29th Dec 2005 08:13
Datang Intl Power Generation Co Ld29 December 2005 The Stock Exchange of Hong Kong Limited takes no responsibility for the contentsof this announcement, makes no representation as to its accuracy or completenessand expressly disclaims any liability whatsoever for any loss howsoever arisingfrom or in reliance upon the whole or any part of the contents of thisannouncement. Datang International Power Generation Co., Ltd. (A sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock code: 0991) CONTINUING CONNECTED TRANSACTION Reference is made to the Prospectus disclosing, inter alia, the Ash DisposalAgreement entered into between the Company and NCPGC in connection with thedisposal of all ash generated by the Company's power plants in accordance withPRC national and local environmental protection requirements and industrialpolicies. Reference is also made to the Company's announcement dated 24 April 2003 inrelation to the State Council's restructuring of the power generation industryin the PRC, whereby the Company has been assigned under the control of ChinaDatang and accordingly shares of the Company originally held by NCPGC, amountingto approximately 35.43% of the issued share capital of the Company, has beentransferred to China Datang by way of administrative allocation. On 20 December 2005, the Company and China Datang entered into the SupplementalAgreement in connection with the Ash Disposal Agreement to amend certain termsof the Ash Disposal Agreement to render the Ash Disposal Agreement in compliancewith the provisions governing continuing connected transactions under therevised Listing Rules which became effective on 31 March 2004. As at the date of the Supplemental Agreement, China Datang owns approximately35.43% of the issued share capital of the Company and is therefore a substantialshareholder of the Company under the Listing Rules. As such, China Datang is aconnected person of the Company under Rule 14A.11 of the Listing Rules, and theAsh Disposal Agreement as amended by the Supplemental Agreement constitute acontinuing connected transaction of the Company. Given that each of the relevantpercentage ratios of the maximum annual value of the services agreed to beprovided by China Datang to the Company under the Ash Disposal Agreement asamended by the Supplemental Agreement is less than 2.5%, the Ash DisposalAgreement as amended by the Supplemental Agreement is only subject to thereporting, annual review and announcement requirements under Rules 14A.37 to14A.40 and Rules 14A.45 to 14A.47 of the Listing Rules. THE SUPPLEMENTAL AGREEMENT Date 20 December 2005 Parties (i) the Company; and (ii) China Datang. Pursuant to the State Council's restructuring of the powergeneration industry in the PRC and an agreement entered into between NCPGC andChina Datang on 15 January 2004, NCPGC transferred the shares of the Companywhich it originally held by way of administrative allocation, amounting toapproximately 35.43% of the issued share capital of the Company, and assignedall its rights and obligations under the Ash Disposal Agreement to China Datang.As such, China Datang is the counterparty in the Supplemental Agreement. Term The Supplemental Agreement provides that the Ash Disposal Agreement is for aterm of 3 years commencing from the date of signing of the SupplementalAgreement to 19 December 2008, and is renewable subject to negotiation betweenthe Company and China Datang within 3 months prior to the expiry of the AshDisposal Agreement as amended by the Supplemental Agreement. The Company willensure its compliance with the Listing Rules in the event that the Ash DisposalAgreement is renewed pursuant to the terms of the Supplemental Agreement. The Services The scope of the services to be provided by China Datang pursuant to the AshDisposal Agreement remains unchanged under the Supplemental Agreement. Pursuantto the terms of the Supplemental Agreement, China Datang will continue to beresponsible for disposing of all ashes generated by the Company's power plantsin accordance with PRC national and local environmental protection requirementsand industrial policies. The Supplemental Agreement will also continue to applyto all future generating units or power plants that are wholly-owned andoperated and managed by the Company. Pricing The mechanism in respect of the determination of the ash disposal charges underthe Ash Disposal Agreement is not affected by the Supplemental Agreement. TheCompany and China Datang will continue to agree annually on a pre-determinedunit ash disposal charge, which shall reflect China Datang's estimated operatingcosts, depreciation of its ash yards, amortisation fees for the construction ofthe ash yard and a profit margin (to be agreed annually by the Company and ChinaDatang based on arm's length negotiations between the Company and China Datang)ranging between 5% to 10% of the costs. The ash disposal charges will continueto be confirmed between the Company and China Datang based on the actual volumeof ashes disposed by China Datang at the pre-determined unit ash disposal chargeon a monthly basis and paid by the Company in cash to China Datang on an annualbasis, and such expenditures will continue to be funded by internal resources ofthe Company. The ash disposal charges levied by China Datang under the AshDisposal Agreement as amended by the Supplemental Agreement are no lessfavourable to the Group than terms available from independent third parties. Maximum Aggregate Annual Caps Pursuant to the Supplemental Agreement, the services as contemplated by the AshDisposal Agreement are subject to the following maximum aggregate annual caps(the "annual caps") for each of the financial years ending 31 December 2007: For the year ending 31 December 2005 RMB60,000,000 (equivalent to approximately HK$57,692,310)For the year ending 31 December 2006 RMB60,000,000 (equivalent to approximately HK$57,692,310)For the year ending 31 December 2007 RMB60,000,000 (equivalent to approximately HK$57,692,310) The annual caps for the services as contemplated by the Ash Disposal Agreementhave been determined with reference to the previous similar ash disposaltransactions between the Company and China Datang and its predecessor, i.e.NCPGC, which amounted to approximately RMB57,920,000, RMB57,890,000 andRMB57,890,000 for each of the years ending 31 December 2002, 2003, and 2004,respectively. INFORMATION RELATING TO THE PARTIES TO THE ASH DISPOSAL AGREEMENT AS AMENDED BYTHE SUPPLEMENTAL AGREEMENT The Company is principally engaged in the development and operation of powerplants, the sale of electricity and thermal power, and the repair, testing andmaintenance of power equipment and power related technical services, with itspresent main operation in the PRC. China Datang is principally engaged in the business of the development,investment, construction, operation and management of power plants and theproduction and sale of electricity and thermal power. REASONS FOR AND BENEFITS OF THE ASH DISPOSAL AGREEMENT AS AMENDED BY THESUPPLEMENTAL AGREEMENT The Ash Disposal Agreement was entered into before certain amendments to theListing Rules became effective on 31 March 2004. It has an indefinite term andprovides that it will terminate only by agreement between the Company and NCPGC(or as required by law) or automatically upon termination of the Power PurchaseAgreement. The Ash Disposal Agreement also contains specific provisions as tohow the unit ash disposal charge shall be calculated. Details of the AshDisposal Agreement were set out in the Prospectus. Pursuant to the amendments to the Listing Rules which became effective on 31March 2004, continuing connected transactions became subject to newrequirements, including (i) the period for the agreement in relation to acontinuing connected transaction must be fixed and not exceed 3 years, and (ii)a maximum aggregate annual value (in terms of monetary value rather than apercentage of the Company's annual revenue) in respect of each continuingconnected transaction must be set and the basis of which must also be disclosed. The Supplemental Agreement was entered into between the Company and China Datangin order to render the Ash Disposal Agreement in compliance with the aboveamendments to the Listing Rules. The Supplemental Agreement provides that, interalia, the Ash Disposal Agreement is for a term of 3 years (which is renewablesubject to negotiation between the Company and China Datang within 3 monthsprior to the expiry of the Ash Disposal Agreement) commencing from the date ofsigning of the Supplemental Agreement to 19 December 2008, and that the annualcaps for each of the years ending 31 December 2005, 2006 and 2007 isRMB60,000,000. Since the ash yards owned by China Datang are situated in the vicinity of thepower plants owned or managed by the Company, it would be practical and costefficient for the Company to continue to engage China Datang to use its ashyards and render the ash-disposing services to the Company's power plants. Assuch, the Directors (including the independent non-executive directors of theCompany) are of the view that the terms of the Supplemental Agreement are fairand reasonable and in the interests of the Company and its shareholders as awhole. CONTINUING CONNECTED TRANSACTION As at the date of the Supplemental Agreement, China Datang owns approximately35.43% of the issued share capital of the Company and is therefore a substantialshareholder of the Company under the Listing Rules. As such, China Datang is aconnected person of the Company under Rule 14A.11 of the Listing Rules, and theAsh Disposal Agreement as amended by the Supplemental Agreement constitute acontinuing connected transaction of the Company. Given that each of the relevantpercentage ratios of the maximum annual value of the services agreed to beprovided by China Datang to the Company under the Ash Disposal Agreement asamended by the Supplemental Agreement is less than 2.5%, the Ash DisposalAgreement as amended by the Supplemental Agreement is only subject to thereporting, annual review and announcement requirements under Rules 14A.37 to14A.40 and Rules 14A.45 to 14A.47 of the Listing Rules. DEFINITIONS In this announcement, the following expressions have the meanings set out belowunless the context otherwise requires: "Ash Disposal Agreement" the agreement entered into between the Company and NCPGC on 5 August 1996 in relation to the disposal by China Datang of all ashes generated by the Company's power plants in accordance with PRC national and local environmental protection requirements and industrial policies"Board" the board of Directors"China Datang" China Datang Corporation (Chinese Characters), a state-owned enterprise established under the laws of the PRC and is a substantial shareholder of the Company holding approximately 35.43% of the issued share capital of the Company"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"Continuing connected transaction" has the meaning ascribed to it in the Listing Rules"Director(s)" the director(s) of the Company''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"HK$" Hong Kong dollar(s), the lawful currency of Hong Kong"Hong Kong" the Hong Kong Special Administrative Region of the PRC"Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange"London Stock Exchange" The London Stock Exchange Limited"NCPGC" (Chinese Characters) (North China Power Group Company), now changed its name to (Chinese Characters) (North China Grid Company Limited), is a State-owned enterprise established in 1993 and currently managed by the State Grid Corporation, which is in turn managed by the central government"Power Purchase Agreement" the agreement entered into between the Company and NCPGC on 5 August 1996 in relation to the purchase of power"PRC" the People's Republic of China"Prospectus" the prospectus in relation to the new issue and placing of 1,244,060,000 H Shares of the Company dated 10 March 1997"RMB" Renminbi, the lawful currency of the PRC"Stock Exchange" The Stock Exchange of Hong Kong Limited"Supplemental Agreement" the supplemental agreement entered into between the Company and China Datang on 20 December 2005 in relation to the Ash Disposal Agreement"%" per cent. By Order of the Board Yang Hongming Company Secretary Beijing, the PRC, 23 December 2005 As at the date of this announcement, the Directors are: Zhai Ruoyu, Zhang Yi, Hu Shengmu, Fang Qinghai, Yang Hongming, Liu Haixia, GuanTiangang, Su Tiegang, Ye Yonghui, Tong Yunshang, Xie Songlin*, Xu Daping*, LiuChaoan*, Yu Changchun* and Xia Qing* * independent non-executive Directors For the purpose of this announcement, HK$1.00 is equivalent to RMB1.04. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Datang Intl H