COSCO SHIPPING HOLDINGS CO., LTD. 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.
中 遠 海 運 控 股 股 份 有 限 公 司
COSCO SHIPPING Holdings Co., Ltd.*
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 1919)
- CONNECTED TRANSACTION DISPOSAL OF INTEREST IN VARIOUS PORT ASSETS
AND
-
POSSIBLE DISPOSAL OF TAICANG TERMINAL AND JIANGSU PETROCHEMICAL TERMINAL
BY COSCO SHIPPING PORTS LIMITED
DISPOSAL OF INTEREST IN VARIOUS PORT ASSETS BY COSCO SHIPPING PORTS
On 18 September 2019, COSCO SHIPPING Ports (a non-wholly owned subsidiary of the Company), as seller, entered into the Longtan Share Purchase Agreement, Yuanyang Share Purchase Agreement and Zhangjiagang Share Purchase Agreement with SIPG (HK) (as purchaser), in relation to the sale and purchase of the indirect interests of COSCO SHIPPING Ports in Nanjing Longtan Terminal (via Longtan SPV), Yangzhou Yuanyang Terminal (via Yuanyang SPV and Zhangjiagang SPV) and Zhangjiagang Terminal (via Zhangjiagang SPV), respectively.
After completion of the Share Purchase Agreements, COSCO SHIPPING Ports will cease to own any interest in any of the Target Companies, Nanjing Longtan Terminal, Yangzhou Yuanyang Terminal and Zhangjiagang Terminal. Each of the Longtan SPV, Yuanyang SPV, Zhangjiagang SPV, Yangzhou Yuanyang Terminal and Zhangjiagang Terminal will cease to be a subsidiary of COSCO SHIPPING Ports following the completion of the Transactions and Nanjing Longtan Terminal will cease to be an associate of COSCO SHIPPING Ports following the completion of the Transactions.
1
IMPLICATIONS UNDER THE LISTING RULES
As at the date of this announcement, SIPG holds 20% of the equity interest in Shanghai Pan Asia, a non-wholly owned subsidiary of the Company. Therefore, SIPG is a substantial shareholder of Shanghai Pan Asia (as defined under the Listing Rules), and the Purchaser (a wholly-owned subsidiary of SIPG) is a connected person of the Company at the subsidiary level. Accordingly, the Transactions constitute connected transactions of the Company pursuant to Chapter 14A of the Listing Rules.
As one or more of the applicable percentage ratios in respect of the Transactions, on an aggregated basis, exceed 1% but are all less than 5%, the Transactions are subject to the reporting, annual review and announcement requirements but are exempt from the circular, independent financial advice and independent shareholders' approval requirements pursuant to Chapter 14A of the Listing Rules.
The Transactions are subject to the satisfaction or waiver of conditions precedent. There is no assurance that the Transactions will take place or as to when they may take place. Shareholders and potential investors of the Company should therefore exercise caution when dealing in the securities of the Company.
POSSIBLE DISPOSAL OF INTERESTS IN TAICANG TERMINAL AND JIANGSU PETROCHEMICAL TERMINAL
In addition to the Transactions set out above, the Board would like to further announce that COSCO SHIPPING Ports also intends to dispose of all of its indirect interests in Taicang Terminal and Jiangsu Petrochemical Terminal. As at the date of this announcement, no agreement has been entered into by the COSCO SHIPPING Ports Group in relation to such disposals.
There is no assurance that the Possible Transactions will take place or as to when they may take place. Shareholders and potential investors of the Company should therefore exercise caution when dealing in the securities of the Company.
2
-
DISPOSAL OF INTEREST IN VARIOUS PORT ASSETS BY COSCO SHIPPING PORTS
INTRODUCTION
On 18 September 2019, COSCO SHIPPING Ports (a non-wholly owned subsidiary of the Company), as seller, entered into the Longtan Share Purchase Agreement, Yuanyang Share Purchase Agreement and Zhangjiagang Share Purchase Agreement with SIPG (HK), as purchaser, in relation to the sale and purchase of the indirect interests of COSCO SHIPPING Ports in Nanjing Longtan Terminal (via Longtan SPV), Yangzhou Yuanyang Terminal (via Yuanyang SPV and Zhangjiagang SPV) and Zhangjiagang Terminal (via Zhangjiagang SPV), respectively. The aggregated consideration under the Share Purchase Agreements is approximately RMB1,064,119,000 (equivalent to approximately HK$1,177,980,000).
As at the date of this announcement, Longtan SPV, Yuanyang SPV and Zhangjiagang SPV are wholly-owned subsidiaries of COSCO SHIPPING Ports and therefore, indirect non- wholly owned subsidiaries of the Company.
Upon completion of the Share Purchase Agreements, COSCO SHIPPING Ports will cease to have any interest in each of the Target Companies.
THE SHARE PURCHASE AGREEMENTS
THE LONGTAN SHARE PURCHASE AGREEMENT
Set out below is a summary of the principal terms of the Longtan Share Purchase Agreement:
Date:
18 September 2019
Parties: - COSCO SHIPPING Ports; and
- the Purchaser.
Subject Matter
Pursuant to the Longtan Share Purchase Agreement, COSCO SHIPPING Ports agreed to sell and the Purchaser agreed to purchase the Longtan Sale Shares, representing 100% of the total issued share capital of Longtan SPV.
The principal asset of Longtan SPV is its interest in Nanjing Longtan Terminal, representing approximately 16.14% of the total issued share capital of Nanjing Longtan Terminal and the entire indirect interest of COSCO SHIPPING Ports in Nanjing Longtan Terminal.
3
Consideration
The consideration for the sale and purchase of the Longtan Sale Shares pursuant to the Longtan Share Purchase Agreement is approximately RMB367,306,000 (equivalent to approximately HK$406,607,000), subject to the adjustment as detailed in the sub-paragraph headed "Adjustment to the consideration - valuation" below.
The consideration for the sale and purchase of the Longtan Sale Shares was determined after arm's length negotiations between the parties with reference to (i) the preliminary valuation of Longtan SPV as at 31 March 2019 prepared by Shanghai Orient Appraisal, being approximately RMB367,306,000 (equivalent to approximately HK$406,607,000); and (ii) the development prospects of Nanjing Longtan Terminal.
Adjustment to the consideration - valuation
The preliminary valuation will be filed with COSCO SHIPPING before the valuation can be finalised in accordance with the relevant regulations of SASAC. The final valuation is subject to any adjustments as requested by COSCO SHIPPING. In the event that the final valuation is different from the preliminary valuation, the consideration for the sale and purchase of the Longtan Sale Shares will be adjusted accordingly. The parties to the Longtan Share Purchase Agreement shall execute a supplemental agreement to agree on the adjusted consideration for the sale and purchase of the Longtan Sale Shares within five Business Days after the final valuation is confirmed. If no adjustment is needed, the parties agree that the consideration set out in the Longtan Share Purchase Agreement shall be the consideration payable by the Purchaser before closing. The consideration (as adjusted (if necessary)) shall be settled by the Purchaser before closing in a US$ equivalent amount by way of a bank transfer to an account designated by COSCO SHIPPING Ports.
Repayment of the payables
As at 31 August 2019, Longtan SPV and Nanjing Longtan Terminal together have an outstanding amount of approximately US$27,000,000 (equivalent to approximately HK$214,000,000) of payables owing to COSCO SHIPPING Ports and its associates. In addition to the consideration, the Purchaser also agreed to fully repay any payables owing to COSCO SHIPPING Ports and its associates by Longtan SPV and Nanjing Longtan Terminal. Within three Business Days after the closing, COSCO SHIPPING Ports shall notify the Purchaser the final amount of payables owing to COSCO SHIPPING Ports and its associates by Longtan SPV and Nanjing Longtan Terminal as at the closing date. The Purchaser shall fully repay such amount to COSCO SHIPPING Ports not later than 30 days after the closing date or by 31 December 2019, whichever occurs later.
4
Conditions precedent to agreement becoming effective
The agreement shall be effective upon the satisfaction or waiver (as appropriate) of, among others, the following:
- the completion of relevant internal approval procedures;
- the completion of filing with COSCO SHIPPING of the preliminary valuation report;
- the execution of the supplemental agreement confirming the final consideration for the transfer of shares (if needed);
- the filing of the transfer of shares with, or the obtaining of the approval of the transfer of shares from the appropriate outbound investment administrative authority; and
- the completion of any other necessary procedure including but not limited to obtaining prerequisite approval and registration in relation to the transfer of shares.
Closing
The Purchaser shall pay to COSCO SHIPPING Ports the consideration on the fifth Business Day from (and including) the effective date of the Longtan Share Purchase Agreement or at any other time as agreed by both parties in writing.
Closing shall take place when the transfer of shares is registered in accordance with the relevant local regulations, which shall be completed within five Business Days of the receipt of the consideration by COSCO SHIPPING Ports.
To ensure that the sale and purchase of shares will be completed by the end of 2019, both parties shall use reasonable endeavours to complete the necessary approvals, registrations and filing procedures required for the closing by 20 December 2019, and to strive to complete the transfer of the consideration for the sale and purchase of the Longtan Sale Shares by the Purchaser to COSCO SHIPPING Ports by 31 December 2019.
Post-closing audit
The parties agreed that audit reports on the net asset value of Longtan SPV in USD in accordance with IFRS and on the net asset value of Nanjing Longtan Terminal in RMB in accordance with China Accounting Standards (i) as at 31 March 2019 (being the valuation date for the preliminary valuation); and (ii) as at closing will be prepared by a reputable auditor with an international name jointly engaged by the parties within five Business Days after closing. If Nanjing Longtan Terminal's net asset value as at closing is less than its net asset value as at 31 March 2019, COSCO SHIPPING Ports shall pay to Longtan SPV such difference in USD within 30 days after the issuance of audit reports.
5
Termination
The Longtan Share Purchase Agreement will be terminated upon, among other things, (i) the non-breaching party's request for termination if the breaching party has committed a material breach of the agreement, causing the non-breaching party's failure to achieve the objective of the agreement; and (ii) the agreement of termination by the parties to the Longtan Share Purchase Agreement.
Other key terms
Pre-closing obligations
COSCO SHIPPING Ports shall exercise shareholder's rights, fulfil its obligations and undertake responsibilities in a prudent and diligent manner. In addition, COSCO SHIPPING Ports shall operate and manage Longtan SPV in accordance with applicable laws and in the normal course of business (a distribution of dividends by Longtan SPV and Nanjing Longtan Terminal or the repayment of payables to COSCO SHIPPING Ports and its associates before the closing date shall not constitute a breach of COSCO SHIPPING Ports' obligations). During the period between the signing date and the closing date, the total amount of the operating costs incurred from daily operation of Longtan SPV shall not be more than US$100,000.
Resignation of directors and senior management
On the day of the receipt of the consideration by COSCO SHIPPING Ports, it shall arrange the resignation of any director and senior management (if any) of Nanjing Longtan Terminal nominated by COSCO SHIPPING Ports or Longtan SPV.
THE YUANYANG SHARE PURCHASE AGREEMENT
Set out below is a summary of the principal terms of the Yuanyang Share Purchase Agreement:
Date:
18 September 2019
Parties:
- COSCO SHIPPING Ports; and
- the Purchaser.
6
Subject Matter
Pursuant to the Yuanyang Share Purchase Agreement, COSCO SHIPPING Ports agreed to sell and the Purchaser agreed to purchase the Yuanyang Sale Shares, representing 100% of the total issued share capital of Yuanyang SPV.
The principal asset of Yuanyang SPV is its interest in Yangzhou Yuanyang Terminal, representing approximately 51% of the total issued share capital of Yangzhou Yuanyang Terminal.
Consideration
The consideration for the sale and purchase of the Yuanyang Sale Shares pursuant to the Yuanyang Share Purchase Agreement is approximately RMB316,039,000 (equivalent to approximately HK$349,855,000), subject to the adjustment as detailed in the sub-paragraph headed "Adjustment to the consideration - valuation" below.
The consideration for the sale and purchase of the Yuanyang Sale Shares was determined after arm's length negotiations between the parties with reference to (i) the preliminary valuation of Yuanyang SPV as at 31 March 2019 prepared by Shanghai Orient Appraisal, being approximately RMB316,039,000 (equivalent to approximately HK$349,855,000); and (ii) the development prospects of Yangzhou Yuanyang Terminal.
Adjustment to the consideration - valuation
The preliminary valuation will be filed with COSCO SHIPPING before the valuation can be finalised in accordance with the relevant regulations of SASAC. The final valuation is subject to any adjustments as requested by COSCO SHIPPING. In the event that the final valuation is different from the preliminary valuation, the consideration for the sale and purchase of the Yuanyang Sale Shares will be adjusted accordingly. The parties to the Yuanyang Share Purchase Agreement shall execute a supplemental agreement to agree on the adjusted consideration for the sale and purchase of the Yuanyang Sale Shares within five Business Days after the final valuation is confirmed. If no adjustment is needed, the parties agree that the consideration set out in the Yuanyang Share Purchase Agreement shall be the consideration payable by the Purchaser before closing. The consideration (as adjusted (if necessary)) shall be settled by the Purchaser before closing in a US$ equivalent amount by way of a bank transfer to an account designated by COSCO SHIPPING Ports.
7
Repayment of the Yuanyang Loan and the payables
As at 31 August 2019, CSPI and CSPD, both being wholly-owned subsidiaries of COSCO SHIPPING Ports, and CSF, being a subsidiary of COSCO SHIPPING, have provided Yangzhou Yuanyang Terminal the Yuanyang Loan with a total outstanding amount of RMB835,500,000 (equivalent to approximately HK$925,000,000). In addition, Yuanyang SPV and Yangzhou Yuanyang Terminal together have an outstanding amount of approximately US$26,000,000 (equivalent to approximately HK$201,000,000) of payables owing to COSCO SHIPPING Ports and its associates as at 31 August 2019. In addition to the consideration, the Purchaser also agreed to fully repay the outstanding amount and interests accrued under the Yuanyang Loan and any payables owing to COSCO SHIPPING Ports and its associates by Yuanyang SPV and Yangzhou Yuanyang Terminal. Within three Business Days after the closing, COSCO SHIPPING Ports shall notify the Purchaser the outstanding amount and interests accrued under the Yuanyang Loan and the final amount of payables owing to COSCO SHIPPING Ports and its associates by Yuanyang SPV and Yangzhou Yuanyang Terminal as at the closing date. The Purchaser shall fully repay the payables owing to COSCO SHIPPING Ports and its associates by Yuanyang SPV and Yangzhou Yuanyang Terminal no later than 30 days after the closing date or by 31 December 2019, whichever occurs later, and the outstanding amount and interests accrued under the Yuanyang Loan up to the closing date as well as any interests accrued under the Yuanyang Loan between the closing date and the date of repayment to COSCO SHIPPING Ports within 60 days from the closing date.
Conditions precedent to agreement becoming effective
The agreement shall be effective upon the satisfaction or waiver (as appropriate) of, among others, the following:
- the completion of relevant internal approval procedures;
- the completion of filing with COSCO SHIPPING of the preliminary valuation report;
- the execution of the supplemental agreement confirming the final consideration for the transfer of shares (if needed);
- the filing of transfer of shares with, or the obtaining of the approval of the transfer of shares from, the appropriate outbound investment administrative authority; and
- the completion of any other necessary procedure including but not limited to obtaining prerequisite approval and registration in relation to the transfer of shares.
8
Closing
The Purchaser shall pay to COSCO SHIPPING Ports the consideration on the fifth Business Day from (and including) the date the Yuanyang Share Purchase Agreement becomes effective and the Purchaser has obtained all anti-trust approvals or at any other time as agreed by both parties in writing.
Closing shall take place when the transfer of shares is registered in accordance with the relevant local regulations, which shall be completed within five Business Days of the receipt of the consideration by COSCO SHIPPING Ports.
To ensure that the sale and purchase of shares will be completed by the end of 2019, both parties shall use reasonable endeavours to complete the necessary approvals, registrations and filing procedures required for the closing by 20 December 2019, and to strive to complete the transfer of the consideration for the sale and purchase of the Yuanyang Sale Shares by the Purchaser to COSCO SHIPPING Ports by 31 December 2019.
Post-closing audit
The parties agreed that audit reports on the net asset value of Yuanyang SPV in USD in accordance with IFRS and on the net asset value of Yangzhou Yuanyang Terminal in RMB in accordance with China Accounting Standards (i) as at 31 March 2019 (being the valuation date for the preliminary valuation); and (ii) as at closing will be prepared by a reputable auditor with an international name jointly engaged by the parties within five Business Days after closing. If Yangzhou Yuanyang Terminal's net asset value as at closing is less than its net asset value as at 31 March 2019, COSCO SHIPPING Ports shall pay to Yuanyang SPV such difference in USD within 30 days after the issuance of audit reports.
Termination
The Yuanyang Share Purchase Agreement will be terminated upon, among other things,
- the non-breaching party's request for termination if the breaching party has committed a material breach of the agreement, causing the non-breaching party's failure to achieve the objective of the agreement; and (ii) the agreement of termination by the parties to the Yuanyang Share Purchase Agreement.
9
Other key terms
Pre-closing obligations
COSCO SHIPPING Ports shall exercise shareholder's rights, fulfil its obligations and undertake responsibilities in a prudent and diligent manner. In addition, COSCO SHIPPING Ports shall operate and manage Yuanyang SPV in accordance with applicable laws and in the normal course of business so that there will not be any material adverse change to Yuanyang SPV and Yangzhou Yuanyang Terminal's situation (including but not limited to the financials, corporate governance, key personnel and other prospects) (a distribution of dividends by Yuanyang SPV and Yangzhou Yuanyang Terminal or the repayment of the payables and the outstanding amount and interests accrued under the Yuanyang Loan to COSCO SHIPPING Ports and its associates before the closing date shall not constitute a breach of COSCO SHIPPING Ports' obligations).
During the period between the signing date and the closing date, the total amount of the operating costs incurred from daily operation of Yuanyang SPV shall not be more than US $100,000. In addition, Yangzhou Yuanyang Terminal shall strive to avoid entering into any new purchase or disposal of assets with a consideration of RMB1,000,000 or more, any guarantee (pledge or mortgage) or any principal financing with parties other than COSCO SHIPPING Ports' associates. In the event of the occurrence of any of the above, Yangzhou Yuanyang Terminal shall communicate and confirm with the Purchaser.
Resignation of directors and senior management
On the day of the receipt of consideration by COSCO SHIPPING Ports, it shall arrange the resignation of any director and senior management (if any) of Yangzhou Yuanyang Terminal nominated by COSCO SHIPPING Ports or Yuanyang SPV. In addition, COSCO SHIPPING Ports has the obligation to assist the representative appointed by the Purchaser to complete the transfer of management rights.
THE ZHANGJIAGANG SHARE PURCHASE AGREEMENT
Set out below is a summary of the principal terms of the Zhangjiagang Share Purchase Agreement:
Date:
18 September 2019
Parties:
- COSCO SHIPPING Ports; and
- the Purchaser.
10
Subject Matter
Pursuant to the Zhangjiagang Share Purchase Agreement, COSCO SHIPPING Ports agreed to sell and the Purchaser agreed to purchase the Zhangjiagang Sale Shares, representing 100% of the total issued share capital of Zhangjiagang SPV.
The principal asset of Zhangjiagang SPV is (i) its interest in Zhangjiagang Terminal, representing approximately 51% of the total issued share capital of Zhangjiagang Terminal and the entire indirect interest of COSCO SHIPPING Ports in Zhangjiagang Terminal; and
- its indirect interest in Yangzhou Yuanyang Terminal through its interest in Zhangjiagang Terminal, representing approximately 4.59% of the total issued share capital of Yangzhou Yuanyang Terminal.
Consideration
The consideration for the sale and purchase of the Zhangjiagang Sale Shares pursuant to the Zhangjiagang Share Purchase Agreement is approximately RMB380,774,000 (equivalent to approximately HK$421,517,000), subject to the adjustment as detailed in the sub-paragraph headed "Adjustment to the consideration - valuation" below.
The consideration for the sale and purchase of the Zhangjiagang Sale Shares was determined after arm's length negotiations between the parties with reference to (i) the preliminary valuation of Zhangjiagang SPV as at 31 March 2019 prepared by Shanghai Orient Appraisal, being approximately RMB380,774,000 (equivalent to approximately HK$421,517,000); and (ii) the development prospects of Zhangjiagang Terminal.
Adjustment to the consideration - valuation
The preliminary valuation will be filed with COSCO SHIPPING before the valuation can be finalised in accordance with the relevant regulations of SASAC. The final valuation is subject to any adjustments as requested by COSCO SHIPPING. In the event that the final valuation is different from the preliminary valuation, the consideration for the sale and purchase of the Zhangjiagang Sale Shares will be adjusted accordingly. The parties to the Zhangjiagang Share Purchase Agreement shall execute a supplemental agreement to agree on the adjusted consideration for the sale and purchase of the Zhangjiagang Sale Shares within five Business Days after the final valuation is confirmed. If no adjustment is needed, the parties agree that the consideration set out in the Zhangjiagang Share Purchase Agreement shall be the consideration payable by the Purchaser before closing. The consideration (as adjusted (if necessary)) shall be settled by the Purchaser before closing in a US$ equivalent amount by way of a bank transfer to an account designated by COSCO SHIPPING Ports.
11
Repayment of the payables
As at 31 August 2019, Zhangjiagang SPV and Zhangjiagang Terminal together have an outstanding amount of approximately US$7,000,000 (equivalent to approximately HK$56,000,000) of payables owing to COSCO SHIPPING Ports or its associates. In addition to the consideration, the Purchaser also agreed to fully repay any payables owing to COSCO SHIPPING Ports and its associates by Zhangjiagang SPV and Zhangjiagang Terminal. Within three Business Days after the closing, COSCO SHIPPING Ports shall notify the Purchaser the final amount of any payables owing to COSCO SHIPPING Ports and its associates by Zhangjiagang SPV and Zhangjiagang Terminal as at the closing date. The Purchaser shall fully repay such amount to COSCO SHIPPING Ports not later than 30 days after the closing date or by 31 December 2019, whichever occurs later.
Conditions precedent to agreement becoming effective
The agreement becomes effective upon the satisfaction or waiver (as appropriate) of, among others, the following:
- the completion of relevant internal approval procedures;
- the completion of filing with COSCO SHIPPING of the preliminary valuation report;
- the execution of the supplemental agreement confirming the final consideration for the transfer of shares (if needed);
- the filing of transfer of shares with, or the obtaining of the approval of the transfer of shares from the appropriate outbound investment administrative authority; and
- the completion of any other necessary procedure including but not limited to obtaining prerequisite approval and registration in relation to the transfer of shares.
Closing
The Purchaser shall pay to COSCO SHIPPING Ports the consideration on the fifth Business Day from (and including) the date the Zhangjiagang Share Purchase Agreement becomes effective and the Purchaser has obtained all anti-trust approvals or at any other time as agreed by both parties in writing.
Closing shall take place when the transfer of shares is registered in accordance with the relevant local regulations, which shall be completed within five Business Days of the receipt of the consideration by COSCO SHIPPING Ports.
To ensure that the sale and purchase of shares will be completed by the end of 2019, both parties shall use reasonable endeavours to complete the necessary approvals, registrations and filing procedures required for the closing by 20 December 2019, and to strive to complete the transfer of the consideration for the sale and purchase of the Zhangjiagang Sale Shares by the Purchaser to COSCO SHIPPING Ports by 31 December 2019.
12
Post-closing audit
The parties agreed that audit reports on the net asset value of Zhangjiagang SPV in USD in accordance with IFRS and on the net asset value of Zhangjiagang Terminal in RMB in accordance with China Accounting Standards (i) as at 31 March 2019 (being the valuation date for the preliminary valuation); and (ii) as at closing will be prepared by a reputable auditor with an international name jointly engaged by the parties within five Business Days after closing. If Zhangjiagang Terminal's net asset value as at closing is less than its net asset value as at 31 March 2019, COSCO SHIPPING Ports shall pay to Zhangjiagang SPV such difference in USD within 30 days after the issuance of audit reports.
Termination
The Zhangjiagang Share Purchase Agreement will be terminated upon, among other things,
- the non-breaching party's request for termination if the breaching party has committed a material breach of the agreement, causing the non-breaching party's failure to achieve the objective of the agreement; and (ii) the agreement of termination by the parties to the Zhangjiagang Share Purchase Agreement.
Other key terms
Pre-closing obligations
COSCO SHIPPING Ports shall exercise shareholder's rights, fulfil its obligations and undertake responsibilities in a prudent and diligent manner. In addition, COSCO SHIPPING Ports shall operate and manage Zhangjiagang SPV in accordance with applicable laws and in the normal course of business so that there will not be any material adverse change to Zhangjiagang SPV and Zhangjiagang Terminal's situation (including but not limited to the financials, corporate governance, key personnel and other prospects) (a distribution of dividends by Zhangjiagang SPV and Zhangjiagang Terminal or the repayment of the payables and loans to COSCO SHIPPING Ports and its associates before the closing date shall not constitute a breach of the COSCO SHIPPING Ports' obligations).
During the period between the signing date and the closing date, the total amount of the operating costs incurred from daily operation of Zhangjiagang SPV shall not be more than US$100,000. In addition, Zhangjiagang Terminal shall strive to avoid entering into any new purchase or disposal of assets with a consideration of RMB1,000,000 or more, any guarantee (pledge or mortgage) or any principal financing with parties other than COSCO SHIPPING Ports' associates. In the event of the occurrence of any of the above, Zhangjiagang Terminal shall communicate and confirm with the Purchaser.
Resignation of directors and senior management
On the day of the receipt of consideration by COSCO SHIPPING Ports, it shall arrange the resignation of any director and senior management (if any) of Zhangjiagang Terminal nominated by COSCO SHIPPING Ports or Zhangjiagang SPV. In addition, COSCO SHIPPING Ports has the obligation to assist the representative appointed by the Purchaser to complete the transfer of management rights.
13
INFORMATION ABOUT THE TARGET COMPANIES
Longtan SPV
Longtan SPV is a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of COSCO SHIPPING Ports and therefore, a non-wholly owned subsidiary of the Company. Its principal business is to hold the indirect interests of COSCO SHIPPING Ports in Nanjing Longtan Terminal.
Set out below is the financial information of Longtan SPV (as prepared in accordance with IFRS) for the six months ended 30 June 2019 and the financial years ended 31 December 2017 and 31 December 2018, and net assets as at 30 June 2019.
(Audited) | (Audited) | |||||
(Unaudited) | For the | For the | ||||
For the 6 | year ended | year ended | ||||
months ended | 31 December | 31 December | ||||
30 June 2019 | 2018 | 2017 | ||||
US$' 000 | US$' 000 | US$' 000 | ||||
Profit/(loss) before taxation | 1,940 | (211) | 511 | |||
Profit/(loss) after taxation | 1,747 | (211) | 495 | |||
(Unaudited) | ||||||
As at | ||||||
30 June 2019 | ||||||
US$' 000 | ||||||
Net assets | 17,924 | |||||
14
Nanjing Longtan Terminal
Nanjing Longtan Terminal is a company incorporated in the PRC. As at the date of this announcement, it is held as to 16.14% by Longtan SPV with the remaining interests held by Independent Third Parties. It is principally engaged in the operation of terminals.
Set out below is the financial information of Nanjing Longtan Terminal (as prepared in accordance with China Accounting Standards) for the six months ended 30 June 2019 and the financial years ended 31 December 2017 and 31 December 2018, and net assets as at 30 June 2019:
(Audited) | (Audited) | |||||
(Unaudited) | For the | For the | ||||
For the 6 | year ended | year ended | ||||
months ended | 31 December | 31 December | ||||
30 June 2019 | 2018 | 2017 | ||||
RMB' 000 | RMB' 000 | RMB' 000 | ||||
Profit before taxation | 68,735 | 139,236 | 119,474 | |||
Profit after taxation | 51,137 | 102,888 | 87,011 | |||
(Unaudited) | ||||||
As at 30 June | ||||||
2019 | ||||||
RMB' 000 | ||||||
Net assets | 2,047,218 | |||||
15
Yuanyang SPV
Yuanyang SPV is a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of COSCO SHIPPING Ports and therefore, a non-wholly owned subsidiary of the Company. Its principal business is to hold the indirect interests of COSCO SHIPPING Ports in Yangzhou Yuanyang Terminal.
Set out below is the financial information of Yuanyang SPV (as prepared in accordance with IFRS) for the six months ended 30 June 2019 and the financial years ended 31 December
2017 and 31 December 2018, and net assets as at 30 June 2019:
(Audited) | (Audited) | |||||
(Unaudited) | For the | For the | ||||
For the 6 | year ended | year ended | ||||
months ended | 31 December | 31 December | ||||
30 June 2019 | 2018 | 2017 | ||||
RMB' 000 | RMB' 000 | RMB' 000 | ||||
Profit/(loss) before taxation | (6) | 131 | 2,813 | |||
Profit/(loss) after taxation | (6) | 131 | 2,587 | |||
(Unaudited) | ||||||
As at | ||||||
30 June 2019 | ||||||
US$' 000 | ||||||
Net assets | 12,821 | |||||
16
Yangzhou Yuanyang Terminal
Yangzhou Yuanyang Terminal is a company incorporated in the PRC. As at the date of this announcement, it is held as to 51% by Yuanyang SPV and 9% by Zhangjiagang Terminal with the remaining interests held by Independent Third Parties. It is principally engaged in the operation of terminals.
Set out below is the financial information of Yangzhou Yuanyang Terminal (as prepared in accordance with China Accounting Standards) for the six months ended 30 June 2019 and the financial years ended 31 December 2017 and 31 December 2018, and net assets as at 30 June 2019:
(Audited) | (Audited) | |||||
(Unaudited) | For the | For the | ||||
For the 6 | year ended | year ended | ||||
months ended | 31 December | 31 December | ||||
30 June 2019 | 2018 | 2017 | ||||
RMB' 000 | RMB' 000 | RMB' 000 | ||||
Loss before taxation | 4,682 | 19,096 | 5,819 | |||
Loss after taxation | 4,682 | 19,096 | 5,819 | |||
(Unaudited) | ||||||
As at | ||||||
30 June 2019 | ||||||
RMB' 000 | ||||||
Net assets | 521,212 | |||||
17
Zhangjiagang SPV
Zhangjiagang SPV is a company incorporated in Hong Kong and a wholly-owned subsidiary of COSCO SHIPPING Ports and therefore, a non-wholly owned subsidiary of the Company. Its principal business is to hold the indirect interests of COSCO SHIPPING Ports in Zhangjiagang Terminal.
Set out below is the financial information of Zhangjiagang SPV (as prepared in accordance with IFRS) for the six months ended 30 June 2019 and the financial years ended 31 December
2017 and 31 December 2018, and net assets as at 30 June 2019:
(Audited) | (Audited) | ||||||
(Unaudited) | For the | For the | |||||
For the 6 | year ended | year ended | |||||
months ended | 31 December | 31 December | |||||
30 June 2019 | 2018 | 2017 | |||||
RMB' 000 | RMB' 000 | RMB' 000 | |||||
Profit/(loss) before taxation | (2) | 6,901 | (31) | ||||
Profit/(loss) after taxation | (2) | 6,549 | (31) | ||||
(Unaudited) | |||||||
As at | |||||||
30 June 2019 | |||||||
US$' 000 | |||||||
Net assets | 14,802 | ||||||
18
Zhangjiagang Terminal
Zhangjiagang Terminal is a company incorporated in the PRC. As at the date of this announcement, it is held as to 51% by Zhangjiagang SPV and 49% by an Independent Third Party. It is principally engaged in the operation of container terminals.
Set out below is the financial information of Zhangjiagang Terminal (as prepared in accordance with China Accounting Standards) for the six months ended 30 June 2019 and the financial years ended 31 December 2017 and 31 December 2018, and net assets as at 30 June 2019:
(Audited) | (Audited) | ||
(Unaudited) | For the | For the | |
For the 6 | year ended | year ended | |
months ended | 31 December | 31 December | |
30 June 2019 | 2018 | 2017 | |
RMB' 000 | RMB' 000 | RMB' 000 | |
Profit before taxation | 40,426 | 89,696 | 75,253 |
Profit after taxation | 30,320 | 67,045 | 56,239 |
(Unaudited) | |||
As at | |||
30 June 2019 | |||
RMB' 000 | |||
Net assets | 478,893 | ||
REASONS FOR AND BENEFITS OF THE TRANSACTIONS
The Transactions are in line with COSCO SHIPPING Port's strategic plan to divest assets in order to achieve capital recycling, which will add momentum for the future development. COSCO SHIPPING Ports aims to improve asset quality, optimize domestic terminal portfolio and improve operating efficiency. Disposal of interest in various port assets, the throughput and profit contribution from which is relatively small, will further streamline COSCO SHIPPING Ports' terminal portfolio and enhance its profitability.
COSCO SHIPPING Ports is committed to building global terminal network with controlling stakes and strengthening control and management of the ports and terminals business. COSCO SHIPPING Ports believes that the Transactions could improve the overall quality of COSCO SHIPPING Ports' terminal portfolio in the Yangtze Delta Region.
Taking into account the above factors and the view of the board of directors of COSCO SHIPPING Ports, the Board (including the independent non-executive Directors) considers that the terms of the Transactions are on normal commercial terms, fair and reasonable and are in the interests of the Company and the Shareholders as a whole.
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INFORMATION ON THE PARTIES
Information on the COSCO SHIPPING Ports Group
COSCO SHIPPING Ports Group is principally engaged in the businesses of managing and operating terminals, and related businesses.
Information on the Purchaser
The Purchaser is principally engaged in businesses of international freight forwarding, shipping agency, container leasing, port stevedoring, warehousing, road cargo transportation, and import and export of goods and technologies. The Purchaser is a wholly-owned subsidiary of SIPG, which holds 20% of the equity interest in Shanghai Pan Asia, a non- wholly owned subsidiary of the Company.
To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner are Independent Third Parties.
INFORMATION ON THE GROUP
The Group provides a wide range of container shipping and terminal services covering the whole shipping value chain for both international and domestic customers.
FINANCIAL EFFECTS OF THE TRANSACTIONS
After completion of the Share Purchase Agreements, COSCO SHIPPING Ports will cease to own any interest in any of the Target Companies, Nanjing Longtan Terminal, Yangzhou Yuanyang Terminal and Zhangjiagang Terminal. Each of Longtan SPV, Yuanyang SPV, Zhangjiagang SPV, Yangzhou Yuanyang Terminal and Zhangjiagang Terminal will cease to be a subsidiary of COSCO SHIPPING Ports following the completion of the Transactions and Nanjing Longtan Terminal will cease to be an associate of COSCO SHIPPING Ports following the completion of the Transactions.
The Group is expected to record a net gain (after deducting the relevant taxes and expenses) from the Transactions of approximately US$76 million (equivalent to approximately RMB522 million) calculated based on, among other factors, the consideration and the net asset value of the Target Companies included in the consolidated financial statements of the Company as at 30 June 2019. Such gain is expected to be recognized in the consolidated financial statements of the Company for the year ending 31 December 2019. As at 30 June 2019, the Company was interested in 47.94% of the total issued share capital of COSCO SHIPPING Ports, and the impact on the profit or loss of minority shareholders of COSCO SHIPPING Ports shall also be taken into account when considering the effect of the Transactions on the net profit attributable to equity holders of the Company. Due to, among other things, the possible fluctuation in the foreign exchange rate, the possible difference in net asset value of the Target Companies as at the actual closing date as compared to that as at 30 June 2019, as well as the possible difference in the relevant taxes and expenses of the Transactions, the actual amount of the net gain on the Transactions may be different from the estimated amount set out above.
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USE OF PROCEEDS
COSCO SHIPPING Ports plans to use the proceeds from the Transactions for the following purposes: (1) future development of the COSCO SHIPPING Ports Group; (2) general working capital; and (3) repayment of loans.
IMPLICATIONS UNDER THE LISTING RULES
As at the date of this announcement, SIPG holds 20% of the equity interest in Shanghai Pan Asia, a non-wholly owned subsidiary of the Company. Therefore, SIPG is a substantial shareholder of Shanghai Pan Asia (as defined under the Listing Rules), and the Purchaser (a wholly-owned subsidiary of SIPG) is a connected person of the Company at the subsidiary level. Accordingly, the Transactions constitute connected transactions of the Company pursuant to Chapter 14A of the Listing Rules.
As one or more of the applicable percentage ratios in respect of the Transactions, on an aggregated basis, exceed 1% but are all less than 5%, the Transactions are subject to the reporting, annual review and announcement requirements but are exempt from the circular, independent financial advice and independent shareholders' approval requirements pursuant to Chapter 14A of the Listing Rules.
DIRECTORS' CONFIRMATION
Mr. Wang Haimin is considered to have a material interest in the Transactions by virtue of his directorships in COSCO SHIPPING Ports and SIPG and thus abstained from voting on the relevant resolution of the Board approving the Share Purchase Agreements and the Transactions contemplated thereunder pursuant to the articles of association of the Company. In addition, Mr. Xu Lirong, being a Director nominated by COSCO SHIPPING, voluntarily abstained from voting on the resolution of the Board approving the Share Purchase Agreements and the Transactions contemplated thereunder and did not express his view thereon. Save as disclosed above, none of the Directors has a material interest in the Transactions or is required to abstain from voting on the relevant resolution of the Board.
The Transactions are subject to the satisfaction or waiver of conditions precedent. There is no assurance that the Transactions will take place or as to when they may take place. Shareholders and potential investors of the Company should therefore exercise caution when dealing in the securities of the Company.
-
POSSIBLE DISPOSAL OF INTERESTS IN TAICANG TERMINAL AND JIANGSU PETROCHEMICAL TERMINAL
In addition to the Transactions set out above, the Board would like to further announce that COSCO SHIPPING Ports also intends to dispose of all of its indirect interests in Taicang Terminal and Jiangsu Petrochemical Terminal. As at the date of this announcement, no agreement has been entered into by the COSCO SHIPPING Ports Group in relation to such disposals.
Further announcement on the possible disposals will be made by the Company in accordance with the applicable reporting and disclosure requirements under the Listing Rules as and when appropriate.
Background information on Taicang Terminal and Jiangsu Petrochemical Terminal is set out below.
21
Taicang Terminal
Taicang Terminal is a company incorporated in the PRC. As at the date of this announcement, COSCO SHIPPING Ports is indirectly interested in 39.04% of the total issued share capital of Taicang Terminal through CSPI, a wholly-owned subsidiary of COSCO SHIPPING Ports. It is principally engaged in the operation of container terminals.
Jiangsu Petrochemical Terminal
Jiangsu Petrochemical Terminal is a company incorporated in the PRC. As at the date of this announcement, COSCO SHIPPING Ports is indirectly interested in 30.40% of the total issued share capital of Jiangsu Petrochemical Terminal through CSPD, a wholly-owned subsidiary of COSCO SHIPPING Ports. It is principally engaged in the operation of bulk liquid storage.
There is no assurance that the Possible Transactions will take place or as to when they may take place. Shareholders and potential investors of the Company should therefore exercise caution when dealing in the securities of the Company.
DEFINITIONS
In this announcement, unless the context requires otherwise, the following terms shall have the meanings as respectively ascribed below:
"Board"
"Business Day"
the board of Directors
means any day (excluding a Saturday, Sunday and any other public holidays) on which banks are generally open for business in Hong Kong and the PRC
"China Accounting | accounting rules and principles adopted in Mainland China |
Standards" |
- ), a joint stock limited company incorporated in the PRC with limited liability, the H shares of which are listed on the Main Board of the Stock Exchange (stock code: 1919) and the A shares of which are listed on the Shanghai Stock Exchange (stock code: 601919)
"COSCO SHIPPING" China COSCO Shipping Corporation Limited *(中國遠洋海運集團 有限公司), a PRC state-owned enterprise and the indirect controlling Shareholder
"COSCO SHIPPING Ports"COSCO SHIPPING Ports Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 1199) and a non-wholly owned subsidiary of the Company
"COSCO SHIPPING | COSCO SHIPPING Ports and its subsidiaries |
Ports Group" | |
"CSF" | COSCO SHIPPING Finance Co., Ltd.* (中遠海運集團財務有限責任 |
公司), a company incorporated in the PRC and a subsidiary of COSCO | |
SHIPPING |
22
"CSPD"
"CSPI"
COSCO SHIPPING Ports Development Co., Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of COSCO SHIPPING Ports
COSCO SHIPPING Ports Investments (Shanghai) Co. Ltd.*(上海中 遠海運港口投資有限公司), a company incorporated in the PRC and a
wholly-owned subsidiary of COSCO SHIPPING Ports
"Director(s)" | the director(s) of the Company |
"Group" | the Company and its subsidiaries |
"HK$" | Hong Kong dollar(s), the lawful currency of Hong Kong |
"Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
"IFRS" | International Financial Reporting Standards |
"Independent | third party(ies) independent of the Company and its connected persons |
Third Party(ies)" | under the Listing Rules |
"Jiangsu Petrochemical | Jiangsu Yangtze Petrochemical Co., Ltd.* (江蘇長江石油化工有限公 |
Terminal" | 司), a company established in the PRC, of which CSPD holds 30.40% |
of the shares | |
"Listing Rules" | the Rules Governing the Listing of Securities on The Stock Exchange |
of Hong Kong Limited | |
"Longtan Sale Shares" | 100% of the entire share capital of Longtan SPV held by COSCO |
SHIPPING Ports as at the date of this announcement | |
"Longtan Share | the share purchase agreement dated 18 September 2019 entered into |
Purchase Agreement" | between COSCO SHIPPING Ports and the Purchaser in relation to the |
sale and purchase of the Longtan Sale Shares | |
"Longtan SPV" | COSCO Ports (Nanjing) Limited (中遠碼頭（南京) 有限公司), a |
company incorporated in the British Virgin Islands, which is a wholly- | |
owned subsidiary of COSCO SHIPPING Ports | |
"Nanjing Longtan | Nanjing Longtan Container Co., Ltd. *(南京港龍潭集裝箱有限公 |
Terminal" | 司), a company incorporated in the PRC, of which Longtan SPV holds |
16.14% of the shares | |
"Possible Transactions" | the possible disposal of all of COSCO SHIPPING Ports' indirect |
interest in Taicang Terminal and Jiangsu Petrochemical Terminal | |
"PRC" | the People's Republic of China which, for the purpose of this |
announcement, excludes Hong Kong and the Macau Special | |
Administrative Region of the People's Republic of China and Taiwan |
23
"Purchaser" or "SIPG (HK)"
"RMB"
"SASAC"
"Sale Shares"
"Shanghai Orient
Appraisal"
"Shanghai Pan Asia"
"Share Purchase Agreements"
"SIPG"
"Stock Exchange" "Taicang Terminal"
"Target Companies"
"Transactions" "US$" or "USD"
"Yangzhou Yuanyang Terminal"
"Yuanyang Loan"
Shanghai International Port Group (HK) Co., Limited (上港集團（香 港）有限公司), a company incorporated in Hong Kong and a wholly-
owned subsidiary of SIPG
Renminbi, the lawful currency of the PRC
the State-owned Assets Supervision and Administration Commission of the PRC
refers to Longtan Sale Shares, Yuanyang Sale Shares and Zhangjiagang Sale Shares collectively
Shanghai Orient Appraisal Co., Ltd * (上海東洲資產評估有限公司), a qualified valuer in the PRC
Shanghai PANASIA Shipping Co., Ltd.* (上海泛亞航運有限公司), a company incorporated in the PRC with limited liability and a non- wholly owned subsidiary of the Company
refers to Longtan Share Purchase Agreement, Yuanyang Share Purchase Agreement and Zhangjiagang Share Purchase Agreement collectively
Shanghai International Port (Group) Co., Ltd.* (上海國際港務（集團） 股份有限公司), a company established in the PRC with limited liability and the shares of which are listed on the Shanghai Stock Exchange (stock code: 600018)
The Stock Exchange of Hong Kong Limited
Taicang International Container Terminal Co., Ltd. *(太倉國際集裝 箱碼頭有限公司), a company incorporated in the PRC, of which CSPI
holds 39.04% of the shares
refers to Longtan SPV, Yuanyang SPV and Zhangjiagang SPV collectively
the transactions under the Share Purchase Agreements
U.S. dollar(s), the lawful currency of the United States of America
Yangzhou Yuanyang Terminal International Ports Co., Ltd.*(揚州遠 揚國際碼頭有限公司), a company incorporated in the PRC, of which
Yuanyang SPV holds 51% of the shares and Zhangjiagang Terminal holds 9% of the shares
r e f e r s t o t h e l o a n s i n t h e a m o u n t o f R M B 4 6 2 , 5 0 0 , 0 0 0 , RMB125,000,000 and RMB248,000,000 provided by CSPI, CSPD and CSF, respectively
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"Yuanyang Sale Shares" | 100% of the entire share capital of Yuanyang SPV held by COSCO |
SHIPPING Ports as at the date of this announcement | |
"Yuanyang Share | the share purchase agreement dated 18 September 2019 entered into |
Purchase Agreement" | between COSCO SHIPPING Ports and the Purchaser in relation to the |
sale and purchase of the Yuanyang Sale Shares | |
"Yuanyang SPV" | COSCO Ports (Yangzhou) Limited (中遠碼頭（揚州）有限公司), a |
company incorporated in the British Virgin Islands, which is a wholly- | |
owned subsidiary of COSCO SHIPPING Ports | |
"Zhangjiagang Sale | 100% of the entire share capital of Zhangjiagang SPV held by COSCO |
Shares" | SHIPPING Ports as at the date of this announcement |
"Zhangjiagang Share | the share purchase agreement dated 18 September 2019 entered into |
Purchase Agreement" | between COSCO SHIPPING Ports and the Purchaser in relation to the |
sale and purchase of the Zhangjiagang Sale Shares | |
"Zhangjiagang SPV" | Win Hanverky Investments Limited, a company incorporated in Hong |
Kong, which is a wholly-owned subsidiary of COSCO SHIPPING Ports | |
"Zhangjiagang Terminal" | Zhangjiagang Win Hanverky Container Terminal Co., Ltd. *(張家港永 |
嘉集裝箱碼頭有限公司), a company incorporated in the PRC, of which | |
Zhangjiagang SPV holds 51% of the shares | |
"%" | per cent |
25
For the purposes of this announcement, (i) other than the section headed "Financial Effects of the Transactions", the exchange rates of RMB1 = HK$1.1070 and US$1 to HK$7.8465 have been used; and (ii) for the purpose of the section headed "Financial Effects of the Transactions", the exchange rate of US$1 = RMB6.8747 (which was published on 28 June 2019 by China Foreign Exchange Trade System pursuant to the authorisation of the People's Bank of China) has been used, where applicable, for purpose of illustration only and does not constitute a representation that any amount has been, could have been or may be exchanged at any particular rate on the date or dates in question or any other date.
For the purposes of this announcement, the English name with an asterisk (*) is an unofficial English transliteration or translation and is for identification purposes only.
By Order of the Board
COSCO SHIPPING Holdings Co., Ltd.
Guo Huawei
Company Secretary
Shanghai, the People's Republic of China
19 September 2019
As at the date of this announcement, the directors of the Company are Mr. XU Lirong1 (Chairman), Mr. WANG Haimin1(Vice Chairman), Mr. YANG, Liang Yee Philip2, Mr. WU Dawei2, Mr. ZHOU Zhonghui2 and Mr. TEO Siong Seng2.
1
2
Executive Director
Independent non-executive Director
- For identification purpose only
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COSCO Shipping Holdings Company Limited published this content on 19 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2019 23:06:04 UTC
