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COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2017
Jan 20, 2017
50782_rns_2017-01-20_7e7de569-0417-4990-baa0-3cc83184e8f9.pdf
Capital/Financing Update
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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.*
(Formerly known as 中海集裝箱運輸股份有限公司 China Shipping Container Lines Company Limited) (A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 02866)
CONNECTED TRANSACTION
CAPITAL INCREASE IN CS FINANCE COMPANY
The Board is pleased to announce that on 20 January 2017, the Company entered into the Capital Increase Agreement with China Shipping and CS Energy, pursuant to which China Shipping, the Company and CS Energy have agreed to increase the registered capital of CS Finance Company by RMB600,000,000 (approximately HK$672,000,000) in proportion to their respective shareholding, subject to the terms and conditions set out therein.
Upon completion of the Capital Increase, the registered capital of CS Finance Company will be increased from RMB600,000,000 (approximately HK$672,000,000) to RMB1,200,000,000 (approximately HK$1,344,000,000) while the respective shareholding of China Shipping, the Company and CS Energy in CS Finance Company will remain unchanged as 10%, 65% and 25%.
As at the date of this announcement, China 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, China Shipping is a controlling shareholder of the Company and therefore a connected person of the Company.
As at the date of this announcement, CS Energy is owned as to 38.56% by China Shipping. Accordingly, CS Energy is an associate of China Shipping and a connected person of the Company.
As at the date of this announcement, CS Finance Company is owned as to 65% by the Company, 10% by China Shipping and 25% by CS Energy, respectively, and a connected subsidiary of the Company. Accordingly, the Capital Increase constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.
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As one or more applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Capital Increase are more than 0.1% but less than 5%, the Capital Increase is subject to the reporting and announcement requirements but is exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.
INTRODUCTION
The Board is pleased to announce that on 20 January 2017, the Company entered into the Capital Increase Agreement with China Shipping and CS Energy, pursuant to which China Shipping, the Company and CS Energy have agreed to increase the registered capital of CS Finance Company by RMB600,000,000 (approximately HK$672,000,000) in proportion to their respective shareholding, subject to the terms and conditions set out therein.
Upon completion of the Capital Increase, the registered capital of CS Finance Company will be increased from RMB600,000,000 (approximately HK$672,000,000) to RMB1,200,000,000 (approximately HK$1,344,000,000) while the respective shareholding of China Shipping, the Company and CS Energy in CS Finance Company will remain unchanged as 10%, 65% and 25%.
THE CAPITAL INCREASE AGREEMENT
The principal terms of the Capital Increase Agreement are as follows:
Date
20 January 2017
Parties
-
(1) China Shipping;
-
(2) the Company; and
-
(3) CS Energy.
Subject matter
China Shipping, the Company and CS Energy have agreed to increase the registered capital of CS Finance Company by RMB600,000,000 (approximately HK$672,000,000) in proportion to their respective shareholding, subject to the terms and conditions set out therein.
Consideration
The aggregate amount of capital contribution payable by China Shipping, the Company and CS Energy to CS Finance Company for the Capital Increase under the Capital Increase Agreement is RMB600,000,000 (approximately HK$672,000,000), of which:
- (1) RMB60,000,000 (approximately HK$67,200,000) shall be payable by China Shipping to CS Finance Company;
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-
(2) RMB390,000,000 (approximately HK$436,800,000) shall be payable by the Company to CS Finance Company; and
-
(3) RMB150,000,000 (approximately HK$168,000,000) shall be payable by CS Energy to CS Finance Company.
The amount of capital contribution shall be payable in full by each of China Shipping, the Company and CS Energy in cash within 15 business days after obtaining the approval from the relevant banking regulatory authority in the PRC for the Capital Increase.
The amount of capital contribution for the Capital Increase was determined after arm’s length negotiations by the parties with reference to, among other things, (i) their respective shareholding in CS Finance Company, (ii) the estimated business needs and future business development of CS Finance Company, and (iii) the net asset value of CS Finance Company.
The Capital Increase will be funded by the internal resources of the Company.
SHAREHOLDING STRUCTURE OF CS FINANCE COMPANY
The shareholding structure of CS Finance Company (i) as at the date of this announcement and (ii) immediately after completion of the Capital Increase is as set out below:
| Parties China Shipping The Company CS Energy Total |
Shareholding as at the date of this announcement Amount of contribution to the registered capital Approximate percentage of the registered capital (RMB’000) (%) 60,000 10 390,000 65 150,000 25 600,000 100 |
Shareholding immediately after completion of the Capital Increase Amount of contribution to the registered capital Approximate percentage of the registered capital (RMB’000) (%) 120,000 10 780,000 65 300,000 25 1,200,000 100 |
|---|---|---|
As disclosed above, upon completion of the Capital Increase, the respective shareholding of China Shipping, the Company and CS Energy in CS Finance Company will remain unchanged as 10%, 65% and 25%.
INFORMATION ON CS FINANCE COMPANY
CS Finance Company is a company incorporated under the laws of the PRC with limited liability, and is principally engaged in deposit services, credit services, financial and financing consultation, credit verification and related consultation and agency services, settlement, and liquidation.
Based on the financial statements of CS Finance Company prepared in accordance with the generally accepted accounting principles in the PRC, the financial information of CS Finance Company for the two years ended 31 December 2014 and 2015 and the nine months ended 30 September 2016 was approximately as follows:
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| For the nine | |||
|---|---|---|---|
| months ended | |||
| For the year | ended 31 December | 30 September | |
| 2014 | 2015 | 2016 | |
| (audited) | (audited) | (unaudited) | |
| (RMB) | (RMB) | (RMB) | |
| Profit before taxation and | 284,000,000 | 263,000,000 |
114,000,000 |
| extraordinary items | (approximately | (approximately |
(approximately |
| HK$318,080,000) | HK$294,560,000) | HK$127,680,000) | |
| Profit after taxation and | 213,000,000 | 208,000,000 |
85,000,000 |
| extraordinary items | (approximately | (approximately |
(approximately |
| HK$238,560,000) | HK$232,960,000) | HK$95,200,000) |
The unaudited net asset value and the unaudited total asset value of CS Finance Company as at 30 September 2016 were approximately RMB879,000,000 (approximately HK$984,480,000) and approximately RMB13,892,000,000 (approximately HK$15,559,040,000), respectively.
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 CHINA SHIPPING
China Shipping is a large shipping conglomerate involved in import and export business, trading, coastal and ocean cargo transportation, dry bulk cargo transportation, supply of food for vessels, management of docks and other services in relation to the above, and operates in different regions of the PRC and across the world.
INFORMATION ON CS ENERGY
CS Energy 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 business of the CS Energy Group is principally engaged in coastal, ocean and Yangtze River cargo transportation, oil transportation, chartering, cargo agency and cargo transportation agency.
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REASONS FOR AND BENEFITS OF THE CAPITAL INCREASE
As various business segments of the Group continue to develop, their financing demands will also increase. The Capital Increase will provide liquidity for CS Finance Company, and enhance its financing capability to provide financing services for various business segments of the Group with larger scale and more varieties, which in turn enhance Shareholders’ value.
Based on the above, the Directors (including the independent non-executive Directors) are of the view that the Capital Increase Agreement and the transactions contemplated thereunder have been entered into on normal commercial terms that are fair and reasonable and in the ordinary and usual course of business of the Company, and the Capital Increase is in the interests of the Company and the Shareholders as a whole.
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 Capital Increase. Save as aforementioned, none of the other Directors has a material interest in the Capital Increase and hence no other Director has abstained from voting on such Board resolutions.
LISTING RULES IMPLICATIONS
As at the date of this announcement, China 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, China Shipping is a controlling shareholder of the Company and therefore a connected person of the Company.
As at the date of this announcement, CS Energy is owned as to 38.56% by China Shipping. Accordingly, CS Energy is an associate of China Shipping and a connected person of the Company.
As at the date of this announcement, CS Finance Company is owned as to 65% by the Company, 10% by China Shipping and 25% by CS Energy, respectively, and a connected subsidiary of the Company. Accordingly, the Capital Increase constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.
As one or more applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Capital Increase are more than 0.1% but less than 5%, the Capital Increase is subject to the reporting and announcement requirements but is exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.
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DEFINITIONS
Unless the context requires otherwise, capitalised terms used in this announcement shall have the meanings as follows:
| “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 |
| “Capital Increase” | the proposed increase in the registered capital of CS Finance |
| Company by RMB600,000,000 (approximately HK$672,000,000) | |
| to be contributed by China Shipping, the Company and CS Energy | |
| in proportion to their respective shareholding pursuant to the | |
| Capital Increase Agreement | |
| “Capital Increase Agreement” | the capital increase agreement dated 20 January 2017 entered into |
| by and among China Shipping, the Company and CS Energy in | |
| relation to the Capital Increase | |
| “China Shipping” | China Shipping (Group) Company#(中國海運（集團）總公司), a |
| state-owned enterprise of the PRC and the controlling shareholder | |
| of the Company | |
| “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, 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 |
| “controlling shareholder” | has the meaning ascribed to it under the Listing Rules |
| “CS Energy” | COSCO SHIPPING Energy Transportation Co., Ltd.#(中遠海運能 |
| 源運輸股份有限公司), 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: | |
| 1138) and the Shanghai Stock Exchange (Stock Code: 600026), | |
| respectively | |
| “CS Energy Group” | CS Energy and its subsidiaries |
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| “CS Finance Company” | China Shipping Finance Company Limited#(中海集團財務有限 |
|---|---|
| 責任公司), a limited liability company incorporated under the | |
| laws of the PRC, which is owned as to 65% by the Company, 25% | |
| by CS Energy and 10% by China Shipping as at the date of this | |
| announcement, and a connected subsidiary of the Company | |
| “Director(s)” | director(s) 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 | The Stock Exchange of Hong Kong Limited |
| Stock Exchange” | |
| “HK$” | Hong Kong dollars, the lawful currency of Hong Kong |
| “Listing Rules” | the Rules Governing the Listing of Securities on The Stock |
| Exchange of Hong Kong Limited | |
| “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) |
| “%” | per cent |
| By order of the Board | |
| COSCO SHIPPING Development Co., Ltd. | |
| Yu Zhen | |
| Joint Company Secretary | |
| Shanghai, the PRC | |
| 20 January 2017 |
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For the purpose of this announcement, translations of RMB into HK$ or vice versa have been calculated by using an exchange rate of RMB1.00 equal to HK$1.12. 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.”.
-
For identification purpose only.
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