Connected Transaction

RNS Number : 2629R

Datang Intl Power Generation Co Ld

28 April 2009

 



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

DATANG INTERNATIONAL POWER GENERATION CO., LTD.

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

(Stock Code: 991)

ANNOUNCEMENT

CONNECTED TRANSACTION

ENTRUSTED LOAN AGREEMENT The Board announced that on 27 April 2009, the Company entered into the Entrusted Loan Agreement with Datang Finance Company and Lvsigang Power Company in relation to the provision of loan facilities of a principal amount of RMB200 million by the Company to Lvsigang Power Company through the Entrusted Loan Arrangement. CONNECTED TRANSACTION As at the date of the announcement, Datang Finance Company is a subsidiary of CDC and Lvsigang Power Company is owned as to 65% and 35% by the Company and CDC, respectively. CDC is the controlling shareholder of the Company, holding 35.60% of the issued share capital of the Company. Lvsigang Power Company and Datang Finance Company are therefore connected persons of the Company under Chapter 14A of the Listing Rules and the Entrusted Loan Arrangement constitutes connected transaction of the Company under Rule 14A.13(2) of the Listing Rules. As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) for the principal amount of the loan facilities under the Entrusted Loan Agreement is less than 2.5% and the Entrusted Loan Arrangement is entered into on normal commercial terms, the Entrusted Loan Agreement is only subject to the reporting and announcement requirements but is exempt from the requirement of approval by the independent shareholders of the Company under Rule 14A.66(2) of the Listing Rules.

BACKGROUND

On 27 April 2009, the Board agreed that the Company would provide an entrusted loan of a maximum amount of not more than RMB700 million to Lvsigang Power Company in phases based on the construction progress of Lvsigang Power Company. 

On the same day, the Company entered into the Entrusted Loan Agreement with Datang Finance Company and Lvsigang Power Company in relation to the provision of loan facilities of a principal amount of RMB200 million by the Company to Lvsigang Power Company through the Entrusted Loan Arrangement.

The Company anticipates that the terms for providing the remaining balance of the loan, being RMB500 million, to Lvsigang Power Company will be substantially the same as that of the Entrusted Loan Agreement and further announcement will be made by the Company in the event of any material differences in such terms. 

ENTRUSTED LOAN AGREEMENT

Date

27 April 2009

Parties

• the Company, as the lender;

• Datang Finance Company, as the lending agent; and

• Lvsigang Power Company, as borrower.

Major Terms of the Entrusted Loan Arrangement

Entrusted Loan Arrangement

Pursuant to the Entrusted Loan Agreement, Datang Finance Company is designated by the Company to act as a lending agent to, inter alia, release the Entrusted Loan, which is funded by the Company, to Lvsigang Power Company and to monitor the use and repayment of the Entrusted Loan by Lvsigang Power Company.

Principal Amount of the Entrusted Loan

RMB200 million

Term

36 months from the date of the Entrusted Loan Agreement

Interest rate

At a floating interest rate, being 10% less than the benchmark interest rate to be charged by other commercial banks for providing commercial loans with maturity of 3 years, to be adjusted once every three months commencing from the first day of the interest payable period. Such interest rate is arrived at after arm's length negotiation between the Company and Lvsigang Power Company after considering the overall reduction of capital costs to the Group as the accounts of Lvsigang Power Company (being the subsidiary of the Company) are consolidated to the accounts of the Company. 

Repayment schedule for the principal of the Entrusted Loan

One-off repayment of principal by Lvsigang Power Company upon maturity. 

Payment schedule for the interests of the Entrusted Loan 

Interests shall be settled by Lvsigang Power Company quarterly. The settlement date falls on the twentieth (20) day of the last month of each quarter.

Handling charge

The handling charge for the Entrusted Loan under the Entrusted Loan Agreement is calculated at 0.025% of the principal amount of the Entrusted Loan under the Entrusted Loan Agreement. The Company shall pay such handling charge on an one-off basis to Datang Finance Company within five working days when the Entrusted Loan Agreement becomes effective. 

Effective Date 

The Entrusted Loan Agreement shall become effective when it is duly signed by the parties. As at the date of this announcement, the Entrusted Loan Agreement has become effective.  

REASONS FOR AND BENEFITS OF ENTERING INTO THE ENTRUSTED LOAN AGREEMENT

In order to improve the turnover of capital flow of Lvsigang Power Company, the Company intends to provide a loan of not more than RMB700 million to Lvsigang Power Company and will provide such loan in phases based on the construction progress of Lvsigang Power Company.

Pursuant to the Entrusted Loan Agreement, the Company agreed to provide a loan of RMB200 million to Lvsigang Power Company. Lvsigang Power Company plans to repay the principal and interests of the loan by utilising its operating income and other funds. 

Further, according to the Entrusted Loan Agreement, Datang Finance Company shall collect a handling charge of 0.025% for acting as the lending agent for the Company's Entrusted Loan, which is lower than the handling charge charged by other commercial banks for providing similar services. Therefore, the Company is of the view that the provision of Entrusted Loan to Lvsigang Power Company is beneficial for a reduction of the overall capital costs of the Company. The Directors (including the independent non-executive Directors) are of the view that the terms of the Entrusted Loan Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. 

CONNECTED TRANSACTION

As at the date of the announcement, Datang Finance Company is a subsidiary of CDC and Lvsigang Power Company is owned as to 65% and 35% by the Company and CDC, respectively. CDC is the controlling shareholder of the Company, holding 35.60% of the issued share capital of the Company. Lvsigang Power Company and Datang Finance Company are therefore connected persons of the Company under Chapter 14A of the Listing Rules and the Entrusted Loan Arrangement constitutes connected transaction of the Company under Rule 14A.13(2) of the Listing Rules. As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) for the principal amount of the loan facilities under the Entrusted Loan Agreement is less than 2.5% and the Entrusted Loan Arrangement is entered into on normal commercial terms, the Entrusted Loan Agreement is only subject to the reporting and announcement requirements but is exempt from the requirement of approval by the independent shareholders of the Company under Rule 14A.66(2) of the Listing Rules.

INFORMATION RELATING TO THE COMPANY

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

INFORMATION RELATING TO LVSIGANG POWER COMPANY

Lvsigang Power Company is a controlling subsidiary of the Company. The Company and CDC hold 55% and 35% of the equity interests in this company, respectively. The registered capital of this company amounts to approximately RMB282.22 million and it plans to construct four 600MW levels coal-fired generating units. 

INFORMATION RELATING TO DATANG FINANCE COMPANY

Datang Finance Company is duly established in the PRC as a non-banking financial institution on 10 May 2005. The registered capital of Datang Finance Company is RMB500 million. The principal business of Datang Finance Company includes the provision of, among others, deposit services, loan services, entrusted loan services and entrusted investment services.

DEFINITIONS 

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

'Board'		the board of Directors
'CDC'		China Datang Corporation
'Company'		Datang International Power Generation Co., Ltd., a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, whose H Shares are listed on the Stock Exchange and the London Stock Exchange and whose A Shares are listed on the Shanghai Stock Exchange
'Connected Person'		has the meaning ascribed to it under the Listing Rules
'Datang Finance Company'		China Datang Finance Company Limited
'Directors'		directors of the Company
'Entrusted Loan'		loan facilities with a principal amount of RMB200 million
'Entrusted Loan Agreement'		the entrusted loan agreement entered into between the Company, Datang Finance Company and Lvsigang Power Company in respect of the Entrusted Loan Arrangement on 27 April 2009
'Entrusted Loan Arrangement'		the arrangement under which Datang Finance Company, which is designated by the Company to act as a lending agent to, inter alia, release the Entrusted Loan, which is funded by the Company, to Lvsigang Power Company and monitor the use and repayment of the Entrusted Loan by Lvsigang Power Company pursuant to the Entrusted Loan Agreement
'Group'		the Company and its subsidiaries from time to time
'Listing Rules'		The Rules Governing the Listing of Securities on the Stock Exchange
'London Stock Exchange'		The London Stock Exchange Limited
' Lvsigang Power Company'		Jiangsu Datang International Lvsigang Power Generation Company Limited
'PRC'		the People's Republic of China
'RMB'		the lawful currency of the PRC
'Shareholder(s)'		the holder(s) of the Share(s)
'Shares'		the ordinary shares of the Company with a nominal value of RMB1.00 each, comprising Domestic Shares and H Shares
'Stock Exchange'		The Stock Exchange of Hong Kong Limited
'%'		per cent

By Order of the Board  

Zhou Gang  

Secretary to the Board 

Beijing, the PRC, 27 April 2009

As at the date of this announcement, the directors of the Company are:Zhai Ruoyu, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia,Guan Tiangang, Su Tiegang, Ye Yonghui, Li Gengsheng, Xie Songlin*, Liu Chaoan*, 

Yu Changchun*, Xia Qing* and Li Hengyuan*.

* Independent non-executive directors

 

END

 

 

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