China Ocean Shipbuilding Industry : DISCLOSEABLE TRANSACTION FORMATION OF JOINT VENTURE (in PDF)

E160330799Ann.indd

The Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

CHINA OCEAN INDUSTRY GROUP LIMITED

中 海 重 工 集 團 有 限 公 司

(Formerly known as China Ocean Shipbuilding Industry Group Limited 中海船舶重工集團有限公司*)

(Incorporated in Bermuda with limited liability)

(Stock code: 00651)

DISCLOSEABLE TRANSACTION FORMATION OF JOINT VENTURE

On 18 March 2016 (as supplemented on 21 March 2016), the First Limited Investor (an indirect wholly-owned Subsidiary of the Company) entered into the JV Agreement with the Required Investor and the Second Limited Investor for the formation of the Joint Venture to invest in providing energy and related service to Logistics Centers first in Jiangxi Province and then spread to those in the whole ocean engineering business in the PRC.

Pursuant to the JV Agreement, the initial investment amount in the Joint Venture will be RMB505,000,000 contributed as to RMB100,000,000 by the First Limited Investor, RMB100,000,000 by the Second Limited Investor and RMB5,000,000 by the Required Investor and RMB300,000,000 by other limited investors to be sourced by the Required Investor (the Required Investor will be obligated to paid up for any shortfall if the Required Investor fails to source sufficient capital from other limited investors for such capital contribution within the Capital Contribution Period mentioned below). The Required Investor needs to assume liabilities of the Joint Venture if the assets of the Joint Venture are insufficient to discharge its liabilities, while the First Limited Investor and the Second Limited Investor are not liable for any of the debts of the Joint Venture, other than to the extent of the value of their respective investment in the Joint Venture.

Since the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the formation of the Joint Venture exceed 5% but less than 25%, the entering into of the JV Agreement constitutes a discloseable transaction and is subject to the reporting and announcement requirements but exempt from the shareholders' approval requirement under Chapter 14 of the Listing Rules.

On 18 March 2016 (as supplemented on 21 March 2016), the First Limited Investor (an indirect wholly-owned Subsidiary of the Company) entered into the JV Agreement with the Required Investor and the Second Limited Investor for the formation of the Joint Venture. The principal terms of the JV Agreement are as follows:-

The JV Agreement

Date: 18 March 2016 (as supplemented on 21 March 2016)

Parties: (1) Jiujiang Baopu Assets Management Company (Limited Partnership) as the required investor, which needs to assume liabilities of the Joint Venture if the assets of the Joint Venture are insufficient to discharge its liabilities

1. China Ocean (LNG) Limited as the limited investor

   
   

2. Jiujiang State-owned Assets Management Company as the limited investor

   
   

   The limited investors are not liable for any of the debts of the Joint Venture, other than for the value of their respective investment amount in the Joint Venture.

   
   

   Scope of Business: The Joint Venture will engage in (i) equity investment using its own capital fund through investment in newly established enterprises, existing enterprises, acquisition of equity interest from corporate investors and any other investment modes as allowed by PRC laws and regulations; (ii) provision of management consultancy services to investee companies and provision of consultancy services for setting up enterprises; and

   (iii) any other business approved by the relevant PRC authorities.

   
   

   The capital investment should be restricted to enterprises registered in Jiujiang City, Jiangxi Province in PRC.

   Term of operation of Joint Venture:

   7 years from the date of issue of the business license of the Joint Venture. Subject to the approval of all the parties, the term of operation may be extended for a further period of 2 years.

   
   

   The first 5 years will be the investment period of the Joint Venture and no new investments may be made by the Joint Venture after this investment period.

   
   

   Investment Amount:	(1)	RMB5,000,000 to be contributed by the Required Investor, representing 1% of the interests in the Joint Venture
   (2)	RMB100,000,000 to be contributed by the First Limited Investor, representing 19.8% of the interests in the Joint Venture
   (3)	RMB100,000,000 to be contributed by the Second Limited

   Investor, representing 19.8% of the interests in the Joint Venture

   
   

3. RMB300,000,000 to be contributed by the other limited Investors to be sourced by the Required Investor, representing 59.4% of the interests in the Joint Venture (the Required Investor will be obligated to paid up for any shortfall if the Required Investor fails to source sufficient capital from other limited investors for such capital contribution within the Capital Contribution Period mentioned below)

Capital Contribution Period:

The aforesaid investment amounts are to be paid to the Joint Venture in cash in full at the later of and after fulfilment of all the Conditions Precedent and within 5 years from the date of issue of

the business license（ 營業執照）of the Joint Venture.

The aforesaid investment amounts are determined after arm's length negotiation of the parties and with reference to the initial funding needs of the Joint Venture and the agreed share of each party in the interest in the Joint Venture.

Conditions Precedent: The JV Agreement will take effect upon the satisfaction of the following conditions:

1. the approval of JV Agreement has been obtained from the relevant government authorities; and

   
   

2. each of the parties to the JV Agreement has obtained the necessary internal and/or external consent and approval required under the laws and regulations (including but not limited to the Listing Rules) applicable to such party, if any, for the entering into of the JV Agreement.

Management of

the Joint Venture:

In general, the Joint Venture shall be managed by the Management Committee, save that the Required Investor, which will be employed by the Joint Venture as the management enterprise, shall be responsible for and shall have the power to carry out, among others, the following matters:

1. seeking investment opportunities and potential investment projects for the Joint Venture and for the Management Committee to approve;

   
   

2. conducting due diligence and gathering information in respect of the investment projects and the entities being invested;

   
   

3. information collection and management of invested projects;