7th Dec 2006 07:00
China Petroleum & Chemical Corp07 December 2006 (a joint stock limited company incorporated in the People's Republic of China with limited liability) ANNOUNCEMENT ON THE PROPOSAL TO OBTAIN A GENERAL MANDATE TO ISSUE SHARES AND PROPOSED ISSUE OF CONVERTIBLE BONDS The Board announced that on 6 December, 2006, the Board resolved, among otherthings, to seek shareholders' approval for obtaining an unconditional generalmandate to allot, issue and deal with additional Shares and for the proposedissue of Convertible Bonds outside Mainland China at the EGM to be convened onor about 22 January 2007. On 6 December, 2006, the Board resolved, among other things, to convene the EGMfor the shareholders to consider the following matters. 1. OBTAINING A GENERAL MANDATE TO ISSUE NEW SHARES In order to ensure flexibility and to give discretion to the Directors in theevent that it becomes desirable to issue any Shares, the Board proposes toobtain shareholders' approval for the General Mandate. As at the date of thisannouncement, there are in issue 16,780,488,000 H Shares and 69,921,951,000Domestic Shares. A maximum of 3,356,097,600 H Shares and 13,984,390,200 DomesticShares representing 20% of each of the existing Domestic Shares and H Shares canbe allotted, issued or dealt with by the Directors pursuant to the GeneralMandate. However, save for the purposes of issuing H Shares upon conversion ofthe Convertible Bonds, Sinopec Corp. has no current plan to issue any Sharesunder the General Mandate. According to relevant PRC laws and regulations, evenif the General Mandate is obtained, any issue of Domestic Shares needshareholders' approval at shareholders' meeting. 2. PROPOSED ISSUE OF CONVERTIBLE BONDS OUTSIDE MAINLAND CHINA Information about the proposed Convertible Bonds Sinopec Corp. has obtained approval from NDRC on 27 November 2006 to issue up toUS$1.5 billion (or approximately HK$11.7 billion) in principal amount ofConvertible Bonds outside Mainland China which will be convertible into new HShares. The Convertible Bonds are proposed to be in the form of US dollar or HKdollar denominated convertible bonds. Application will be made to list theConvertible Bonds on an internationally recognised stock exchange. The issuesize, interest rate, conversion price, exchange rate structure and timing of theissue of the Convertible Bonds will be determined by the Board after carefulconsideration and taking into account the prevailing market conditions and allother relevant factors at the time of the offering. Other terms and conditionsof the Convertible Bonds will also be determined by the Board prior to theproposed issue of the Convertible Bonds. The Convertible Bonds are expected tobe offered only to professional and institutional investors, and existingShareholders of Sinopec Corp. will not be entitled to subscribe for theConvertible Bonds solely by virtue of their shareholdings in Sinopec Corp. Therewill not be a public offering of the Convertible Bonds. As at the date of thisannouncement, Sinopec Corp. does not have any concrete plan for the issue andlisting of the Convertible Bonds. Further announcements will be made upon thedetermination of the terms and conditions of the Convertible Bonds. The proposed issue of the Convertible Bonds will be conditional on, among otherthings, the following: (a) the obtaining of the approvals of all Shareholders by way of specialresolutions in relation to the obtaining of the General Mandate and the proposedissue of the Convertible Bonds at the EGM (at which no Shareholder is requiredto abstain from voting at the EGM); (b) the obtaining of the approvals or consents from the relevant PRCregulatory authorities including the CSRC; (c) the granting by the Hong Kong Stock Exchange of approval for the listingof and permission to deal in the new H Shares to be issued upon conversion (ifany) of the Convertible Bonds; and (d) the granting of approval for the listing of the Convertible Bonds by aninternationally recognised stock exchange on which the Convertible Bonds are tobe listed. The authority granted to the Board by way of special resolutions passed at theEGM with regard to the proposed issue of the Convertible Bonds will expiretwelve months after the date of EGM. Upon conversion of the Convertible Bonds, amaximum of up to 3,356,097,600 new H Shares can be issued pursuant to theGeneral Mandate to be obtained at the EGM . Sinopec Corp. will not issue anyShares under the Convertible Bonds if this will result in the lack of publicfloat as required under the Listing Rules. The proposed issue of the ConvertibleBonds is independent of the proposed Domestic Corporate Bond Issue. Proposed Use of Proceeds The net proceeds of the proposed issue of the Convertible Bonds are expected tobe used for the repayment of existing foreign currency loans of Sinopec Corp.incurred in connection with the privatisation of Sinopec Corp.'s subsidiaries:Beijing Yanhua Petrochemical Company Limited and Sinopec Zhenhai Refining &Chemical Company Limited which were previously listed on the Hong Kong StockExchange. The terms of the loans are on normal commercial terms. Should the actual use of proceeds have to meet any disclosure and/orshareholders' approval requirement under the Listing Rules, Sinopec Corp.shall comply with the relevant provisions of the Listing Rules to make thenecessary disclosure and to seek the appropriate approvals as required. Reasons for the issue of the Convertible Bonds The Board has carefully considered different options for the financing needs ofSinopec Corp. as set out above and believes the proposed issue of theConvertible Bonds to be the most appropriate arrangement for Sinopec Corp. asthe issue of the Convertible Bonds would allow Sinopec Corp. to further improveits asset liabilities structure and reduce its existing costs of financing. Impact on Shareholders Upon conversion of the Convertible Bonds to be issued, there would be anincrease in the number of H Shares held by the public. The exact size of theincrease will depend upon the final terms of the Convertible Bonds, including,among other terms, the size of the issue and the conversion price at which theConvertible Bonds will be converted into H Shares. It is currently contemplatedthat the initial conversion price will be determined with reference to a premiumover the closing price of the previous trading day of the H Shares or theaverage closing price of H Shares for a certain period of trading daysimmediately prior to the pricing date. The final terms of the Convertible Bondsare expected to be determined only after the completion of the "book-building"process. Shareholders' equity interest in Sinopec Corp. will be diluted asa result of the exercise of the conversion rights attached to the ConvertibleBonds. Further announcements will be made once the terms and conditions of theConvertible Bonds are determined. Amendments to the articles of association At the EGM, special resolutions will be proposed to authorise the Secretary tothe Board to make necessary amendments to the Articles of Association to reflectthe increase of the registered capital of Sinopec Corp. to comprise the Sharesin issue and the new H Shares to be issued upon conversion of the ConvertibleBonds. New H Shares Any new H Shares to be issued upon conversion of the Convertible Bonds will rankpari passu with, and within the same class as, the H Shares in issue on therelevant conversion date in all respects, save in respect of entitlements todividends and other distributions which will depend on the conversion date(s)for the Convertible Bonds and the date for the payment of dividends or otherdistribution with respect to the Shares. EGM Sinopec Corp. is preparing to convene an EGM on or about 22 January 2007. Acircular containing further details of the proposed resolutions, together withthe relevant notice of meeting, will be sent to the Shareholders in due course. The Shareholders and potential investors should be aware that the proposed issueof the Convertible Bonds is subject to the conditions set out above beingfulfilled or waived, as applicable, and consequently the proposed issue of theConvertible Bonds may or may not proceed. Accordingly, they are advised toexercise caution when dealing in the Shares. In this Announcement, unless otherwise indicated in the context, the followingexpressions have the meaning set out below: "Articles of Association" the articles of association of Sinopec Corp. "Board" the board of directors of Sinopec Corp. "Convertible Bonds" up to US$1.5 billion (or approximately HK$11.7 billion ) in the principal amount of convertible bonds proposed to be issued by Sinopec Corp. outside Mainland China which are convertible into new H Shares "CSRC" China Securities Regulatory Commission of the PRC "Directors" the directors of Sinopec Corp. "Domestic Corporate Bond Issue" the proposed issue by Sinopec Corp. of not more than RMB10 billion in principal amount of corporate bonds within Mainland China as announced by Sinopec Corp. on the date of this announcement "Domestic Shares" Renminbi denominated ordinary Domestic Shares with nominal value of RMB 1.00 each in the share capital of Sinopec Corp. and which are listed on the Shanghai Stock Exchange "EGM" the extraordinary general meeting of Sinopec Corp. to be held on or about 22 January 2007 "General Mandate" an unconditional general mandate to the Directors that during the twelve months from the EGM or the date of the next AGM (whichever is earlier), to separately or concurrently, allot, issue, and deal with additional domestic shares and overseas listed foreign shares of Sinopec Corp. and to make or grant offers, agreements or options in respect thereof, with an aggregate nominal value of not exceeding 20% of each of the existing domestic shares and overseas listed foreign shares of Sinopec Corp. in issue as at the date of this announcement. "H Shares" overseas listed foreign invested shares in the Sinopec Corp.'s share capital, with a nominal value of RMB 1.00 each, which are listed on the Hong Kong Stock Exchange "Hong Kong" the Hong Kong Special Administrative Region of the People's Republic of China "Hong Hong Stock Exchange" the Stock Exchange of Hong Kong Limited "Listing Rules" Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (as amended from time to time) "Mainland China" for the purpose of this announcement, the PRC excluding the Hong Kong Special Administrative Region of the People's Republic of China, the Macau Special Administrative Region of the People's Republic of China and Taiwan "NDRC" the National Development and Reform Commission of the PRC "PRC" the People's Republic of China "Share(s)" the H Shares and Domestic Shares of Sinopec Corp. "Shareholders" holders of the Shares "Sinopec Corp." China Petroleum & Chemical Corporation For and on behalf of the Board of Directors China Petroleum & Chemical Corporation Chen Ge Secretary to the Board of Directors Beijing, PRC, 6 December 2006 As at the date of this Announcement, the directors of Sinopec Corp are Messrs.Chen Tonghai*,Zhou Yuan*, Wang Tianpu#, Zhang Jianhua#, Wang Zhigang#, DaiHouliang#, Fan Yifei*, Yao Zhongmin*, Shi Wanpeng+, Liu Zhongli+ and Li Deshui+. # Executive Directors * Non-executive Directors + Independent Non-executive Directors This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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