CITIC Limited — Capital/Financing Update 2011

Jul 15, 2011

13.51A

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 disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(Incorporated in Hong Kong with limited liability) (Stock Code: 00267)

ANNOUNCEMENT

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF EQUITY INTERESTS IN CITIC GUOAN CO., LTD.

As part of CITIC Pacific’s strategy to focus on the development of its three major businesses of special steel manufacturing, iron ore mining and property development in mainland China, the Vendor, an indirect wholly-owned subsidiary of CITIC Pacific has on 15 July 2011 entered into the Sale and Purchase Agreement with the Purchaser, a wholly-owned subsidiary of CITIC Group, to dispose of its 50% non-controlling interest in CITIC Guoan, representing CITIC Pacific’s non-core investment in cable television projects, system integration and software development in the PRC. The consideration for the Disposal is RMB3.511 billion (equivalent to approximately HK$4.213 billion).

CITIC Guoan is an investment holding company, primarily holding a 41.42% interest in Guoan Information (a Shenzhen Stock Exchange listed company) and the Property. CITIC Guoan is accounted for as a jointly-controlled entity of the Group.

Listing Rules Implications

As the applicable percentage ratio (as defined in the Listing Rules) in respect of the Disposal exceeds 5% but is less than 25%, the Disposal constitutes a discloseable transaction for CITIC Pacific under Chapter 14 of the Listing Rules.

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The Purchaser is a wholly-owned subsidiary of CITIC Group, and therefore an associate of the controlling shareholder of CITIC Pacific. Accordingly, the Purchaser is a connected person of CITIC Pacific and the Disposal constitutes a connected transaction on the part of CITIC Pacific under Chapter 14A of the Listing Rules. The Disposal is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. CITIC Group and its associates are required to abstain from voting on the resolution approving the transactions contemplated under the Sale and Purchase Agreement.

A circular containing, among other things, (i) further details of the Sale and Purchase Agreement and transactions contemplated therein; (ii) recommendations from the independent board committee of CITIC Pacific to the Independent Shareholders; (iii) the advice from the independent financial adviser to the independent board committee of CITIC Pacific and the Independent Shareholders; together with (iv) a notice convening an extraordinary general meeting of CITIC Pacific at which resolutions will be proposed for the approval of the transactions contemplated under the Sale and Purchase Agreement will be sent to the Shareholders as soon as practicable and is expected to be despatched to the Shareholders on or before 19 August 2011, which would allow for sufficient time for collating information required to be included in the circular.

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INTRODUCTION

The Board is pleased to announce that on 15 July 2011, the Vendor, an indirect whollyowned subsidiary of CITIC Pacific, entered into the Sale and Purchase Agreement with the Purchaser, pursuant to which the Vendor agreed to sell and the Purchaser agreed to purchase the Sale Interest at the consideration of RMB3.511 billion (equivalent to approximately HK$4.213 billion).

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THE DISPOSAL

The Sale and Purchase Agreement

Date

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15 July 2011

Parties

• (a) Way Trend Investments Limited ( 全揚投資有限公司 ) (as the Vendor)

• (b) 中信國安集團公司 (as the Purchaser)

As at the date of this announcement, the Purchaser is a wholly-owned subsidiary of CITIC Group, and therefore an associate of the controlling shareholder of CITIC Pacific. Accordingly, the Purchaser is a connected person of CITIC Pacific.

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Subject of the Disposal

The Sale Interest represents 50% of the equity interest of CITIC Guoan. The remaining 50% interest of CITIC Guoan is owned by the Purchaser.

Consideration

The total consideration for the Disposal is RMB3.511 billion (equivalent to approximately HK$4.213 billion) which shall be settled in one lump-sum in immediately available funds in US$ equivalent (or in RMB upon agreement by both parties). The US$ and RMB conversion rate shall be the mid-point rate published by the State Administration of Foreign Exchange on its website (www.safe.gov.cn) on the second business day immediately before the date of completion of the Disposal.

The consideration for the Disposal was arrived at after arm’s length negotiation between the Vendor and the Purchaser, having taken into account factors including the trend of the closing price of the shares of Guoan Information, market conditions, trading multiples benchmarks of comparable companies, customary discounts for non-controlling block trades and the market value of the Property.

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Conditions Precedent

Completion of the Disposal is conditional upon the following conditions being fulfilled:

• (a) the grant of approval in respect of the Disposal by the Ministry of Finance of the PRC and registration of the assets evaluation report on CITIC Guoan with the relevant PRC authorities;

• (b) the grant of approval in respect of the Sale and Purchase Agreement by the relevant PRC governmental authorities in charge of commerce and foreign investments;

• (c) compliance with the relevant provisions of the Listing Rules, including the grant of approval by the Independent Shareholders of the Disposal in accordance with the Listing Rules at an extraordinary general meeting of CITIC Pacific; and

• (d) the obtaining of all other governmental, relevant approval authority or (where applicable) third party approvals, consents and/or waivers in respect of the transactions in connection with the Disposal.

Completion

Not later than the third business day immediately following the day on which all of the conditions set out in the Sale and Purchase Agreement are fulfilled, the relevant party shall notify the other in writing that the Sale and Purchase Agreement has become unconditional and completion shall take place on the fifth business day (or such other date the parties may agree in writing) immediately after the date of receipt of the aforesaid notification. The longstop date for fulfillment of the conditions set out in the Sale and Purchase Agreement shall be no later than six months from the date of the Sale and Purchase Agreement or such later date as the parties may agree.

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INFORMATION ON CITIC PACIFIC

CITIC Pacific’s major businesses are special steel manufacturing, iron ore mining and property development in mainland China. Other businesses include energy and civil infrastructure. It also holds controlling interests in Dah Chong Hong Holdings Limited and CITIC Telecom International Holdings Limited.

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INFORMATION ON THE VENDOR

The Vendor is an investment holding company incorporated in Hong Kong and an indirect wholly-owned subsidiary of CITIC Pacific.

INFORMATION ON THE PURCHASER

The principal business activity of the Purchaser is investment holding. The Purchaser, through its subsidiaries, is principally engaged in information industry businesses (which include investment in and operation of cable television projects, telecommunication valueadded services, satellite communications, integrated network systems, software development and advertising), resource extraction, advanced and new technology projects and tourism real estate development.

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INFORMATION ON CITIC GUOAN

CITIC Guoan is an investment holding company, primarily holding a 41.42% interest in Guoan Information (a Shenzhen Stock Exchange listed company) and the Property. As at the end of 2010, Guoan Information operated 17 cable television projects in 7 provinces in China. It also engaged in businesses which include resource extraction, high technology and new materials, real estate development and property management.

Set out below is a summary of the unaudited consolidated financial information of CITIC Guoan for the two years ended 31 December 2009 and 2010 (prepared in accordance with Hong Kong accounting standards):

	For the year	ended 31 December
	2010	2009
	RMB’ million	RMB’ million
Net profit before taxation	427	818
Net profit after taxation	393	664
Net profit after taxation attributable to the	169	287
shareholders of CITIC Guoan

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The unaudited consolidated net asset value of CITIC Guoan as at 31 December 2010 attributable to the shareholders of CITIC Guoan, prepared in accordance with Hong Kong accounting standards, was RMB3,648 million (equivalent to approximately HK$4,378 million).

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REASONS FOR AND BENEFITS OF THE DISPOSAL

It is CITIC Pacific’s strategy to focus on the development of its three major businesses of special steel manufacturing, iron ore mining and property development in mainland China. CITIC Pacific’s 50% non-controlling interest in CITIC Guoan represents CITIC Pacific’s non-core investment in cable television projects, system integration and software development in the PRC. The Disposal is in line with the Group’s strategy. It is expected that with reference to CITIC Pacific’s carrying value of its 50% equity interest in CITIC Guoan as at 31 December 2010, an estimated profit of approximately HK$2.35 billion would arise from the Disposal. CITIC Pacific intends to use the net proceeds (after deducting relevant costs and expenses in connection with the Disposal) for general working capital purpose of the Group.

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The Directors (excluding the independent non-executive Directors whose opinion will be given after receiving advice from the independent financial adviser) consider the terms of the Sale and Purchase Agreement to be on normal commercial terms, are fair and reasonable and in the interests of CITIC Pacific and its shareholders as a whole.

None of the Directors has a material interest in the Disposal. Accordingly, none of them is required to abstain from voting on the Board resolutions for considering and approving the Disposal.

LISTING RULES IMPLICATIONS

As the applicable percentage ratio (as defined in the Listing Rules) in respect of the Disposal exceeds 5% but is less than 25%, the Disposal constitutes a discloseable transaction for CITIC Pacific under Chapter 14 of the Listing Rules.

The Purchaser is a wholly-owned subsidiary of CITIC Group, and therefore an associate of the controlling shareholder of CITIC Pacific. Accordingly, the Purchaser is a connected person of CITIC Pacific and the Disposal constitutes a connected transaction on the part of CITIC Pacific under Chapter 14A of the Listing Rules. The Disposal is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. CITIC Group and its associates are required to abstain from voting on the resolution approving the transactions contemplated under the Sale and Purchase Agreement.

A circular containing, among other things, (i) further details of the Sale and Purchase Agreement and transactions contemplated therein; (ii) recommendations from the independent board committee of CITIC Pacific to the Independent Shareholders; (iii) the advice from the independent financial adviser to the independent board committee of CITIC Pacific and the Independent Shareholders; together with (iv) a notice convening an extraordinary general meeting of CITIC Pacific at which resolutions will be proposed for the approval of the transactions contemplated under the Sale and Purchase Agreement will be sent to the Shareholders as soon as practicable and is expected to be despatched to the Shareholders on or before 19 August 2011, which would allow for sufficient time for collating information required to be included in the circular.

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DEFINITIONS

In this announcement, unless the context requires otherwise, the following expressions have the following meanings:

“Board”	board of Directors
“CITIC Group”	中國中信集團公司(CITIC Group), a state-owned enterprise
	established under the laws of the PRC and which owns
	approximately 57.51% shareholding interest in CITIC Pacific
	as at the date of this announcement
“CITIC Guoan”	中信國安有限公司(CITIC Guoan Co., Ltd.), a limited
	liability sino-foreign equity joint venture established in the
	PRC
“CITIC Pacific”	CITIC Pacific Limited, a company incorporated in Hong Kong
	with limited liability, the shares of which are listed on the Stock
	Exchange
“connected person”	has the meaning as ascribed under the Listing Rules
“Directors”	directors of CITIC Pacific
“Disposal”	the sale of the Sale Interest pursuant to the Sale and Purchase
	Agreement
“Guoan Information”	中信國安信息產業股份有限公司(CITIC Guoan Information
	Industry Co., Ltd.), a joint stock limited company incorporated
	in the PRC whose shares are listed on the Shenzhen Stock
	Exchange
“Group”	CITIC Pacific and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Independent Shareholders”	Shareholders other than CITIC Group and its associates
“Listing Rules”	Rules Governing the Listing of Securities on the Stock
	Exchange
“Property”	CITIC Building, situated at 19 Jianguomenwai Dajie, Beijing,
	China

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“Purchaser” 中信國安集團公司 , a company with limited liability incorporated in the PRC and a wholly-owned subsidiary of CITIC Group

“PRC” the People’s Republic of China

“RMB” Renminbi, the lawful currency of the PRC

“Sale Interest” the registered capital of RMB723,395,000 in CITIC Guoan (equivalent to approximately HK$868,074,000), representing 50% of the equity interest in CITIC Guoan

“Sale and Purchase the sale and purchase agreement entered into between the Agreement” Vendor and the Purchaser on 15 July 2011 in relation to the Disposal

“Shareholders” shareholders of CITIC Pacific

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“US$” United States dollars, the lawful currency of the United States of America

“Vendor” Way Trend Investments Limited ( 全揚投資有限公司 ), a company with limited liability incorporated in Hong Kong and an indirect wholly-owned subsidiary of CITIC Pacific

By Order of the Board CITIC Pacific Limited Ricky Choy Wing Kay Company Secretary

Hong Kong, 15 July 2011

In this announcement, the conversions of RMB into HK$ have been made at a rate of RMB1.00 to HK$1.2. Such conversions are for reference only and should not be construed as representations that the RMB amount could be converted into HK$ at that or any other rates.

As at the date hereof, the executive directors of CITIC Pacific are Messrs Chang Zhenming (Chairman), Zhang Jijing, Carl Yung Ming Jie, Vernon Francis Moore, Liu Jifu, Milton Law Ming To and Kwok Man Leung; the non-executive directors of CITIC Pacific are Messrs André Desmarais, Ju Weimin, Yin Ke and Peter Kruyt (alternate director to Mr André Desmarais); and the independent non-executive directors of CITIC Pacific are Messrs Alexander Reid Hamilton, Gregory Lynn Curl and Francis Siu Wai Keung.

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