announcement, reporting and Independent Shareholders' approval requirements set out under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.54 of the Listing Rules, any connected person and any Shareholder and their associates with a material interest in the Transactions are required to abstain from voting on the relevant resolution at the EGM. As at the Latest Practicable Date, Cathay Pacific, being a substantial shareholder of the Company and Air China Cargo, together with its associates, will abstain from voting on the Transactions and the relevant annual caps at the EGM.

The Independent Board Committee, comprising all the four independent non-executive Directors, namely Mr. Fu Yang, Mr. Li Shuang, Mr. Han Fangming and Mr. Yang Yuzhong, has been established to advise the Independent Shareholders in respect of the Transactions and the relevant annual caps contemplated thereunder. We, China Merchants Securities, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

BASIS OF OUR OPINION

In formulating our advice and opinion, we have relied on the accuracy of the information and representations contained in the Circular, which have been considered to be complete and relevant, and the information obtained from the public domain. We have assumed that all statements, information and representations made or referred to in the Circular, for which the Directors are solely responsible for, were true, accurate and complete in all material respects at the time when they were made and will continue to be so as at the date of the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due and careful enquiry and were based on honestly held opinions. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Company and we have been advised by the Directors and the management of the Company that no material fact has been omitted from the information and representations provided, and referred to, in the Circular. We have no reason to suspect that any material information has been withheld by the Directors or the management of the Company. We have not, however, carried out any independent verification of the information provided to us by the Directors and the management of the Company and the information obtained from the public domain, nor have we conducted any independent investigation into the affairs, the business and financial position and the future prospects of each member of the Group, Air China Cargo and their respective shareholders, associates and business partners. Our opinion is based on the information and representations available to us as of the date of this letter. We have no obligation to update our advice and opinion to take into account circumstances and events occurring after the date of this letter. As a result, circumstances and events could occur prior to the approval of the Transactions and the relevant annual caps contemplated thereunder that, if known to us at the time when we had rendered our advice and opinion, would have altered our advice and opinion.

INFORMATION ABOUT THE PARTIES

The Company

The Company is the only national flag carrier of China and a member of the Star Alliance, the world's largest airline alliance. The Company's principal business activity is air passenger, air cargo and airline-related services.

Air China Cargo

Air China Cargo is principally engaged in the operation of cargo airline services.

As at the Latest Practicable Date, Air China Cargo is a non-wholly owned subsidiary of the Company which is owned as to 51%, 24% and 25% by the Company, Fine Star Enterprises Corporation and Cathay Pacific, respectively. Air China Cargo has become a connected person of the Company by virtue of being a non-wholly owned subsidiary of the Company in which Cathay Pacific, as a substantial shareholder of the Company, holds more than 10% of the voting rights.

THE TRANSACTIONS

Upon Air China Cargo becoming a joint venture cargo airline between the Company and Cathay Pacific, there are certain continuing transactions between the Group and Air China Cargo which mainly comprise the sale of bellyhold space of its passenger aircrafts, provision of ground support and engineering services and other services.

The abovementioned transactions are governed by certain written agreements between the Group and Air China Cargo. In anticipation of the expiry of the those agreements, on 27 October 2011, the Company and Air China Cargo entered into the Framework Agreement and the Board approved the Transactions.

PRINCIPAL FACTORS CONSIDERED

In formulating and giving our independent advice to the Independent Board Committee and the Independent Shareholders, we have taken into consideration the reasons for and benefits of the Transactions, the principal terms of the Framework Agreement and the rationale to derive the relevant proposed annual caps.

Reasons for and benefits of the Transactions

As stated in the Letter from the Board, the Directors believe that it is in the best interest of the Company to enter into the Transactions because Air China Cargo, being a company having engaged in air cargo business for a long time, has a profound understanding of and extensive experience in the air cargo business and the air cargo industry, and therefore possesses certain advantages in promoting the Group's air cargo business with access to its bellyhold space.

As disclosed on the official website of Air China Cargo, Air China Cargo was established in 2003 and it is the only cargo company that can carry flags with the headquarter in Beijing and major cargo operation base in Shanghai. By the end of 2010, Air China Cargo has owned the largest cargo plane team equipped with 9 planes of Boeing 747-400. On 11 November 2011, Air China Cargo was awarded "China's Top 10 Influential Logistics Enterprises of 2010" and "China's Brand Value Top 100 Logistics Enterprises of 2010" in the 2010 China International Logistics Week.

Moreover, according to the annual reports of the Company for the three years ended 31 December 2008, 2009 and 2010, the available freight tonne kilometres (the "AFTKs") of Air China Cargo, including its freighters and the bellyhold space of its passenger aircraft, were approximately 6,217 million AFTKs, 6,449 million AFTKs and 7,429 million AFTKs for each of the three years ended 31 December 2008, 2009 and 2010, which represented 97.8%, 99.1% and 94.6% of the total AFTKs of the Group with the growth rates of approximately 3.7% and 15.2% for 2009 and 2010 respectively.

Furthermore, the Group (including Air Cargo China) has significant presence in Beijing, which have established their headquarters and major operation bases in Beijing, the aircraft related services such as ground support and aircraft maintenance engineering services could be easily accessible and thereby generate revenue and benefit for the Group with low additional cost.

Given that (i) Air China Cargo has a profound understanding of, extensive experience and reputation in the air cargo business and the air cargo industry, (ii) its contribution to the Group's operation and growth and (iii) successful cooperative relationship between the Company and Air Cargo China since 2003, we concur with Director's view that it is in the interests to enter into the Transactions which are able to provide streamlined and efficient cooperation and transactions between the Company and Air China Cargo.

Principal terms of the Framework Agreement

Pursuant to the Framework Agreement, the Group (apart from Air China Cargo) will provide the following services to Air China Cargo:

(i)     the provision of bellyhold space of the passenger aircrafts operated by the Group;

(ii)    ground support and aircraft maintenance engineering, including, among others, the repair and maintenance of aircrafts and engines; and

(iii)  other services to Air China Cargo including, among others, labour management and import and export agency services.

Air China Cargo will provide the following services to the Group (apart from Air China Cargo):

(i)   ground support including, among others, cargo and mail ground loading and unloading and security inspection services; and

(ii)    other services provided to the Group (apart from Air China Cargo).

The term of the Framework Agreement is three years, ending on 31 December 2013, which is renewable unless being terminated by either party to the Framework Agreement. The consideration of specific continuing connected transactions under the Framework Agreement shall be agreed between the Company and Air China Cargo on a case-by-case basis. As advised by the Directors, the consideration of specified connected transactions under the Framework Agreement shall also be implemented in accordance with the prevailing market prices or industry standards.

We have obtained the specific agreements and/or the pricing guidelines and other relevant information in respect of those continuing connected transactions for the period from 2008 to 2011 and note that the pricing bases for each of the Transactions, either in accordance with the then prevailing market prices or industry standards, were adopted in setting the consideration of the relevant Transactions for each of the three years ended 31 December 2008, 2009 and 2010 save for the transactions in respect of the provision of bellyhold space of the passenger aircrafts operated by the Group to Air China Cargo (the "Services").

As advised by the management of the Company, upon Air China Cargo becoming a joint venture cargo airline, the pricing basis in determining the fees charged on the Services has changed from merely determining the prices of the services based on mutual agreement after considering the market factors to a new pricing basis which takes into consideration of costs, the commission received by the Company and market conditions and factors to determine the prices of the Services.

Given the Company is able to recover its cost in providing the Services and shares a high proportion of profit generated from the sales of Services by Air China Cargo to its customers under the new pricing basis, we concur with the Directors' view that such new pricing basis is beneficial to the Company.

In addition, the Board (including the independent non-executive Directors) confirms that the Transactions have been conducted on normal commercial terms or on terms no less favourable than those available to independent third parties and were entered into on a continuing and regular basis and in the ordinary and usual course of business of the Company, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

As such, we concur the Directors' view that the bases for determining the prices for the services under the Transactions are on normal commercial terms and fair and reasonable.

Historical amounts and proposed annual caps

Set out below are (i) the historical actual aggregate amounts paid by Air China Cargo to the Company and paid by the Company to the Air China Cargo for each of the three years ended 31 December 2008, 2009 and 2010, respectively; (ii) the proposed annual caps for the aggregate amounts payable by Air China Cargo to the Company and payable by the Company to Air China Cargo for each of the three years ending 31 December 2011, 2012 and 2013, respectively; and (iii) the respective year-to-year growth rates of historical actual aggregate amounts and the proposed annual caps for the aggregate amounts paid/payable by Air China Cargo to the Company and payable by the Company to Air China Cargo:

	Historical Figures			Proposed annual caps
Transactions	For the year ended 31 December 2008	For the year ended 31 December 2009	For the year ended 31 December 2010	For the year ending 31 December 2011	For the year ending 31 December 2012	For the year ending 31 December 2013
Amounts paid/payable by Air China Cargo to the Company	RMB3.3 billion	RMB2.7 billion	RMB3.9 billion	RMB5.6* billion	RMB6.3 billion	RMB7.7 billion
Growth rate	n/a	-18.2%	44.4%	n/a	12.5%	22.2%
Amounts payable by the Company to Air China Cargo	Nil	nil	nil	RMB46.0 million	RMB46.0 million	RMB46.0 million
Growth rate	n/a	n/a	n/a	n/a	nil	nil

*   The Company expects that approximately RMB380.0 million will be payable by Air China Cargo to the Company in 2011 since 25 November 2011, the date on which the Framework Agreement, if approved on the EGM, becomes effective.

Source: The Letter from the Board

As stated in the Letter from the Board, the Board has considered (i) the historical transaction amounts and (ii) the expected growth of such Transactions to derive the proposed annual caps.

Amount payable by Air Cargo China to the Company

As illustrated in the table above, the historical amounts paid by Air China Cargo to the Company for each of the three years ended 31 December 2008, 2009 and 2010 were approximately RMB3.3 billion, RMB2.7 billion and RMB3.9 billion, respectively. As advised by the management of the Company, the historical amounts paid by Air China Cargo to the Company dropped by approximately 18.2% from RMB3.3 billion for 2008 to RMB2.7 billion for 2009, which was mainly due to the effect of financial crisis occurred in second half of 2008. The historical amounts paid by Air China Cargo to the Company increased by approximately 44.4% from RMB2.7 billion for 2009 to RMB3.9 billion for 2010, which is mainly attributable to the economy rebounded from the financial crisis.

As advised by the management of the Company, for the nine months ended 30 September 2011, the unaudited historical amounts paid by Air China Cargo to the Company for the similar services contemplated under the Framework Agreement was approximately RMB3.1 billion, representing 55.4% of the proposed annual cap in respect of services provided by Company to Air China Cargo for the year ending 31 December 2011. The Company also expects that approximately RMB1.3 billion will be payable by Air China Cargo to the Company in 2011 since 1 October 2011. Accordingly, under conservative estimation, the aggregate expected amounts paid by Air China Cargo to the Company and the corresponding utilisation rate are expected to be approximately RMB4.4 billion and 78.6% respectively for the year ending 31 December 2011. The Directors advise that in view of the air cargo industry practice and market trend of 2011, the freight traffic and the revenue arising from the sale of the bellyhold space of its passenger aircrafts for the fourth quarter of 2011 are expected to be higher than the each of the first three quarters of 2011 as a result of the Christmas and New Year seasonal effect. Hence, the Directors would like to reserve certain buffer in deriving the proposed annual caps on the amount payable by Air China Cargo to the Company for the year ending 31 December 2011 with a view to respond to the sudden increase in the demand for the services in the fourth quarter of 2011.

As stated in the Letter from the Board, the bellyhold cargo space for Air China Cargo will increase along with the expansion of the fleet of the Group (including Air China Cargo). The Directors advise that as a result of the rapid expansion of the Group's business in the past three years, the total number of passenger aircrafts of the Group (including Air China Cargo) increased from 250 in 2009 to 268 in 2010, and reached 275 as at 30 June 2011. The fleet of the Group (including Air China Cargo) is expected to expand at an annual rate of approximately 10% to 15% from 2011 to 2013. Hence, Air China Cargo is able to further integrate its businesses and increase its transportation capacity upon the formation of the joint venture company and accordingly, the demand for the services from the Group is expected to increase in future.

We also note that the PRC has experienced steady economic growth in the past few years. According to the official statistics published by the National Bureau of Statistics of China, (i) the gross domestic products of the PRC has been growing in the past few years and increased from approximately RMB21,631.4 billion in 2006 to approximately RMB40,120.2 billion in 2010, representing a compound annual growth rate of approximately 16.7% although the growth rate of the gross domestic products of the PRC in 2009 dropped to approximately 8.6% from 18.2% of that in 2008 and (ii) volume of freight traffic in the PRC increased from approximately 20.4 billion tones in 2006 to approximately 32.4 billion tones in 2010, representing a compound annual growth rate of approximately 12.3%.

With reference to the World Air Cargo Forecast 2010-2011 issued in 2010 by the Boeing Company, the domestic China air cargo market is expected to have an annual growth rate of 9.2% for the period from 2009 to 2029. It also states that demand for air cargo transport rebounded sharply in 2010 after a calamitous 18-month decline that began in May 2008. Despite the aforesaid downturn, world air cargo traffic will be triple over the next 20 years, compared to 2009 levels, with an average annual growth rate of 5.9%.

The Directors consider that the demand for the air cargo services is correlated to the economic situation, the PRC's freight traffic volume and the growth in the global and PRC's air cargo market. In view of rising trend in above statistics, the Directors consider, we concur that the demand for services from Air China Cargo is expected to increase accordingly despite the recent fluctuation in the global economy.

In addition, we understand from the Directors that the unit air transportation prices are expected to rise in the future as they expect that the aviation fuel prices will increase in the coming few years. They also take into account the impact of the increase in crude price on the demand for the services to derive the proposed annual caps. With reference to World Bank Commodity Price Data updated on 5 October 2011, we noted that the historical monthly average petroleum crude price increased from US$74.88 per barrel in December 2009 to US$90.01 per barrel in December 2010, representing an increase of approximately 20.2% from that of the previous year. During the first nine months of 2011, the historical monthly average petroleum crude price fluctuated between US$92.69 per barrel in January 2011, being the lowest monthly average price of the year and US$108.65 per barrel in March 2011, being the highest monthly average price of the year. In September 2011, it recorded a historical monthly average petroleum crude price of US$100.82 per barrel, representing an increase of approximately 12.0% from the monthly average price in December 2010. In addition, even though the global economy is affected by recent economic crisis, according to the crude price forecast as at the Latest Practicable Date from Bloomberg which reflected the consensus view on the forecasts of crude oil prices for the coming four years amongst the independent research houses, we note that the crude price is expected to increase during 2012 to 2015 with an average growth rate of approximately 8.8% annually.

Amount payable by Company to Air Cargo China

In respect of the proposed caps on the amount payable by the Company to Air Cargo China, the estimated aggregate amount payable by the Company to Air China Cargo for each of the three years ending 31 December 2011, 2012 and 2013 will be capped at RMB46.0 million.

In order to assess the reasonableness in deriving the aforesaid proposed caps, we obtained and reviewed the estimation on the amount of various kind of services to be provided by Air China Cargo prepared by the management of the Company. We also understand from the Directors that they derive such proposed caps for each of the three years ending 31 December 2011, 2012 and 2013 after considering the potential additional services to be provided by Air China Cargo to the Company, such as ground support services and lease of properties.

Having considered (i) the growth rate in the historical amounts paid by Air China Cargo to the Company for the year ended 31 December 2010; (ii) the expected increase in bellyhold space of its passenger aircrafts after the expansion of the fleet size of the Group; (iii) the expected growth in the unit air transportation price and demand for services from Air China Cargo after considering the economic situation and demand for freight traffic services; and (iv) the expected potential additional services to be provided by Air China Cargo to the Company, we concur with the Directors' view that the proposed annual caps for the Transactions have been fairly and reasonably determined.

RECOMMENDATION

Taking into consideration of the above, we consider that (i) the Transactions are in the interests of the Company and its Independent Shareholders as a whole, in the ordinary and usual course of business of the Company, on normal commercial terms and fair and reasonable so far as the Company and Independent Shareholders as a whole are concerned; and (ii) the proposed annual caps for the Transactions have been fairly and reasonably determined. Accordingly, we recommend the Independent Shareholders and the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Transactions and the relevant annual caps contemplated thereunder.

Yours faithfully,

For and on behalf of

China Merchants Securities (HK) Co., Limited

Christine Au

Executive Director

Investment Banking Department

APPENDIX I

GENERAL INFORMATION

1.     RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2.     DISCLOSURE OF INTERESTS OF DIRECTORS AND SUPERVISORS

As at the Latest Practicable Date, the Company's Directors, supervisors or chief executives had following interests or short positions in the shares, underlying shares and/or debentures (as the case may be) of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) which were notifiable to the Company and Hong Kong Stock Exchange pursuant to the SFO, or shall be recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or which shall be notified to the Company and Hong Kong Stock Exchange pursuant to the Model Code or Securities Transaction by Directors of Listed Issuers (the "Model Code").

Interests in Shares of Associated Corporations

			Number of Shares
						Shareholding
			Interest of			percentage
			children			as at the
Name of associated			under the			Latest
corporation and	Class of	Personal	age of 18	Corporate		Practicable
relevant shareholder	shares	Interest	or spouse	interest	Total	Date
Cathay Pacific Airways
Limited Ian Sai Cheung, Shiu	Ordinary	1,000	-	-	1,000	0.00%

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, supervisors or chief executives of the Company had interests or short positions in the shares, underlying shares and/or debentures (as the case may be) of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were notifiable to the Company and Hong Kong Stock Exchange pursuant to the SFO, or were recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or which were notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.

The following Directors had abstained from voting on the relevant Board resolution passed to approve the Transactions: Mr. Kong Dong (director of Cathay Pacific), Mr. Christopher Dale Pratt (director of Cathay Pacific), Mr. Ian Sai Cheung Shiu (director of Cathay Pacific), Mr. Cai Jianjiang (director of Cathay Pacific) and Mr. Fan Cheng (director of Air China Cargo and Cathay Pacific). Save as disclosed in this circular, none of the Directors had any material interest in the Transactions and none of the Directors abstained or was required to abstain from voting on the relevant Board resolutions passed to approve the Transactions.

None of the Directors or supervisors of the Company was materially interested in any contract or arrangement subsisting at the Latest Practicable Date and which is significant in relation to the business of the Group.

None of the Directors or supervisors or expert of the Company has any direct or indirect interest in any assets which have been, since 31 December 2010 (the date to which the latest published audited financial statements of the Group were made up), 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, to any member of the Group.

Mr. Christopher Dale Pratt is a non-executive Director of the Company and is concurrently the chairman and an executive director of Cathay Pacific. Mr. Sai Cheung Shiu, Ian is a non-executive Director of the Company and is concurrently a non-executive director of Cathay Pacific. Cathay Pacific is a substantial shareholder of the Company, holding 2,507,385,455 H shares in the Company as at 30 September 2011, which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, and it wholly owns Hong Kong Dragonair Airlines Limited ("Dragonair"). Mr. Kong Dong, the chairman and a non-executive Director of the Company, and Mr. Cai Jianjiang and Mr. Fan Cheng, both executive Directors of the Company, are concurrently non-executive directors of Cathay Pacific. Cathay Pacific and Dragonair compete or are likely to compete either directly or indirectly with some aspects of the business of the Company as they operate airline services to certain destinations, which are also served by the Company.

Save as above, none of the Directors or supervisors of the Company and their respective associates (as defined in the Listing Rules) has any competing interests which would be required to be disclosed under Rule 8.10 of the Listing Rules.

3.     SERVICE CONTRACTS

None of the Directors has any existing or proposed service contract with any member of the Group which is not expiring or terminable by the Group within one year without payment of compensation (other than statutory compensation).

4.     NO MATERIAL ADVERSE CHANGE

The Directors confirm that there has been no material adverse change in the Group's financial or trading position since 31 December 2010, being the date to which the latest published audited accounts of the Group have been made up.

5.     EXPERT

The following are the qualifications of the expert who has given its opinion or advice, which is contained in this Circular:

Name                                               Qualification

China Merchants Securities                 a corporation licensed to conduct Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) of the regulated activities under the Securities and Futures Ordinance (Cap. 571), the independent financial adviser to the Independent Board Committee and Independent Shareholders in connection with the Transactions and the relevant annual caps.

As at the Latest Practicable Date, China Merchants Securities did not have:

(a)    any direct or indirect interest in any assets which have since 31 December 2010 (being the date to which the latest published audited consolidated financial statements of the Group 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; or

(b)   any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

China Merchants Securities has given and has not withdrawn its written consent to the issue of this circular with inclusion of its opinion and the reference to its name included herein in the form and context in which it appears.

6.     MISCELLANEOUS

(a)    The joint company secretaries of the Company are Huang Bin and Tam Shuit Mui. Ms. Tam is an associate member of the Hong Kong Institute of Certified Public Accountants (HKICPA) and a member of The American Institute of Certified Public Accountant (AICPA), USA.

(b)   The registered address of the Company is at 9/F, Blue Sky Mansion, 28 Tianzhu Road, Zone A, Tianzhu Airport Industrial Zone, Shunyi District, Beijing, China. The head office of the Company is at No. 30, Tianzhu Road, Tian Zhu Airport Economic Development Zone, Shunyi District, Beijing, China.

(c)   The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited, Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

7.     DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company in Hong Kong at 5th Floor, CNAC House, 12 Tung Fai Road, Hong Kong International Airport, Hong Kong during normal business hours on any business day from the date of this circular until 24 November 2011:

(a)    the Framework Agreement;

(b)   the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on pages 11 to 12 of this circular;

(c)   the letter from China Merchants Securities to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 13 to 21 of this circular; and

(d)   the consent letter issued by the expert referred to in this circular.

APPENDIX II

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

AIR CHINA LIMITED

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

(Stock Code: 00753)

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

Reference is made to the notice of the extraordinary general meeting dated 10 October 2011 (the "EGM Notice") which sets out the ordinary resolution to be considered by shareholders at the extraordinary general meeting (the "EGM") to be held at the Conference Room, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC at 10:00 a.m. on 25 November 2011.

Reference is also made to the announcement dated 27 October 2011 issued by the Company in respect of, among others, the continuing connected transactions between the Company and Air China Cargo Co., Ltd. ("Air China Cargo") (the "Transactions") (the "Announcement") and the circular of the Company dated 10 November 2011 in respect of the same subject matter (the "Circular"), which calls for the approval to the Transactions and the relevant annual caps by the independent shareholders of the Company by way of poll at the EGM. Cathay Pacific Airways Limited, being a substantial shareholder of the Company and Air China Cargo, together with its associates, will abstain from voting on the Transactions and the relevant annual caps at the EGM. Unless otherwise indicated, capitalised terms used in this notice shall have the same meaning as those defined in the Circular.

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the EGM, which will be held as originally scheduled, will consider and, if thought fit, pass the following by way of an ordinary resolution in addition to the resolution set out in the EGM Notice.

ORDINARY RESOLUTION

To consider and approve: the continuing connected transactions between the Company and Air China Cargo Co., Ltd.; the annual caps for the aggregate amount payable by Air China Cargo Co., Ltd. to the Company pursuant to such continuing connected transactions for the years ending 31 December 2011, 2012 and 2013, being RMB5.6 billion, RMB6.3 billion and RMB7.7 billion, respectively; and the annual caps for the aggregate amount payable by the Company to Air China Cargo Co., Ltd. pursuant to the same continuing connected transactions for the years ending 31 December 2011, 2012 and 2013, being RMB46.0 million, RMB46.0 million and RMB46.0 million, respectively.

By order of the Board
 Air China Limited
 Chairman
Kong Dong

Beijing, the PRC, 10 November 2011

As at the date of this notice, the directors of the Company are Mr. Kong Dong, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Sun Yude, Mr. Christopher Dale Pratt, Mr. Ian Sai Cheung Shiu, Mr. Cai Jianjiang, Mr. Fan Cheng, Mr. Fu Yang*, Mr. Li Shuang*, Mr. Han Fangming* and Mr. Yang Yuzhong*.

* Independent non-executive Director of the Company

Notes:

(1)     A revised proxy form is enclosed with this notice. The form of proxy dispatched together with the EGM Notice (the "Original Proxy Form") is superseded by this revised proxy form.

(2)     Please refer to the EGM Notice for details in respect of the other resolution to be passed at the EGM, eligibility for attending the EGM, proxy, registration procedures, closure of register of members and other relevant matters.

(3)     Please refer to the notice of attendance of the EGM of the Company dated 10 October 2011 in respect of the timing and address for attending the EGM and other relevant matters.

 

END

 

 

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