COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2017

Jul 11, 2017

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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中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.*

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 02866)

DISCLOSEABLE TRANSACTION

ACQUISITION OF CONTAINERS

THE ACQUISITION

The Board is pleased to announce that on 11 July 2017, Florens Container Investment, an indirect wholly-owned subsidiary of the Company, entered into the Container Purchase Contract with CLC II, pursuant to which CLC II agrees to sell and transfer legal and beneficial title and deliver to, and Florens Container Investment agrees to buy and take legal and beneficial title to and accept, the Containers upon and subject to the terms and conditions of the Container Purchase Contract.

IMPLICATIONS UNDER THE LISTING RULES

As one or more applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Acquisition exceed 5% but are less than 25%, the Acquisition constitutes a discloseable transaction of the Company which is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

INTRODUCTION

The Board is pleased to announce that on 11 July 2017, Florens Container Investment, an indirect wholly-owned subsidiary of the Company, entered into the Container Purchase Contract with CLC II, pursuant to which CLC II agrees to sell and transfer legal and beneficial title and deliver to, and Florens Container Investment agrees to buy and take legal and beneficial title to and accept, the Containers upon and subject to the terms and conditions of the Container Purchase Contract.

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CONTAINER PURCHASE CONTRACT

The principal terms of the Container Purchase Contract are as follows:

Date

11 July 2017

Parties

• (1) Florens Container Investment (as buyer); and

• (2) CLC II (as seller).

Subject Matter

In consideration of the payment of approximately US$200.38 million (equivalent to approximately HK$1,564.97 million) by Florens Container Investment to CLC II, CLC II agrees to sell and transfer legal and beneficial title and deliver to, and Florens Container Investment agrees to buy and take legal and beneficial title to and accept, the Containers upon and subject to the terms and conditions of the Container Purchase Contract on an “as is, where is” condition, free from all security interests.

Consideration

The consideration for the Acquisition is approximately US$200.38 million (equivalent to approximately HK$1,564.97 million), which was determined after arm’s length negotiations between Florens Container Investment and CLC II with reference to, among other things, prevailing market price of comparable second-hand containers. The Acquisition will be funded by the internal resources and external debt financing of the Group.

Conditions Precedent

Conditions Precedent

The following conditions precedent shall be fulfilled on or prior to the Delivery Date:

• (a) the Lease Agreement has been duly executed by the parties thereto;

• (b) the conditions precedent set out in the Lease Agreement have been or will be satisfied and/or waived on the Delivery Date; and

• (c) the Existing Security Interests have been or will be discharged and released on the Delivery Date.

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Payment and Delivery

Subject to the terms and conditions of the Container Purchase Contract and following the issuance by the Parties of a written confirmation that the conditions precedent set out in the Container Purchase Contract have been fulfilled and/or waived:

• (a) Florens Container Investment and CLC II shall execute and deliver the delivery and acceptance certificate in the form set out in the Container Purchase Contract;

• (b) CLC II shall execute and deliver the bill of sale in the form set out in the Container Purchase Contract to Florens Container Investment; and

• (c) Florens Container Investment shall pay the amount of the consideration for the Acquisition on and for value on the Delivery Date to the designated bank account(s) notified in writing by CLC II,

whereupon, among other things, the legal and beneficial title to and risk of the Containers shall pass from CLC II to Florens Container Investment.

Termination

It is expressly agreed between the Parties that if for any reason prior to Delivery, the obligation of Florens Container Investment to lease the Containers to the Lessee under the Lease Agreement is terminated, then without prejudice to the rights or remedies which CLC II and Florens Container Investment may have at law, equity or otherwise, the Container Purchase Contract shall automatically terminate whereupon neither party shall have any further liability thereunder.

INFORMATION ON THE GROUP AND PARTIES TO THE CONTAINER PURCHASE CONTRACT

Information on the Group

The Company is a joint stock company established under the laws of the PRC with limited liability, the H Shares of which are listed on the Main Board of the Hong Kong Stock Exchange and the A Shares of which are listed on the Shanghai Stock Exchange.

The Group is principally engaged in providing integrated financial services with diversified leasing businesses such as vessel leasing, container leasing and non-shipping finance leasing, supply chain finance, shipping insurance, logistic infrastructure investment and other financial assets investment services.

Information on Florens Container Investment

Florens Container Investment is a company incorporated in the British Virgin Islands with limited liability and is an indirect wholly-owned subsidiary of the Company. It is principally engaged in container investments and in holding containers.

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Information on CLC II

CLC II is a company incorporated in Bermuda with limited liability. It is principally engaged in investment holding.

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, CLC II and its ultimate beneficial owners are third parties independent of the Company and its connected persons under the Listing Rules.

REASONS FOR AND BENEFITS OF THE ACQUISITION

As the Company strives to develop its container leasing business in the long run and become an industry-leading leasing company with unique competitive edge on the basis of the current leasing business, the Acquisition is in line with the business of the Group and will expand the scale in its container leasing business. In addition, the Acquisition would increase the proportion of self-owned containers of the Group and ensure that the Group’s demand for containers is satisfied.

Based on the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Container Purchase Contract and the transactions contemplated thereunder are fair and reasonable and the Acquisition is in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As one or more applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Acquisition exceed 5% but are less than 25%, the Acquisition constitutes a discloseable transaction of the Company which is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

DEFINITIONS

Unless the context requires otherwise, capitalised terms used in this announcement shall have the meanings as follows:

• “Acquisition” the sale and purchase of the Containers pursuant to the Container Purchase Contract

• “A Share(s)” the domestic share(s) in the ordinary share capital of the Company with a par value of RMB1.00 each, which are listed on the Shanghai Stock Exchange

• “associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors of the Company

“CEU” a unit of measurement based on the approximate cost of a container relative to the cost of a twenty-foot standard dry freight container

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“CLC II”	CLC II Company Limited, a company incorporated in Bermuda
	with limited liability
“Company”	COSCO SHIPPING Development Co., Ltd.* (中遠海運發展股份
	有限公司), a joint stock limited company established in the PRC,
	the H Shares and A Shares of which are listed on the Main Board
	of the Hong Kong Stock Exchange (Stock Code: 2866) and the
	Shanghai Stock Exchange (Stock Code: 601866), respectively
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Containers”	154,000 units of second-hand containers, totalling 227,000 CEU
“Container Purchase Contract”	the container purchase contract entered into between Florens
	Container Investment and CLC II on 11 July 2017 in respect of
	the Acquisition
“controlling shareholder”	has the meaning ascribed to it under the Listing Rules
“Delivery”	the date and time when Florens Container Investment shall obtain
	legal and beneficial title to the Containers pursuant to the terms
	and conditions of the Container Purchase Contract
“Delivery Date”	the date of the Delivery pursuant to the terms of the Container
	Purchase Contract
“Director(s)”	director(s) of the Company
“Existing Security Interests”	the container mortgage in respect of, inter alia, the Containers,
	executed by CLC II in favour of ING Bank N.V., Singapore
	Branch
“Florens Container Investment”	Florens Container Investment (SPV) Limited, a limited company
	incorporated in the British Virgin Islands and an indirect
	wholly-owned subsidiary of the Company
“Group”	the Company and its subsidiaries
“H Share(s)”	the overseas listed foreign shares in the ordinary share capital of
	the Company with a par value of RMB1.00 each, which are listed
	on the Main Board of the Hong Kong Stock Exchange
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Hong Kong Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

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“Lease Agreement”	the lease agreement entered into between Florens Container
	Investment as lessor and the Company as lessee on 11 July 2017
“Lessee”	COSCO SHIPPING Development (Hong Kong) Co., Ltd. (中
	遠海運發展（香港）有限公司), a company incorporated in Hong
	Kong with limited liability and a wholly-owned subsidiary of the
	Company
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“Parties”	collectively, Florens Container Investment and CLC II
“PRC”	the People’s Republic of China excluding, for the purpose of this
	announcement, Hong Kong, the Macau Special Administrative
	Region of the PRC and Taiwan
“RMB”	Renminbi, the lawful currency of the PRC
“Share(s)”	A Share(s) and H Share(s)
“Shareholder(s)”	holder(s) of Share(s)
“US$”	the lawful currency of the United States of America
“%”	per cent
	By order of the Board
	COSCO SHIPPING Development Co., Ltd.
	Yu Zhen
	Company Secretary

Shanghai, the People’s Republic of China 11 July 2017

For the purpose of this announcement, translations of US$ into HK$ or vice versa have been calculated by using an exchange rate of US$1.00 equal to HK$7.81. Such exchange rate has been used, where applicable, for the purpose of illustration only and does not constitute a representation that any amounts were, may have been or will be exchanged at such rate or any other rates or at all.

As at the date of this announcement, the Board comprises Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, being executive Directors, Mr. Feng Boming, Mr. Huang Jian and Mr. Chen Dong, being non-executive Directors, and Mr. Cai Hongping, Ms. Hai Chi Yuet and Mr. Graeme Jack, being independent non-executive Directors.

• The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

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