CITIC Limited — Capital/Financing Update 2011

Jan 26, 2011

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.

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

CONNECTED TRANSACTIONS

ACQUISITION OF 100% EQUITY INTEREST IN CITIC SHIPPING AND PROVISION OF FINANCIAL ASSISTANCE

Coal is the major raw material for the Ligang power station in Jiangyin, Jiangsu province. It consumes about 9 million tons of coal per year. As the coal is mostly purchased from Northern China, the transportation of coal from ports in Northern China is crucial to the stable production of electricity by Ligang power station. CITIC Shipping is the single largest shipping supplier to the Ligang power station, which is the largest customer of CITIC Shipping.

In order to maximize control over the shipment of coal to the Ligang power station, it is intended that Jiangyin Ligang acquires CITIC Shipping. CITIC Shipping is currently a wholly-owned subsidiary of CITIC (HK).

At present, CITIC Shipping owns 5 small size bulk carriers with a total carrying capacity of around 144,000 DWT (dead weight ton), 2 tug boats and 4 barges with a total carrying capacity of around 20,000 DWT and its wholly-owned subsidiary Jiangyin Xinan is a service company, owning 4 tugs for providing assistance to mooring and departing of big vessels at quay. The acquisition of CITIC Shipping will cost RMB120,270,827.95 (approximately HK$141,919,577) which is the minimum bidding price and also the valuation of an independent valuer.

For the purposes of the Transactions, (i) Jiangyin Lidian entered into the Equity Transfer Agreement on 26 January 2011 with CITIC Trust, pursuant to which Jiangyin Lidian agreed to purchase from CITIC Trust 100% equity interest in CITIC Shipping at a consideration of RMB120,270,827.95 (approximately HK$141,919,577); and (ii) Jiangyin Lidian entered into the Loan Agreement, pursuant to which it agreed to provide CITIC Shipping a loan of up to RMB58,000,000 (approximately HK$68,440,000) for the purpose of paying back the bank loan which will become due upon the transfer of the equity of CITIC Shipping.

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Jiangyin Lidian is an indirect wholly-owned subsidiary of Jiangyin Ligang. As described in the announcement of CITIC Pacific dated 21 April 2010, the shareholding of Jiangyin Ligang is undergoing a rationalisation and upon completion of such rationalisation, the attributable interest of CITIC Pacific over Jiangyin Ligang will remain to be approximately 71%. Jiangyin Ligang is accounted for as a jointly controlled entity of CITIC Pacific. However, it is a subsidiary of CITIC Pacific for the purpose of the Listing Rules.

CITIC Trust held 90% and 10% of the equity interest in CITIC Shipping on behalf of CITIC (HK) and CITIC Investment respectively in its capacity as a trustee. CITIC Investment is a wholly-owned subsidiary of CITIC (HK). CITIC (HK) is a wholly-owned subsidiary of CITIC Group, a controlling shareholder of CITIC Pacific. In addition, CITIC Trust is also a wholly-owned subsidiary of CITIC Group, and thus all of CITIC (HK), CITIC Investment, being an associate of CITIC (HK), and CITIC Trust are connected persons of CITIC Pacific.

The Transactions constitute connected transactions of CITIC Pacific pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios under the Listing Rules relating to the aggregate amount of (i) the consideration for the Equity Transfer Agreement; and (ii) the loan amount provided to CITIC Shipping under the Loan Agreement are more than 0.1% but less than 5%, the Transactions are only subject to the reporting and announcement requirements and exempted from the independent Shareholders’ approval pursuant to the Listing Rules.

INTRODUCTION

Jiangyin Lidian submitted a tender to bid for the 100% equity interest in CITIC Shipping which had been put out to open tender on SUAEE. The tender was awarded to Jiangyin Lidian and therefore, CITIC Trust and Jiangyin Lidian entered into the Equity Transfer Agreement on 26 January 2011. Jiangyin Lidian is an indirect wholly-owned subsidiary of Jiangyin Ligang. As described in the announcement of CITIC Pacific dated 21 April 2010, the shareholding of Jiangyin Ligang is undergoing a rationalisation and upon completion of such rationalisation, the attributable interest of CITIC Pacific over Jiangyin Ligang will remain to be approximately 71%. Jiangyin Ligang is accounted for as a jointly controlled entity of CITIC Pacific. However, it is a subsidiary of CITIC Pacific for the purpose of the Listing Rules.

THE EQUITY TRANSFER AGREEMENT

Date

26 January 2011

Parties

(1) Transferor: CITIC Trust; and (2) Transferee: Jiangyin Lidian

CITIC Trust held 90% and 10% of the equity interest in CITIC Shipping on behalf of CITIC (HK) and CITIC Investment respectively in its capacity as a trustee. CITIC Investment is a wholly-owned subsidiary of CITIC (HK). CITIC (HK) is a wholly-owned subsidiary of CITIC Group, a controlling shareholder of CITIC Pacific. In addition, CITIC Trust is also a

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wholly-owned subsidiary of CITIC Group, and thus all of CITIC (HK), CITIC Investment, being an associate of CITIC (HK), and CITIC Trust are connected persons of CITIC Pacific.

CITIC (HK) is principally engaged in investment holding.

CITIC Investment is principally engaged in provision of consultancy services.

CITIC Trust is principally engaged in trust business such as fund trust, movable and immovable property trust.

Assets

100% equity interest in CITIC Shipping, being all the equity interest held by CITIC Trust in CITIC Shipping.

CITIC Shipping is principally engaged in providing transportation services by carriers in the PRC.

Consideration and Completion

The consideration for the Acquisition is RMB120,270,827.95 (approximately HK$141,919,577), of which RMB40,000,000 (approximately HK$47,200,000) was already paid to SUAEE as deposit at the time when Jiangyin Lidian submitted the bidding tender. The remaining consideration shall be paid by Jiangyin Lidian to SUAEE in full within 5 business days after the signing of the Equity Transfer Agreement, whereby SUAEE will pay the entire sum of consideration to CITIC Trust within 5 business days after issuance of the relevant asset and equity transaction certificate.

The consideration was the minimum bidding price stipulated by CITIC Trust. According to a valuation performed by an independent valuer on CITIC Shipping, the appraised net asset value of CITIC Shipping as at the Reference Date (31 July 2010) was RMB120,270,827.95 (approximately HK$141,919,577). The valuation was based on the market value of the assets and liabilities of CITIC Shipping as of the Reference Date. The consideration represents the appraised net asset value of CITIC Shipping under the said valuation. The consideration will be funded by internal resources of and bank loan to be drawn by Jiangyin Ligang.

Completion will take place on the date when the Business Administration Registration of CITIC Shipping is updated to reflect the registered owner as Jiangyin Lidian.

If at any time within 1 year commencing from the Completion Date, it comes to the attention of Jiangyin Lidian of any matter relating to CITIC Shipping which happened on or before the Reference Date but not revealed in its audited accounts or valuation report at the Reference Date and as a result of which the audited net asset value of CITIC Shipping would have been reduced if such matter has been taken into account, the consideration shall be reduced by an amount equivalent to the said reduction in the audited net asset value (the “ Shortfall Amount” ), and CITIC Trust shall, upon notification by Jiangyin Lidian, pay the Shortfall Amount to Jiangyin Lidian within 5 business days of such notification.

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Jiangyin Lidian has agreed that:

• (a) CITIC Shipping will not change its principal business;

• (b) it will not transfer, pledge or dispose its interests in CITIC Shipping within 3 years after the Business Administration Registration of CITIC Shipping has been updated;

• (c) if after the transfer, CITIC Group indicates its disagreement to CITIC Shipping making reference to "中信" in its name, Jiangyin Lidian shall within 14 business days of such notification change the name of CITIC Shipping.

Furthermore, Jiangyin Lidian has agreed to procure CITIC Shipping to make a one-off payment to repay all balances (including interests where applicable) due by CITIC Shipping to CITIC Trust, CITIC (HK) and its subsidiaries within 7 business days after the Business Administration Registration has been updated. Jiangyin Lidian is jointly and severally liable to repay such balances. For reference purposes, the aggregate amounts due by CITIC Shipping to such parties as at 31 December 2010 are set out as below :

	RMB	US$	JPY	HK$	Total
Aggregate Amounts HK$ equivalent	146,935,065	14,573,936	24,362,573	339,690	289,689,850
	173,383,377	113,676,701	2,290,082	339,690

PROVISION OF FINANCIAL ASSISTANCE

On 26 January 2011, Jiangyin Lidian entered into the Loan Agreement, pursuant to which Jiangyin Lidian has agreed to provide CITIC Shipping a loan of up to RMB58,000,000 (approximately HK$68,440,000) for a term of 1 year (" Term ") commencing from 1 February 2011 (or the remittance record date) to 31 January 2012 (or a date being 1 year after the remittance record date) for the purpose of paying back CITIC Shipping’s bank loan, which will become due upon the transfer of the equity of CITIC Shipping. Such lending arrangement constitutes a financial assistance transaction. The above loan is a one-off facility and is unsecured and bear interest at a rate calculated at the prime rate of PRC and floating every 3 months. Interest of the loan shall be payable every 3 months while the principal amount of the loan shall be repaid on the expiry of the Term.

INFORMATION OF CITIC SHIPPING

CITIC Shipping is a shipping company, providing transportation services by carriers. It has around 18 years’ history of operating shipping business in the PRC and has a staff of 147 persons. It owns 5 small size bulk carriers with a total carrying capacity of around 144,000 DWT (dead weight ton), 2 tug boats and 4 barges with a total carrying capacity of around 20,000 DWT and its wholly-owned subsidiary Jiangyin Xinan is a service company, owning 4 tugs for providing assistance to mooring and departing of big vessels at quay. Upon completion of the Equity Transfer Agreement, CITIC Shipping will become a subsidiary of Jiangyin Lidian and an indirect non-wholly-owned subsidiary of CITIC Pacific for the purpose of the

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Listing Rules. For accounting purpose, Jiangyin Ligang and its subsidiaries are jointly controlled entities of CITIC Pacific. The group structure of CITIC Shipping is as follow:

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----- Start of picture text -----

CITIC Shipping
1.23%
100%
Shanghai Mingzhu River
Jiangyin Xinan
Sightseeing
Shipping Limited
Development Limited
( 江陰信安船務有
( 上海明珠水上娛樂發
限公司 )
展有限公司 )
(note)
----- End of picture text -----

Note:

The remaining 98.77% of Shanghai Mingzhu River Sightseeing Development Limited is currently owned by two independent third parties.

FINANCIAL INFORMATION OF CITIC SHIPPING

Set out below are the financial information of CITIC Shipping based on its unaudited consolidated financial statements for the financial years ended 31 December 2009 and 2010 prepared in accordance with Hong Kong accounting standards:

	Year ended	Year ended
	31 December 2009	31 December 2010
	(RMB’million)	(RMB’million)
CITIC Shipping
Profit/(loss) before taxation	20	(33)
Profit/(loss) after taxation	16	(34)

The unaudited consolidated net asset value of CITIC Shipping as at 31 December 2010 was approximately RMB49 million (approximately HK$58 million).

The original investment amount of CITIC (HK) and CITIC Investment in respect of 100% in CITIC Shipping was RMB55,000,000 (approximately HK$64,900,000), including capital contribution into CITIC Shipping at the time of its establishment and the cost to acquire the minority stake.

INFORMATION OF THE GROUP

The Group is engaged in a diversified range of businesses in Hong Kong and the PRC, including the manufacturing of special steel, iron ore mining, property development and investment, basic infrastructure (such as power generation, tunnels and communications) and marketing and distribution.

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Jiangyin Ligang is principally engaged in the business of power generation, supply and sale of electricity.

Jiangyin Lidian was newly incorporated in 2009 and is principally engaged in the coal transportation to support the operation of Jiangyin Ligang. At present, Jiangyin Lidian has four 57,000 DWT carriers in operation with another 57,000 DWT carrier under construction.

REASONS FOR AND BENEFIT OF THE ACQUISITION

Coal is the major raw material for the Ligang power station in Jiangyin, Jiangsu province. It consumes about 9 million tons of coal per year. As the coal used by Jiangyin Ligang is mostly purchased from Northern China, the transportation of coal from ports in Northern China is crucial to the stable production of electricity by Ligang power station. CITIC Shipping is the single largest shipping supplier to the Ligang power station, which is the largest customer of CITIC Shipping.

Given that Jiangyin Lidian’s carriers will be put into operation in succession, it is in Jiangyin Lidian’s interest to acquire CITIC Shipping to maximise its control on the vessel fleet for its coal transportation, strengthen the management team and expertise in shipping industry and provide synergy effect for sea transportation business.

The Board, including the independent non-executive Directors, considers that the terms of the Equity Transfer Agreement and the Loan Agreement are fair and reasonable and on normal commercial terms and that the entering into of the Equity Transfer Agreement and the Loan Agreement is in the interest of the Group and the Shareholders as a whole.

Furthermore, none of the Directors has material interest in the Equity Transfer Agreement and the Loan Agreement or is required to abstain from voting on the Board resolutions in relation to the Equity Transfer Agreement and the Loan Agreement.

IMPLICATIONS OF THE LISTING RULES

CITIC Trust held 90% and 10% of the equity interest in CITIC Shipping on behalf of CITIC (HK) and CITIC Investment respectively in its capacity as a trustee. CITIC Investment is a wholly-owned subsidiary of CITIC (HK). CITIC (HK) is a wholly-owned subsidiary of CITIC Group, a controlling shareholder of CITIC Pacific. In addition, CITIC Trust is also a wholly-owned subsidiary of CITIC Group, and thus all of CITIC (HK), CITIC Investment, being an associate of CITIC (HK), and CITIC Trust are connected persons of CITIC Pacific.

The Transactions constitute connected transactions of CITIC Pacific pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios under the Listing Rules relating to the aggregate amount of (i) the consideration for the Equity Transfer Agreement; and (ii) the loan amount provided to CITIC Shipping under the Loan Agreement are more than 0.1% but less than 5%, the Transactions are only subject to the reporting and announcement requirements and exempted from the independent Shareholders’ approval pursuant to the Listing Rules.

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DEFINITIONS

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

“Acquisition”

the acquisition of equity interest in CITIC Shipping by Jiangyin Lidian pursuant to the Equity Transfer Agreement;

“associate”

has the meaning ascribed to it by the Listing Rules;

“Board”

the board of Directors;

“CITIC (HK)”

CITIC Hong Kong (Holdings) Limited ( 中信(香港集 團 ) 有限公司 ), a company incorporated in Hong Kong with limited liability and a wholly-owned subsidiary of CITIC Group ;

“CITIC Group”

CITIC Group ( 中國中信集團公司 ), the ultimate holding company of CITIC (HK) and CITIC Pacific;

• “CITIC Pacific”

CITIC Pacific Limited ( 中信泰富有限公司 ), a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange;

“CITIC Investment”

CITIC Investment Management (Shanghai) Company Limited ( 中信投資管理(上海 ) 有限公司 ), a company established in the PRC and a wholly-owned subsidiary of CITIC (HK);

“CITIC Shipping”

Shanghai CITIC Shipping Corporation Limited ( 上海 中信輪船有限公司 ), a company established in the PRC with limited liability ;

“CITIC Trust”

CITIC Trust Co., Ltd ( 中信信托有限責任公司 ), a company established in the PRC and a wholly-owned subsidiary of CITIC Group;

“Completion”

the completion of the Equity Transfer Agreement;

“Completion Date”

date of Completion;

“connected person”

has the meaning ascribed to it by the Listing Rules;

“controlling shareholder”

has the meaning ascribed to it by the Listing Rules

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“Directors”

“Equity Transfer Agreement”

“Group”

“HK$”

“Hong Kong”

“Jiangyin Lidian”

“Jiangyin Ligang”

“Jiangyin Xinan”

• “JPY”

• “Listing Rules”

“Loan Agreement”

“percentage ratio(s)”

“PRC”

the directors of CITIC Pacific;

• the equity transfer agreement entered into between Jiangyin Lidian and CITIC Trust on 26 January 2011 in relation to the Acquisition;

CITIC Pacific and its subsidiaries;

• Hong Kong dollars, the lawful currency of Hong Kong;

• the Hong Kong Special Administrative Region of the PRC;

• Jiangyin Lidian Coal Transportation & Marketing Co., Ltd. ( 江陰利電煤炭運銷有限公司 ), a company established in the PRC with limited liability and a wholly-owned subsidiary of Jiangyin Ligang;

• Jiangyin Ligang Electric Power Generation Company Limited ( 江陰利港發電股份有限公司 ), a foreign investment stock company established in the PRC and an indirect non-wholly-owned subsidiary of CITIC Pacific for the purpose of operating Ligang power station phases 3 and 4;

• Jiangyin Xinan Shipping Limited ( 江陰信安船務有 限公司 ), a company established in the PRC and a wholly-owned subsidiary of CITIC Shipping;

• Japanese yen, the lawful currency of Japan;

• the Rules Governing the Listing of Securities on the Stock Exchange;

• the loan agreement entered into among Jiangyin Lidian as lender, CITIC Shipping as borrower and China Construction Bank Corporation as agent on 26 January 2011, pursuant to which Jiangyin Lidian agreed to provide CITIC Shipping a loan of up to RMB58,000,000 (approximately HK$68,440,000) for the purpose of paying back CITIC Shipping’s bank loan which will become due upon the transfer of CITIC Shipping’s equity;

has the meaning ascribed to it by the Listing Rules;

People’s Republic of China;

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“Reference Date” 31 July 2010; “RMB” Renminbi, the lawful currency of the PRC; “Shareholders” shareholders of CITIC Pacific; “Stock Exchange” The Stock Exchange of Hong Kong Limited;

“Stock Exchange” The Stock Exchange of Hong Kong Limited; “SUAEE” Shanghai United Assets and Equity Exchange;

“Transactions” the Acquisition and the provision of financial assistance under the Loan Agreement; and

“US$”

United States dollars, the lawful currency of the United States of America.

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

Hong Kong, 26 January 2011

In this announcement, the conversions of foreign currency amounts into Hong Kong dollars have been made at rates of RMB1.00 to HK$1.18, US$1.00 to HK$7.80 and JPY100.00 to HK$9.40. Such conversions are for reference only and should not be construed as representations that those foreign currency amounts could be converted into Hong Kong dollars 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, Li Shilin, Liu Jifu, Milton Law Ming To, Wang Ande and Kwok Man Leung; the non-executive directors of CITIC Pacific are Messrs Willie Chang, 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, Hansen Loh Chung Hon and Norman Ho Hau Chong.

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