COSCO SHIPPING : DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION CONSTRUCTION OF FIVE VESSELS

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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)

DISCLOSEABLE TRANSACTION AND CONNECTED TRANSACTION

CONSTRUCTION OF FIVE VESSELS

CONSTRUCTION OF FIVE VESSELS

On 10 March 2020, the Buyers (five indirect wholly-owned subsidiaries of the OOIL, and therefore indirect non-wholly owned subsidiaries of the Company) respectively entered into the Shipbuilding Contracts on substantially the same terms with the respective Builders for the construction of the respective Vessels for an aggregate consideration of US$778.4 million (equivalent to approximately HK$6,110.44 million).

LISTING RULES IMPLICATIONS

As at the date of this announcement, COSCO SHIPPING and its associates control or are entitled to exercise control over approximately 46.22% of the entire issued share capital of the Company. Therefore, COSCO SHIPPING is a controlling shareholder of the Company and a connected person of the Company. Nantong KHI is an associate of COSCO SHIPPING which indirectly holds 50% equity interest in Nantong KHI. Dalian KHI is an indirect subsidiary of COSCO SHIPPING, and Nantong KHI directly holds 30% equity interest in Dalian KHI. Accordingly, both Nantong KHI and Dalian KHI are connected persons of the Company under Chapter 14A of the Listing Rules, and the Transaction constitutes a connected transaction of the Company.

As the Shipbuilding Contracts are entered into with entities connected with each other, the Shipbuilding Contracts are aggregated as a Transaction under Rule 14A.82(1) of the Listing Rules. As one or more of the applicable percentage ratios in respect of the Transaction exceeds 5%, but all are less than 25%, the Transaction constitutes a discloseable transaction of the Company subject to the reporting, announcement, circular and independent shareholders' approval requirements under Chapter 14 and Chapter 14A of the Listing Rules.

An Independent Board Committee comprising all the independent non-executive Directors (except Mr. Yang Liang Yee Philip) has been established to advise the Independent Shareholders on the terms of the Transaction and on how to vote on the resolutions in respect of the Transaction at the general meeting of the Company. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

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A circular containing, among others, further details of the Transaction, a letter from the Independent Board Committee and a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, is expected to be despatched to the Shareholders on or around 24 April 2020 as additional time is required to prepare certain information in the circular.

BACKGROUND

On 10 March 2020, the Buyers (five indirect wholly-owned subsidiaries of OOIL, and therefore indirect non-wholly owned subsidiaries of the Company) respectively entered into the Shipbuilding Contracts on substantially the same terms with the respective Builders for the construction of the respective Vessels for a consideration of US$155.68 million (equivalent to approximately HK$1,222.09 million) for each Vessel, and for an aggregate consideration of US$778.4 million (equivalent to approximately HK$6,110.44 million) for all the Vessels. Among the Shipbuilding Contracts, three were entered into with Nantong KHI and two were entered into with Dalian KHI.

FINANCE TERMS

OOIL, a non-wholly owned subsidiary of the Company, currently envisages that bank financing will be arranged for the Transaction and expects that finance for about 60% of the contract price of each Vessel, with the financing guaranteed by OOIL, will be finalised in the near future with the balance of the contract price to be funded from internal resources of OOIL. Should such bank finance not be arranged, the full contract price of each Vessel would come from internal resources of OOIL Group.

CONTRACT TERMS

The terms of the Shipbuilding Contracts (including the consideration for each Vessel) were determined on an arm's length basis and on normal commercial terms (based on price comparable to market price agreed between a willing buyer and a willing seller, payment terms, technical terms and delivery dates that meet OOIL's requirement).

Under each of the Shipbuilding Contracts, the relevant Purchaser shall pay the consideration of US$155.68 million in cash in instalments based on progress intervals on the construction of each Vessel.

The Vessels are expected to be delivered between the first quarter of year 2023 and the early fourth quarter of year 2023 subject to any early delivery or delay in delivery as provided in each of the Shipbuilding Contracts.

REASONS FOR AND BENEFITS OF THE TRANSACTION

Based on OOIL Group's evaluation on price, technical terms and delivery schedule, Nantong KHI's and Dalian KHI's offer is the best amongst the bidders.

The Shipbuilding Contracts have been entered into for the purposes of improving the quality of service which OOIL Group provides to its customers. It is the view of the Directors that ownership of the Vessels will improve both the operation efficiency and profitability of OOIL Group.

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The size of the Vessels together with the current vessels of smaller size would complete the fleet size of the OOIL Group and would bring economy of scale to the OOIL Group. The deployment of Vessels will be able to strengthen the market position of OOIL Group and enhance its cost competitiveness.

OOIL Group's fixed assets will increase following delivery of the Vessels, whilst current assets will decrease and long term liabilities will increase depending on the proportion of the contract price funded from internal resources and external finance.

The executive Directors, namely, Mr. Xu Lirong, Mr. Wang Haimin, Mr. Yang Zhijian and Mr. Feng Boming, as Directors nominated by COSCO (a controlling shareholder of the Company and a wholly-owned subsidiary of COSCO SHIPPING), have abstained from voting on the resolutions for the approval of the Transaction by the Board according to the Company's articles of association. Other than the abovementioned Directors, the remaining Directors are independent non-executive Directors. Mr. Yang Liang Yee Philip, an independent non-executive Director, has voluntarily abstained from voting on the Transaction as he is an independent non-executive director of OOIL. The independent non-executive Directors (except Mr. Yang Liang Yee Philip) will express their views on the Transaction in the circular after considering the advice of the Independent Financial Adviser.

LISTING RULES IMPLICATIONS

As of the date of this announcement, COSCO SHIPPING and its associates control or are entitled exercise control over the voting rights in respect of 5,579,222,079 A shares and 87,635,000 H shares of the Company, representing approximately 46.22% of the entire issued share capital of the Company. Therefore, COSCO SHIPPING is a controlling shareholder of the Company and a connected person of the Company. Nantong KHI is an associate of COSCO SHIPPING which indirectly holds 50% equity interest in Nantong KHI. Dalian KHI is an indirect subsidiary of COSCO SHIPPING, and Nantong KHI directly holds 30% equity interest in Dalian KHI. Accordingly, both Nantong KHI and Dalian KHI are connected persons of the Company under Chapter 14A of the Listing Rules, and the Transaction constitutes a connected transaction of the Company.

As the Shipbuilding Contracts are entered into with entities connected with each other, the Shipbuilding Contracts are aggregated as a Transaction under Rule 14A.82(1) of the Listing Rules. As one or more of the applicable percentage ratios in respect of the Transaction exceeds 5%, but all are less than 25%, the Transaction constitutes a discloseable transaction of the Company subject to the reporting, announcement, circular and independent shareholders' approval requirements under Chapter 14 and Chapter 14A of the Listing Rules.

An Independent Board Committee comprising all the independent non-executive Directors (except Mr. Yang Liang Yee Philip) has been established to advise the Independent Shareholders on the terms of the Transaction and on how to vote on the resolutions in respect of the Transaction at the general meeting of the Company. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

A circular containing, among others, further details of the Transaction, a letter from the Independent Board Committee and a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, is expected to be despatched to the Shareholders on or around 24 April 2020 as additional time is required to prepare certain information in the circular.

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COSCO SHIPPING and its associates will abstain from voting on the resolution in respect of the Transaction at the general meeting of the Company.

INFORMATION ON THE GROUP, OOIL GROUP AND THE BUILDERS

OOIL Group is principally engaged in the provision of container transport and logistics services.

The Group provides a wide range of container shipping and terminal services covering the whole shipping value chain for both international and domestic customers.

To the best of the Directors' knowledge, information and belief, Nantong KHI is a company established in the PRC and is an associate of COSCO SHIPPING, and in which each of COSCO SHIPPING and Kawasaki Heavy Industries Ltd. ("Kawasaki", a heavy industrial manufacturer whose shares are listed on the Tokyo Stock Exchange) indirectly or directly holds 50% equity interest respectively. Nantong KHI is principally engaged in the business of manufacturing, sales and repairing of ships (including trial-run for self-built ships).

To the best of the Directors' knowledge, information and belief, Dalian KHI is a company established in the PRC and is an indirect subsidiary of COSCO SHIPPING. It is directly held as to 36% by a wholly-owned subsidiary of COSCO SHIPPING, and as to 30% by Nantong KHI. Dalian KHI's other direct shareholder is Kawasaki. Dalian KHI is principally engaged in the business of design, manufacturing, sales and repairing of ships (excluding military ships).

To the best of the Directors' knowledge, information and belief, the scope of business of COSCO SHIPPING includes international shipping, ancillary business in international maritime transportation, import and export of goods and technologies, international freight agency business, leasing of self-owned vessels, sale of vessels, containers and steel, and maritime engineering.

DEFINITIONS

In this announcement, unless the context requires otherwise, the following terms have the meanings set out below, and words in plural shall include the singular and vice versa, as applicable:

"associates"

"Board"

"Builders"

"Buyers"

"Company"

has the meaning ascribed to it under the Listing Rules

the board of Directors

Dalian KHI and Nantong KHI

Newcontainer No.108 (Marshall Islands) Shipping Inc. ("NC108"), Newcontainer No.109 (Marshall Islands) Shipping Inc. ("NC109"), Newcontainer No.110 (Marshall Islands) Shipping Inc. ("NC110"), Newcontainer No.111 (Marshall Islands) Shipping Inc. ("NC111"), and Newcontainer No.112 (Marshall Islands) Shipping Inc. ("NC112"), each an indirect wholly-owned subsidiary of OOIL, and therefore a non-wholly owned subsidiary of the Company

COSCO SHIPPING Holdings Co., Ltd.* (中遠海運控股股份有 限公司), 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)

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"connected person" "COSCO"

"COSCO SHIPPING"

"COSCO SHIPPING Group" "Dalian KHI"

"Directors" "HK$"

"Independent Board Committee"

"Independent Financial Adviser"

"Independent Shareholders"

"Listing Rules"

"Nantong KHI"

"OOIL"

"OOIL Group" "PRC" "Shareholders"

has the meaning ascribed to it under the Listing Rules

China Ocean Shipping Company Limited* (中國遠洋運輸有 限公司), a PRC state-owned enterprise, the direct controlling shareholder of the Company and a wholly-owned subsidiary of

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 an indirect controlling shareholder of the Company

COSCO SHIPPING and its subsidiaries and associates

Dalian COSCO KHI Ship Engineering Co., Ltd.* (大連中遠海運川 崎船舶工程有限公司), a company established in the PRC and an indirect subsidiary of COSCO SHIPPING. Nantong KHI directly

holds 30% equity interest in Dalian KHI

the directors of the Company

Hong Kong Dollars, the lawful currency of The Hong Kong Special Administrative Region of the PRC

an independent board committee of the Board comprising all the independent non-executive Directors (except Mr. Yang Liang Yee Philip)

First Shanghai Capital Limited (第一上海融資有限公司), being the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the terms of the Transaction

Shareholders other than those who are members of the COSCO SHIPPING Group

the Rules Governing the Listing of Securities on the Main Board of the Stock Exchange

Nantong COSCO KHI Ship Engineering Co., Ltd.* (南通中遠海 運川崎船舶工程有限公司), a company established in the PRC and an associate of COSCO SHIPPING which indirectly holds 50%

equity interest in Nantong KHI

Orient Overseas (International) Limited (東方海外（國際）有限公

司*), a company incorporated in Bermuda and listed on the Main Board of the Stock Exchange (stock code: 316), and a non-wholly owned subsidiary of the Company

OOIL and its subsidiaries

the People's Republic of China

holder(s) of the share(s) of the Company

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"Shipbuilding Contracts" the following five shipbuilding contracts all dated 10 March 2020 in relation to the respective Vessels, each of which relates to one Vessel and contains substantially the same terms: (i) three shipbuilding contracts entered into by Nantong KHI with each of NC108, NC109 and NC110 respectively in respect of the three related Vessels; and (ii) two shipbuilding contracts entered into by Dalian KHI with each of NC111 and NC112 respectively in respect of the two related Vessels

"Stock Exchange"

"subsidiaries"

"TEU"

"Transaction"

"US$"

"Vessels"

The Stock Exchange of Hong Kong Limited

has the meaning ascribed to it under the Listing Rules

twenty-foot equivalent container unit

the transactions contemplated under the Shipbuilding Contracts

United States Dollars, the lawful currency of the United States

five units of 23,000 TEU container vessels, three of which will constructed by Nantong KHI and two of which will be constructed by Dalian KHI according to the respective Shipbuilding Contracts

"%"

per cent

The exchange rate used for reference purpose in this announcement is US$1.00 to HK$7.85.

By Order of the Board

COSCO SHIPPING Holdings Co., Ltd.

Guo Huawei

Company Secretary

Shanghai, the People's Republic of China

11 March 2020

As at the date of this announcement, the directors of the Company are Mr. XU Lirong1 (Chairman), Mr. WANG Haimin1 (Vice Chairman), Mr. YANG Zhijian1, Mr. FENG Boming1, 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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