14th Apr 2008 08:18
Datang Intl Power Generation Co Ld14 April 2008 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: 991) ANNOUNCEMENT DISCLOSEABLE AND CONNECTED TRANSACTION INVESTMENT AGREEMENT The Board announces that on 11 April 2008, the Company entered into theInvestment Agreement with Beijing Gas Group, CDC and New Horizon Capital toestablish the Keqi Coal-based Gas Company, for the purposes of planning,constructing and operating the Keqi Coal-based Gas Project. The Company, BeijingGas Group, CDC and New Horizon Capital agreed to contribute to the establishmentof Keqi Coal-based Gas Company in the proportion of 51%, 33%, 6% and 10%,respectively. DISCLOSEABLE AND CONNECTED TRANSACTION Pursuant to the Listing Rules, as the consideration ratio and assets ratio (asdefined in Rule 14.07 of the Listing Rules) are more than 5% but less than 25%,the Investment Agreement constitutes a discloseable transaction of the Companyby virtue of Rule14.04(1)(f) of the Listing Rules which is subject to thenotification and announcement requirements as set out in Rules 14.34 to 14.39 ofthe Listing Rules. As at the date of the Investment Agreement, CDC held approximately 33.74% of theissued share capital of the Company. Accordingly, CDC is a connected person ofthe Company under the Listing Rules and the Investment Agreement constitutes aconnected transaction of the Company by virtue of Rule 14A.13(1)(a) of theListing Rules. As each of the assets and consideration ratios (as defined inRule 14.07 of the Listing Rules) is more than 2.5%, the Investment Agreement issubject to the reporting, announcement and Independent Shareholders' approvalrequirements under Chapter 14A of the Listing Rules. The Company will alsodisclose the relevant details in the next published annual report and accountsof the Company in accordance with the relevant requirements as set out in Rule14A.45 of the Listing Rules. A circular containing details of the InvestmentAgreement, a letter from the Independent Board Committee, and a letter from theindependent financial advisor, both advising the terms of the InvestmentAgreement, together with the notice of the general meeting, will be despatchedto the Shareholders as soon as practicable. INVESTMENT AGREEMENT Date 11 April 2008 Parties to the Investment Agreement 1. The Company,2. Beijing Gas Group,3. CDC, and4. New Horizon Capital To the best of the directors' knowledge, information and belief having madeall reasonable enquiry, each of Beijing Gas Group and New Horizon Capital (andtheir ultimate beneficial owner) are third parties independent of the Companyand connected persons of the Company. Major Terms of the Investment Agreement Pursuant to the Investment Agreement, the Company, Beijing Gas Group, CDC andNew Horizon Capital agreed to contribute in cash to the establishment of KeqiCoal-based Gas Company in the proportion of 51%, 33%, 6% and 10%, respectively,for the purposes of planning, constructing and operating the Keqi Coal-based GasProject. The Keqi Coal-based Gas Project involves a total investment of approximatelyRMB18,780,000,000 (equivalent to approximately HK$20,867,000,000). The totalcapital commitment of the Company will be RMB9,577,800,000 (i.e. 51% of thetotal investment amount of RMB18,780,000,000).The ultimate registered capital ofKeqi Coal-based Gas Company is approximately 30% of the total investment of theproject, which is approximately RMB5,634,000,000 (equivalent to approximatelyHK$6,260,000,000) Pursuant to the Investment Agreement, the initial registered capital of KeqiCoal-based Gas Company is RMB100,000,000 (equivalent to approximatelyHK$111,111,111). The Company, Beijing Gas Group, CDC and New Horizon Capitalwill be responsible for contributing by way of cash in the proportion of 51%,33%, 6% and 10%, respectively (i.e., the approximate sums of RMB51,000,000(equivalent to approximately HK$56,666,667), RMB33,000,000 (equivalent toapproximately HK$36,666,667), RMB6,000,000 (equivalent to approximatelyHK$6,666,667) and RMB10,000,000 (equivalent to approximately HK$11,111,111),respectively), to the initial registered capital of Keqi Coal-based Gas Company.As at the date of this announcement, the respective parties to the InvestmentAgreement have not contributed any registered capital to Keqi Coal-based GasCompany. The Company's contribution to the registered capital of KeqiCoal-based Gas Company will be funded by internal resources. The respective parties to the Investment Agreement agree that they will increasethe registered capital of Keqi Coal-based Gas Company in stages based on theconstruction progress of the Keqi Coal-based Gas Project, and the Company,Beijing Gas Group, CDC and New Horizon will contribute to the increasedregistered capital in the same proportion as their respective contributions tothe aforesaid initial registered capital of Keqi Coal-based Gas Company. Pursuant to the Investment Agreement, all funds required for the construction ofthe Keqi Coal-based Gas Project will be funded by the registered capital of KeqiCoal-based Gas Company and financing resources in the PRC, (i.e., loans frombanks.) The respective parties to the Investment Agreement agree to, ifnecessary, provide guarantees to Keqi Coal-based Gas Company's financing inproportion to their respective capital contributions, while Keqi Coal-based GasCompany will provide a counter-guarantee with its assets and earnings or withother feasible means as a security against the guarantees provided by therespective parties to the Investment Agreement. In the event of any furthercapital injections or other guarantees against borrowings required upon theCompany, the Company will comply with the relevant requirements under theListing Rules if and when necessary. Effective Date of the Investment Agreement The Investment Agreement will become effective once the respective parties tothe Investment Agreement have respectively obtained their internal approvals andthe approvals from the relevant government authorities of the PRC for theinvestment items in the Investment Agreement. As at the date of thisannouncement, the Investment Agreement has been approved by the internalcompetent authorities of Beijing Gas Group, CDC, New Horizon Capital. However,the Investment Agreement is yet to be approved by the Independent Shareholderspursuant to the Articles of Association and the Listing Rules. Since New Horizon Capital is a fund company set up in Hong Kong, the InvestmentAgreement is subject to the approval by the Ministry of Commerce. As at the dateof this announcement, the approval of the Investment Agreement by the Ministryof Commerce is still pending. Other Major terms of the Investment Agreement The term of operation of Keqi Coal-based Gas Company shall be 30 years from thedate of issuance of the relevant business license. Information relating to Keqi Coal-based Gas Company Pursuant to the Investment Agreement, Keqi Coal-based Gas Company, upon itsestablishment, will plan, construct and operate the Keqi Coal-based Gas Project,which is located in Kesheketeng Qi, Chifeng City, Inner Mongolia. KeqiCoal-based Gas Project, will use the brown coal from the Shengli Coalfield whichis 5 km from the northwest of Xilinhaote, Inner Mongolia, as raw materials andfuels, and apply developed and reliable gasification technology. Natural gas,the principal product, will be transmitted by a long-distance pipeline covering440 km in total which runs from the project site (Kesheketeng Qi destination) tothe final destination in Miyun, Beijing, the PRC. The final size of the KeqiCoal-based Gas Project is subject to the approval by the relevant governmentauthorities of the PRC. The Keqi Coal-based Gas Project will be constructed inthree stages. The whole project is expected to be completed by 2012 and isexpected to produce 4,000,000,000 cubic meters of natural gas and otherby-products per annum upon commencement of production. Keqi Coal-based Gas Company will become a subsidiary of the Company upon itsestablishment and the results of Keqi Coal-based Gas Company will beconsolidated in to the accounts of the Company subsequent to its establishment Even though the current domestic market demand for the clean energy source ofnatural gas is substantially larger than its supply, and that the market pricesof natural gas rise along with the increase of prices of other energy sourcessuch as petroleum and coal, the future benefits to be derived by Keqi Coal-basedGas Company will be considerably affected in the event that the market prices ofnatural gas fluctuate in the future. The Company will closely monitor the trendof domestic and international natural gas prices, as well as striving to achievea stronger risk-resistant ability for Keqi Coal-based Gas Company. Information relating to the Group The Group 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 itsmain service areas in the PRC. Information relating to Beijing Gas Group Beijing Gas Group is a wholly-owned subsidiary of Beijing Enterprises HoldingCompany Limited, a company incorporated in Hong Kong and listed on The StockExchange of Hong Kong Limited. Beijing Enterprises Group Company Limited, a state-owned enterprise in the PRC,is the beneficial controller of Beijing Enterprises Holding Company Limited.Beijing Gas Group has a registered capital of RMB1,980,000,000 and isprincipally engaged in the city-gas pipeline business. Information relating to New Horizon Capital New Horizon Capital is a fund company set up in May 2007 in Hong Kong. Theinvestors of the fund comprise more than 20 internationally-renownedinstitutions. The fund size is US$500,000,000. New Horizon Capital is asecondary fund under management by the team, investing largely in variousindustries such as manufacturing, new energy, consumables, biomedicines andautomobile accessories and parts. Information relating to CDC CDC is a state-owned enterprise and its registered capital is RMB12,000,000,000.Its main scope of operations are the development, investment, construction,operation and management of power energy, organisation of power (thermal)production and sales, power technology development and consultation. REASONS FOR AND BENEFITS OF ENTERING INTO THE INVESTMENT AGREEMENT The Company has devised the objective of diversification of business structure,and the Company's investment in and construction of Keqi Coal-based GasProject will allow the Company to develop on the aspect of clean energyproduction. The Keqi Coal-based Gas Project is located in an area with abundantcoal resources which provides a reliable source of raw materials and fuels tothe Keqi Coal-based Gas Project, and with abundant water resources andconvenient transportation facilities which will help to lower the operationcosts of the Keqi Coal-based Gas Project. Moreover, the Keqi Coal-based GasProject aims to supply gas largely to Beijing and to cities along the gastransmission pipeline upon its completion. As a political, cultural andfinancial center of the PRC, Beijing has an enormous demand for clean energy !Vnatural gas, given its higher requirement for the quality of the airenvironment. The Company believes the Keqi Coal-based Gas Project, upon itscompletion, will benefit from the growing demand for clean energy in Beijing andthe cities along the gas transmission pipeline, which in turn will enhance theCompany's profitability as a whole. The Directors believe that entering intothe Investment Agreement will facilitate the profit growth of the Company. The terms of the Investment Agreement were negotiated on an arm's lengthbasis between the Company and the parties thereto and were determined on normalcommercial terms. The Directors (excluding the independent non-executivedirectors whose views will be contained in the circular to be dispatched to theshareholders in accordance with the requirements of the Listing Rules takinginto account the advice from the independent financial adviser) consider thatthe terms of Investment Agreement are fair and reasonable and in the bestinterest of the Company and the Shareholders as a whole. DISCLOSEABLE AND CONNECTED TRANSACTION Pursuant to the Listing Rules, as the consideration ratio and assets ratio (asdefined in Rule 14.07 of the Listing Rules) is more than 5% but less than 25%,the Investment Agreement constitutes a discloseable transaction of the Companyby virtue of Rule14.04(1)(f) of the Listing Rules which is subject to thenotification and announcement requirements as set out in Rules 14.34 to 14.39 ofthe Listing Rules. As at the date of the Investment Agreement, CDC held approximately 33.74% of theissued share capital of the Company. Accordingly, CDC is a connected person ofthe Company under the Listing Rules and the Investment Agreement constitutes aconnected transaction of the Company by virtue of Rule 14A.13(1)(a) of theListing Rules. As each of the assets and consideration ratios (as defined inRule 14.07 of the Listing Rules) is more than 2.5%, the Investment Agreement issubject to the reporting, announcement and Independent Shareholders' approvalrequirements under Chapter 14A of the Listing Rules. The Company will alsodisclose the relevant details in the next published annual report and accountsof the Company in accordance with the relevant requirements as set out in Rule14A.45 of the Listing Rules. A circular containing details of the InvestmentAgreement, a letter from the Independent Board Committee, and a letter from theindependent financial advisor, both advising the terms of the InvestmentAgreement, together with the notice of the general meeting, will be despatchedto the Shareholders as soon as practicable. Shareholders (and their associates) who has a material interest in thetransaction shall abstain from voting in the annual general meeting. CDC and itsassociates have to be abstained from voting in approving the InvestmentAgreement in the annual general meeting. INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISOR An Independent Board Committee comprising the independent non-executiveDirectors will be formed to advise the Independent Shareholders on the terms ofthe Investment Agreement. None of the independent non-executive Directors hasany material interest in the Investment Agreement. The Company will appoint an independent financial advisor to advise theIndependent Board Committee and the Independent Shareholders on the terms of theInvestment Agreement. DESPATCH OF CIRCULAR A circular containing details of the Investment Agreement, a letter from theIndependent Board Committee, and a letter from the independent financialadvisor, both advising the terms of the Investment Agreement, together with thenotice of the general meeting will be despatched to the Shareholders as soon aspracticable. DEFINITIONS In this announcement, unless the context otherwise requires, the followingexpressions have the following meanings: AGM the annual general meeting of the Company to be held to consider and, if thought fit, approve the Investment Agreement A Share(s) the domestic ordinary share(s) of the Company with a nominal value of RMB1.00 each Articles of Association A the Articles of Association of the Company Beijing Gas Group Beijing Gas Group Co., Ltd, a limited company established under the laws of the PRC and a wholly-owned subsidiary of Beijing Enterprises Holding Company Limited, a company incorporated in Hong Kong and listed on The Stock Exchange of Hong Kong Limited Board the board of directors of the Company CDC China Datang Corporation, a state-owned enterprise established under the laws of the PRC and a controlling Shareholder of the Company holding approximately 33.74% of the issued share capital of the Company as at the date of this announcement Company Datang International Power Generation Co., Ltd., a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, of which the H Shares are listed on The Stock Exchange of Hong Kong Limited and The London Stock Exchange Limited and the A Shares are listed on the Shanghai Stock Exchange Connected Person has the meaning ascribed to it under the Listing Rules Directors directors of the Company H Share(s) the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each HK$ Hong Kong dollar(s), the lawful currency of Hong Kong Hong Kong the Hong Kong Special Administrative Region of the PRC Independent shareholders the shareholders other than the connected persons of the Company; CDC and its associates have to be abstained from voting in approving the Investment Agreement in the general meeting Independent Board Committee the independent board committee of the Company, comprising four independent non-executive Directors Investment Agreement the investment agreement entered into on 11 April 2008 by the Company, Beijing Gas Group, New Horizon Capital and CDC to establish the Keqi Coal-based Gas Company, for purpose of planning, constructing and operating the Keqi Coal-based Gas Project Keqi Coal-based Gas Company Inner Mongolia Datang International Keqi Coal-based Gas Company Limited Keqi Coal-based Gas Project the coal conversion project involving the expected production of 4,000,000,000 cubic meters of natural gas and other by-products per annum in Kesheketeng Qi, Inner Mongolia Listing Rules Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited Ministry of Commerce Ministry of Commerce of the PRC New Horizon Capital (New Horizon Capital Advisors Limited), a fund company established in Hong Kong PRC the People's Republic of China RMB Renminbi, the lawful currency of the PRC Shareholder(s) shareholder(s) of the Company % per cent. Note: Unless otherwise specified and for reference only, the conversion of HongKong dollars into Renminbi is based on the exchange rate of HK$1= RMB0.9 in thisannouncement. By Order of the Board Zhou Gang Secretary to the Board Beijing, the PRC, 11 April 2008 As at the date of this announcement, the directors of the Company are: Zhai Ruoyu, Zhang Yi, Hu Shengmu, Fang Qinghai, Zhou Gang, Liu Haixia, GuanTiangang, Su Tiegang, Ye Yonghui, Li Gengsheng, Xie Songlin*, Liu Chaoan*, YuChangchun* and Xia Qing* * Independent non-executive Directors This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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