COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2018

Aug 3, 2018

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)

INSIDE INFORMATION

PROPOSED ISSUANCE OF RENEWABLE CORPORATE BONDS

This announcement is made by the Company pursuant to Rule 13.09(2)(a) of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the SFO.

The Board is pleased to announce that, on 3 August 2018, the Board has approved the Proposed Issuance of Renewable Corporate Bonds, pursuant to which the Company proposes to issue renewable corporate bonds in the aggregate principal amount of not more than RMB6 billion in one or multiple tranches to qualified investors.

The Proposed Issuance of Renewable Corporate Bonds is subject to the approval of the Shareholders at the EGM and the approval of the relevant PRC regulatory authorities.

A circular containing, among other things, further details of the Proposed Issuance of Renewable Corporate Bonds and a notice convening the EGM will be despatched to Shareholders in due course.

The completion of the Proposed Issuance of Renewable Corporate Bonds is subject to, among other things, the approval of the Shareholders and the relevant PRC regulatory authorities and may or may not proceed. Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company.

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INTRODUCTION

This announcement is made by the Company pursuant to Rule 13.09(2)(a) of the Listing Rules and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the SFO.

The Board is pleased to announce that, on 3 August 2018, the Board has approved the Proposed Issuance of Renewable Corporate Bonds, pursuant to which the Company proposes to issue renewable corporate bonds in the aggregate principal amount of not more than RMB6 billion in one or multiple tranches to qualified investors.

The Proposed Issuance of Renewable Corporate Bonds is subject to the approval of the Shareholders at the EGM and the approval of the relevant PRC regulatory authorities.

PROPOSED ISSUANCE OF RENEWABLE CORPORATE BONDS

The details of the Proposed Issuance of Renewable Corporate Bonds are set out below.

• Size of issuance: The aggregate principal amount of the Renewable Corporate Bonds will be not more than RMB6 billion. The actual size of the Proposed Issuance of Renewable Corporate Bonds will be determined by the Board (or persons authorised by the Board) with the authorisation by the Shareholders at the EGM based on the market conditions and the capital needs of the Company.

• Method of issuance: The Proposed Issuance of Renewable Corporate Bonds will be conducted through public offerings in one or multiple tranches. The specific method of issuance of the Proposed Issuance of Renewable Corporate Bonds will be determined by the Board (or persons authorised by the Board) with the authorisation by the Shareholders at the EGM based on the market conditions and the capital needs of the Company.

• Target investors and The Renewable Corporate Bonds will be issued to qualified placing arrangements investors, the scope of which will be determined pursuant to the for the Shareholders: relevant PRC laws and regulations, and will not be offered to the Shareholders by way of placing.

• Maturity of the Renewable The Renewable Corporate Bonds shall have a base term of Corporate Bonds: not more than five years. At the end of the base term and each extended term, the Company shall have an option to extend the maturity of the Renewable Corporate Bonds for an additional term, or to repay the Renewable Corporate Bonds in full.

The specific term and respective size of the issuance of the Renewable Corporate Bonds will be determined by the Board (or persons authorised by the Board) with the authorisation by the Shareholders at the EGM based on the market conditions and the capital needs of the Company.

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Interest rate and its The Renewable Corporate Bonds will carry a fixed interest rate determination method: per annum. In the event of deferred interest payment, interest shall accrue on the deferred interest payment at the prevailing interest rate.

• The interest rate of the Renewable Corporate Bonds for the base term shall be determined by the Company and the lead underwriter through negotiation and based on the book-building results among qualified investors and within a preset range. The interest rate shall be fixed throughout the base term and shall be reset for each subsequent additional term, the method of which shall be determined by the Company and the lead underwriter through negotiation in accordance with the relevant PRC laws and regulations.

• Face value and issue price:

• The Renewable Corporate Bonds shall have a face value of RMB100 and shall be issued at the face value.

Use of proceeds:

The proceeds from the Proposed Issuance of Renewable Corporate Bonds, after deduction of the relevant expenses, are intended to be used for the repayment of the indebtedness and the replenishment of the working capital of the Company and for other purposes as permitted by applicable laws and regulations.

• The specific use of proceeds will be determined by the Board (or persons authorised by the Board) with the authorisation by the Shareholders at the EGM based on the capital needs of the Company.

• Method of underwriting: The Proposed Issuance of Renewable Corporate Bonds shall be underwritten by the underwriting syndicate organised by the lead underwriter by way of standby commitment.

• Terms for redemption or sale back:

• The Board (or persons authorised by the Board) with the authorisation by the Shareholders at the EGM will determine (with reference to the market conditions and the relevant rules) whether the Renewable Corporate Bonds will have any terms for redemption or sale back and the details thereof.

• Method of repayment of principal and interest:

• The repayment of principal and interest of the Renewable Corporate Bonds shall be made in accordance with the relevant rules and regulations of the securities registration institution. Where the Company does not exercise the right of deferring interest payment, interest accruing on the Renewable Corporate Bonds shall be payable annually.

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Terms for deferring interest payment:

• Mandatory interest payment and restrictions on deferring interest payment:

• The Renewable Corporate Bonds shall confer a right to the Company to defer interest payment. Subject to the restrictions on deferring interest payment as described below, at each interest payment date of the Renewable Corporate Bonds, the Company may elect to defer the payment of interest for the current period and any deferred interest and the yield thereof to the next interest payment date, without subject to any restriction on the number of deferment of interest payment.

• If, during the 12-month period immediately preceding an interest payment date of the Renewable Corporate Bonds, the Company has (i) distributed dividends to the Shareholders or (ii) reduced its registered capital, the Company shall not be entitled to exercise the right to defer interest payment.

In the event that the Company has exercised the right to defer interest payment, it shall not (i) distribute dividends to the Shareholders or (ii) reduce its registered capital, until all deferred interest and the yield thereof have been settled in full.

Listing arrangement:

Guarantee:

• Safeguard measures for the repayment of the Renewable Corporate Bonds:

• Validity period of the resolutions:

• Upon completion of the Proposed Issuance of the Renewable Corporate Bonds, the Company will, subject to the satisfaction of the conditions for listing, apply for the listing of the Renewable Corporate Bonds on the Shanghai Stock Exchange. Subject to the approval of the relevant regulatory authorities and the relevant laws and regulations, the Company may also apply for the listing of the Renewable Corporate Bonds on other stock exchanges.

• The Renewable Corporate Bonds are not guaranteed.

• During the term of the Renewable Corporate Bonds, if the Company expects that it will be unable to repay the principal or any accrued interest of the Renewable Corporate Bonds in accordance with the terms of issuance, the Board (or persons authorised by the Board) with the authorisation by the Shareholders at the EGM will adopt various debt protection measures to safeguard the interests of the bondholders.

• The resolutions in relation to the Proposed Issuance of Renewable Corporate Bonds shall become effective from the date of passing of such resolutions by the Shareholders at the EGM, and shall remain valid for 24 months from the date of the approval of the Proposed Issuance of Renewable Corporate Bonds by the China Securities Regulatory Commission.

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AUTHORISATION TO THE BOARD IN RELATION TO THE PROPOSED ISSUANCE OF RENEWABLE CORPORATE BONDS

In order to ensure effective implementation of the Proposed Issuance of Renewable Corporate Bonds, the Board proposes to seek the approval of the Shareholders at the EGM for authorisation to the Board (or persons authorised by the Board) to handle, at its absolute discretion, all matters in connection with the Proposed Issuance of Renewable Corporate Bonds in accordance with the relevant laws and regulations and the Articles of Association, taking into account the prevailing market conditions and based on the principle of maximising the interests of the Shareholders, including but not limited to the following:

• (i) to formulate and adjust the specific plans and terms for the Proposed Issuance of Renewable Corporate Bonds in accordance with the applicable laws and regulations, the relevant rules and regulations of the securities regulatory authorities and the resolutions passed at the EGM, and based on the actual conditions of the Company and the market, including but not limited to the specific size of issuance, maturity, interest rate and its determination method, the right to defer interest payment and related arrangements, debt protection measures, timing of issuance and related arrangements, the availability of terms for redemption or sale back, order of repayment, rating arrangements, underwriting arrangements, specific subscription method, time and method for the repayment of principal and interest, use of proceeds, listing, liquidity and termination of issuance;

• (ii) to engage intermediaries and appoint a bond trustee manager, and to enter into the bond trustee management agreement and formulate rules for the meeting of bondholders in connection with the Proposed Issuance of Renewable Corporate Bonds;

• (iii) to formulate, approve, sign, amend and disclose all application materials and legal documents relating to the Proposed Issuance of Renewable Corporate Bonds, to revise and supplement the application documents as required by the regulatory authorities, and upon completion of the Proposed Issuance of the Renewable Corporate Bonds, to handle matters relating to the listing, repayment of principal and interest and the renewal option of the Renewable Corporate Bonds, including but not limited to authorising, signing, executing, amending and completing all documents, contracts, agreements and covenants (including but not limited to underwriting agreement(s), bond trustee management agreement(s), listing agreement(s) and other legal documents) which are necessary for the issuance and listing of the Renewable Corporate Bonds, and making relevant disclosure in accordance with relevant laws, regulations and listing rules of the place where the Company’s securities are listed (including but not limited to preliminary and final offering memorandum, all announcements and circulars in relation to the issuance of domestic debt financing instruments of the Company);

• (iv) to handle other specific matters in relation to the issuance and listing of the Renewable Corporate Bonds in accordance with the rules of the relevant stock exchange regarding the issuance and listing of bonds, including but not limited to preparing, revising and submitting application materials in relation to the issuance and listing of domestic debt financing instruments of the Company as required by the relevant regulatory authorities, and signing the relevant application materials and other legal documents;

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• (v) to make relevant adjustments to matters relating to the Proposed Issuance of Renewable Corporate Bonds in accordance with the opinion of the regulatory authorities, policy changes, or the changes in market conditions, or determining whether to continue with all or part of the work in respect of the Proposed Issuance of Renewable Corporate Bonds in accordance with the actual situation, except for matters that require re-approval by the Shareholders at general meeting pursuant to relevant laws, regulations and the Articles of Association;

• (vi) to set up a designated bank account for the purpose of maintaining the proceeds from the Proposed Issuance of Renewable Corporate Bonds and to enter into a tripartite custodian agreement with the bond trustee manager and the relevant commercial bank with respect to the designated bank account; and

• (vii) to handle other matters in connection with the Proposed Issuance of Renewable Corporate Bonds.

The aforementioned authorisation to the Board (or persons authorised by the Board) shall be valid during the period between the date of the passing of the relevant resolution at the EGM and the day on which all the authorised matters in relation to the Proposed Issuance of Renewable Corporate Bonds have been completed.

REASONS FOR AND BENEFITS OF THE PROPOSED ISSUANCE OF RENEWABLE CORPORATE BONDS

The Proposed Issuance of Renewable Corporate Bonds would broaden the sources of financing of the Company. The proceeds to be raised from the Proposed Issuance of Renewable Corporate Bonds are intended to be used for the repayment of the existing indebtedness and the replenishment of the working capital of the Company.

The Board is of the view that the Proposed Issuance of Renewable Corporate Bonds is conducive to the comprehensive and sustainable development of the business of the Group, which would in turn enhance the competitiveness of the Company and its return to the Shareholders.

GENERAL

The EGM will be convened for the Shareholders to consider and, if thought fit, approve, among other things, the Proposed Issuance of Renewable Corporate Bonds.

A circular containing, among other things, further details of the Proposed Issuance of Renewable Corporate Bonds and a notice convening the EGM will be despatched to Shareholders in due course.

The completion of the Proposed Issuance of Renewable Corporate Bonds is subject to, among other things, the approval of the Shareholders and the relevant PRC regulatory authorities and may or may not proceed. Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company.

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DEFINITIONS

Unless the context requires otherwise, capitalised 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
“Articles of Association”	the articles of association of the Company, as amended and adopted
	from time to time
“Board”	the board of directors of the Company
“Company”	COSCO SHIPPING Development Co., Ltd.* (中遠海運發展股份有
	限公司), a joint stock limited company incorporated in the PRC with
	limited liability, 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
“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, the Proposed
	Issuance of Renewable Corporate Bonds
“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 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”
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock Exchange
	of Hong Kong Limited

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“PRC” the People’s Republic of China which, for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

• “Proposed Issuance of the proposed public issuance of renewable corporate bonds of the Renewable Corporate Company in the aggregate principal amount of not more than RMB6 Bonds” billion

• “Renewable Corporate the renewable corporate bonds to be issued under the Proposed Issuance Bonds” of Renewable Corporate Bonds

• “RMB” Renminbi, the lawful currency of the PRC

• “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Shareholder(s)” holder(s) of the A Share(s) and H Share(s)

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

Shanghai, the People’s Republic of China 3 August 2018

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. Liang Yanfeng, being non-executive Directors, and Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong, Mr. Gu Xu and Ms. Zhang Weihua, being independent non-executive Directors.

• The Company is a registered non-Hong Kong company as defined under 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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