Connected Transaction

Datang Intl Power Generation Co Ld 01 February 2006 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your 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 GENERATION CO., LTD., you should at once hand this circular to the purchaser or the 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. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) DISCLOSEABLE AND CONNECTED TRANSACTION Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders DBS Asia Capital Limited A letter from the independent board committee of Datang International Power Generation Co., Ltd. (the 'Company') is set out on page 9 of this circular. A letter from DBS Asia Capital Limited containing its advice to the independent board committee and the independent shareholders of the Company is set out on pages 10 to 13 of this circular. A notice convening an extraordinary general meeting of the Company to be held at 11:00 a.m. on 27 March 2006 is set out on pages 14 to 15 of this circular for your reference and the notice of attendence and proxy form for the extraordinary general meeting are enclosed with this circular. If you intend to attend the aforementioned extraordinary general meeting, please complete and return the notice of attendence in accordance with the instructions printed thereon as soon as possible and in any event not later than 6 March 2006. Whether or not you are able to attend the aforementioned extraordinary general meeting, please complete and return the enclosed proxy form(s) in accordance with the instructions printed thereon. Completion and return of the proxy form(s) will not preclude you from attending and voting in person at the aforementioned extraordinary general meeting or any adjournment thereof should you so wish. 27 January 2006 CONTENTS Page DEFINITIONS 1 LETTER FROM THE BOARD Introduction 4 Investment Agreement 5 Reasons for and the benefits of entering into the Investment Agreement 7 Information relating to the parties to the Investment Agreement 7 Extraordinary general meeting 7 Procedure to demand a poll 8 Recommendation 8 General 8 LETTER FROM THE INDEPENDENT BOARD COMMITTEE 9 LETTER FROM DBS ASIA 10 NOTICE OF EXTRAORDINARY GENERAL MEETING 14 APPENDIX - GENERAL INFORMATION 16 DEFINITIONS In this circular, unless the context otherwise requires, the following expressions have the following meanings: 'Articles of Association' means the articles of association of the Company 'associate(s)' has the meaning ascribed to it under the Listing Rules 'Board' the board of Directors 'BTT' means Beijing-Tianjin-Tangshan 'Company' Datang International Power Generation Co., Ltd. (Chinese Characters), a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, the H Shares are listed on the Stock Exchange and the London Stock Exchange 'connected person' has the meaning ascribed to it under the Listing Rules 'DBS Asia' means DBS Asia Capital Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Investment Agreement, a licensed corporation for types 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities under the SFO 'Director(s)' the director(s) of the Company 'Domestic Shares' the domestic shares of the Company, with a nominal value of RMB1.00 each, which are subscribed for or credited as paid up in RMB 'EGM' the extraordinary general meeting of the Company to be held on 27 March 2006 to consider and, if thought fit, to approve the Investment Agreement 'Group' the Company and its subsidiaries 'H Shares' the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each and are listed on the Stock Exchange and the London Stock Exchange 'Hebei Investment' Hebei Construction Investment Company (Chinese Characters), a state-owned enterprise established under the laws of the PRC and is a substantial shareholder of the Company holding approximately 13.01% of the issued share capital of the Company as at the date of the Investment Agreement 'HK$' Hong Kong dollar(s), the lawful currency of Hong Kong '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, namely Mr. Xie Songlin, Mr. Xu Daping, Mr. Liu Chaoan, Mr. Yu Changchun and Mr. Xia Qing 'Independent Shareholders' Shareholders other than Hebei Investment and its associates 'Investment Agreement' the investment agreement in relation to the Hebei Wangtan Power Plant Project dated 8 January 2006 entered into between the Company and Hebei Investment 'Latest Practicable Date' 23 January 2006 'Listing Rules' Rules Governing the Listing of Securities on the Stock Exchange 'London Stock Exchange' The London Stock Exchange Limited 'MW' Megawatts 'PRC' the People's Republic of China 'RMB' Renminbi, the lawful currency of the PRC 'SFO' the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) 'Share(s)' the ordinary share(s) of the Company with a nominal value of RMB1.00 each, comprising Domestic Shares and H Shares 'Shareholder(s)' the holder(s) of the Share(s) 'Stock Exchange' The Stock Exchange of Hong Kong Limited 'Wangtan Power Company' Hebei Datang International Wangtan Power Co., Ltd. (Chinese Characters) 'Wangtan Power Plant Project' Hebei Wangtan Power Plant Project (Chinese Characters) which consists of two 600MW coal-fired power generating units '%' per cent. For the purpose of this circular, HK$1.00 is equivalent to RMB1.04. LETTER FROM THE BOARD DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) Executive Directors: Registered office: Mr. Zhang Yi No. 482 Guanganmennei Avenue Mr. Yang Hongming Xuanwu District Beijing, 100053 Non-executive Directors: PRC Mr. Zhai Ruoyu (Chairman) Mr. Hu Shengmu Principal place of business in Hong Kong: Mr. Fang Qinghai c/o Simmons & Simmons Mr. Liu Haixia 35th Floor, Cheung Kong Center, Ms. Guan Tiangang 2 Queen's Road Central Mr. Su Tiegang Central Mr. Ye Yonghui Hong Kong Mr. Tong Yunshang Independent non-executive Directors: Mr. Xie Songlin Mr. Xu Daping Mr. Liu Chaoan Mr. Yu Changchun Mr. Xia Qing 27 January 2006 To the Shareholders Dear Sir or Madam, DISCLOSEABLE AND CONNECTED TRANSACTION INTRODUCTION On 10 January 2006, the Board announced that on 8 January 2006, the Company entered into the Investment Agreement with Hebei Investment for the purposes of constructing and operating the Wangtan Power Plant Project by establishing Wangtan Power Company. Pursuant to the Investment Agreement, the Company and Hebei Investment agreed to contribute to the registered capital of Wangtan Power Company in the proportion of 70% and 30%, respectively. As at the date of the Investment Agreement, Hebei Investment owns approximately 13.01% of the issued share capital of the Company, therefore Hebei Investment is a connected person of the Company under the Listing Rules. Accordingly, the Investment Agreement constitutes a connected transaction for the Company under the Listing Rules. As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) is more than 2.5%, the Investment Agreement is subject to reporting, announcement and independent shareholders' approval requirements under Rule 14A.32 of the Listing Rules. Relevant details will also be included in the next published annual report and accounts of the Company in accordance with Rule 14A.45 of the Listing Rules. According to the Listing Rules, the Investment Agreement also constitutes a discloseable transaction of the Company which is subject to the notification and publication requirements as set out in Rules 14.34 to 14.39 of the Listing Rules. The Independent Board Committee has been formed to advise the Independent Shareholders on the terms of the Investment Agreement. DBS Asia has been appointed as the independent financial adviser to the Independent Board Committee and Independent Shareholders. The recommendation of the Independent Board Committee and the advice of DBS Asia are as set out on pages 9 to 13 of this circular. The purpose of this circular is (i) to provide you with further information on the Investment Agreement; (ii) to set out the opinions and recommendations of the Independent Board Committee and DBS Asia; and (iii) to give you notice of the EGM at which the resolution set out therein will be proposed. The EGM will be held for the purpose of obtaining the approval from the Independent Shareholders in respect of the Investment Agreement by way of poll. As at the date of this circular, Hebei Investment, being a holder of 13.01% of the issued share capital of the Company and who is required to abstain from voting at the EGM approving the Investment Agreement under the Listing Rules, controls or is entitled to control over all of its voting rights in respect of its shares in the Company. INVESTMENT AGREEMENT Date 8 January 2006 Parties (1) the Company; and (2) Hebei Investment. Major terms of the Investment Agreement Pursuant to the Investment Agreement, the Company and Hebei Investment agreed to contribute to the registered capital of Wangtan Power Company in the proportion of 70% and 30%, respectively, for the purposes of constructing and operating the Wangtan Power Plant Project. The total investment amount of the Wangtan Power Plant Project is expected to be approximately RMB5,940,000,000 (equivalent to approximately HK$5,711,538,462), 20% of which is the registered capital of Wangtan Power Company, i.e. RMB1,188,000,000 (equivalent to approximately HK$1,142,307,692). Pursuant to the Investment Agreement, the Company and Hebei Investment will be responsible to contribute in cash 70% (i.e. RMB831,600,000 (equivalent to approximately HK$799,615,385)) and 30% (i.e. RMB356,400,000 (equivalent to approximately HK$342,692,308)), respectively, of the registered capital of Wangtan Power Company and the payment terms of such contribution will be agreed between the parties to the Investment Agreement in accordance with the construction progress of the Wangtan Power Plant Project. The Investment Agreement does not stipulate a time limit within which both parties will contribute to the registered capital of Wangtan Power Company. As at the Latest Practicable Date, no contribution to the registered capital of Wangtan Power Company has been made by the parties to the Investment Agreement. The Company's contribution to the registered capital of Wangtan Power Company will be funded by internal resources. According to the Investment Agreement, all funds required for the construction of the Wangtan Power Plant Project will be funded by the registered capital of Wangtan Power Company and third party borrowings in the PRC and in which case, each of the Company and Hebei Investment will severally guarantee such borrowings in proportion to their respective capital contribution in Wangtan Power Company if so required. In the event of any further capital contribution or guarantee of borrowings by the Company, it will comply with the relevant requirements under the Listing Rules if and when necessary. The Investment Agreement will become effective when the respective party to the Investment Agreement has obtained their internal approvals for the investments under the Investment Agreement which, apart from the approval by the Independent Shareholders pursuant to the Listing Rules, have all been obtained as at the Latest Practicable Date. The Wangtan Power Plant Project has been approved by the National Development and Reform Commission in the PRC and the application for the business license of Wangtan Power Company is in process. The Investment Agreement has no long-stop date and upon the establishment of Wangtan Power Company, it will become a subsidiary of the Company. Discloseable and connected transaction As at the date of the Investment Agreement, Hebei Investment owns approximately 13.01% of the issued share capital of the Company, therefore Hebei Investment is a connected person of the Company under the Listing Rules. Accordingly, the Investment Agreement constitutes a connected transaction for the Company under the Listing Rules. As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) is more than 2.5%, the Investment Agreement is subject to reporting, announcement and independent shareholders!| approval requirements under Rule 14A.32 of the Listing Rules. Relevant details will also be included in the next published annual report and accounts of the Company in accordance with Rule 14A.45 of the Listing Rules. Hebei Investment and its associates will abstain from voting at the EGM. According to the Listing Rules, the Investment Agreement also constitutes a discloseable transaction of the Company which is subject to the notification and publication requirements as set out in Rules 14.34 to 14.39 of the Listing Rules. Information relating to the Wangtan Power Plant Project The Wangtan Power Plant Project, consisting of two 600MW coal-fired power generating units, is located in the Tangshan Seaport Development Zone, Tangshan, Hebei Province, the PRC, in which abundant coal resources is found. The Wangtan Power Plant Project has been approved by the National Development and Reform Commission of the PRC in 2005 and pre-construction work has been undertaken by the Company. Through negotiations during the pre-construction stage of the Wangtan Power Plant Project, the Company and Hebei Investment agreed as to the details of the cooperation in the project and accordingly entered into the Investment Agreement. Pursuant to the Investment Agreement, Hebei Investment has agreed to reimburse the Company for all expenses it incurred in the pre-construction stage of the project in the proportion of its investment in Wangtan Power Company. The Wangtan Power Plant Project is now in its testing stage and it is currently expected to be in operation in or around April 2006. REASONS FOR AND THE BENEFITS OF ENTERING INTO THE INVESTMENT AGREEMENT The Wangtan Power Plant Project is constructed in Hebei Province and the electricity generated by the coal-fired generating units constructed pursuant to such project will be sold in full to the BTT Power Grid. The Company believes that the power generating units constructed in the Wangtan Power Plant Project could take advantage of the growing demand for electricity in the BTT area, which in turn would enhance the operating profits of the Company as a whole. The Company is willing and able to participate in the Wangtan Power Plant Project solely without any partners, but the Company believes that the participation in the project with Hebei Investment will enable the Company to spread its risks associated with the project and diversify its resources into other viable projects. The terms and conditions of the Investment Agreement are determined after arm's length negotiation between the parties thereto and, in view of the above reasons and benefits, the Directors (including the independent non-executive Directors) believe that the terms and conditions of the Investment Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. INFORMATION RELATING TO THE PARTIES TO THE INVESTMENT AGREEMENT The Group is principally engaged in the development and operation of power plants, the sale of electricity and thermal power, and the repair, testing and maintenance of power equipment and power related technical services, with its present main operation in the PRC. The principal business of Hebei Investment includes the development of investment businesses, provision of security and guarantee to enterprises and investing in and management of energy, transportation and communications projects. EXTRAORDINARY GENERAL MEETING The notice convening the EGM is set out on pages 14 to 15 of this circular. PROCEDURE TO DEMAND A POLL Pursuant to the Articles of Association, a general voting shall be made at the Shareholders' meeting by a show of hands. However, the following persons shall have the right to request for a voting by poll before or after a voting by show of hands: (A) the chairman of the meeting; or (B) at least two Shareholders present in person or by proxy entitled to vote at the meeting; or (C) one or more Shareholders present in person or by proxy representing 10% or more of the total voting rights of all the Shareholders. A person who has made a request for voting by poll can withdraw such demand. Pursuant to Rule 14A.52 of the Listing Rules, the vote taken at the EGM must be taken by poll. RECOMMENDATION Your attention is drawn to the letter from the Independent Board Committee as set out on page 9 of this circular which contains its recommendation to the Independent Shareholders on the terms of the Investment Agreement. Your attention is also drawn to the letter of advice received from DBS Asia, the independent financial adviser to the Independent Board Committee and the Independent Shareholders as set out on pages 10 to 13 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 Investment Agreement, the casting of votes for or against the resolution approving the Investment Agreement by poll at the EGM as well as the principal factors and reasons considered by it in concluding its advice. GENERAL No gain or loss by the Company will arise and there will be no impact on the assets and liabilities of the Company as a result of the establishment of Wangtan Power Company upon completion of the Investment Agreement. Upon the establishment of Wangtan Power Company, it will be owned as to 70% and 30% by the Company and Hebei Investment, respectively, and will become a subsidiary of the Company. The results of Wangtan Power Company will be consolidated into the results of the Company and the assets and liabilities of Wangtan Power Company will be included in the consolidated accounts of the Company. Your attention is also drawn to the general information as set out in the appendix of this circular. By Order of the Board Datang International Power Generation Co., Ltd. Yang Hongming Company Secretary LETTER FROM THE INDEPENDENT BOARD COMMITTEE DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) Legal address and head office No. 482 Guanganmennei Avenue Xuanwu District Beijing, 100053 The People's Republic of China 27 January 2006 To the Independent Shareholders Dear Sir or Madam, DISCLOSEABLE AND CONNECTED TRANSACTION We refer to the circular issued by the Company to its shareholders and dated 27 January 2006 (the 'Circular!) of which this letter forms part. Terms defined in the Circular have the same meanings when used in this letter unless the context otherwise requires. Under the Listing Rules, the transactions contemplated under the Investment Agreement between the Company and Hebei Investment constitute a connected transaction for the Company and are thus 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 Investment Agreement and to advise the Independent Shareholders in connection with the Investment Agreement as to whether, in our opinion, the terms of the Investment Agreement are fair and reasonable so far as the Independent Shareholders are concerned and whether the Investment Agreement is in the interests of the Company and the Shareholders as a whole. DBS Asia 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 DBS Asia as set out in the Circular. Having considered the principal factors and reasons considered by, and the advice of, DBS Asia as set out in its letter of advice, we consider that the Investment Agreement is on normal commercial terms, and that the Investment Agreement is in the best interest of the Company and the Shareholders as a whole. We also consider that the Investment Agreement are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Investment Agreement at the EGM. Yours faithfully, Xie Songlin Xu Daping Liu Chaoan Yu Changchun Xia Qing Independent Board Committee LETTER FROM DBS ASIA The following is the text of the letter of advice dated 27 January 2006 from DBS Asia to the Independent Board Committee and Independent Shareholders for the purpose of incorporation into this circular. DBS Asia Capital Limited 27 January 2006 To the Independent Board Committee and Independent Shareholders of Datang International Power Generation Co., Ltd. Dear Sirs DISCLOSEABLE AND CONNECTED TRANSACTION We refer to our engagement as the independent financial adviser to the Independent Board Committee and Independent Shareholders in relation to the Investment Agreement, details of which are set out in the letter from the Board as set out in the circular (the 'Circular!) to the Shareholders dated 27 January 2006, of which this letter forms part. Expressions used in this letter shall have the same meaning as defined in the Circular. The Company enters into the Investment Agreement with Hebei Investment which owns approximately 13.01% of the issued share capital of the Company as at the date of the Investment Agreement. As Hebei Investment is a connected person of the Company, the Investment Agreement constitutes a connected transaction for the Company under the Listing Rules. Our scope of work under this engagement is to assess the fairness and reasonableness of the terms of the Investment Agreement insofar as the Independent Shareholders are concerned and whether the Investment Agreement is in the interest of the Company and its Shareholders as a whole. It is not within our scope of work to opine on any other aspects of the Investment Agreement. While we would comment from an overall perspective whether the Investment Agreement is in the interests of the Company and its Shareholders as a whole, our focus is not on the commercial or viability aspects of the Investment Agreement for which the Directors are primarily responsible for. In arriving at our opinion, we have relied on the information, opinions and facts supplied, and representations made to us, by the Directors, legal 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 material respects at the time they were made and continue to be so at the date of the despatch 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. 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 the prospects of the Company or any of its subsidiaries or associates. PRINCIPAL FACTORS CONSIDERED In arriving at our opinion with regard to the terms of the Investment Agreement, we have considered the principal factors set out below: 1. BACKGROUND Business of the Company and its subsidiaries The Company and its subsidiaries are principally engaged in the development and operations 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 operation in the PRC. We understand that the Company has invested in power plant projects in the PRC on a joint venture basis and the last power plant project that the Company has invested on a joint venture basis was in 2005. Background and business of Hebei Investment The principal business of Hebei Investment includes the development of investment businesses, provision of security and guarantee to enterprises and investing in and management of energy, transportation and communications projects. We note that Hebei Investment is a state-owned enterprise established under the laws of the PRC. As advised by the Directors, Hebei Investment was founded and is wholly owned by the Hebei provincial government. As the Wangtan Power Plant Project is located in the Hebei Province, the Directors are of the view that it will be beneficial to future operations of the Wangtan Power Plant Project by having Hebei Investment as a joint venture partner. 2. MAJOR TERMS OF THE INVESTMENT AGREEMENT Pursuant to the Investment Agreement, the Company and Hebei Investment will be responsible to contribute in cash 70% (i.e. RMB831,600,000 (equivalent to approximately HK$799,615,385) and 30% (i.e. RMB356,400,000 (equivalent to approximately HK$342,692,308), respectively, of the registered capital of Wangtan Power Company and the payment terms of such contribution will be agreed between the parties to the Investment Agreement in accordance with the construction progress of the Wangtan Power Plant Project. According to the Investment Agreement, all funds required for the construction of the Wangtan Power Plant Project will be funded by the registered capital of Wangtan Power Company and third party borrowings in the PRC and in which case, each of the Company and Hebei Investment will severally guarantee such borrowings in proportion to their respective capital contribution in Wangtan Power Company if so required. The Investment Agreement does not stipulate a time limit within which both parties will contribute to the registered capital of Wangtan Power Company. We were advised that the Company has financed the construction of Wangtan Power Plant Project and has conducted a review of the assets and liabilities of such project incurred during the construction period prior to entering into the Investment Agreement. Pursuant to the Investment Agreement, Hebei Investment has agreed to reimburse the Company for all expenses it incurred in the pre-construction stage of the project in the proportion of its interest in Wangtan Power Company. The Directors consider that the terms of the Investment Agreement are fair and reasonable to the Company given that the Company and Hebei Investment proportionally share their respective cash contribution to the registered capital and they will severally guarantee the third party borrowings in proportion to their respective capital contribution in Wangtan Power Company if so required. Based on this and the factors discussed in this letter including, in particular, that Hebei Investment has agreed to reimburse the Company for all expenses it incurred in the pre-construction stage of the Wangtan Power Plant Project in the proportion of its interest in Wangtan Power Company and the expected benefits of having Hebei Investment as a joint venture partner for the project, we are of the view that the terms of the Investment Agreement are fair and reasonable as far as the Independent Shareholders are concerned. 3. REASONS FOR AND BENEFITS OF THE INVESTMENT AGREEMENT The Wangtan Power Plant Project is being constructed in the Hebei Province and the electricity generated by the coal-fired generating units constructed pursuant to such project will be sold to the BTT Power Grid. Given that the principal business of the Company is the development and operations of power plants and the sale of electricity and thermal power, we consider that the entering into of the Investment Agreement for the purposes of constructing and operating the Wangtan Power Plant Project is within the normal and ordinary course of business of the Company. The Directors consider that the power generating units constructed in the Wangtan Power Plant could take advantage of the growing demand for electricity in the BTT area, which in turn would enhance the operating profits of the Company as a whole and is in the interests of the Company and the Shareholders as a whole. As advised by the Directors, the Wangtan Power Plant Project has been structured as a joint venture project since the commencement stage. The Directors consider that having a joint venture partner in this project will enable the Company to spread its risks associated with the project and to allow the Company to diversify its resources into other viable projects. In addition, having Hebei Investment as the joint venture partner for this project is beneficial to the future operations of the project given the Hebei provincial government background of Hebei Investment. Given the above factors and the fact that Hebei Investment has agreed to reimburse the Company for all expenses it incurred in the pre-construction stage of the project in the proportion of its interest in Wangtan Power Company according to the Investment Agreement, we consider that the Investment Agreement is in the interests of the Company and its Shareholders as a whole. 4. WORKING CAPITAL The Company's capital contribution to the registered capital of Wangtan Power Company will be funded by internal resources. We have discussed with the Directors the impact of the expected capital contribution and the guarantee of third party borrowings in the PRC pursuant to the Investment Agreement on the working capital position of the Company and have reviewed the latest published financial statements of the Company for the six months ended 30 June 2005. The Directors are of the view and we concur that the expected capital contribution of RMB831,600,000 by the Company and the guarantee of third party borrowings in the PRC is not expected to have material adverse impact on the working capital of the Company and its subsidiaries. OPINION Having considered the principal factors discussed above, we are of the opinion that the terms of the Investment Agreement are fair and reasonable so far as the Independent Shareholders are concerned and the Investment Agreement is in the interests of the Company and the 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 Investment Agreement. Yours faithfully, For and on behalf of DBS ASIA CAPITAL LIMITED Kelvin S. K. Lau Managing Director NOTICE OF EXTRAORDINARY GENERAL MEETING DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the 'EGM') of Datang International Power Generation Co., Ltd. (the 'Company') will be held at the Company's Conference Room No. 804, No. 482, Guanganmennei Avenue, Xuanwu District, Beijing, the People's Republic of China (the 'PRC') at 11:00 a.m. on 27 March 2006 for the purpose of considering and, if thought fit, pass the following resolution: Ordinary Resolution 'To approve, ratify and confirm the investment agreement dated 8 January 2006 entered into between the Company and Hebei Construction Investment Company for the purposes of constructing and operating the Hebei Wangtan Power Plant Project by establishing Hebei Datang International Wangtan Power Co., Ltd. and to authorise any one director of the Company to execute all such documents and to do all such acts or things incidental to, ancillary to or in connection with the transaction contemplated under such agreement on behalf of the Company.' By Order of the Board Yang Hongming Company Secretary Beijing, the PRC, 27 January 2006 Notes: 1. Shareholders of the Company should note that, pursuant to the articles of association of the Company, no transfer of shares of the Company will be registered from 26 February 2006 to 27 March 2006, both dates inclusive. Shareholders of the Company whose names are registered in the register of members of the Company at the close of business on 24 February 2006 are entitled to attend and vote at the EGM. 2. Any shareholder of the Company 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 more than one proxy are appointed to attend the EGM, the voting rights can only be exercised by way of poll. 4. If the proxy form of a holder of H shares of the Company is signed by any person other than the shareholder of the Company, the power of attorney or other authority should be notarially certified. To be valid, notarially certified copy of the power of attorney or other authority, together with the proxy form, must be deposited at the Company's H share registrar, Computershare Hong Kong Investor Services Limited of 46/F, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not less than 24 hours before the holding of the EGM. 5. If the proxy form of a holder of domestic shares of the Company is signed by any person other than the shareholder of the Company, the power of attorney or other authority should be notarially certified. To be valid, notarially certified copy of the power of attorney or other authority, together with the proxy form, must be deposited at the Company at 8/F, No. 482, Guanganmennei Avenue, Xuanwu District, Beijing, the People's Republic of China. Postcode: 100053, not less than 24 hours before the holding of the EGM. 6. Shareholders of the Company who intend to attend the EGM are required to send the Notice of Attendance to the registered address of the Company by hand, post, cable or fax on or before 6 March 2006. Completion and return of the Notice of Attendance will not affect the right of shareholders of the Company to attend the EGM. 7. The EGM is expected to last for an hour. Shareholders of the Company or their proxies (if any) attending the EGM shall be responsible for their own travel and accommodation expenses. Registered Address of the Company: 8/F, No. 482, Guanganmennei Avenue, Xuanwu District, Beijing, The People's Republic of China Postcode: 100053 Tel: (8610) 83581905 Fax: (8610) 83977083 or (8610) 83581907 As at the date of this notice, the Directors are: Zhai Ruoyu, Zhang Yi, Hu Shengmu, Fang Qinghai, Yang Hongming, Liu Haixia, Guan Tiangang, Su Tiegang, Ye Yonghui, Tong Yunshang, Xie Songlin*, Xu Daping*, Liu Chaoan*, Yu Changchun* and Xia Qing* * independent non-executive Directors APPENDIX GENERAL INFORMATION 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. DISCLOSURE OF INTERESTS Directors, chief executive and supervisors of the Company (i) As at Latest Practicable Date, 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 interest and short position 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, supervisors, proposed Directors or proposed supervisors has any direct or indirect interest in any assets which have since 31 December 2004 (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. Substantial shareholders of the Company As at 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 Company!|s shares which falls to be disclosed to the Company and the Stock Exchange under the provisions of Division 2 and 3 of Part XV of the SFO: Name of shareholder Class of No. of shares held Percentage to Percentage to total Percentage to total share total issued issued domestic issued H shares share capital of shares the Company (%) (%) (%) China Datang Domestic 1,828,768,200 (L) 35.43 49 - Corporation shares (Note 1) Beijing Energy Domestic 671,792,400 (L) 13.01 18 - Investment (Group) shares Company (Note 2) Hebei Investment Domestic 671,792,400 (L) 13.01 18 - shares (Note 3) Tianjin Jinneng Domestic 559,827,000 (L) 10.84 15 - Investment Company shares (Note 4) UBS AG H shares 201,722,112 (L) 3.91 - 14.10 (L) 52,800,007 (S) 1.02 - 3.69 (S) Alliance Capital H shares 157,493,140 (L) 3.05 - 11.01 (L) Management L.P. J.P. Morgan Chase & H shares 114,470,221 (L) 2.22 - 8.00 (L) Co. 84,961,871 (P) 1.65 - 5.94 (P) Templeton Asset H shares 84,472,320 (L) 1.64 - 5.90 (L) Management Limited (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 Director, is an employee of China Datang Corporation. 2. Each of Mr. Liu Haixia and Ms. Guan Tiangang, both non-executive Director, is an employee of Beijing Energy Investment (Group) Company. 3. Each of Mr. Su Tiegang and Mr. Ye Yonghui, both non-executive Director, is an employee of Hebei Investment. 4. Mr. Tong Yunshang, 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 Company's 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, or was otherwise 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 the Company and its subsidiaries. INTEREST IN CONTRACT As at Latest Practicable Date, none of the Directors or the Company's supervisors was materially interested in any contract or arrangement subsisting as at the date of this circular which is significant in relation to the business of the Group. SERVICE CONTRACT 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)). DIRECTORS' INTERESTS IN COMPETING BUSINESS 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, other than being a director of the Company and/or its subsidiaries and their respective associates, which compete or are likely to compete, either directly or indirectly, with the businesses of the Company and its subsidiaries as required to be disclosed pursuant to the Listing Rules. NO MATERIAL ADVERSE CHANGE At the Latest Practicable Date, none of the Directors was aware of any material adverse change in the financial or trading position of the Group since 31 December 2004 (being the date to which the latest published audited financial statements of the Company were made up). EXPERT (a) The following is the qualification of DBS Asia which has given its opinion or advice which is contained in this circular: Name Qualification DBS Asia Capital Limited Deemed licensed corporation to engage in types 1 (dealing in securities), 4 (advising on securities) and 6 (advising on corporate finance) regulated activities under the SFO (b) DBS Asia does not have any shareholding, direct or indirect, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group. (c) DBS Asia 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. (d) DBS Asia does not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2004, the date to which the latest published audited financial statements of the Company were made up. (e) The letter and recommendation given by DBS Asia are given as of the date of this circular for incorporation herein. 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. MISCELLANEOUS (a) The English text of this circular shall prevail over the Chinese text. (b) The registered and head office of the Company is situated at No. 482, Guanganmennei Avenue, Xuanwu District, Beijing, the PRC. (c) The place of business of the Company in Hong Kong is at c/o Simmons & Simmons, 35th Floor, Cheung Kong Center, 2 Queen's Road Central, Central, Hong Kong. (d) 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. (e) The secretary of the Company is Mr. Yang Hongming, who is a senior economist and was graduated from North China Power College. (f) The Company has been using its best endeavour in finding a suitable candidate to assume the position of qualified accountant, as required under Rule 3.24 of the Listing Rules (the 'Rule!), since the effective date of the Rule. Due to the practical difficulties in finding candidate who has relevant experience in the power industry, the Company has yet to appoint a qualified accountant as required under the Rule and the Company will continue to use its best endeavour in finding a suitable candidate to assume such position as soon as practicable. DOCUMENT AVAILABLE FOR INSPECTION A copy of the Investment Agreement is available for inspection at the principal place of business in Hong Kong of the Company at 35th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong during normal business hours from the date of this circular up to and including 13 February 2006. This information is provided by RNS The company news service from the London Stock Exchange

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Datang International Power Generation Co Ltd. (DAT)
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