Circulars-MAJOR TRANSACTION - PURCHASE OF AIRCRAFT

RNS Number : 0386G
Air China Ld
27 February 2015
 



 

THIIS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

 

 

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 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: 00753)

 

 

 

 

 

 

 

 

 

MAJOR TRANSACTION PURCHASE OF AIRCRAFT

 

 

 

 

 

 

 


 

 

 

 

 

27 February 2015


 

 

 

CONTENTS

 

 

Page                

 

 

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

 

 

LETTER FROM THE BOARD

 

 

I.          Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                4

 

 

II.         Major Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                5

 

 

III.       Financial and Trading Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  6

 

 

IV.       Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 7

 

 

V.         Recommendation and Shareholder's Written Approval . . . . . . . . . . . . . . . . . . . . .                7

 

 

VI.       Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                7

 

 

APPENDIX I         -  FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . . . . . .                       8

 

 

APPENDIX II   -  GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      11


 

 

 

DEFINITIONS

 

 

 

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

 

"2010 August Purchase Agreement"      the aircraft purchase agreement dated 31 August 2010 entered into among the Company, AIE and the Boeing Company pursuant to which  the  Company  has  agreed  to  purchase  and  the  Boeing Company has agreed to sell certain Boeing 787-9 aircraft

 

"2010 June Purchase Agreement"           the  aircraft  purchase  agreement  dated  25  June  2010  entered  into among the Company, AIE and the Boeing Company pursuant to which  the  Company  has  agreed  to  purchase  and  the  Boeing Company has agreed to sell certain Boeing 737-800 aircraft

 

"2011 Purchase Agreement"                        the aircraft purchase agreement dated 7 March 2011 entered into among the Company, AIE and the Boeing Company pursuant to which  the  Company  has  agreed  to  purchase  and  the  Boeing Company has agreed to sell certain Boeing 747-8 aircraft

 

"AIE"                                                                Air China Import and Export Co., Ltd. (國航進出口有限公司), a company  incorporated  in  the  PRC  with  limited  liability  and  a wholly-owned subsidiary of the Company

 

"Aircraft Purchase Agreements"                 the two aircraft purchase agreements dated 22 December 2014 and entered into by the Company, AIE and Boeing Company, pursuant to which the Company has agreed to purchase the Boeing Aircraft from Boeing Company

 

"Board"                                                            the board of directors of the Company

 

 

"Boeing Aircraft"                                           60  Boeing  model  737  aircraft  to  be  purchased  by  the  Company pursuant to the Aircraft Purchase Agreements

 

"Boeing Company"                                        The Boeing Company, a company incorporated under the Laws of Delaware of the United States

 

 

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

 

"CNACG"                                                         China National Aviation Corporation (Group) Limited, a company incorporated  under  the  laws  of  Hong  Kong,  which  is  a  wholly- owned subsidiary of CNAHC and a substantial shareholder of the Company as at the Latest Practicable Date


 

 

"CNAF"                                                            China National Aviation Finance Co., Ltd., a company incorporated in the PRC with limited liability

 

"CNAHC"                                                        China   National  Aviation   Holding  Company,   a  company  with limited  liability  incorporated  under  the  laws  of  the  PRC,  which was a substantial shareholder of the Company as at the Latest Practicable Date

 

"CNAHC Group"                                           CNAHC and its controlled companies and, for the purpose of this circular, excluding the Group

 

"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

 

 

"Group"                                                           the Company and its subsidiaries

 

 

"HK$"                                                         Hong Kong dollars, the lawful currency of Hong Kong "Hong Kong"                                                             Hong Kong Special Administrative Region of the PRC "Hong Kong Stock Exchange"                                             The Stock Exchange of Hong Kong Limited

"Latest Practicable Date"                            25  February  2015,  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

 

 

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

 

"RMB"                                                              Renminbi, the lawful currency of the PRC

 

 

"SFO"                                                                 the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong  Kong),  as  amended,  supplemented  or  otherwise  modified from time to time

 

"Shareholders"                                                  the shareholders of the Company


 

 

"Transaction"                                                  the purchase by the Company of the Boeing Aircraft pursuant to the Aircraft Purchase Agreements

 

 

"US$"                                                                United States dollars, the lawful currency of the United States


 

 

 

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: 00753)

 


Directors:

Non-executive Directors:

Mr. Cai Jianjiang Ms. Wang Yinxiang Mr. Cao Jianxiong Mr. Feng Gang

Mr. John Robert Slosar

Mr. Ian Sai Cheung Shiu

 

Executive Directors: Mr. Song Zhiyong Mr. Fan Cheng

 

Independent non-executive Directors:

Mr. Fu Yang

Mr. Yang Yuzhong

Mr. Pan Xiaojiang

Mr. Simon To Chi Keung


  Registered office:

  Blue Sky Mansion

  28 Tianzhu Road 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

 

 

 

 

 

 

 

 

27 February 2015


 

To the Shareholders

 

 

Dear Sir or Madam,

 

 

MAJOR TRANSACTION

PURCHASE OF AIRCRAFT

 

I.          INTRODUCTION

 

 

On 22 December 2014, the Company announced that the Company and AIE entered into the Aircraft Purchase Agreements with Boeing Company, pursuant to which the Company has agreed to purchase the Boeing Aircraft from Boeing Company.

 

The Transaction constitutes a major transaction of the Company under the Listing Rules.


 

 

The purpose of this circular is to set out further details of the Transaction.

 

 

II.         MAJOR TRANSACTION

            Aircraft Purchase Agreements Date:

22 December 2014

 

 

Parties:

 

 

(a)        the Company, as the purchaser, the principal business activity of which is air passenger, air cargo and airline-related services;

 

(b)       AIE, as the import agent for the Company; and

 

 

(c)        Boeing Company, as the vendor, one of whose principal business activities is aircraft manufacturing.

 

The Company confirms that, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Boeing Company and each of its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defined under the Listing Rules).

 

Aircraft to be purchased:

 

 

The Boeing Aircraft, being 60 Boeing model 737 aircraft

 

 

Consideration:

The aircraft basic price comprises the airframe price, optional features price and engine price. The aircraft basic price of the Boeing Aircraft to be acquired by the Company in aggregate is

approximately  US$5,888  million  (equivalent  to  approximately  HK$45,661  million)  (price  quoted from open market as at July 2012). The aircraft price is subject to price escalation by applying a formula. Boeing Company has granted to the Company significant price concessions with regard to the Boeing Aircraft. These concessions will take the form of credit memoranda which may be used by the Company towards the final price payment of the Boeing Aircraft or may be used for the purpose of purchasing goods and services from Boeing Company. Such credit memoranda were determined after arm's length negotiations between the parties and as a result, the actual consideration for the Boeing Aircraft is lower than the aircraft basic price mentioned above.

 

The  Transaction  was  negotiated  and  entered  into  in  accordance  with  customary  business practice. The Directors confirm that the extent of the price concessions granted to the Company in the Transaction is comparable with the price concessions that the Company had obtained in the previous


 

 

aircraft purchase agreement entered into between the Company and Boeing Company as set out in the announcement of the Company dated 1 March 2013. The Company believes that there is no material impact of the price concessions obtained in the Transaction on the unit operating cost of the Group's fleet. It is normal business practice of the global airline industry to disclose the aircraft basic price, instead of the actual price, for aircraft acquisitions. Disclosure of the actual consideration will result in the loss of the significant price concessions and hence a significant negative impact on the Group's cost for the Transaction and will therefore not be in the interest of the Company and the Shareholders as a whole. The Company has applied to the Hong Kong Stock Exchange for, and the Hong Kong Stock Exchange has granted, a waiver from strict compliance of Rule 14.66(4) of the Listing Rules in respect of disclosure of the actual consideration of the Boeing Aircraft.

 

Payment and delivery terms:

 

 

The aggregate consideration for the Transaction is payable by the Company by cash in instalments. The Company is expecting to take delivery of the Boeing Aircraft in stages from 2016 to 2020.

 

 

Source of funding:

 

 

The  Transaction  will  be  funded  through  cash  generated  from  the  Company's  business operations, commercial bank loans and other financing instruments of the Company.

 

Reasons for and Benefits of the Boeing Transaction

 

 

The Transaction will expand the overall fleet capacity of the Group and optimize its fleet structure. If not taking into account the adjustments that may be made to the fleet (including the disposal of used aircraft) based on marketing condition and aging of the fleet, the Transaction will strengthen the fleet capacity of the Group with an increase of approximately 8%, based on the number of  available  tonne  kilometers  of  the  Group  as  at  31  December  2013.  The  Company  expects  the Boeing Aircraft will deliver more cost efficient performance and provide more comfortable services to its passengers.

 

The Directors believe  that the  terms of the  Transaction are fair and  reasonable  and in  the interests of the Company and the Shareholders as a whole.

 

III.       FINANCIAL AND TRADING PROSPECTS

 

 

The Directors expect that several factors including the slowing down of economic growth of the PRC, the continued development of the domestic high-speed rail network and the international large-scale airlines' penetration into the Chinese market with increasing speed will present challenges to the Group's operation in 2015. Also, the fluctuation in fuel prices is likely to have an impact over the Group's business in 2015. Nonetheless, the Directors believe that the Group's strategies would enable it to continue to develop its business.  Such  strategies  include  continuing  to  develop  the  Group's  hub  network,  improving  its  cost structure  and  enhancing  its  cost  control,  optimising  the  allocation  of  its  core  resources  to  improve  the efficiency  of  resource  utilization,  enhancing  service  management  and  promoting  product  innovation  to improve customer experience, etc. Thus, the Directors view the financial and trading prospects during the


 

 

current financial year of the Company ending 31 December 2015 with confidence. In addition, the Directors are of the view that the Transaction is not expected to have any material impact on earnings, assets and liabilities of the Company.

 

IV.     WORKING CAPITAL

 

 

Taking into account the financial resources available to the Group, the Directors are of the opinion that the Group will have sufficient working capital for the Group's requirement for the next 12 months following the date of this circular.

 

V.       RECOMMENDATION AND SHAREHOLDER'S WRITTEN APPROVAL

 

 

This circular is despatched to Shareholders for information purpose only. No general meeting will be convened for approving the Transaction. As at the Latest Practicable Date, CNAHC, the controlling Shareholder, directly and indirectly (through CNACG, a wholly-owned subsidiary of CNAHC), held approximately 53.37% of the total issued share capital of the Company. Each of CNAHC and CNACG and their respective associates (as defined in the Listing Rules) does not have any interest in the Transaction other than as a shareholder of the Company. In addition, none of the Shareholders has a material interest in the Transaction which is different from the other Shareholders and as such, none of the Shareholders would be required to abstain from voting on the Transaction if a general meeting were to be convened to approve the Transaction. Pursuant to Rule 14.44 of the Listing Rules, the Transaction has been approved in writing by CNAHC and CNACG.

 

Although no general meeting will be convened, the Board considers that the Transaction was entered into on normal commercial terms and the terms of the Transaction are fair and reasonable and are in the best interests of the Company and the Shareholders as a whole. Accordingly, if a general meeting were convened for approving the Transaction, the Board would have recommended the Shareholders to vote in favour of the Transaction.

 

VI.     ADDITIONAL INFORMATION

 

 

Your attention is drawn to the additional information set out in the appendices to this circular.

 

 

By order of the Board Air China Limited Cai Jianjiang Chairman

 

Beijing, the PRC


 

 

APPENDIX

FINANCIAL INFORMATION OF THE GROUP

 

 

I.          CONSOLIDATED FINANCIAL STATEMENTS

 

 

The Company is required to set out in this circular information for the last three financial years with respect to the profits and losses, financial record and position and the latest published balance sheet together with the notes to the consolidated financial statements of the Group for the last financial year.

 

The audited consolidated financial statements of the Group (i) for the year ended 31 December 2013 has been set out from page 63 of the 2013 annual report of the Company published on 16 April 2014; (ii) for the year ended 31 December 2012 has been set out from page 63 of the 2012 annual report of the Company published on 25 April 2013; and (iii) for the year ended 31 December 2011 has been set out from page 65 of the 2011 annual report of the Company published on 19 April 2012. All these financial statements have been published  on  the  Hong  Kong  Stock  Exchange's  website  at  http://www.hkexnews.hk  and  the  Company's website at http://www.airchina.com.

 

II.         INDEBTEDNESS

            Borrowings

The table below sets forth the Group's total outstanding indebtedness as at 31 December 2014:

 


 

 

 

Notes

Total

RMB

(in million)

 

Bank loans and other loans

 

(1)

 

57,482

Finance lease obligations

(2)

35,992

Corporate bonds


20,834

Bills payable


150  

 

 

Total


 

 

114,458

 

 

Notes:



 

(1)        The Group's bank loans, other loans and corporate bonds with an aggregate amount of approximately RMB28,095 million were secured by mortgages over certain of the Group's assets. The pledged assets included aircraft, buildings, machinery and land use rights with an aggregate net book value of approximately RMB40,038 million as at 31 December 2014.

 

(2)        The Group's finance lease obligations with an aggregate amount of approximately RMB35,992 million were secured by mortgages over certain of the Group's aircraft. The pledged aircraft had an aggregate net book value of approximately RMB58,673 million as at 31 December 2014.

 

In addition to the above, as at 31 December 2014, certain of the Group's bank deposits with an aggregate  amount  of  approximately  RMB75  million  were  pledged  against  the  Group's  aircraft operating leases, aircraft overhaul and others.


 

 

Contingent liabilities

 

 

As at 31 December 2014, the Group had the following significant contingent liabilities:

 

 

(i)         Pursuant to the restructuring of CNAHC in preparation for the listing of the Company's H  shares  on  the  HKSE  and  the  LSE,  the  Company  entered  into  a  restructuring agreement  (the  "Restructuring  Agreement")  with  CNAHC  and  CNACG  on  20 November 2004. According to the Restructuring Agreement, except for liabilities constituting or arising out of or relating to business undertaken by the Company after the restructuring, no liabilities would be assumed by the Company and the Company would  not  be  liable,  whether  severally,  or  jointly  and  severally,  for  debts  and obligations incurred prior to the restructuring by CNAHC and CNACG. The Company has also undertaken to indemnify CNAHC and CNACG against any damage suffered or incurred by CNAHC and CNACG as a result of any breach by the Company of any provision of the Restructuring Agreement.

 

(ii)        On 26 February 2007, the Eastern District Court of New York of the Federal Judiciary of the United States filed a civil summon against the Company and Air China Cargo Co., Ltd. ("Air China Cargo"), claiming that they, together with a number of other airlines,  have  violated  certain  anti-trust  regulations  in  respect  of  their  air  cargo operations in the United States by acting in concert in imposing excessive surcharges to impede the offering of discounts and allocating revenue and customers so as to increase, maintain and stabilise air cargo prices. The Court is currently considering whether the case should proceed as a class action. Because the litigation is on-going, the Directors are of the view that the ultimate outcome of this claim cannot be reliably estimated and consider that no provision for this claim is needed accordingly.

 

(iii)       On   17   November   2009,   Airport   City   Development   Co.,   Ltd.   ("Airport   City Development") commenced proceedings involving approximately RMB224 million against the Company, Air China Cargo, Air China International Corporation, for the unlawful  use  of  land  owned  by  Airport  City  Development.  As  the  claim  is  at  the mediation stage, the Directors are of the view that the ultimate outcome of this claim cannot be reliably estimated and consider that no provision for this claim is needed accordingly.

 

(iv)      In  May  2011,  Shenzhen  Airlines  received  a  summon  issued  by  the  Higher  People's Court of Guangdong Province in respect of a guarantee provided by Shenzhen Airlines on  loans  borrowed  by  Shenzhen  Huirun  Investment  Co.  Ltd  ("Huirun",  a  non- controlling shareholder of Shenzhen Airlines) from a third party amounting to RMB390,000,000.  It  was  alleged  that  Shenzhen  Airlines  had  entered  into  several guarantee agreements with Huirun and the third party, pursuant to which Shenzhen Airlines  acted  as  a  guarantor  in  favor  of  the  third  party  for  the  loans  borrowed  by Huirun.  The  Directors  consider  that  the  provision  of  RMB130,000,000  which  was provided in previous years in respect of this legal claim is adequate.


 

 

(v)       Shenzhen Airlines provided guarantees to banks for certain employees in respect of their residential loans as well as for certain pilot trainees in respect of their tuition loans. As at 31 December 2014, Shenzhen Airlines had outstanding guarantees for employees' residential loans amounting to RMB412,301,273 and for pilot trainees' tuition loans amounting to RMB225,987,570.

 

Except as disclosed above and apart from intra-group liabilities, as at 31 December 2014, the Group did not have any debt securities issued and outstanding, or authorized or otherwise created but unissued, term loans, any other borrowings or indebtedness in the nature of borrowing of the Group including  bank  overdrafts  and  liabilities  under  acceptances  (other  than  normal  trade  bills)  or acceptance credits or hire purchase commitments, mortgages and charges, contingent liabilities or guarantee.

 

Save as disclosed above, the Directors have confirmed that there has been no material change in the indebtedness of the Group since 31 December 2014.


 

 

APPENDIX II

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 Group. 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

 

Save as disclosed below, 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 the 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 for Securities Transactions by Directors of Listed Companies.

 



Number of shares



 Name of company
Relevant shareholder

Personal interest

Interest of children under the age of 18 or spouse

Corporate interest

Total

Shareholding percentage as at the Latest Practicable Date







Cathay Pacific Airways Limited






Ian Sai Cheung Shiu

1,000
(ordinary shares)

-

-

1,000
(ordinary shares)

0.00%







Air China Limited






Zhou Feng

10,000
(A Shares)

-

-

10,000
(A Shares)

0.00%

Shen Zhen

33,200
(A Shares)

-

-

33,200
(A Shares)

0.00%

 

 


None of the Directors or supervisors of the Company has any direct or indirect interest in any assets which  have  been,  since  31  December  2013  (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.

 

None of the Directors or supervisors of the Company is 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.


 

 

Mr. John Robert Slosar is a non-executive Director of the Company and is concurrently the chairman and  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 2,633,725,455 H shares in the Company as at the Latest Practicable Date, 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 Dragon Airlines Limited ("Dragonair"). Mr. Cai Jianjiang, the chairman and a non-executive Director of the Company, and Mr. Song Zhiyong 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 if each of them were a controlling shareholder of the Company.

 

3.         MATERIAL CONTRACTS

 

 

The  Group  has  entered  into  the  following  material  contracts  within  the  two  years  immediately preceding the date of this circular:

 

(a)        the aircraft purchase agreement dated 1 March 2013 between Air China Cargo, AIE and the Boeing Company pursuant to which Air China Cargo has agreed to purchase and the Boeing Company has agreed to sell 8 Boeing 777-F freighters, details of which are set out in the Company's circular dated 27 June 2013;

 

(b)       the supplemental agreements dated 1 March 2013 to the 2010 June Purchase Agreement, 2010 August Purchase Agreement  and 2011 Purchase Agreement, respectively between the Company, AIE and the Boeing Company, pursuant to which the Company has agreed to purchase and the Boeing Company has agreed to sell the 2 Boeing 747-8I aircraft, 1 Boeing 777-300ER  aircraft and 20 Boeing 737-800 aircraft, details of which are set out in the Company's circular dated 27 June 2013;

 

 

(c)        the aircraft purchase agreement dated 24 May 2013 between the Company, AIE and Airbus S.A.S., pursuant to which the Company has agreed to purchase and Airbus S.A.S., has agreed to sell 60 Airbus 320-series aircraft, details of which are set out in the Company's circular dated 27 June 2013;

 

(d)       the  aircraft  purchase  agreement  dated  24  May  2013  between  Shenzhen  Airlines  Company Limited and Airbus S.A.S., pursuant to which Shenzhen Airlines Company Limited has agreed to purchase and Airbus S.A.S., has agreed to sell 40 Airbus 320-series aircraft, details of which are set out in the Company's circular dated 27 June 2013;

 

(e)        the  capital  increase  agreement  dated  26  June  2014  between  the  Company,  Cathay  Pacific China  Cargo  Holdings  Limited,  Fine  Star  Enterprises  Corporation  and  Air  China  Cargo, pursuant  to  which  (a)  the  Company  has  agreed  to  subscribe  for  an  additional  amount  of


 

 

registered  capital  of  RMB1,020,000,000  in  Air  China  Cargo  and  (b)  Cathay  Pacific  China Cargo Holdings Limited and Fine Star Enterprises Corporation have agreed to subscribe for additional amounts of registered capital of RMB500,000,000 and RMB480,000,000 respectively   in   Air   China   Cargo,   details   of   which   are   set   out   in   the   Company's announcement dated 26 June 2014;

 

(f)        the trademark licensing framework agreement dated 28 October 2014 between the Company and CNAHC in respect of granting by the Company to CNAHC Group of a non-exclusive licence for the use of 83 registered trademarks of the Company for a term of three years from 1 January 2015 to 31 December 2017, details of which are set out in the Company's circular dated 31 October 2014;

 

(g)       the Aircraft Purchase Agreements;

 

 

(h)       the equity transfer agreements dated 24 December 2014 between the Company and each of AIE, Air China Shantou Industrial Development Co. and Beijing Phoenix Aviation Industrial Co in respect of the acquisitions of their respective equity interests in the registered capital of CNAF by the Company, details of which are set out in the Company's announcement dated 24 December 2014; and

 

 

(i)         the capital injection agreement dated 24 December 2014 between the Company and CNAHC, pursuant to which the Company and CNAHC have agreed to (a) increase the registered capital of CNAF from RMB505,269,500 to RMB1,127,961,864 and (b) inject additional capital in CNAF in the amount of RMB571,819,449.68 and RMB171,020,919.65, respectively, details of which are set out in the Company's announcement dated 24 December 2014.

 

Except as disclosed above, no other material contract has been entered into by the Group within the two years immediately preceding the date of this circular.

 

4.         LITIGATION

 

 

As at the Latest Practical Date, the litigation or claims of material importance pending or threatened against members of the Group are disclosed in the section titled "Contingent Liabilities" under "II. Indebtedness" in Appendix I.

 

As  at  the  Latest  Practical  Date,  save  as  disclosed  above,  the  Company  was  not  involved  in  any significant litigation or arbitration. To the knowledge of the Company, there was no litigation or claim of material importance pending or threatened against the Company except as disclosed above, and there was no litigation or claims of material importance pending or threatened against any member of the Group except as disclosed above.

 

5.         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).


 

 

6.        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 2013, being the date to which the latest published audited financial statements of the Group have been made up.

 

7.        MISCELLANEOUS

 

 

(a)        The joint company secretaries of the Company are Rao Xinyu 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 Blue Sky Mansion, 28 Tianzhu Road, 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.

 

 

8.        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 13

March 2015:

 

 

(a)        the articles of association of the Company;

 

 

(b)       the 2011, 2012 and 2013 annual reports of the Company;

 

 

(c)        a copy of each material contract referred to in the section headed "Material Contracts" of this Appendix; and

 

 

(d)       a copy of each circular issued pursuant to the requirements set out in Chapters 14 and/or 14A which has been issued since the date of the latest published audited accounts of the Company.

 

 

In respect of the Transaction, the Company has applied to the Hong Kong Stock Exchange for, and the Hong Kong Stock Exchange has granted, a waiver for the Transaction from strict compliance with Rule 14.58(4), Rule 14.66(10) and Appendix 1B paragraph 43(2)(b) to the Listing Rules, so that only the redacted version of the Aircraft Purchase Agreements will be available for inspection by the public. Information in relation to the actual consideration will not be disclosed in the aforesaid aircraft acquisition agreements.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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