LIAONING PORT 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.
大連港股份有限公司
Dalian Port (PDA) Company Limited*(a sino-foreign joint stock limited company incorporated in the People's Republic of China)
(Stock Code: 2880) MAJOR AND CONTINUING CONNECTED TRANSACTION FINANCIAL SERVICES AGREEMENT
The Company hereby announces that the Company entered into the Financial Services Agreement with Finance Company on 28 August 2014 to renew the financial services (including the Deposit Services, the Loan Services, the Settlement Services and other financial services) provided by Finance Company to the Group for one year from 1 January 2015 to 31
December 2015, subject to the terms and conditions set out therein.
Provision of the Deposit Services constitutes a non-exempt continuing connected transaction under the Hong Kong Listing Rules for the Company and is subject to the reporting, annual review, announcement and the independent shareholders' approval requirements. Further, the provision of Deposit Services constitutes a major transaction under Chapter 14 of the Hong Kong Listing Rule.
The Loan Services to be provided by Finance Company to the Group would constitute financial assistance by a connected person for the benefit of the Group, which are on normal commercial terms similar or better than those offered from independent third parties for comparable services in the PRC and which are exempt under Rule 14A.90 of the Hong Kong Listing Rules from all reporting, annual review, announcement and independent shareholders' approval requirements since no security over the assets of the Group would be granted in respect of the loan.
In respect of the Settlement Services and other financial services to be provided by Finance Company to the Group, the Company expects that the total annual fees payable by the Group to Finance Company will not exceed RMB3,000,000 for the year ending 31 December 2015, which will fall within the de minimis threshold set out in Rule 14A.76(1) of the Hong Kong
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Listing Rules, therefore the provision of the Settlement Services and other financial services by Finance Company to the Group is exempt from the reporting, annual review, announcement and independent shareholders' approval requirements of the Hong Kong Listing Rules.
The Company will send a circular containing, among other things, a letter of advice from the independent financial adviser to both the Independent Board Committee and the Independent Shareholders and a letter of recommendation from the Independent Board Committee to the Independent Shareholders and the details of the general meeting to be held to approve the provision of Deposit Services on or before 15 September 2014 in accordance with the Hong Kong Listing Rules.
Date: | 28 August 2014 |
Parties: | (i) the Company; and (ii) Finance Company |
Financial Services: | Finance Company shall provide to the Group the following financial services: (i) depository services in accordance to the rules and regulations prescribed by the PBOC, including current deposit, fixed term deposit, call deposit and agreement deposit; (ii) loan services including line of credit, bill acceptance; , bills discounted, guarantee and other credit services; (iii) settlement services including payment and clearance services; and (iv) other financial services within the scope of the Financial Company's license. |
Duration of the Financial Services Agreement: | The Financial Services Agreement will be effective upon its execution by the contracting parties and subject to both parties having obtained the necessary approval and proper authorizations. The Financial Services Agreement is valid for one year from 1 January 2015 and to and including 31 December 2015. |
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Material Terms of the Financial Services Agreement: | The material terms of the Financial Services Agreement includes, inter alia, the following: the interest rate payable by Finance Company to the Group for any deposits should not be lower than the interest rate prescribed by PBOC for comparable deposits; it should also not be lower than interest rate paid by other major commercial banks in the PRC for comparable deposits; and it should not be lower than interest rate paid by Finance Company to any member of the PDA Group (other than any member of the Group) for comparable deposits. the daily closing balance of the Group's deposit with Finance Company should not exceed RMB4.0 billion. the daily closing balance of the Group's loan with Finance Company should not exceed RMB5.0 billion. the interest rate for any loan provided by Finance Company to the Group should not be higher than the rate charged by major commercial banks in the PRC for comparable loans; and it should not be higher than the interest payable by any member of the PDA Group (other than any member of the Group) to Finance Company for comparable loans. the settlement services are provided by Finance Company free of any charge. services fee for other financial services should not be higher than the fee charges by other financial institutions in the PRC for comparable services. |
Mutual Undertakings | The Company has made the following undertakings to Finance Company in the Financial Services Agreement: it will provide accurate, legitimate and complete information and certificate(s) when receiving any services provided under the Financial Services Agreement. The Company will strictly abide the rules governing the usage of Finance Company's services systems and shall be responsible for safekeeping and the confidentiality of any relevant information and security credentials; and |
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it will, during the period within which the Financial Services Agreement remains valid, notify Finance Company of any material changes, including but not limited to, changes in its shareholding structure or control.
Finance Company has made, amongst others, the following undertakings to the Company in the Financial Services Agreement that it will :
provide services to the Group at terms not less favourable than for comparable services provided to PDA or other members of the PDA Group (other than the Group); the terms of any services will also not be less favourable than terms in respect of comparable services provided by other financial institutions;
ensure that its Financial Operation License （金融許
可證） and other permits, approvals and filings were
legally obtained and will remain valid and effective;
ensure the secure operation of its fund settlement and clearance network and protect the safety of funds, control risk exposure, satisfy the withdrawn quests for any deposited funds;
ensure that it is in strict compliance with the risk monitoring indicators for financial institutions issued by CBRC and that its major regulatory indicators such as gearing ratio, interbank borrowing ratio and liquidity ratio will also comply with the requirements of CBRC; and
provide annual audit reports to the Company and provide other financial reports upon the request of the Company, as well as report its operation condition to the Company. The Company's auditor is authorized to review and inspect relevant accounting records of Finance Company in connection with fulfillment of requirements of the Hong Kong Listing Rules.
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Finance Company is a non-bank finance company under the direction of PBOC with permit to provide various financial services, including depository and loan facilities, credit facilities, clearance and settlement of money and credit references, to the members of the PDA Group.
Finance Company has been providing stable and high quality financial services to the member of the Group since 2012. The Directors believe that the renewal of Financial Services pursuant to the Financial Services Agreement, will enable it to continue to centralize its control and management over the financial resources of the Group, therefore to further improve the utilization and efficiency of fund usage and the Company's capabilities in fund clearance, financial management and investment. The Directors also consider the entering into the Financial Services Agreement will provide the Group with diversified sources of funding.
The terms of the Financial Services Agreement were arrived upon arm's length negotiations between the parties. The Directors (excluding the independent non-executive Directors who will give their opinion based on the recommendation of the independent financial adviser) consider that the terms of the Financial Services Agreement, in particular the terms for provision of the Deposit Services are on normal commercial or better terms, therefore believe that the terms and the proposed cap for the Deposit Services are fair and reasonable and in the best interests of the Group and the shareholders of the Company as a whole.
Each of Mr. Hui Kai, Mr. Xu Song, Mr. Xu Jian, Mr. Zhang Zuogang and Mr. Dong Yanhong, being a Director who also holds a management position with PDA, has abstained from voting on the board resolution approving the transaction contemplated under the Financial Services Agreement at the board meeting held on 28 August 2014. Save as disclosed above, none of the Directors attending the board meeting has a material interest in the Financial Services Agreement.
C. FURTHER INFORMATION ABOUT THE PARTIESThe Group mainly operates in Dalian port in Dalian, Liaoning Provinceand is principally engaged in the following services: (i) the provision of terminal and related logistics services for oil products and liquefied chemicals; (ii) the provision of terminal and related logistics services for containers; (iii) automobile terminal and related logistics and trade services; (iv) ore terminal and related logistics services; (v) general cargo terminal and related logistics and trade services; (vi) bulk grain terminal and related logistics and trade services; (vii) passenger and roll-on, roll-off terminal and related logistics services; and (viii) port value-added services and ancillary port operations.
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Finance Company is a non-bank finance company jointly established by the Company and its controlling shareholder, PDA in the PRC. Finance Company's main business scope covers providing various financial services, including depository and loan facilities, credit facilities, clearance and settlement of money and credit references, to the PDA Group.
PDA and the Company hold 60% and 40% of equity interests of Finance Company, respectively. Finance Company therefore is a connected person of the Company.
Finance Company has been providing financial services to the Group since 2012. The following table sets out the historical figures in respect of deposit services, loan services, settlement services provided by Finance Company to the Group for the past years and the approved annual cap for the year of 2014:
For the year ended 31 December 2012 (RMB'000) | For the year ended 31 December 2013 (RMB'000) | For 6 months ended 30 June 2014 (RMB'000) | Annual caps for each of three years of 2012, 2013 and 2014 (RMB'000) | |
Deposit services (maximum daily closing balance) | 1,555,962 | 1,491,809 | 2,429,552 | 4,000,000 |
Loan services (maximum daily closing balance) | 4,750,000 | 787,000 | 125,023 | 5,000,000 |
Settlement services and other financial services | 106 | 101 | 239 | 700 |
The Board has considered and proposed the following caps for the year of 2015 in respect of (i) the maximum daily closing balance of deposits (including accrued interest) placed by the Group with Finance Company; (ii) the maximum daily closing balance of loan provided by Finance Company to the Group (including accrued interest), and (iii) the maximum annual handling fees in connection with Settlement
Services and other financial services pursuant to the Financial Services Agreement:
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Deposit Services RMB4.0 billion (per day)
Loan Services RMB 5.0 billion
(per day)
The cap for Deposit Services has been determined with reference to a number of factors including:
(i) the historical figures of the maximum daily closing balance of deposit as shown in the table above;
(ii) the increasing asset and operation scale and the expected amount of cash of the Group available for deposit;
(iii) the expected amount of interest income from Finance Company compared with interest income that could otherwise be obtained by placing deposits with other commercial banks;
(iv) the potential financial risks associated with other financial services providers; and
(v) the strategies for treasury management of the Company taking into account the business development plans and the financial needs of the Group.
The cap for Loan Services has been determined with reference to a number of factors including:
(i) the historical figures of the maximum daily outstanding balance of loans (including accrued interest and handling fee) for the Loan Services as shown in the table above; and
(ii) Group's capital needs and Finance Company's financial ability for providing loan or credit to, and
guarantee for the Group.
Aggregate handling fees in connection with the Settlement
RMB3,000,000 (per year)
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The Settlement Services shall be provided free of charge. The proposed cap for the aggregate handling fees in connection with other financial services
Services and other financial services
on an annual basis has been determined with reference to:
(i) the historical amounts of handling fees as shown in the table above;
(ii) the market rates of the similar services as promulgated by PBOC and the entrusted loan services which is expected to commence in
2015; and
(iii) the operation and financial needs of the Group in the coming years.
The Directors (excluding the independent non-executive Directors who will give their opinion based on the recommendation of the independent financial adviser) consider that such caps as stated above are fair and reasonable.
Under the Hong Kong Listing Rules, provision of the Deposit Services constitutes a non-exempt continuing connected transaction and is subject to the reporting, annual review, announcement and the independent shareholders' approval requirements. Further, provision of Deposit Services constitutes a major transaction under Chapter
14 of the Hong Kong Listing Rules.
The provision of Loan Services to be provided by Finance Company to the Group would amount to financial assistance by a connected person for the benefit of the Group, which are on normal commercial terms or better than those offered from independent third parties for comparable services in the PRC and which is exempt under Rule 14A.90 of the Hong Kong Listing Rules from all reporting, annual review, announcement and independent shareholders' approval requirements since no security over the assets of the Group granted in respect of the loan.
In respect of the Settlement Services and the other financial services to be provided by Finance Company to the Group, the Company expects that the total annual fees payable by the Group to Finance Company will not exceed RMB 3,000,000 for the year of 2015, which will fall within the de minimis threshold set out in Rule 14A.76(1) of the Hong Kong Listing Rules, therefore the provision of the Settlement Services and other financial services by Finance Company to the Group is exempt from the reporting, annual review, announcement and independent shareholders' approval requirements under the Hong Kong Listing Rules.
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An Independent Board Committee has been formed to advise the Independent Shareholders in respect of the provision of the Deposit Services. Independent financial adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Deposit Services. PDA and its associates are required to abstain from voting in respect of the proposed resolution to approve the Deposit Services in the general meeting.
F. GENERAL INFORMATION
The Company will send a circular containing, among other things, a letter of advice from the independent financial adviser to both the Independent Board Committee and the Independent Shareholders and a letter from the Independent Board Committee to the Independent Shareholders and the details of the Deposit Services on or before 15
September 2014 in accordance with the Hong Kong Listing Rules.
"Board" | the board of directors of the Company; |
"CBRC" | 中 國 銀 行 業 監 督 管 理 委 員 會 (China Banking Regulatory Commission); |
"Company" | 大 連 港 股 份 有 限 公 司 (Dalian Port (PDA) Company Limited*), a joint stock limited company incorporated in the PRC; |
"connected person" | has the meaning ascribed to it under the Hong Kong Listing Rules; |
"controlling shareholder" | has the meaning ascribed to it under the Hong Kong Listing Rules; |
"Deposit Services" | depository services to be provided by Finance Company to the Group pursuant to the Financial Services Agreement; |
"Directors" | the directors of the Company; |
"Finance Company" | 大連港集團 財務有限公司 (Dalian Port Group Finance Company Limited), a non-bank finance company jointly established by PDA and the Company under the PRC laws; |
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"Financial Services
Agreement"
an agreement entered into by the Company and Finance Company on 28 August 2014 in regard to provision of Deposit Services, Loan Services, Settlement Services and other financial services by Finance Company to the Group;
"Group" the Company and its subsidiaries;
"Hong Kong
Listing Rules"
the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited;
"Independent
Board Committee"
the independent committee of the Board, the members of which consist of all the independent non-executive Directors, formed to advise the Independent Shareholders with respect to the Financial Services Agreement, in particular, the provision and the cap of Deposit Services;
"Independent
Shareholders"
shareholders of the Company other than PDA and its associates;
"Loan Services" credit, loan and guarantee services to be provided by Finance Company to the Group pursuant to the Financial Services Agreement;
"PBOC" 中國人民銀行 (People's Bank of China);
"PDA" 大連港集團有限公司 (Dalian Port Corporation Limited), the controlling shareholder of the Company and Finance Company and a limited liability company established under the PRC laws;
"PDA Group" PDA and its subsidiaries;
"PRC" the People's Republic of China (for the purpose of this announcement, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan);
"RMB" Renminbi, the lawful currency of the PRC;
"Settlement
Services"
settlement and clearance services to be provided by Finance Company to the Group pursuant to the Financial Services Agreement;
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"Shareholders" The shareholders of the Company; and
"Stock Exchange" The Stock Exchange of Hong Kong Limited.
By order of the Board of Directors
Joint Company Secretaries
Dalian City, Liaoning Province, the PRC
28 August 2014
As at the date of this announcement, the Directors are:
Executive Directors: HUI Kai, XU Song and SU Chunhua
Non-executive Directors: XU Jian, Zhang Zuogang and DONG Yanhong
Independent Non-executive Directors: Wan Kam To, Peter and GUO Yu
* The Company is registered as Non-Hong Kong Company under Part XI of the previous Companies Ordinance (equivalent to Part 16 of the Companies Ordinance with effect from 3 March 2014) under the English name "Dalian Port (PDA)
Company Limited".
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