COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2006

Jun 14, 2006

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes 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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(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock code: 2866)

Discloseable Transaction: Finance Lease of Containers

The Board is pleased to announce that on 9 June 2006, CS Asia, a wholly-owned subsidiary of the Company, has entered into the Head Lease Agreement with CF 2006-1, pursuant to which CS Asia shall lease from CF 2006-1 separate batches of Lease Containers. The lease period for each batch of Lease Containers shall be eight years commencing from the date of acceptance of such batch of Lease Containers by CS Asia. Under the Loan Agreement, the Lenders shall provide to CF 2006-1 a loan up to the maximum principal amount of US$300,000,000 (equivalent to approximately HK$2,328,000,000) to fund the purchase of the Lease Containers. On the assumption that such loan is fully drawn down on 9 June 2006 for the purchase of containers and LIBOR is at the rate of 5.24% (i.e. LIBOR on 5 June 2006) throughout the lease period, the maximum aggregate lease payments payable by CS Asia for the Lease Containers under the Head Lease Agreement is approximately US$371,838,000 (equivalent to approximately HK$2,885,463,000).

As the transaction under the Head Lease Agreement constitutes a finance lease and the relevant percentage ratios applicable to such transaction for the purpose of Chapter 14 of the Listing Rules is more than 5% but less than 25%, it constitutes a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules. A circular containing, amongst other things, information regarding the Head Lease Agreement will be despatched to the Shareholders shortly.

1. The Head Lease Agreement

• (a) Date: 9 June 2006

• (b) Parties Lessor: CF 2006-1, which to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, is a special purpose vehicle incorporated for the purpose of entering into the Finance Lease Agreements and has not otherwise carried on any other business prior to entering into the Finance Lease Agreements

• The Company is registered as an oversea company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name and the English name “China Shipping Container Lines Company Limited”.

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Lessee: CS Asia, a wholly-owned subsidiary of the Company principally engage in arranging the finance lease of vessels, containers and relevant equipments to the Group

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, CF 2006-1 and its ultimate beneficial owners, the Lenders, are independent third parties that are not connected persons of the Company, and are not connected with the Directors, supervisors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates.

(c) The Lease Containers

CF 2006-1 shall, during the Availability Period, either purchase from the Vendors under separate Borrower S&P Agreements or purchase from CS Asia under separate Lessee S&P Agreements batches of Lease Containers. The containers which might be sold by CS Asia to CF 2006-1 in the future will be supplied by the Vendors. Lease Containers purchased by CF 2006-1 from CS Asia or the Vendors shall be leased back or leased to CS Asia under the Head Lease Agreement.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendors, other than DFIC and certain subsidiaries of China Shipping, together with their ultimate beneficial owners are not connected persons of the Company, and are not connected with the Directors, supervisors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates. The Board also confirms that the terms and conditions of the Borrower S&P Agreements to be entered into between the Vendors, other than DFIC and certain subsidiaries of China Shipping, and CF 2006-1 and those of the Lessee S&P Agreements to be entered into between CS Asia and CF 2006-1 shall be on normal commercial terms and on terms that are fair and reasonable and no less favourable to the Group than terms available from independent third parties.

The Vendors are principally engaged in the production of marine containers and container spare parts.

• (d) Lease Payments

Under the Head Lease Agreement, the lease payments for each batch of Lease Containers shall be paid in 32 quarterly payments, which are not of the same amount, each comprising of principal and /or interest components. The principal component of any particular batch of Lease Containers shall be its purchase price payable by CF 2006-1 under the relevant Borrower S&P Agreement or the relevant Lessee S&P Agreement. The interest component is determined by the principal amount outstanding, the lease period and the interest rate, which is LIBOR plus a certain margin. Pursuant to the Loan Agreement, the LIBOR in relation to any relevant sum and relevant period shall be the rate shown on the TMS as being the rate per annum at which United States dollars deposits for a three-month period are offered at or about 11:00 a.m. (London time) on the second business day on which United States dollars deposits may be dealt in on the London interbank market before the first day of such period or, if no such rate appears on the TMS, the rate determined by Citicorp. CS Asia shall pay each lease payment to CF 2006-1 in arrears, with the first payment falling due on the seventh calendar day prior to the date falling three months after that batch of containers have been accepted by CS Asia and subsequent payments falling due on each of the dates which fall at consecutive three months’ intervals after such first payment date. All the lease payments shall be paid in full and in United States dollars. Under the Loan Agreement, the

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Lenders shall provide to CF 2006-1 a loan up to the maximum principal amount of US$300,000,000 (equivalent to approximately HK$2,328,000,000) to fund the purchase of the Lease Containers from the Vendors and CS Asia. On the assumption that such loan is fully drawn down on 9 June 2006 for the purchase of containers and LIBOR is at the rate of 5.24% (i.e. LIBOR on 5 June 2006) throughout the lease period, the maximum aggregate lease payments payable by CS Asia for the Lease Containers under the Head Lease Agreement is approximately US$371,838,000 (equivalent to approximately HK$2,885,463,000). CS Asia intends to fund such lease payments from the operating revenue of the Group to be generated through its utilization of such Lease Containers.

The terms of the Head Lease Agreement, including the interest element of the lease payments, were determined on the basis of arm’s length negotiations between CS Asia and the Lenders.

The principal amount of US$300,000,000 available under the Loan Agreement was determined by the Group after taking into account the expected growth in its container shipping business and the additional number of containers required to meet such growth.

• (e) Lease Period

• Under the Head Lease Agreement, the lease period for each batch of Lease Containers shall be a term of eight years commencing from the date of acceptance of such batch of Lease Containers by CS Asia. Furthermore, CS Asia may elect to early terminate the lease period for a particular batch of Lease Containers at any time, provided that the Outstanding Indebtedness relating to such batch of Lease Containers has been satisfied and discharged in full by CS Asia, or CS Asia may elect to early terminate the lease period by written notice when CF 2006-1 defaults in the performance of certain of its obligations under the Head Lease Agreement and such default continues.

• (f) Title The title to each and every container shall remain fully vested in CF 2006-1 throughout its relevant lease period.

• (g) Purchase Option At the end of the lease period of each relevant batch of Lease Containers, provided that all sums owed by CS Asia to CF 2006-1 in respect of such batch of Lease Containers have been satisfied and discharged in full, CS Asia shall have the option to purchase such batch of Lease Containers for US$1 (equivalent to approximately HK$7.76).

• (h) The Sub-Lease Agreement and the Agreement to Lease On 9 June 2006, CS Asia entered into the Sub-Lease Agreement with CSHK, a wholly-owned subsidiary of the Company, for the sub-lease of each batch of Lease Containers it shall receive under the Head Lease Agreement. Under the Sub-Lease Agreement, the lease payments for each batch of Lease Containers shall be paid on a quarterly basis and shall be calculated based on the particular types of containers leased. CSHK shall pay each lease payment to CS Asia in arrears on the eighth calendar day before the end of each calendar quarter commencing from the date on which the first advance payment is made by the Lenders to CF 2006-1 under the Loan Agreement for the acquisition of the relevant batch of containers.

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On the same day, CS Asia entered into the Agreement to Lease with the Company, under which the Company agreed to sub-lease from CS Asia the relevant Lease Containers upon the expiry or termination of the Sub-Lease Agreement for any reason. The lease period for each relevant batch of Lease Containers shall be at least eight years. The lease payments are the same as those set out in the Sub-Lease Agreement which shall be paid quarterly in arrear on the eighth day prior to the last day of each consecutive three months’ period commencing from the date on which CS Asia receives advance payment from the Company in relation to the sub-lease of such Lease Containers.

2. Security Deed

CF 2006-1, CS Asia and CSHK entered into the Security Deed with Citicorp as security agent on 9 June 2006, under which they agreed to assign with full title guarantee by way of a first priority assignment to Citicorp all their respective rights, title and interest present and future in and to, among other things, the Finance Lease Agreements and all their respective benefits therein by way of security for payment of the Outstanding Indebtedness.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, (1) Citicorp is a restricted licence bank and principally engages in dealing in securities, advising on securities and asset management; and (2) Citicorp and its ultimate beneficial owners are independent third parties that are not connected persons of the Company, and are not connected with the Directors, supervisors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates.

3. Reasons for Entering into the Finance Lease Arrangements

The Company is one of the world’s leading container shipping companies, currently seeking opportunities to acquire additional containers to meet growing transportation demand and achieve sustainable growth. The transaction outlined in this announcement is consistent with the Group’s strategy of generating operating revenue from additional containers, which can be used to finance the acquisition of such containers. Furthermore, when the repayment period or lease period exceeds 5 years (as stated above, the lease period for each batch of Lease Containers is 8 years), it is easier for the Company to acquire the containers on a finance lease basis as compared with funding such acquisition by obtaining a direct loan from banks, and the interest rate applicable under a finance lease arrangement is lower. The Company is therefore funding the acquisition of the Lease Containers on a finance lease basis.

The Board also confirms that the transaction contemplated under the Head Lease Agreement (including the lease payments) was entered into in the ordinary and usual course of its business, and on normal commercial terms and on terms that are fair and reasonable, in the interests of the Company and its shareholders as a whole and no less favourable to the Company than terms available from independent third parties. Particulars of these agreements will be disclosed in the circular to the Shareholders.

4.

Accounting Treatment of Finance Lease of Containers

The accounting treatment of this finance lease shall be consistent with the Company’s present accounting policy regarding finance leases described below.

This finance lease shall be capitalised at the lease’s commencement at the lower of the fair value of the Lease Containers and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current liabilities. The interest element of the finance cost is recognised in the consolidated

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profit and loss account over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Each Lease Container held under this finance lease is depreciated over the shorter of its estimated useful life or the relevant lease period.

5. General Information

The Group is principally engaged in the operation and management of international and domestic container marine transportation.

As the transaction under the Head Lease Agreement constitutes a finance lease and the relevant percentage ratios applicable to such transaction for the purpose of Chapter 14 of the Listing Rules is more than 5% but less than 25%, it constitutes a discloseable transaction for the Company under Rule 14.06(2) of the Listing Rules. A circular containing, amongst other things, information regarding the Head Lease Agreement will be despatched to the Shareholders shortly.

DFIC is a Vendor and certain other subsidiaries of China Shipping might also become Vendors. Since DFIC and those subsidiaries of China Shipping are connected persons of the Company, the sale of containers by them to CS Asia constitute connected transactions of the Company under the Listing Rules. These connected transactions shall be entered into in accordance with the terms and conditions of the master provision of containers agreement dated 1 April 2006 entered into between the Company and China Shipping. Please refer to the Company’s announcement dated 27 January 2006 and circular dated 13 February 2006 for details of that agreement. Such connected transactions together with the associated annual caps have been approved by the Shareholders (China Shipping and its associates abstaining) at the special general meeting of the Shareholders on 31 March 2006.

The transactions whereby DFIC and certain subsidiaries of China Shipping sell containers to CF 2006-1 under the Borrower S&P Agreements and then CF 2006-1 leases such containers to CS Asia under the Head Lease Agreement shall be entered into in accordance with the terms and conditions of the above master provision of containers agreement.

The aggregate annual consideration receivable by DFIC and those subsidiaries of China Shipping for the sale of containers to CS Asia and CF 2006-1, together with the aggregate annual consideration receivable by other members of China Shipping Group for the sale of containers to the Group under the above master provision of containers agreement, shall not exceed the relevant annual cap mentioned in the Company’s announcement dated 27 January 2006.

6. Definition

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

• “Agreement to Lease”

“associates”

the agreement to sub-lease executed on 9 June 2006 between CS Asia as lessor and the Company as lessee

has the meaning ascribed to such term under the Listing Rules

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“Availability Period”

the period commencing on 9 June 2006 and ending on the earlier of (1), either (a) the date falling eleven months after 9 June 2006, or (b) (in the case where CF 2006-1 exercises its option to extend such period pursuant to the provisions of the Loan Agreement) the date falling fourteen months after 9 June 2006; and (2) the date on which the relevant funds under the Loan Agreement is fully drawn, cancelled or terminated under the provisions of the Loan Agreement

• “Board”

• “Borrower S&P Agreements”

• “CF 2006-1”

• “China Shipping”

the board of directors of the Company

container sale and purchase agreements or similar contracts to be executed during the Availability Period by a Vendor as seller and CF 2006-1 as purchaser for the purchase of containers

• Container Finance 2006-1 Limited, a company incorporated under the laws of the Cayman Islands China Shipping (Group) Company (中國海運（集 團）總公司 ), a wholly state-owned enterprise of the PRC and the controlling shareholder of the Company

• “China Shipping Group” China Shipping and its subsidiaries and associates (excluding the Group)

• “Citicorp” Citicorp International Limited, a restricted license bank incorporated in Hong Kong, which is a subsidiary of Citigroup Inc., a worldwide financial services organization incorporated in the State of New York, United States of America

• “Company” China Shipping Container Lines Company Limited (中海集裝箱運輸股份有限公司 ), a joint stock limited company established in the PRC, of which 2,420,000,000 H shares are listed on The Stock Exchange of Hong Kong Limited

“Co-ordinating Lead Arrangers” Citigroup Global Markets Asia Ltd., a limited liability company incorporated in Hong Kong, and its representative office Citibank, N.A. Shanghai Branch incorporated in the PRC, as co-ordinating lead arrangers under the Loan Agreement, each of which, so far as the Directors are aware, having made all reasonable enquiries, together with its ultimate beneficial owners are independent third parties that are not connected persons of the Company, and are not connected with the Directors, supervisors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates

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“CS Asia” China Shipping Container Lines (Asia) Co., Ltd. ( 中海集裝箱運輸（亞洲）有限公司 ), a company incorporated under the laws of the British Virgin Islands with its principal place of business in Hong Kong, and a wholly-owned subsidiary of the Company

• “CSHK”

China Shipping Container Lines (Hong Kong) Co., Ltd. (中海集裝箱運輸（香港）有限公司 ), a limited liability company incorporated in Hong Kong and a wholly-owned subsidiary of the Company

• “DFIC” Dong Fang International Container (Lianyungang) Co., Ltd., a limited liability company incorporated in the PRC, a wholly-owned subsidiary of China Shipping and a connected person of the Company

• “Directors” the directors of the Company

• “Finance Lease Agreements” the Lessee S&P Agreements, the Borrower S&P Agreements, the Head Lease Agreement, the SubLease Agreement, the Agreement to Lease, the Security Deed and the Loan Agreement

• “Group” the Company and its subsidiaries

“Head Lease Agreement” the agreement to lease executed on 9 June 2006 between CS Asia as lessee and CF 2006-1 as lessor “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Lease Containers” relevant units and items of new containers to be purchased by CF 2006-1 from CS Asia under separate Lessee S&P Agreements or from the Vendors under separate Borrower S&P Agreements and to be leased back or leased by CF 2006-1 to CS Asia under the Head Lease Agreement

“Lenders” the banks and other financial institutions named in the Loan Agreement who agreed to make available a loan facility of up to US$300,000,000 to the CF2006-1

• “Lessee S&P Agreements” container sale and purchase agreements to be executed during the Availability Period by CS Asia as seller and CF 2006-1 as purchaser for the purchase of containers

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“Loan Agreement” the loan agreement with CF 2006-1 as borrower and the Lenders as lenders dated 9 June 2006

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“Outstanding Indebtedness” the aggregate of all principal amounts advanced, all interest accrued thereon, the expenses and all other sums of money from time to time owing by CF 2006-1 to the Lenders under the Loan Agreement “percentage ratio” has the meaning ascribed to such term under the Listing Rules “PRC” the People’s Republic of China “Security Deed” the security deed executed on 9 June 2006 between CF 2006-1, CS Asia and CSHK as assignors and Citicorp as security agent “Shareholders” shareholders of the Company “Sub-Lease Agreement” the agreement to sub-lease executed on 9 June 2006 between CS Asia as lessor and CSHK as lessee “TMS” the display designated as page “3750” on the telerate monitor system or such other page as may replace page “3750” on that system for the purpose of displaying offered rates for US$ deposits “US$” United States dollars, the lawful currency of United States of America “Vendors” China International Marine Containers Group, Co., Ltd., Changzhou Xin Huachang International Containers Co., Ltd., Singamas Container Holdings Ltd., Jindo Corporation, Yangzhou Tongyun Container Co., Ltd., Yangzhou Tonglee Reefer Container Co., Ltd., DFIC, and their respective subsidiaries or associated companies and such other companies which shall have been approved by the Co-ordinating Lead Arrangers and which have agreed to sell containers to CS Asia and CF 2006-1

By order of the Board of

China Shipping Container Lines Company Limited Li Kelin Chairman

Shanghai, the People’s Republic of China 13 June 2006

The Board as at the date of this announcement comprises of Mr. Li Kelin, Mr. Jia Hongxiang, Mr. Huang Xiaowen and Mr. Zhao Hongzhou, being executive directors, Mr. Li Shaode, Mr. Zhang Jianhua, Mr. Wang Daxiong, Mr. Zhang Guofa and Mr. Xu Hui, being nonexecutive directors, and Mr. Hu Hanxiang, Mr. Gu Nianzu, Mr. Wang Zongxi and Mr. Lam Siu Wai, Steven, being independent non-executive directors.

The exchange rate adopted in this announcement for illustration purposes only is US$1.00 = HK$7.76

“Please also refer to the published version of this announcement in South China Morning Post.”

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