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

Mar 6, 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 SALE AND LEASEBACK ARRANGEMENT

The Board is pleased to announce that on 6 March 2017, Oriental Fleet (an indirect wholly owned subsidiary of the Company) and Golar Hull entered into the Sale and Leaseback Arrangement, pursuant to which: (i) Oriental Fleet has agreed to purchase, and Golar Hull has agreed to sell, the Vessel at the Purchase Consideration of US$187 million (equivalent to approximately HK$1.45 billion); and (ii) Oriental Fleet has agreed to charter to Golar Hull, and Golar Hull has agreed to charter from Oriental Fleet, the Vessel for the Charter Period.

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

As the exercise of the Purchase Option is not at the discretion of Oriental Fleet, according to Rule 14.74(1) of the Listing Rules, on the grant of the Purchase Option, the transaction will be classified as if the Purchase Option had been exercised. As all of the applicable percentage ratios calculated in accordance with the Listing Rules for the grant of the Purchase Option are below 5%, the grant of the Purchase Option does not constitute a discloseable transaction of the Company under the Listing Rules. The Company will comply with the disclosure requirements under Rule 14.74(2) of the Listing Rules upon the exercise or transfer of the Purchase Option.

INTRODUCTION

The Board is pleased to announce that on 6 March 2017, Oriental Fleet (an indirect wholly owned subsidiary of the Company) and Golar Hull entered into the Sale and Leaseback Arrangement, pursuant to which: (i) Oriental Fleet has agreed to purchase, and Golar Hull has agreed to sell, the Vessel at the Purchase Consideration of US$187 million (equivalent to approximately HK$1.45 billion); and (ii) Oriental Fleet has agreed to charter to Golar Hull, and Golar Hull has agreed to charter from Oriental Fleet, the Vessel for the Charter Period.

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THE SALE AND LEASEBACK ARRANGEMENT

The principal terms of the Sale and Leaseback Arrangement are as follows:

Date

• 6 March 2017

Parties to the Memorandum of Agreement

• (1) Golar Hull (as seller); and

• (2) Oriental Fleet (as purchaser).

Parties to the Bareboat Charter

• (1) Oriental Fleet (as owner); and

• (2) Golar Hull (as charterer).

Purchase Consideration and payment

Pursuant to the Memorandum of Agreement, Oriental Fleet has agreed to purchase, and Golar Hull has agreed to sell, the Vessel for the Purchase Consideration of US$187 million (equivalent to approximately HK$1.45 billion).

The Purchase Consideration was determined after arm’s length negotiations between Oriental Fleet and Golar Hull with reference to the market value of liquefied natural gas carrier vessels of comparable size and year of built and the valuation of the Vessel. According to the certificates of valuation issued by two independent valuers, (i) the charter free market value of the Vessel as at 28 December 2016 on willing buyer and willing seller basis was US$194.5 million (equivalent to approximately HK$1.51 billion) and (ii) the estimated value of the Vessel as at 31 December 2016 performed on willing seller and willing buyer basis was US$197 million (equivalent to approximately HK$1.53 billion).

The payment of the Purchase Consideration by Oriental Fleet is conditional upon the provision of certain delivery documents and evidence by Golar Hull to Oriental Fleet, subject to set off of the Upfront Hire. The Purchase Consideration, subject to the set off of the Upfront Hire, will be satisfied by the internal resources of the Group.

Hire payments and handling fee

Pursuant to the Bareboat Charter, Oriental Fleet has agreed to charter to Golar Hull, and Golar Hull has agreed to charter from Oriental Fleet, the Vessel for the Charter Period . The Total Hire payable by Golar Hull to Oriental Fleet comprises:

• (1) the Upfront Hire in the amount of US$75 million (equivalent to approximately HK$582 million), which shall be payable on or before the Actual Delivery Date and set off against the Purchase Consideration;

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• (2) the Principal Hire in the aggregate amount of US$62 million (equivalent to approximately HK$481.1 million) which shall be payable on the corresponding Hire Payment Date in accordance with the payment schedule set out in the Bareboat Charter; and

• (3) the Variable Hire, which shall be calculated in accordance with the specified formula and payable on the corresponding Hire Payment Date in accordance with the payment schedule set out in the Bareboat Charter.

The Variable Hire payable on a particular Hire Payment Date shall be calculated in accordance with the following formula:

A x B x C

where,

• (1) A is the then applicable Financing Principal immediately prior to the relevant Hire Payment Date;

• (2) B is LIBOR for the relevant Hire Period then ending, plus certain margin pursuant to the Bareboat Charter; and

• (3) C is a fraction whose denominator is 360 and the numerator is the number of days which has elapsed from the previous Hire Payment Date.

In addition, Golar Hull shall pay to an escrow agent the Handling Fee before one banking day prior to the Actual Delivery Date and the Handling Fee shall be released to Oriental Fleet on the Actual Delivery Date.

The Total Hire and the Handling Fee were determined after arm’s length negotiations between Oriental Fleet and Golar Hull with reference to the Purchase Consideration and the prevailing market practice.

Purchase obligations

Subject to no total loss of the Vessel pursuant to the terms of the Bareboat Charter, among other things, on the date falling 120 months after the Actual Delivery Date, Oriental Fleet shall be obliged to sell, and Golar Hull shall be obliged to (or cause its nominee to) purchase, the Vessel, at the applicable Purchase Obligation Price.

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Purchase Option

Subject to, among other things, Golar Hull having delivered the Purchase Option Notice to Oriental Fleet at least three months prior to the proposed Purchase Option Date, Golar Hull may purchase the Vessel on the relevant Purchase Option Date at the purchase option price, being the aggregate of:

• (1) an amount equivalent to the then applicable Financing Principal;

• (2) an amount calculated by multiplying the applicable percentage to the then applicable Financing Principal in accordance with the terms of the Bareboat Charter;

• (3) all unpaid sums due and payable under the Transaction Documents together with default interest accrued thereon for the period of non-payment; and

• (4) any reasonable third party legal costs incurred by Oriental Fleet in respect of the exercise of the Purchase Option.

If the Purchase Option has not been exercised, Golar Hull shall pay to Oriental Fleet the Balloon, being an amount of US$50 million (equivalent to approximately HK$388 million), on the final Hire Payment Date in addition to any hire payments.

The Guarantee

Pursuant to the Guarantee, GLNG irrevocably and unconditionally:

• (1) guarantees (as primary obligor and not merely as surety) to Oriental Fleet:

• (i) the due and punctual performance and observance by Golar Hull of all its obligations under the Memorandum of Agreement and the Bareboat Charter; and

• (ii) the due and punctual payment and discharge of all moneys which may from time to time fall due to be paid by Golar Hull under or pursuant to the Memorandum of Agreement and the Bareboat Charter;

• (2) undertakes that if:

• (i) Golar Hull defaults in the due and punctual performance of any of its obligations under the Memorandum of Agreement and the Bareboat Charter, GLNG shall on demand by Oriental Fleet cause the performance of those obligations; and

• (ii) Golar Hull fails to pay on the due date any sum whatsoever due and payable by it under or pursuant to the Memorandum of Agreement and the Bareboat Charter, GLNG shall pay that sum on or before such date as stipulated in Oriental Fleet’s demand.

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The Share Charge, the Account Charge and the Charterers’ Assignment

In addition, as security of all indebtedness of Golar Hull and GLNG (as a chargor and as a guarantor) to Oriental Fleet under the Transaction Documents:

• (1) GLNG has executed the Share Charge in favour of Oriental Fleet; and

• (2) Golar Hull shall execute the Account Charge and the Charterers’ Assignment in favour of Oriental Fleet on or before the Actual Delivery Date.

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 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 THE PARTIES TO THE SALE AND LEASEBACK ARRANGEMENT

Oriental Fleet is a limited liability company established under the laws of the British Virgin Islands and is a vessel holding company. As at the date of this announcement, Oriental Fleet is an indirect wholly owned subsidiary of the Company.

Golar Hull is a limited liability company incorporated under the laws of the Republic of the Marshall Islands and is a vessel holding company. As at the date of this announcement, Golar Hull is a direct wholly owned subsidiary of GLNG.

GLNG is a company established under the laws of Bermuda and the shares of which are listed on the Nasdaq Stock Market (Stock Code: GLNG), and is one of the world’s largest independent owners and operators of liquefied natural gas carriers.

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of Golar Hull and GLNG and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons.

REASONS FOR AND BENEFITS OF THE SALE AND LEASEBACK ARRANGEMENT

The Group transformed from a container liner operator into an integrated financial services platform and has since been focusing on the provision of various ship leasing and shipping-related financing services. It is expected that the Sale and Leaseback Arrangement would facilitate the expansion of the Group’s ship leasing business, and enhance the profitability of the Group.

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The Directors (including the independent non-executive Directors) are of the view that the terms of the Sale and Leaseback Arrangement and the transactions contemplated thereunder are fair and reasonable and the Sale and Leaseback Arrangement is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

The Sale and Leaseback Arrangement

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

The Purchase Option

As the exercise of the Purchase Option is not at the discretion of Oriental Fleet, according to Rule 14.74(1) of the Listing Rules, on the grant of the Purchase Option, the transaction will be classified as if the Purchase Option had been exercised. As all of the applicable percentage ratios calculated in accordance with the Listing Rules for the grant of the Purchase Option are below 5%, the grant of the Purchase Option does not constitute a discloseable transaction of the Company under the Listing Rules. The Company will comply with the disclosure requirements under Rule 14.74(2) of the Listing Rules upon the exercise or transfer of the Purchase Option.

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

“Account Charge” the deed of charge over the Earnings Account and all amounts from time to time standing to the credit to the Earnings Account to be executed by Golar Hull on or before the Actual Delivery Date in favour of Oriental Fleet

“Actual Delivery Date” the date of delivery of the Vessel by Oriental Vessel to Golar Hull under the Bareboat Charter “Balloon” US$50 million “Bareboat Charter” the bareboat charter dated 6 March 2017 entered into between Oriental Fleet and Golar Hull, pursuant to which Oriental Fleet agreed to charter to Golar Hull, and Golar Hull agreed to charter from Oriental Fleet, the Vessel

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• “Board” the board of Directors of the Company “Charter Period” the period of 120 consecutive months commencing from the Actual Delivery Date, subject to the terms of the Bareboat Charter

• “Charterers’ Assignment” the deed of assignment to be executed by Golar Hull on or before the Actual Delivery Date in favour of Oriental Fleet in relation to certain of Golar Hull’s rights and interest in, among other things, the Earnings

• “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 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 “Director(s)” director(s) of the Company “Earnings” in relation to the Vessel, all hires, freights, pool income and other sums payable to or for the account of Golar Hull in respect of the Vessel including (without limitation) all earnings received or to be received from each sub-charter, all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel

• “Earnings Account” the account in the name of Golar Hull designated by Oriental Fleet as the account into which the Earnings shall be paid free and clear of any cost, fee, expense, disbursement, withholding or deduction

• “Financing Principal” the amount equal to the Purchase Consideration as may be deducted by payment of (i) the Upfront Hire; (ii) certain payments in relation to value maintenance of the Vessel pursuant to the Bareboat Charter; (iii) the Principal Hire; and (iv) the Balloon, at any time

• “GLNG” Golar LNG Limited, a company incorporated in Bermuda and the shares of which are listed on the Nasdaq Stock Market (Stock Code: GLNG)

• “Golar Hull” Golar Hull M2022 Corp., a company incorporated in the Republic of the Marshall Islands

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“Guarantee”	the guarantee dated 6 March 2017 by GLNG in favour of Oriental
	Fleet in respect of the obligations of Golar Hull under the
	Memorandum of Agreement and the Bareboat Charter
“Group”	the Company and its subsidiaries
“Handling Fee”	the non-refundable handling fee which shall be an amount equal to
	2% of the difference between the Purchase Consideration and the
	Upfront Hire
“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 Stock Exchange
“Hire Payment Date”	the last day of each month during each and any Hire Period
“Hire Period”	each and every consecutive three-month period during the Charter
	Period, the first Hire Period to commence on the Actual Delivery
	Date and each and any successive Hire Period to commence on the
	last day of the preceding Hire Period, provided that if a Hire Period
	would otherwise extend beyond the expiration of the Charter Period,
	then such Hire Period shall terminate on the expiration of the Charter
	Period
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“LIBOR”	the London Interbank Offered Rate for the offering of deposits in
	US$ for a period comparable to the relevant Hire Period and, if any
	such rate is below zero, LIBOR will be deemed to be zero
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“Memorandum of	the memorandum of agreement dated 6 March 2017 entered into
Agreement”	between Oriental Fleet and Golar Hull, pursuant to which Oriental
	Fleet agreed to purchase, and Golar Hull agreed to sell, the Vessel
“Oriental Fleet”	Oriental Fleet LNG 01 Limited (東方富利LNG01有限公司), a
	company incorporated in the British Virgin Islands and an indirect
	wholly owned subsidiary of the Company
“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
“Principal Hire”	the principal hire payable on the Hire Payment Dates by Golar Hull
	to Oriental Fleet under the Bareboat Charter

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“Purchase Consideration”

• the consideration for the sale and purchase of the Vessel payable by Oriental Fleet to Golar Hull under the Memorandum of Agreement, being US$187 million (equivalent to approximately HK$1.46 billion)

• “Purchase Obligation Price”

• a price being the aggregate of:

• (i) (a) if the relevant payment date falls on the expiry of the Charter Period, US$1; or (b) in all other circumstances, the applicable Financing Principal; and

• (ii) all unpaid sums due and payable under the Transaction Documents together with default interest accrued thereon for the period of non-payment

• “Purchase Option”

• the option to purchase the Vessel which Golar Hull may exercise in accordance with terms of the Bareboat Charter

• “Purchase Option Date” the date indicated in the Purchase Option Notice, being a business day that:

• (i) falls on any of the third, fourth, fifth, sixth, seventh, eighth and ninth anniversary of the Actual Delivery Date; and

• (ii) on which Golar Hull shall exercise the Purchase Option

• “Purchase Option Notice” a written notice which Golar Hull may deliver to Oriental Fleet for the purpose of exercising the Purchase Option

• “RMB” Renminbi, the lawful currency of the PRC “Sale and Leaseback the arrangement in relation to the sale and leaseback of the Vessel Arrangement” comprising the Memorandum of Agreement and the Bareboat Charter “Share(s)” A Share(s) and H Share(s)

“Share Charge” the charge of the entire issued share capital of Golar Hull dated 6 March 2017 by GLNG in favour of Oriental Fleet “Shareholder(s)” holder(s) of Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Total Hire” the Upfront Hire, the Principal Hire and the Variable Hire “Transaction Documents” the Memorandum of Agreement, the Bareboat Charter, the Guarantee, the Share Charge, the Account Charge, the Charterers’ Assignment and any other documents in connection with the Sale and Leaseback Arrangement

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• “Upfront Hire” a non-refundable advance hire payment payable by Golar Hull to Oriental Fleet under the Bareboat Charter, being US$75 million (equivalent to approximately HK$582 million)

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

• “Variable Hire” variable hire payable on the Hire Payment Dates by Golar Hull to Oriental Fleet under the Bareboat Charter

• “Vessel” a 160,000 m[3] liquefied natural gas carrier vessel of 80,762 DWT (in metric tons), named “Golar Crystal” and built in 2014

“%” per cent

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

Shanghai, the People’s Republic of China 6 March 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$7.76. 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 of 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”.

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