COSCO SHIPPING Development Co., Ltd. - Capital/Financing Update 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.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of COSCO SHIPPING Development Co., Ltd.

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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)

(1) REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE CONTROLLING SHAREHOLDER (3) SPECIFIC MANDATE

REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

In light of the New PRC Regulations, on 20 April 2017, the Board has approved, among other things, the Revised Proposed Non-public Issuance of A Shares, pursuant to which the Company will issue a maximum of 2,336,625,000 A Shares (subject to adjustments) to not more than 10 specific target subscribers, including COSCO SHIPPING, which would raise a gross proceeds of up to RMB8.6 billion.

The issue price of the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares shall not be lower than the Benchmark Price, being (i) 90% of the Average Trading Price (being the average trading price of the A Shares during the 20 trading days immediately preceding the Price Determination Date, which is calculated by dividing the total turnover of the A Shares by the total trading volume of the A Shares during the 20 trading days immediately preceding the Price Determination Date) or (ii) the Floor Price (being the latest audited net asset per Share of the Company before the issuance of A Shares under the Revised Proposed Nonpublic Issuance of A Shares), whichever is higher. The final issue price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the EGM and the Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulations, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares.

The A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares represents (i) approximately 29.46% of the existing issued A Shares and approximately 20% of the existing total issued share capital of the Company as at the date of this announcement; and (ii) approximately 22.75% of the enlarged issued A Shares and approximately 16.67% of the enlarged total issued share capital of the Company upon completion of the Revised Proposed Non-public Issuance of A Shares.

The Company will issue the A Shares under the Specific Mandate to be sought from the Independent Shareholders at the EGM and the Class Meetings. The Company will apply to the Shanghai Stock Exchange for the listing of, and permission to deal in, the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. The A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares can be traded on the Shanghai Stock Exchange upon the expiration of the lock-up period.

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY COSCO SHIPPING

As part of the Revised Proposed Non-public Issuance of A Shares, on 20 April 2017, the Company and COSCO SHIPPING entered into the COSCO Subscription Agreement, pursuant to which COSCO SHIPPING has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. COSCO SHIPPING will not participate in the pricing exercise for the Revised Proposed Non-public Issuance of A Shares, but will accept results of market inquiry and subscribe for the A Shares at the same subscription price as other target subscribers.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, COSCO SHIPPING and its associates control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 100,944,000 H Shares, representing approximately 39.02% of the total issued share capital of the Company. Accordingly, COSCO SHIPPING is a controlling shareholder of the Company and therefore a connected person of the Company. The COSCO Subscription constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is therefore subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

EGM AND CLASS MEETINGS

The EGM and the Class Meetings will be convened to consider and, if thought fit, approve, among other things, (i) the Revised Proposed Non-public Issuance of A Shares; (ii) the COSCO Subscription; and (iii) the Specific Mandate.

COSCO SHIPPING and its associates and those who are involved in or interested in the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and/or the Specific Mandate will be required to abstain from voting on the resolutions to be proposed at the EGM and/or the Class Meetings in relation to the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate. In the event that a Shareholder becomes a subscriber under the Revised Proposed Non-public Issuance of A Shares, such Shareholder will be required to abstain from voting at the EGM and/or the Class Meetings. Save as aforementioned, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no other Shareholder has a material interest in the Revised Proposed Nonpublic Issuance of A Shares, the COSCO Subscription and the Specific Mandate and therefore no other Shareholder is required to abstain from voting at the EGM and/or the Class Meetings.

A circular containing, among other things, (i) further details of the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate; (ii) a letter from the Independent Board Committee to the Independent Shareholders containing its recommendation in respect of the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate; and (iii) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its recommendation in respect of the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate, is expected to be despatched to the Shareholders on or before 19 May 2017, which is more than 15 business days after the publication of this announcement, as more time is needed for the preparation of certain information to be included in the circular.

The completion of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription are subject to the satisfaction of certain conditions. Accordingly, the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

INTRODUCTION

Reference is made to the announcement of the Company dated 20 April 2017 in relation to the termination of the CS Subscription Agreement.

As part of the Revised Proposed Non-public Issuance of A Shares, on 20 April 2017, the Company and COSCO SHIPPING entered into the COSCO Subscription Agreement, pursuant to which COSCO SHIPPING has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. China Shipping will not participate in the Revised Proposed Non-public Issuance of A Shares.

THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

The details of the Revised Proposed Non-public Issuance of A Shares are set out below.

Details of the Revised Proposed Non-public Issuance of A Shares

Class and par value of Shares to be issued:

A Shares with a par value of RMB1.00 each.

Method and time of issuance:

The Revised Proposed Non-public Issuance of A Shares will be carried out by way of non-public issue of A Shares to not more than 10 specific target subscribers, including COSCO SHIPPING. The Company will complete the Revised Proposed Non-public Issuance of A Shares within six months after obtaining the approval from the CSRC.

Number of A Shares to be issued:

A maximum of 2,336,625,000 A Shares will be issued under the Revised Proposed Non-public Issuance of A Shares, which represents:

(i) approximately 29.46% of the existing issued A Shares and approximately 20% of the existing total issued share capital of the Company as at the date of this announcement; and
(ii) approximately 22.75% of the enlarged issued A Shares and approximately 16.67% of the enlarged total issued share capital of the Company upon completion of the Revised Proposed Non-public Issuance of A Shares.

The Cap will be adjusted if there occurs any ex-right event (such as, bonus issue, capitalization of capital reserves, additional issuance or placing of new Shares) between the Board Resolutions Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares. The formula for the adjustment is set out below:

Q = Q0 x (1+N1)

where,

(i) Q is the Cap after adjustment for any ex-right event between the Board Resolutions Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares;
(ii) Q0 is the Cap; and

(iii) N 1 is the number of (a) Shares being issued upon capitalisation of capital reserves for each Share, and/or (b) Shares being issued upon distribution of share dividend for each Share by the Company between the Board Resolutions Date and the date of issuance of A Shares under the Revised the Proposed Non-public Issuance of A Shares.

On 20 April 2017, the Board has approved the Revised Proposed Non-public Issuance of A Shares and passed resolutions that the gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares shall be not more than RMB8.6 billion. Notwithstanding any adjustment to the Cap and/or the Benchmark Price, the (i) maximum gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares as approved by the Board will in any event not exceed RMB8.6 billion; and (ii) pursuant to the New PRC Regulations, the Cap will in any event not exceed 20% of the total number of total issued share capital of the Company prior to the issuance of the A Shares under the Revised Proposed Non-public Issuance of A Shares.

Subject to the Cap, the Board proposes that the Shareholders at the EGM and the Class Meetings grant to the Board and its authorised person(s) such authority as necessary for determining the final number of A Shares to be issued based on the market conditions and negotiations with the sponsor (the lead underwriter) with reference to the amount of proceeds to be raised and the actual amount of subscription received.

COSCO SHIPPING undertakes to subscribe for 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. China Shipping will not participate in the Revised Proposed Non-public Issuance of A Shares.

The Revised Proposed Non-public Issuance of A Shares is not underwritten.

Target subscribers:

The target subscribers for the Revised Proposed Non-public Issuance of A Shares will be not more than 10 specific subscribers (including COSCO SHIPPING). The target subscribers other than COSCO SHIPPING include securities investment fund management companies, securities companies, trust investment companies, finance companies, insurance institutional investors, qualified foreign institutional investors and other qualified investors in compliance with applicable laws and regulations. Securities investment fund management companies, which subscribe for the A Shares with two or more of the funds managed by them, shall each be taken as one single subscriber. Trust companies may only subscribe for the A Shares with their own funds.

Pursuant to Rules 23 and 24 of the Rules for the Implementation Rules for the Non-public Issuance of Shares by Listed Companies, where the board resolution of the company has not identified specific target subscribers for the non-public issuance of shares, the sponsor shall issue invitation for subscription to eligible specific target subscribers after obtaining approval documents from the CSRC. The list of eligible specific target subscribers shall include: (i) investors who have submitted a letter of intent after the announcement of the board resolution by the company; (ii) the top 20 shareholders of the company; and (iii) not less than 20 securities investment fund management companies, 10 securities companies and five insurance institutional investors, which are eligible under the “Measures for the Administration of Securities Offering and Underwriting” (《證券發行與承銷管理辦法》).

According to the applicable PRC laws, regulations and regulatory requirements, foreign investors cannot subscribe in non-public issue of A shares of listed companies by way of cash unless they are approved qualified foreign institutional investors or foreign strategic investors. In order to ensure the independence of the H Shareholders, and after considering the applicable PRC laws, regulations and regulatory requirements, the scope of targeted subscribers (other than COSCO SHIPPING and its associates) under the Revised Proposed Non-public Issuance of A Shares will exclude all the H Shareholders (including approved qualified foreign institutional investors, foreign strategic investors and approved PRC investors which could invest in H Shares, including the qualified domestic institutional investors and the southbound trading investors under the Shanghai-Hong Kong Stock Connect). According to the PRC Legal Advisers, the aforementioned scope of targeted subscribers is in compliance with the applicable PRC laws, regulations and regulatory requirements.

The final list of subscribers (other than COSCO SHIPPING) will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the EGM and the Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulations, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares.

As at the date of this announcement, apart from the COSCO Subscription Agreement, the Company has not entered into any agreement with any potential subscribers in respect of the Revised Proposed Non-public Issuance of A Shares. The Company currently expects that, with the exception of COSCO SHIPPING: (i) the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares will only be issued to subscribers who and whose ultimate beneficial owners are third parties independent of the Company and its connected persons, and none of them will become substantial shareholders of the Company nor, together with parties acting in concert with it, would trigger mandatory general offer obligation under the Takeovers Code, upon completion of their respective subscriptions of the A Shares under the Revised Proposed Non-public Issuance of A Shares; and (ii) the subscribers will not be parties acting in concert with COSCO SHIPPING. The Company will comply with all the relevant requirements of the Listing Rules and the Takeovers Code should there be any changes or if otherwise necessary.

Price Determination Date, issue price and pricing principles:

The Price Determination Date of the Revised Proposed Non-public Issuance of A Shares is the first day of the offering period of the Revised Proposed Non-public Issuance of A Shares.

The issue price shall not be lower than the Benchmark Price, being (i) 90% of the Average Trading Price or (ii) the Floor Price, whichever is higher. The final issue price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the EGM and the Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulations, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares.

P = (P0 – Div)/(1 + N2)

where,

(i) P is the Benchmark Price after adjustment for any ex-right or ex-dividend event between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares;
(ii) P0 is the Benchmark Price before adjustment;
(iii) Div is the amount of cash dividend per Share in RMB distributed by the Company between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares; and
(iv) N 2 is the number of (a) Shares being issued upon capitalisation of capital reserves for each Share, and/or (b) Shares being issued upon distribution of share dividend for each Share by the Company between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares.

According to the Company Law of the PRC and the Articles of Association, the Company may only distribute dividends out of its distributable profits, being the Company’s profit after income tax after offsetting (i) the accumulated losses brought forward from the previous years and (ii) the allocations to the statutory surplus reserve fund and, if any, the discretionary common reserve (in such order of priorities) before payment of any dividend on shares.

As disclosed in the audited financial statements of the Company for the year ended 31 December 2016 prepared under PRC GAAP as set out in the overseas regulatory announcement published by the Company on 30 March 2017, the Company had accumulated losses as at 31 December 2016. In addition, as disclosed in the annual results announcement for the year ended 31 December 2016 published by the Company on 30 March 2017, the Board did not recommend the payment of any dividend for the year ended 31 December 2016. As such, the Company is of the view that the possibility of adjusting the Benchmark Price as a result of exright or ex-dividend events for the Revised Proposed Non-public Issuance of A Shares is relatively low.

All the target subscribers will subscribe for the A Shares under the Revised Proposed Non-public Issuance of A Shares at the same issue price in cash. COSCO SHIPPING will not participate in the price inquiry exercise for the Revised Proposed Non-public Issuance of A Shares, and will accept the price inquiry results and subscribe for the A Shares at the same issue price as other target subscribers.

Conditions precedent of the Revised Proposed Non-public Issuance of A Shares:

The Revised Proposed Non-public Issuance of A Shares is conditional upon:

(i) the obtaining of the approval from the Board and the Shareholders at the EGM and the Class Meetings;
(ii) the obtaining of the approval from the SASAC; and
(iii) the obtaining of the approval from the CSRC.

According to the PRC Legal Advisers, none of the conditions above may be waived by any party to the Revised Proposed Non-public Issuance of A Shares and therefore, if any of the conditions above is not satisfied, the Company will not proceed with the Revised Proposed Non-public Issuance of A Shares.

As at the date of this announcement, no application for the approval of the Revised Proposed Non-public Issuance of A Shares has been submitted to the SASAC or the CSRC by the Company. The Company will submit the application for approval to (i) the SASAC following the approval by the Board of the adjustments under the Revised Proposed Non-public Issuance of A Shares; and (ii) the CSRC following the approval by the Independent Shareholders of the adjustments under the Revised Proposed Non-public Issuance of A Shares at the EGM and the Class Meetings, in accordance with applicable laws and regulations in the PRC.

Lock-up period:

Place of listing of the A Shares to be issued:

COSCO SHIPPING shall not transfer the A Shares subscribed under the Revised Proposed Non-public Issuance of A Shares within 36 months from the date of the completion of the Revised Proposed Non-public Issuance of A Shares. All other target subscribers shall not transfer the A Shares subscribed under the Revised Proposed Non-public Issuance of A Shares within 12 months from the date of the completion of the Revised Proposed Non-public Issuance of A Shares.

The Company will apply to the Shanghai Stock Exchange for the listing of, and permission to deal in, the A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares. The A Shares to be issued under the Revised Proposed Nonpublic Issuance of A Shares can be traded on the Shanghai Stock Exchange upon the expiration of the lock-up period.

Use of proceeds:

The gross proceeds to be raised from the Revised Proposed Nonpublic Issuance of A Shares will be not more than RMB8.6 billion (inclusive of the subscription by COSCO SHIPPING pursuant to the COSCO Subscription Agreement). The net proceeds from the Revised Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Revised Proposed Non-public Issuance of A Shares) are intended to be used in the following manner:

(i) as to approximately RMB6.8 billion to be used for the capital injection in FIL, which in turn will be used by FIL to purchase containers during the period of 2017 to 2019 for the purpose of maintaining and expanding container scale and securing competitive position in the market; and
(ii) as to approximately RMB1.8 billion to be used for repayment of maturing corporate bonds (which are held by persons other than the existing Shareholders), the principal terms of which are as follows:

Issuer: The Company Date of first issuance: 12 June 2007 Maturity date: On the date falling upon the expiry of 10 years after the date of first issuance (i.e. 12 June 2017) Principal amount: RMB1.8 billion Interest: 4.51% per annum

If the actual proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares are less than the aggregate amount of the proceeds as per the above allocation, the Company will make up for the shortfall by utilising its internal resources or other means of financing. The Board may make adjustments as to the specific projects, the order of priority and the specific amount allocated for each project based on the net proceeds actually raised. Before the receipt of the proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares, the Company will, depending on the status of the projects, finance these projects by funds raised through other means of financing, which will be substituted by the proceeds raised from the Revised Proposed Non-public Issuance of A Shares in accordance with relevant procedures as required by applicable laws and regulations once the same becomes available.

Specific mandate to The Company will issue the A Shares under the Specific Mandate issue A Shares: to be sought from the Independent Shareholders at the EGM and the Class Meetings. Distribution of profit: Upon completion of the Revised Proposed Non-public Issuance of A Shares, the existing and new Shareholders will be entitled to share the Company’s cumulative undistributed profits at the time of the issuance of A Shares under the Revised Proposed Nonpublic Issuance of A Shares. Rights of the A Shares The A Shares to be issued under the Revised Proposed Non-public to be issued: Issuance of A Shares, when fully paid and issued, will rank pari passu in all respects amongst themselves and with the A Shares in issue at the time of the issuance of such A Shares. Validity period of the The resolutions regarding the Revised Proposed Non-public resolutions: Issuance of A Shares shall be valid for 12 months from the date of the passing of the resolutions at the EGM and the Class Meetings.

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY COSCO SHIPPING

Major terms of the COSCO Subscription Agreement

Date: 20 April 2017 Parties: (1) The Company, as the issuer; and (2) COSCO SHIPPING, as the subscriber.

Number of A Shares The number of A Shares to be issued to COSCO SHIPPING under to be issued: the COSCO Subscription Agreement shall be 50% of the total number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares.

Subscription price and pricing principles:

The subscription price shall not be lower than the Benchmark Price (subject to adjustments).

The final subscription price will be determined by the Board and its authorised person(s) with the authorisation by the Shareholders at the EGM and the Class Meetings and the sponsor (the lead underwriter) based on the price inquiry results in accordance with the price priority principle and applicable laws and regulations, after obtaining the approval documents issued by the CSRC in respect of the Revised Proposed Non-public Issuance of A Shares.

COSCO SHIPPING (including the senior management who are also Directors) will not participate in the pricing exercise for the Revised Proposed Non-public Issuance of A Shares, but will accept results of market inquiry and subscribe for the A Shares at the same subscription price as other target subscribers.

The Benchmark Price will be adjusted if there occurs any ex-right or ex-dividend event (such as distribution of dividend, bonus issue, capitalization of capital reserves, additional issuance or placing of new Shares) between the Price Determination Date and the date of the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares. Please refer to the section headed “Revised Proposed Non-public Issuance of A Shares – Details of the Revised Proposed Non-public Issuance of A Shares – Price Determination Date, issue price and pricing principles” for further details of the adjustments.

The aggregate subscription price under the COSCO Subscription Agreement will be paid by COSCO SHIPPING to the Company in cash by bank transfer on the specific payment date as confirmed by the sponsor (the lead underwriter) in the notice of payment.

Conditions precedent of the COSCO Subscription:

The COSCO Subscription is conditional upon:

(i) the obtaining of the approval from the Board and the Shareholders at the EGM and the Class Meetings;
(ii) the obtaining of the approval from the SASAC; and
(iii) the obtaining of the approval from the CSRC.

According to the PRC Legal Advisers, none of the conditions above may be waived by either party to the COSCO Subscription Agreement and therefore, if any of the conditions above is not satisfied, the Company will not proceed with the COSCO Subscription.

As at the date of this announcement, no application for the approval of the COSCO Subscription has been submitted to the SASAC or the CSRC by the Company. The Company will submit the application for approval to (i) the SASAC following the approval by the Board of the COSCO Subscription; and (ii) the CSRC following the approval by the Independent Shareholders of the COSCO Subscription at the EGM and the Class Meetings, in accordance with applicable laws and regulations in the PRC.

Lock-up period:

Pursuant to the COSCO Subscription Agreement, COSCO SHIPPING shall not transfer the A Shares subscribed by it under the Revised Proposed Non-public Issuance of A Shares within 36 months from the date of the completion of the Revised Proposed Non-public Issuance of A Shares.

Distribution of profit:

Upon the completion of the COSCO Subscription, the existing Shareholders and COSCO SHIPPING will be entitled to share the Company’s cumulative undistributed profits at the time of the issuance of the A Shares under the COSCO Subscription Agreement.

Information on the parties to the COSCO Subscription Agreement

The Company

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.

COSCO SHIPPING

COSCO SHIPPING is a company incorporated under the laws of the PRC, and is a state-owned enterprise wholly-owned and controlled by SASAC. The scope of business of COSCO SHIPPING includes international shipping, ancillary business in international maritime transportation, import and export of goods and technologies, international freight agency business, leasing of self-owned vessels, sales of vessels, containers and steel and maritime engineering.

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

As at the date of this announcement, the total issued share capital of the Company is 11,683,125,000 Shares, which comprises 7,932,125,000 A Shares and 3,751,000,000 H Shares.

The shareholding structure of the Company (a) as at the date of this announcement and (b) immediately after completion of the Revised Proposed Non-public Issuance of A Shares (assuming that (i) the maximum number of A Shares up to the Cap is being issued, (ii) COSCO SHIPPING subscribes for 50% of the maximum number of A Shares being issued and (iii) there is no change in the total issued share capital of the Company since the date of this announcement save for the issue of the A Shares pursuant to the Revised Proposed Non-public Issuance of A Shares) is as set out below:

Name of Shareholder Class of Shares COSCO SHIPPING and its associates_(Note 1)_ A H Sub-total Public A Shareholders A Public H Shareholders H Total	Shareholding as the date of this announcement Number of Shares Approximate percentage of the issued A Share capital (%) Approximate percentage of the total issued share capital (%) 4,458,195,175 56.20 38.16 100,944,000 – 0.86 4,559,139,175 – 39.02 3,473,929,825 43.80 29.73 3,650,056,000 – 31.24 11,683,125,000 100.00 100.00	Shareholding immediately after completion of the Revised Proposed Non-public Issuance of A Shares Number of Shares Approximate percentage of the issued A Share capital (%) Approximate percentage of the total issued share capital (%) 5,626,507,675 54.79 40.13 100,944,000 – 0.72 5,727,451,675 – 40.85 4,642,242,325 45.21 33.11 3,650,056,000 – 26.04 14,019,750,000 100.00 100.00	Shareholding immediately after completion of the Revised Proposed Non-public Issuance of A Shares Number of Shares Approximate percentage of the issued A Share capital (%) Approximate percentage of the total issued share capital (%) 5,626,507,675 54.79 40.13 100,944,000 – 0.72 5,727,451,675 – 40.85 4,642,242,325 45.21 33.11 3,650,056,000 – 26.04 14,019,750,000 100.00 100.00
			40.85 33.11 26.04
			100.00

Note:

As at the date of this announcement, COSCO SHIPPING does not directly hold any Shares. An aggregate of 4,458,195,175 A Shares is held by China Shipping, a wholly-owned subsidiary of COSCO SHIPPING, and an aggregate of 100,944,000 H Shares is held by Ocean Fortune Investment Limited, an indirectly wholly-owned subsidiary of COSCO SHIPPING.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company has not conducted any equity fund raising exercises during the 12 months immediately preceding the date of this announcement.

REASONS FOR AND BENEFITS OF THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND THE COSCO SUBSCRIPTION

The Revised Proposed Non-public Issuance of A Shares

The Board considers that the Revised Proposed Non-public Issuance of A Shares is conducive to the comprehensive and sustainable development of the Company’s business and would lay a strong foundation for the Company’s transformation from a container liner operator into an integrated financial services platform with leasing businesses such as vessel leasing, container leasing and non-shipping leasing as core and shipping financing as feature.

Pursuant to the Implementation Rules for the Non-public Issuance of Shares by Listed Companies, where the board of a listed company resolves to issue shares by way of non-public issuance, the board resolution shall specify, among other things, the maximum proceeds to be raised from the non-public issuance and the specific use of the proceeds. Accordingly, on 20 April 2017, the Board has approved the Revised Proposed Non-public Issuance of A Shares and passed resolutions that the gross proceeds to be raised from the Revised Proposed Non-public Issuance of A Shares shall be not more than RMB8.6 billion and that the net proceeds from the Revised Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Revised Proposed Non-public Issuance of A Shares) are intended to be used (i) as to approximately RMB6.8 billion for the capital injection in FIL; and (ii) as to approximately RMB1.8 billion for the repayment of the Company’s maturing corporate bonds (which are held by persons other than the existing Shareholders). Please refer to the section headed “Revised Proposed Non-public Issuance of A Shares – Details of the Revised Proposed Non-public Issuance of A Shares – Use of Proceeds” for further details of the use of proceeds.

The capital injection of approximately RMB6.8 billion in FIL will be used by FIL to purchase containers during the period of 2017 to 2019 for the purpose of maintaining and expanding container scale and securing competitive position in the market. The aforementioned capital injection in FIL is in line with the business strategy of the Company and would facilitate the transformation of the business and future development of the Company as an integrated financial services platform with diversified leasing businesses.

The long term capital raised from the Revised Proposed Non-public Issuance of A Shares would also optimize the Company’s capital structure and reduce the Company’s debt-to-asset ratio, which enables the Company to obtain further debt financing and lower the costs of its debt financing.

The COSCO Subscription

The COSCO Subscription demonstrates the confidence COSCO SHIPPING places in the Company and COSCO SHIPPING’s support to the development and transformation of the business of the Company as an integrated financial services platform with diversified leasing businesses.

The terms and conditions of the CS Subscription Agreement are agreed after arm’s length negotiations between the Company and COSCO SHIPPING. As stated in the section headed “Implications under the Listing Rules”, all the executive Directors and non-executive Directors have abstained from voting on the relevant Board resolutions approving the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription.

The independent non-executive Directors consider that while the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription are not conducted in the ordinary and usual course of business of the Group, the terms of the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription are on normal commercial terms and are fair and reasonable, and the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription are in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, all being executive Directors, hold directorship(s) or act as senior management in China Shipping and its associates, and Mr. Feng Boming, Mr. Chen Dong and Mr. Huang Jian, all being non-executive Directors were nominated by China Shipping to the Board. Accordingly, Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong, Mr. Xu Hui, Mr. Feng Boming, Mr. Chen Dong and Mr. Huang Jian have therefore abstained from voting on the relevant Board resolutions approving the adjustments under the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription. As at the date of this announcement, none of the aforementioned Directors hold any Shares. Save as aforementioned, none of the other Directors has a material interest in the Revised Proposed Non-public Issuance of A Shares and the COSCO Subscription and hence no other Director has abstained from voting on such Board resolutions.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

The Independent Board Committee (comprising all the independent non-executive Directors) has been formed in accordance with Chapter 14A of the Listing Rules to advise the Independent Shareholders on the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate.

In this connection, an Independent Financial Adviser will be appointed with the approval of the Independent Board Committee to advise the Independent Board Committee and the Independent Shareholders in respect of the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate.

EGM AND CLASS MEETINGS

The Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate will be proposed by way of special resolutions at the EGM and the Class Meetings to be approved by the Independent Shareholders. The voting in relation to the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate at the EGM and the Class Meetings will be conducted by way of poll.

COSCO SHIPPING and its associates and those who are involved in or interested in the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and/or the Specific Mandate will be required to abstain from voting on the resolutions to be proposed at the EGM and/or the Class Meetings in relation to the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate. In the event that a Shareholder becomes a subscriber under the Revised Proposed Non-public Issuance of A Shares, such Shareholder will be required to abstain from voting at the EGM and/or the Class Meetings. Save as aforementioned, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no other Shareholder has a material interest in the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate and therefore no other Shareholder is required to abstain from voting at the EGM and/or the Class Meetings.

A notice convening the EGM and a notice convening the H Shares Class Meeting was despatched to the Shareholders on 20 April 2017.

DEFINITIONS

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

“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
“A Shareholder(s)”	holder(s) of A Share(s)
“A Share Class Meeting”	the class meeting of the A Shareholders
“Articles of Association”	the articles of association of the Company
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Average Trading Price”	the average trading price of the A Shares during the 20 trading
	days immediately preceding the Price Determination Date, which
	is calculated by dividing the total turnover of the A Shares by the
	total trading volume of the A Shares during the 20 trading days
	immediately preceding the Price Determination Date
“Benchmark Price”	(i) 90% of the Average Trading Price or (ii) the Floor Price,
	whichever is higher
“Board”	the board of directors of the Company
“Board Resolutions Date”	20 April 2017
“Cap”	2,336,625,000 A Shares
“China Shipping”	China Shipping (Group) Company#(中國海運（集團）總公司),
	a PRC state-owned enterprise, the controlling shareholder of the
	Company and a wholly owned subsidiary of COSCO SHIPPING
“Class Meetings”	the A Shares Class Meeting and the H Shares Class Meeting
“Company”	COSCO SHIPPING Development Co., Ltd.* (中遠海運發展股份
	有限公司) and formerly known as 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, whose H Shares and A
	Shares are listed on 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
“controlling shareholder”	has the meaning ascribed to it under the Listing Rules

“COSCO SHIPPING”

China COSCO SHIPPING Corporation Limited[#] (中國遠洋海運集團有限公司), a PRC state-owned enterprise and the indirect controlling shareholder of the Company

“COSCO Subscription” the proposed subscription of A Shares by COSCO SHIPPING pursuant to the COSCO Subscription Agreement
“COSCO Subscription the subscription agreement dated 20 April 2017 entered into between Agreement” the Company and COSCO SHIPPING, pursuant to which COSCO SHIPPING has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, 50% of the number of A Shares to be issued under the Revised Proposed Non-public Issuance of A Shares
“CS Subscription the subscription agreement date 11 October 2016 entered into Agreement” between the Company and China Shipping, pursuant to which China Shipping has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue, such number of A Shares for an amount of not less than RMB5 billion and not more than RMB7 million under the Proposed Non-public Issuance of A Shares, and further details of which are set out in the circular of the Company dated 1 December 2016
“CSRC” China Securities Regulatory Commission (中國證券監督管理委員會)
“Director(s)” director(s) of the Company
“EGM” the extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve, among other things, (i) the adjustments under the Revised Proposed Non-public Issuance of A Shares; (ii) the COSCO Subscription; and (iii) the Specific Mandate
“FIL” Florens International Limited (佛羅倫國際有限公司), a company incorporated under the laws of the British Virgin Islands with limited liability and an indirect wholly owned subsidiary of the Company
“Floor Price” the latest audited net asset per Share of the Company before the issuance of A Shares under the Revised Proposed Non-public Issuance of A Shares
“Group” the Company and its subsidiaries as at the date of this announcement “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 Main Board of the Hong Kong Stock Exchange
“H Shareholder(s)” holder(s) of H Share(s)
“H Shares Class Meeting” the class meeting of the H Shareholders

the Hong Kong Special Administrative Region of the PRC

“Hong Kong”

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

“Implementation Rules for the Non-public Issuance of Shares by Listed Companies”

the “Implementation Rules for the Non-public Issuance of Shares by Listed Companies”《上市公司非公開發行股票實施細則》

“Independent Board the independent board committee of the Company comprising Mr. Committee” Cai Hongping, Mr. Tsang Hing Lun, Ms. Hai Chi Yuet and Mr. Graeme Jack, being all the independent non-executive Directors, which is formed to advise the Independent Shareholders on the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate in accordance with the Listing Rules
“Independent Financial an independent financial adviser to be appointed by the Company Adviser” to advise the Independent Board Committee and the Independent Shareholders in respect of the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and the Specific Mandate
“Independent Shareholders” Shareholders other than (i) COSCO SHIPPING and its associates and (ii) all other parties (if any) who are interested or involved in the Revised Proposed Non-public Issuance of A Shares, the COSCO Subscription and/or the Specific Mandate
“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“New PRC Regulations” the “Decision in Amending the Implementation Rules for the Nonpublic Issuance of Shares by Listed Companies” (《關於修改《上市公司非公開發行股票實施細則》的決定》) and the “Issuance Regulation Questions and Answers – Regulatory Requirements regarding Guiding and Regulating Financing Activities of Listed Companies” (《發行監管問答－關於引導規範上市公司融資行為的監管要求》) issued by the CSRC on 17 February 2017
“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
“PRC GAAP” the Generally Accepted Accounting Principles in the PRC
“PRC Legal Advisers” the PRC legal advisers to the Company
“Price Determination Date” the first day of the offering period of the Revised Proposed Nonpublic Issuance of A Shares

“Proposed Non-public the proposed non-public issuance of not more than 3,278,688,524 Issuance of A Shares” A Shares by the Company to not more than 10 specific target subscribers, including China Shipping, further details of which are set out in the circular of the Company dated 1 December 2016 “Revised Proposed the proposed non-public issuance of not more than 2,336,625,000 A Non-public Issuance of Shares (subject to adjustments) by the Company to not more than 10 A Shares” specific target subscribers, including COSCO SHIPPING “RMB” Renminbi, the lawful currency of the PRC “SASAC” State-owned Assets Supervision and Administration Commission of the State Council of the PRC (中國國務院國有資產監督管理委員會) “Share(s)” A Share(s) and H Share(s) “Shareholder(s)” holder(s) of Share(s) “Specific Mandate” the specific mandate to be sought from the Independent Shareholders at the EGM and the Class Meetings to issue the A Shares under the Revised Proposed Non-public Issuance of A Shares “Takeovers Code” the Hong Kong Code on Takeovers and Mergers “trading day(s)” a day on which the Shanghai Stock Exchange is open for dealing or trading in securities “%” per cent

By order of the Board COSCO SHIPPING Development Co., Ltd. Yu Zhen Joint Company Secretary

Shanghai, the People’s Republic of China

20 April 2017

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, Mr. Tsang Hing Lun, 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.”.
For identification purpose only.

AI assistant

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

50782_rns_2017-04-20_8bb67682-d379-48db-b887-78f9f740c4a7.pdf

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

(1) REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE CONTROLLING SHAREHOLDER (3) SPECIFIC MANDATE

REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY COSCO SHIPPING

IMPLICATIONS UNDER THE LISTING RULES

EGM AND CLASS MEETINGS

INTRODUCTION

THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

Details of the Revised Proposed Non-public Issuance of A Shares

Target subscribers:

Price Determination Date, issue price and pricing principles:

Conditions precedent of the Revised Proposed Non-public Issuance of A Shares:

Lock-up period:

Place of listing of the A Shares to be issued:

Use of proceeds:

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY COSCO SHIPPING

Major terms of the COSCO Subscription Agreement

Conditions precedent of the COSCO Subscription:

Lock-up period:

Distribution of profit:

Information on the parties to the COSCO Subscription Agreement

The Company

COSCO SHIPPING

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

REASONS FOR AND BENEFITS OF THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND THE COSCO SUBSCRIPTION

The Revised Proposed Non-public Issuance of A Shares

The COSCO Subscription

IMPLICATIONS UNDER THE LISTING RULES

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

EGM AND CLASS MEETINGS

DEFINITIONS

“COSCO SHIPPING”

20 April 2017

For identification purpose only.

AI assistant

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

50782_rns_2017-04-20_8bb67682-d379-48db-b887-78f9f740c4a7.pdf

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

(1) REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES (2) CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY THE CONTROLLING SHAREHOLDER (3) SPECIFIC MANDATE

REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY COSCO SHIPPING

IMPLICATIONS UNDER THE LISTING RULES

EGM AND CLASS MEETINGS

INTRODUCTION

THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

Details of the Revised Proposed Non-public Issuance of A Shares

Target subscribers:

Price Determination Date, issue price and pricing principles:

Conditions precedent of the Revised Proposed Non-public Issuance of A Shares:

Lock-up period:

Place of listing of the A Shares to be issued:

Use of proceeds:

CONNECTED TRANSACTION – PROPOSED SUBSCRIPTION OF A SHARES BY COSCO SHIPPING

Major terms of the COSCO Subscription Agreement

Conditions precedent of the COSCO Subscription:

Lock-up period:

Distribution of profit:

Information on the parties to the COSCO Subscription Agreement

The Company

COSCO SHIPPING

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

REASONS FOR AND BENEFITS OF THE REVISED PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND THE COSCO SUBSCRIPTION

The Revised Proposed Non-public Issuance of A Shares

The COSCO Subscription

IMPLICATIONS UNDER THE LISTING RULES

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISERS

EGM AND CLASS MEETINGS

DEFINITIONS

“COSCO SHIPPING”

20 April 2017

For identification purpose only.

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