Re Agreement
Beijing Datang Power Generation Com
08 November 2002
If you are in any doubt as to any aspect of this circular or as to the action to
be taken, 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 Beijing Datang Power
Generation Company Limited, you should at once hand this circular to the
purchaser or transferee or to the bank, stockbroker 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.
BEIJING DATANG POWER GENERATION CO. LTD.
(A Sino-foreign joint stock limited company incorporated in the People's
Republic of China)
DISCLOSEABLE TRANSACTION
7 November, 2002
Page
Definitions 1
Letter from the Board
1. Introduction 3
2. The Investment 4
3. The Consideration 4
4. Information Relating to the Li Xian Jiang Hydropower Project 4
5. Reasons for the Investment 6
6. Additional Information 6
Appendix - General Information 7
In this Circular, unless otherwise specified, the following words and
expressions shall have the meanings ascribed thereto.
BIC: Beijing International Power Development Investment Company, a state-owned enterprise
established in the PRC
Directors: The directors of the Company
HCI: Hebei Province Construction Investment Company, a state-owned enterprise established
in the PRC
HK$: Hong Kong dollars, the lawful currency of Hong Kong
H Shares: Overseas listed foreign invested shares issued by the Company, with a nominal value of
RMB1.00 each, which are subscribed for and traded in Hong Kong dollars and for which
listing and dealing are permitted on the Stock Exchange of Hong Kong Limited and on
the Official List of the London Stock Exchange
Latest Practicable Date: 7 November, 2002, being the latest practicable date prior to the printing of this
document for ascertaining certain information referred to herein
Li Xian Jiang Company: Yunnan Datang Li Xian Jiang Hydropower Development Company Limited
NCPGC: North China Power Group Company, a state-owned enterprise established in the PRC and
holding 35.43% of the Company's registered share capital
PRC: The People's Republic of China
SDI Ordinance: Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong)
Shareholders: Registered holders of the Company's issued shares
Si Mau Asset: Si Mau Area State-Owned Asset Operation Company Limited
The Company: Beijing Datang Power Generation Company Limited, incorporated as a Sino-foreign joint
stock limited company established in the PRC
The Group: The Company and its subsidiaries
The Li Xian Jiang Hydropower The planning, construction and operation of the Three Hydropower Stations
Project:
The Li Xian Jiang Joint The agreement dated 18 October 2002 between the Company and Si Mau Asset in respect of
Venture Agreement: the establishment of Li Xian Jiang Company
The Listing Rules: The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited
The Stock Exchange: The Stock Exchange of Hong Kong Limited
The Three Power Stations: Ya Yang Shan Hydropower Station, Long Ma Hydropower Station, Ju Pu Du Hydropower
Station
TJC: Tianjin Jinneng Investment Company, a state-owned enterprise established in Tianjin
Note:--For the purpose of this circular, all amounts in RMB were
translated into HK$ at an exchange rate of RMB1.06: HK$1.00.
BEIJING DATANG POWER GENERATION CO. LTD.
(A Sino-foreign joint stock limited company incorporated in the People's
Republic of China)
Executive Directors:
Legal Address and
Yu Hongji Head Office:
Zhang Yi
Yang Hongming No. 482
Wang Xianzhou Guanganmennei Avenue
Xuanwu District
Independent Non-Executive Directors: Beijing
The PRC
Zhai Ruoyu
Hu Shengmu
Yang Jiayi Principal Place of
Liu Haixia Business in Hong Kong
Su Tiegang
Ye Yonghui c/o Simmons & Simmons
Tong Yunshang 35/F Cheung Kong Center
Zhang Wantuo 2 Queen's Road Central
Xu Daping Hong Kong
Wu Zhentao
7 November, 2002
To the Shareholders
Dear Sir or Madam,
DISCLOSEABLE TRANSACTION
1. INTRODUCTION
On 18 October 2002, the Company entered into the Li Xian Jiang Joint Venture
Agreement with Si Mau Asset. Pursuant to the Li Xian Jiang Joint Venture
Agreement, the Company and Si Mau Asset agreed to invest 70% and 30%
respectively, in the registered capital of Li Xian Jiang Company for the purpose
of constructing and operating three hydropower stations of the Li Xian Jiang
Hydropower Project.
Si Mau Asset is independent and is not connected with the promoters, directors,
supervisors, chief executive or substantial shareholders of the Company or any
of its subsidiaries or any of its associates.
The Li Xian Jiang Joint Venture Agreement constitutes a discloseable transaction
for the company pursuant to Chapter 14 of the Listing Rules as the consideration
paid by the Company (by way of contribution towards the registered capital of Li
Xian Jiang Company) plus the maximum amount to be guaranteed by the Company in
respect of future borrowings of Li Xian Jiang Company equals to 15.2% of the
latest consolidated net tangible assets of the Group.
2. THE INVESTMENT
Pursuant to the Li Xian Jiang Joint Venture Agreement, the total investment of
the Li Xian Jiang Hydropower Project is RMB3,052,860,000 (equivalent to
approximately HK$2,880,056,604) (subject to the approval of the relevant PRC
authorities) and the registered capital of Li Xian Jiang Company is
RMB140,000,000 (equivalent to approximately HK$132,075,472). It is proposed that
the difference between the total investment and the registered capital will be
funded by Li Xian Jiang Company by means of third party borrowings, in respect
of which the Company and Si Mau Asset agreed to guarantee 70% and 30%
respectively on a several basis in accordance with the actual financial needs of
Li Xian Jiang Company.
3. THE CONSIDERATION
Pursuant to the Li Xian Jiang Joint Venture Agreement, the registered capital of
Li Xian Jiang Company will amount to approximately RMB140,000,000 (equivalent to
approximately HK$132,075,472). The registered capital will be contributed in
cash by the Company and Si Mau Asset in proportions of 70% and 30% respectively.
Accordingly, the Company will contribute approximately RMB98,000,000 (equivalent
to approximately HK$92,452,830) in total to the registered capital of Li Xian
Jiang Company. Such amount will be funded from the Company's internal financial
resources. The detailed timing and manner of such capital contribution by each
of the parties to the agreement will be set out in the Articles of Association
of Li Xian Jiang Company.
Apart from its contribution to the registered capital of Li Xian Jiang Company
and its obligation to provide guarantees for the funding of the Li Xian Jiang
Hydropower Project according to the investment ratio as described above, the
Company is not obliged to provide any other funding to Li Xian Jiang Company
under the Li Xian Jiang Joint Venture Agreement.
4. INFORMATION RELATING TO THE LI XIAN JIANG HYDROPOWER PROJECT
It is proposed that Li Xian Jiang Company will be established in Si Mau, Yunnan
Province and for a term of 30 years (excluding the construction period).
The Li Xian Jiang Hydropower Project consists of the Three Power Stations. The
Company and Si Mau Asset have agreed to establish Li Xian Jiang Company as a
joint venture company for the purpose of planning, constructing and operating
the Three Hydropower Stations, namely:
(A) Ya Yang Shan Hydropower Station
The estimated total investment of this hydropower station amounts to
RMB700,860,000. It is proposed to consist of a set of 3x33 MW
hydraulic-turbine generating units.
(B) Long Ma Hydropower Station
The estimated total investment of this hydropower station amounts to
RMB1,330,000,000. It is proposed to consist of a set of 3x80 MW
hydraulic-turbine generating units.
(C) Ju Pu Du Hydropower Station
The estimated total investment of this hydropower station amounts to
RMB1,022,000,000. It is proposed to consist of a set of 3x80 MW
hydraulic-turbine generating units.
The total amount of investment of the Li Xian Jiang Hydropower Project is
estimated to be approximately RMB3,052,860,000. The final total investment will,
however, be in accordance with the amount approved by the relevant government
authorities in the PRC.
Major Terms
The registered capital of Li Xian Jiang Company is proposed to be
RMB140,000,000. The Company agreed to contribute towards 70% (RMB98,000,000)
while Si Mau Asset agreed to contribute towards 30% (RMB42,000,000) of the
registered capital of Li Xian Jiang Company. All contributions shall be paid by
the parties in cash. Any profits generated by Li Xian Jiang Company will be
shared between the Company and Si Mau Asset in accordance with the percentage of
their respective shareholdings in Li Xian Jiang Company. The timing and the
amount for the injection of capital will be set out in the Articles of
Association of Li Xian Jiang Company.
The total investment required by the Li Xian Jiang Hydropower Project is
estimated to be approximately RMB3,052,860,000 (subject to any adjustment made
by the relevant PRC government authorities). The Company and Si Mau Asset agreed
that the difference between the total investment and the registered capital will
be funded by Li Xian Jiang Company by means of third party borrowings, in
respect of which the Company and Si Mau Asset agreed to guarantee 70% and 30%
respectively on a several basis in accordance with the actual financial needs of
Li Xian Jiang Company. The Company will comply with the relevant Listing Rules
in relation to such guarantee.
The board of directors of Li Xian Jiang Company shall consist of seven directors
in total, 4 of which shall be appointed by the Company, 2 of which shall be
appointed by Si Mau Asset and 1 of which shall be appointed by and out of the
employees of Li Xian Jiang Company.
The Li Xian Jiang Joint Venture Agreement will become effective when all
necessary approvals in the PRC have been obtained.
The Directors expect that Li Xian Jiang Company, once established, will be
treated as a subsidiary of the Company.
5. REASONS FOR THE INVESTMENT
The resources for hydropower construction are abundant in Yunnan and the
investment environment is relatively favourable for newly established power
enterprises in the Western region of the PRC. In support of the development of
the Western region, the PRC Government has granted certain favourable policies
to such newly established power enterprises, including tax concessions, thereby
enhancing their profitability and competitiveness and in return, increasing
shareholder's return. The Li Xian Jiang Hydropower Project has been included
into Yunnan's Power Construction Project Planning of the Tenth Five-Year Plan
and the Eleventh Five-Year Plan, as well as the province-wide and
Yunnan-to-Guangdong power balancing projects.
The development conditions for the Three Power Stations developed along the Li
Xian Jiang River are favourable, and resources for hydropower are abundant. Upon
completion, the unit cost of hydropower generation will be much lower than that
of thermal power generation.
The Yunnan power market consists of both hydropower and thermal power
generation. While focusing on developing thermal power plants, the Company also
constructs hydropower plants of large capacity. Hydropower plants and thermal
power plants would complement each other during rainy versus dry seasons,
thereby enabling the Company to maintain a balanced position in the power
market.
The annual capital investment of the construction of Ya Yang Shan Hydropower
Station, Long Ma Hydropower Station and Ju Pu Du Hydropower Station only
represents a small portion of the Company's capital revenue and, therefore, will
not affect the Company's capital operation and profit distribution.
The Directors expect that the Li Xian Jiang Hydropower Project will bring about
an increase in the Company's earnings.
The Li Xian Jiang Joint Venture Agreement allows the Company to participate in
the development and operation of hydropower projects in Yunnan. This is
consistent with the Company's development strategies of 'dual emphasis', that
is, development within versus outside the region, development of hydro versus
thermal power plants, and greenfield development vs. acquisition, and as such
will further strengthen the Company's ability in continual development and
enhance its shareholder value.
6. ADDITIONAL INFORMATION
Your attention is drawn to the additional information set out in the appendices
which form part of this circular.
By Order of the Board
Beijing Datang Power Generation Company Limited
Zhai Ruoyu
Chairman
1. Responsibility statement
This document includes particulars given in compliance with the Listing Rules
for the purpose of providing information with regard to the Li Xian Jiang Joint
Venture Agreement and the Company.
The Directors collectively and individually accept full responsibility for the
accuracy of the information contained in this document 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 herein
misleading.
2. disclosure of interests
As of the Latest Practicable Date, none of the Directors had any interests in
the share capital of the Company or its associated corporations (within the
meaning of the SDI Ordinance) which have been notified to the Company and the
Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests
which they are deemed or taken to have under section 31 of, or part 1 of the
Schedule to, the SDI Ordinance) or which are required, pursuant to section 29 of
the SDI Ordinance, to be entered in the register referred to therein or which
are required to be notified to the Company and the Stock Exchange pursuant to
the Model Code for Securities Transactions by Directors of Listed Companies.
3. Substantial Shareholders
Save as disclosed below, there is no other person known to the Directors who is,
directly or indirectly, interested in 10% or more of the nominal value of any
class of share capital carrying rights to vote in all circumstances at general
meetings of any member of the Group:
Name of shareholder or person so Shares Number of Percentage shareholding
interested shares or amount or paid equity holding
of paid
equity held
NCPGC Domestic shares 1,828,768,200 35.43%
BIC Domestic shares 671,792,400 13.01%
HCI Domestic shares 671,792,400 13.01%
TJC Domestic shares 559,827,000 10.84%
4. Directors' Service Contracts
Director Employed by Date of contract, unexpired term Remuneration and Others
and notice period benefits in kind (per
annum)
Yu Hongji The Company The contract was signed on 6 RMB150,000 There are no
December 1999 with an unexpired provisions for
term of approximately 21 months. commissions,
Either party may terminate the profit-sharing
contract by 6 months prior notice arrangements or
to the other party. compensation in the
event of early
termination.
Zhang Yi The Company The contract was signed on 24 RMB150,000 There are no
June 1999 with an unexpired term provisions for
of approximately 21 months. commissions,
Either party may terminate the profit-sharing
contract by 6 months prior notice arrangements or
to the other party. compensation in the
event of early
termination.
Yang Hongming The Company The contract was signed on 29 RMB150,000 There are no
October 1998 with an unexpired provisions for
term of approximately 21 months. commission,
Either party may terminate the profit-sharing
contract by 6 months prior notice arrangements or
to the other party. compensation in the
event of early
termination.
Wang Xianzhou The Company The contract was signed on 18 RMB150,000 There are no
November 2000 with an unexpired provisions for
term of approximately 21 months. commissions,
Either party may terminate the profit-sharing
contract by 6 months prior notice arrangements or
to the other party. compensation in the
event of early
termination.
Save as disclosed above, there are no other directors' service contracts which
are in force with any member of the Group.
5. Litigation
The Directors are not aware of any litigation or arbitration of material
importance pending or threatened against any member of the Group.
6. MISCELLANEOUS
(i) The Company Secretary is Yang Hongming.
(ii) Save as disclosed herein, none of the Directors is
materially interested in any contract or arrangement subsisting
at the date of this document which is significant in relation to
the business of the Group.
(iii) The Directors are not aware of any adverse material
change in the financial or trading position of the Group since
the date on which the Company published its latest audited
accounts.
(iv) Save as disclosed herein, none of the Directors has any
direct or indirect interest in any assets acquired or disposed
of by or leased to any member of the Group or proposed to be
acquired or disposed of by or leased to any member of the Group
since the date on which the Company published its audited
accounts for the year ended 31 December 2001.
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