COSCO SHIPPING Development Co., Ltd. - Capital/Financing Update 2021

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This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

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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) MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT

(2) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES TO RAISE ANCILLARY FUNDS

(3) CONNECTED TRANSACTION – CS SUBSCRIPTION AGREEMENT (4) APPLICATION FOR WHITEWASH WAIVER (5) SPECIAL DEAL AND

(6) RESUMPTION OF TRADING IN A SHARES

MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT

The Board is pleased to announce that on 27 January 2021, the Company and COSCO SHIPPING Investment entered into the Acquisition Agreement, pursuant to which the Company has conditionally agreed to purchase and COSCO SHIPPING Investment has conditionally agreed to sell, the Target Assets, in consideration of the allotment and issuance of the Consideration Shares by the Company to COSCO SHIPPING Investment.

PROPOSED NON-PUBLIC ISSUANCE OF A SHARES TO RAISE ANCILLARY FUNDS

CONNECTED TRANSACTION – CS SUBSCRIPTION AGREEMENT

As part of the Proposed Non-public Issuance of A Shares, on 27 January 2021, the Company and China Shipping entered into the CS Subscription Agreement 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 RMB600 million and not more than the limit of the proceeds to be raised under the Proposed Non-public Issuance of A Shares as approved by the CSRC.

IMPLICATIONS UNDER THE LISTING RULES

Proposed Acquisition

As one or more of the applicable percentage ratios in respect of the Proposed Acquisition in accordance with the Listing Rules exceed 25% but are less than 75%, the Proposed Acquisition constitutes a major transaction of the Company which is subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As at the date of this announcement, 47,570,789 A Shares, representing approximately 0.41% of the total issued share capital of the Company, are held by COSCO SHIPPING, 4,410,624,386 A Shares, representing approximately 38.00% of the total issued share capital of the Company, are held by China Shipping, and 100,944,000 H Shares, representing approximately 0.87% of the total issued share capital of the Company, are held by Ocean Fortune Investment Limited, a wholly-owned subsidiary of COSCO SHIPPING Investment. Therefore, 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 39.28% of the total issued share capital of the Company. COSCO SHIPPING is an indirect controlling shareholder of the Company and therefore a connected person of the Company. COSCO SHIPPING Investment is an indirect wholly-owned subsidiary of COSCO SHIPPING and therefore an associate of COSCO SHIPPING. Accordingly, COSCO SHIPPING Investment is a connected person of the Company. Therefore, the Proposed Acquisition also constitutes a connected transaction of the Company which is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

CS Subscription

China Shipping is a controlling shareholder of the Company and therefore a connected person of the Company.

The CS 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.

IMPLICATIONS UNDER THE TAKEOVERS CODE

Application for Whitewash Waiver

As at the date of this announcement, COSCO SHIPPING (i) directly holds 47,570,789 A Shares, representing approximately 0.41% of the total issued share capital of the Company; and (ii) indirectly holds (a) through China Shipping (which is a wholly-owned subsidiary of COSCO SHIPPING), 4,410,624,386 A Shares, representing approximately 38.00% of the total issued share capital of the Company; and (b) through Ocean Fortune Investment Limited, a wholly-owned subsidiary of COSCO SHIPPING Investment (which is in turn an indirect wholly-owned subsidiary of COSCO SHIPPING) 100,944,000 H Shares, representing approximately 0.87% of the total issued share capital of the Company. 6,900,000 H Shares, representing approximately 0.06% of the total issued share capital of the Company, are held under the Asset Management Plan voluntarily invested by Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui (each of whom is an executive Director) and certain other existing and former supervisor, senior management and employees of the Company, who are considered to be acting in concert with COSCO SHIPPING. Therefore, COSCO SHIPPING and parties acting in concert with it control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 107,844,000 H Shares, representing approximately 39.33% of the total issued share capital of the Company. Pursuant to the relevant PRC laws and regulations, the 79,627,003 A Shares repurchased and held by the Company as treasury shares for implementation of the A Share Option Incentive Scheme do not carry any voting rights, and therefore, as at the date of this announcement, COSCO SHIPPING and parties acting in concert with it control or are entitled to exercise control 39.61% of the voting rights in the Company.

Accordingly, upon completion of the Proposed Acquisition, pursuant to Rule 26.1 of the Takeovers Code, COSCO SHIPPING will be required to make a mandatory general offer for all the securities of the Company not already owned or agreed to be acquired by COSCO SHIPPING and parties acting in concert with it, unless the Whitewash Waiver from strict compliance with Rule 26.1 of the Takeovers Code is obtained from the Executive.

Special Deal in relation to the Proposed Non-public Issuance of A Shares

Pursuant to Rules 23 and 24 of the Rules for the Implementation of Non-public Issuance of Shares by Listed Companies (《上市公司非公開發行股票實施細則》), where the board resolution of the company has not identified specific target subscribers for the non-public issuance of shares, the sponsor, being the PRC independent financial adviser (the lead underwriter) of the Company in respect of the Proposed Non-public Issuance of A Shares, shall issue invitation for subscription to eligible specific target subscribers after obtaining approval documents from the CSRC and on the date immediately preceding the commencement of the offering period in respect of the issuance. 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 (which may or may not be a shareholder); (ii) the top 20 shareholders of the company as at the date immediately preceding the commencement of the offering period; 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 relevant PRC laws, regulations and regulatory requirements, the scope of the target subscribers under the 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 target subscribers is in compliance with the relevant PRC laws, regulations and regulatory requirements.

An application will be made by the Company to the Executive for its consent to the Special Deal pursuant to Rule 25 of the Takeovers Code. If such consent is not obtained or if the Special Deal is not approved by the Independent Shareholders, the Proposed Acquisition, the Proposed Non-public Issuance of A Shares and the CS Subscription will not proceed.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee (comprising Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong and Ms. Zhang Weihua, each being an independent non-executive Director) has been formed in accordance with Chapter 14A of the Listing Rules and Rule 2.8 of the Takeovers Code to advise the Independent Shareholders on, among other things, the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal. As all the three non-executive Directors, namely Mr. Huang Jian, Mr. Liang Yanfeng and Mr. Ip Sing Chi, were nominated by COSCO SHIPPING to the Board, and Mr. Cai Hongping, an independent non-executive Director, also serves as an external director of COSCO SHIPPING Investment, they are not included as members of the Independent Board Committee.

In this connection, the 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 Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal. Further announcement(s) will be made by the Company upon the appointment of the Independent Financial Adviser.

GENERAL

As at the date of this announcement, the audit and valuation work for the Proposed Acquisition have not been completed. Following completion of the aforementioned audit and valuation work, the final consideration for the Proposed Acquisition will be confirmed by way of entering into of the Supplemental Agreement by the Company and COSCO SHIPPING Investment, which is currently expected to be in or around late April 2021 and will be prior to the despatch of the circular in relation to, among other things, the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal.

The terms of the Proposed Non-public Issuance of A Shares including, among other things, the proposed size of issuance and use of proceeds, are subject to the further approval by the Board after the terms of the Proposed Acquisition are finalized.

It is currently expected that the abovementioned audit and valuation work for the Proposed Acquisition will be completed in or around April 2021, following which, the terms of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares will be finalized. Further announcement(s) will be made by the Company in respect of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares as and when appropriate in accordance with the applicable laws and regulations.

EGM AND CLASS MEETINGS

The EGM will be convened to consider and, if thought fit, approve, among other things, (i) the Proposed Acquisition; (ii) the Proposed Non-public Issuance of A Shares; (iii) the CS Subscription; (iv) the Specific Mandates; and (v) the Whitewash Waiver.

The A Shares Class Meeting will be convened to consider and, if thought fit, approve, among other things, (i) the Proposed Acquisition; (ii) the Proposed Non-public Issuance of A Shares; (iii) the CS Subscription; and (iv) the Specific Mandates.

The H Shares Class Meeting will be convened to consider and, if thought fit, approve, among other things, (i) the Proposed Acquisition; (ii) the Proposed Non-public Issuance of A Shares; (iii) the CS Subscription; (iv) the Specific Mandates; and (v) the Special Deal.

The Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal will be proposed by way of special resolutions at the EGM, the A Shares Class Meeting and/or the H Shares Class Meeting to be approved by the Independent Shareholders.

The voting in relation to the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal at the EGM and/or the Class Meetings will be conducted by way of poll.

COSCO SHIPPING and its associates and parties acting in concert with it (including the participants of the Asset Management Plan in respect of the H Shares held thereunder) and those who are involved in or interested in the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal will be required to abstain from voting on the relevant resolutions to be proposed at the EGM, the A Shares Class Meeting and/or the H Shares Class Meeting. In the event that a Shareholder becomes a subscriber under the Proposed Non-public Issuance of A Shares, such Shareholder will be required to abstain from voting at the EGM, the A Shares Class Meeting and/or the H Shares Class Meeting. 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 Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal 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 Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal; (ii) a letter from the Independent Board Committee to the Independent Shareholders containing its recommendation in respect of the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal; (iii) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its recommendation in respect of the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/ or the Special Deal; (iv) the financial information of the Target Companies; (v) certain other information required under the Listing Rules and the Takeovers Code; and (vi) the notice of the EGM and the Class Meetings is expected to be despatched to the Shareholders on or before 21 May 2021, which is more than 15 business days after the publication of this announcement as required under the Listing Rules and more than 21 days of the date of this announcement as required under Rule 8.2 of the Takeovers Code, as the terms of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares will only be finalized in or around late April 2021 and more time is needed for the preparation of certain information to be included in the circular. The Company will apply to the Executive for the consent to extend the time for the despatch of the circular and further announcement(s) will be made in compliance with the requirements of the Listing Rules and the Takeovers Code.

RESUMPTION OF TRADING IN A SHARES

At the request of the Company, trading in the A Shares on the Shanghai Stock Exchange has been suspended from 14 January 2021 as the Company was contemplating the Proposed Acquisition which involves significant uncertainties. An application has been made by the Company to the Shanghai Stock Exchange for the resumption of trading in the A Shares on the Shanghai Stock Exchange from 28 January 2021.

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

Reference is made to the Agreement of Intent Announcement in relation to, among other things, the potential acquisition of the Target Assets.

Simultaneously with the Proposed Acquisition, the Company proposed to conduct the Proposed Non-public Issuance of A Shares to not more than 35 specific target subscribers (including China Shipping) to raise ancillary funds. The total amount of ancillary funds to be raised thereunder shall not exceed 100% of the final consideration for the Proposed Acquisition and the number of A Shares to be issued shall not exceed 30% of the issued share capital of the Company prior to completion of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares. As part of the Proposed Non-public Issuance of A Shares, on 27 January 2021, the Company and China Shipping entered into the CS Subscription Agreement 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 RMB600 million and not more than the limit of the proceeds to be raised under the Proposed Non-public Issuance of A Shares as approved by the CSRC.

I. MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT

The principal terms of the Acquisition Agreement are set out below:

Date: 27 January 2021

Parties: (1) the Company, as purchaser; and

(2) COSCO SHIPPING Investment, as vendor.

Subject matter:

Pursuant to the Acquisition Agreement, the Company has conditionally agreed to purchase and COSCO SHIPPING Investment has conditionally agreed to sell, the Target Assets, being 100% of the equity interests in the Target Companies, in consideration of the allotment and issuance of the Consideration Shares by the Company to COSCO SHIPPING Investment.

Consideration:

The parties have agreed to engage China Tong Cheng, a qualified asset appraisal agency in the PRC, to conduct a valuation on the Target Assets and issue the Asset Valuation Report with the Valuation Benchmark Date of 31 December 2020. The unaudited aggregate net asset value of the Target Companies as at the Valuation Benchmark Date was approximately RMB3,104 million (being the sum of the unaudited net asset value of the Target Companies as at 31 December 2020 as set out in the section headed “I. MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT – Information on the Target Companies”, the disclosure of which is pursuant to Rules 14.58(6) and (7) of the Listing Rules and which does not meet the standard required under Rule 10 of the Takeovers Code and will be reported on by the Company’s financial advisers and auditors in the next document to be sent to the Shareholders pursuant to Rule 10 of the Takeovers Code), the parties have agreed to proceed with the Proposed Acquisition with reference to such preliminary consideration. The final consideration for the Proposed Acquisition will be determined after arm’s length negotiations between the parties with reference to the appraised value of the Target Assets set out in the Asset Valuation Report, subject to filing with the competent state-owned assets supervision and administrative authorities, and will be confirmed by way of entering into the Supplemental Agreement.

As at the date of this announcement, the audit and valuation work for the Proposed Acquisition have not been completed. It is currently expected that the audit and valuation work for the Proposed Acquisition will be completed in or around April 2021 and the Asset Valuation Report will be issued by China Tong Cheng in or around late April 2021.

The final consideration payable by the Company to COSCO SHIPPING Investment for the Proposed Acquisition shall be satisfied by the allotment and issuance of the Consideration Shares by the Company to COSCO SHIPPING Investment.

Further announcement(s) will be made by the Company in respect of, among other things, the appraised value of the Target Assets, a summary of the Asset Valuation Report, the final consideration for the Proposed Acquisition and the number of the Consideration Shares proposed to be issued, upon the entering into of the Supplemental Agreement by the Company and COSCO SHIPPING Investment in or around late April 2021 in accordance with the applicable laws and regulations.

Issue of Consideration Shares:

In accordance with the relevant PRC laws and regulations and based on the negotiations between the parties, the issue price of the Consideration Shares shall be RMB2.51 per Consideration Share, representing 90% of the average trading prices of the A Shares for the 120 trading days prior to the Pricing Benchmark Date of 27 January 2021 (rounded up to the nearest two decimal places).

During the period between the Pricing Benchmark Date and the date of issue of the Consideration Shares, in case of any ex-rights or ex-dividends events of the Company including distribution of cash dividends, bonus issues, capitalization issues, rights issues, the issue price of the Consideration Shares will be adjusted (rounded up to the nearest two decimal places) in accordance with the relevant PRC laws and regulations. The formulae for the adjustments are set out below:

In the event of bonus issues or capitalization issues:
P1 = P0/(1 + n)
In the event of rights issues:
P1 = (P0 + A × k)/(1 + k)
In the event of distribution of cash dividends:
P1 = P0 – D
In the event of simultaneous (i) bonus issues or capitalization issues; and (ii) rights issues:

P1 = (P0 + A × k)/(1 + n + k)

In the event of simultaneous (i) bonus issues or capitalization issues; (ii) rights issues; and (iii) distribution of cash dividends:

P1 = (P0 – D + A × k)/(1 + n + k)

where,

(i) P0 is the issue price of the Consideration Shares before adjustment;
(ii) n is the number of bonus shares or shares to be issued upon capitalization issue per Share;
(iii) k is the number of new shares to be allotted per Share under rights issue;
(iv) A is the issue price per new share under rights issue;
(v) D is the amount of cash dividend per Share; and
(vi) P1 is the issue price of the Consideration Shares after adjustment.

The number of Consideration Shares to be issued by the Company to COSCO SHIPPING Investment shall be calculated by (i) the final consideration for the Proposed Acquisition, divided by (ii) the final issue price of the Consideration Shares. In the event of fractional shares, COSCO SHIPPING Investment shall waive such fractional shares.

Assuming that (i) the final consideration for the Proposed Acquisition is RMB3,104 million; and (ii) the final issue price of the Consideration Shares is RMB2.51, the number of Consideration Shares to be issued by the Company to COSCO SHIPPING Investment is 1,236,653,386 A Shares.

The final number of Consideration Shares to be issued by the Company to COSCO SHIPPING Investment shall be subject to the approval by the CSRC. Pursuant to the relevant PRC laws and regulations, such approval of the CSRC will only be obtained after the approval by the Independent Shareholders at the EGM and the Class Meetings. Where adjustment will be required by the CSRC, it is expected that there will be downward (but not upward) adjustment to the number of Consideration Shares to be issued by the Company to COSCO SHIPPING Investment and further announcement(s) will be made by the Company.

The Consideration Shares will be issued under the Specific Mandate to be sought from the Independent Shareholders at the EGM and the Class Meetings.

Lock-up period:

Pursuant to the Acquisition Agreement, COSCO SHIPPING Investment has undertaken that it shall not transfer any of the Consideration Shares within 36 months from the date of issue of the Consideration Shares.

In the event that (i) the closing prices of the A Shares for twenty (20) consecutive trading days within six months following the completion of the Proposed Acquisition fall below the issue price of the Consideration Shares (as adjusted for any ex-rights or ex-dividends events during such six months in accordance with the relevant PRC laws and regulations); or (ii) the closing price of the A Shares as at the end of the six month period following the completion of the Proposed Acquisition is below the issue price of the Consideration Shares, the lock-up period will be automatically extended for six months.

The lock-up undertaking shall also be applicable to any additional A Shares received by COSCO SHIPPING Investment as a result of bonus issues and/or capitalization issues of the Company after completion of the Proposed Acquisition.

Conditions precedent:

Completion of the Proposed Acquisition is conditional upon the fulfilment and/or waiver of the following conditions precedent:

(i) the Acquisition Agreement having become effective (which is conditional upon the fulfilment of all the conditions set forth in the section headed “MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT – Effectiveness of the Acquisition Agreement” in this announcement);
(ii) the obtaining of the Whitewash Waiver and the consent to the Special Deal from the Executive;
(iii) the Asset Valuation Report having been filed and confirmed with the competent state-owned assets supervision and administrative authorities;
(iv) the waiver of the obligation of COSCO SHIPPING Investment and parties acting in concert with it to make a general offer of the securities of the Company as a result of the Proposed Acquisition under the relevant PRC laws and regulations at the meeting of the Shareholders;
(v) the obtaining of approval or waiver from onshore and offshore competent regulatory authorities in respect of the concentration of business operations involved in the Proposed Acquisition (if required); and
(vi) the obtaining of approval from or filing with (as applicable) the relevant department of the ministry of commerce in respect of the subscription of the Consideration Shares by COSCO SHIPPING Investment.

The conditions precedent set out in paragraphs (i) to (iv), and (vi) above may not be waived by any party to the Acquisition Agreement and therefore, if any of the conditions precedent set out in paragraphs (i) to (iv), and (vi) above is not satisfied, the Company will not proceed with the Proposed Acquisition. The condition precedent set out in paragraph (v) above may be waived by the parties to the Acquisition Agreement.

As the relevant assessment on the requirement for approval or waiver from onshore and offshore competent regulatory authorities in respect of the concentration of business operations involved in the Proposed Acquisition is subject to the audited financial information of the Target Companies which is still being prepared, the requirement for this condition precedent cannot be ascertained at this stage. For illustration, pursuant to the relevant PRC laws and regulations, merger clearance will be required from the State Administration for Market Regulation of the PRC if the proposed concentration meets either of the following turnover thresholds: (a) combined worldwide turnover of all business operators concerned in the preceding financial year is more than RMB10 billion, and nationwide turnover within the PRC of each of at least two of the business operators concerned in the preceding financial year is more than RMB400 million; or (b) combined nationwide turnover within the PRC of all the business operators concerned in the preceding financial year is more than RMB2 billion, and nationwide turnover within the PRC of each of at least two of the business operators concerned in the preceding financial year is more than RMB400 million. It is currently expected that the relevant assessment will be completed by the time of the entering into of the Supplemental Agreement, and further details thereof will be disclosed in the further announcement to be issued by the Company. The condition precedent set out in paragraph (v) above may be waived by the parties to the Acquisition Agreement, after taking into account, among other things, the applicable legal advice and commercial considerations such as time required to obtain the relevant clearance (whether by way of approval, waiver or expiration of waiting period).

None of the conditions precedent has been fulfilled or waived as at the date of this announcement. It is currently expected that the condition precedent set out in paragraph (iii) above will be fulfilled by the time of the entering into of the Supplemental Agreement.

There is no long stop date under the Acquisition Agreement in respect of the fulfilment and/or waiver of the conditions precedent. The parties will however endeavor to take necessary steps to cause the conditions precedent be fulfilled and, if applicable and appropriate, waived and proceed with completion of the Proposed Acquisition.

Completion:

The parties agreed that following the fulfilment and/or waiver of the applicable conditions precedent, the Target Assets shall be transferred to the Company and the Consideration Shares shall be allotted and issued to COSCO SHIPPING Investment in a timely manner.

Completion shall take place upon completion of the change in industry and commerce registration.

Effectiveness of the Acquisition Agreement:

The effectiveness of the Acquisition Agreement is conditional upon the fulfilment of all of the following conditions:

(i) the Acquisition Agreement having been duly executed by both parties;
(ii) the approval of the Proposed Acquisition by the Board and the Independent Shareholders at the EGM and the Class Meetings;
(iii) the approval of the Proposed Acquisition by the internal governing bodies of COSCO SHIPPING Investment;
(iv) the approval of the Proposed Acquisition by the internal governing bodies of the Target Companies;
(v) the approval of the Restructuring by the competent stateowned assets supervision and administrative authorities; and
(vi) the approval of the Proposed Acquisition by the CSRC.

None of the above conditions may be waived by any party to the Acquisition Agreement. If any of the conditions is not fulfilled, the Acquisition Agreement will not become effective and according to the PRC Legal Advisers, the parties will not have any rights, obligations and liabilities under the Acquisition Agreement.

As at the date of this announcement, the condition set out in paragraph (i) above has been fulfilled. The conditions set out in paragraph (ii) (in respect of the approval by the Board only), (iii) and (iv) above will be fulfilled by the time of the entering into of the Supplemental Agreement, which is currently expected to be in or around late April 2021. The Supplemental Agreement will set out, among other things, the final consideration for the Proposed Acquisition and the number of the Consideration Shares proposed to be issued.

The condition set out in paragraph (v) above in respect of the approval of the Restructuring by the competent state-owned assets supervision and administrative authorities will be fulfilled prior to the EGM and the Class Meetings, while the condition in respect of the approval of the Proposed Acquisition by the CSRC as set out in paragraph (vi) above will only be fulfilled after the EGM and the Class Meetings in accordance with the relevant PRC laws and regulations.

Termination:

The Acquisition Agreement may be terminated in the following circumstances:

(i) the Acquisition Agreement may be terminated by written confirmation of the parties upon the occurrence of force majeure events which render the Acquisition Agreement incapable of performance;
(ii) the parties unanimously agree to terminate the Acquisition Agreement;
(iii) in the event of material breach of the Acquisition Agreement by one party rendering the purpose of the Acquisition Agreement no longer achievable, the non-defaulting party shall be entitled to terminate the Acquisition Agreement; and
(iv) each of the parties is entitled to terminate the Acquisition Agreement by written notice at any time before completion of the Proposed Acquisition in any of the following circumstances:
(a) if due to any objections raised by government authorities, securities transaction administration authorities or judicial institutions in relation to the content and performance of the Acquisition Agreement, (1) the Acquisition Agreement is terminated, revoked or deemed invalid; or (2) the material principle terms of the Acquisition Agreement cannot be fulfilled which materially affects the purpose of the signing of the Acquisition Agreement;
(b) if due to any explicit objections raised by competent government authorities in respect of certain terms of the Acquisition Agreement, and such terms have a material impact on the Proposed Acquisition which materially affects the purpose of signing of the Acquisition Agreement; and

(c) if (1) the occurrence of material changes to relevant laws, regulations and regulatory documents renders the principal terms of the Acquisition Agreement illegal; or (2) any of the parties is unable to perform its main obligations under the Acquisition Agreement due to national policies and orders.

The circumstances set out in sub-paragraphs (iv)(a) and (iv) (b) above are intended to provide for the right of the parties to terminate the Acquisition Agreement in the event of any objections from authorities (including judicial institutions), which cannot be expected at the time of signing of the Acquisition Agreement.

In the event that the Acquisition Agreement is terminated, released, voided or deemed to be invalid, the Proposed Acquisition shall not proceed and the Target Assets shall remain with COSCO SHIPPING Investment.

Information on the Target Companies

As at the date of this announcement, each of the Target Companies is a wholly-owned subsidiary of COSCO SHIPPING Investment. The unaudited aggregate net asset value of the Target Companies as at 31 December 2020 was RMB3,104,099,225.

Upon completion of the Proposed Acquisition, each of the Target Companies will become a wholly-owned subsidiary of the Company and the financial information of the Target Companies will be consolidated into the consolidated financial statements of the Group.

Further details of the Target Companies are set out as follows:

DFIC Qidong

DFIC Qidong is a limited liability company established in the PRC and is principally engaged in the manufacturing of dry freight, specialized and refrigerated containers.

The financial information of DFIC Qidong for the two financial years ended 31 December 2019 and 2020, prepared in accordance with Hong Kong Financial Reporting Standards, was as follows:

	For the year ended	For the year ended
	31 December	31 December
	2019	2020
	(unaudited)	(unaudited)
	RMB	RMB
Net profit/(loss) before taxation	(254,449,770.32)	162,954,920.12
Net profit/(loss) after taxation	(252,319,314.98)	162,954,963.87

The unaudited net asset value of DFIC Qidong as at 31 December 2020 was approximately RMB1,433,512,724.

DFIC Qingdao

DFIC Qingdao is a limited liability company established in the PRC, and the DFIC Qingdao Group is principally engaged in the manufacturing of dry freight, specialized and refrigerated containers.

The consolidated financial information of the DFIC Qingdao Group for the two financial years ended 31 December 2019 and 2020, prepared in accordance with Hong Kong Financial Reporting Standards, was as follows:

	For the year ended	For the year ended
	31 December	31 December
	2019	2020
	(unaudited)	(unaudited)
	RMB	RMB
Net profit/(loss) before taxation	(86,638,499.53)	128,109,785.21
Net profit/(loss) after taxation	(86,655,164.50)	117,364,060.50

The unaudited consolidated net asset value of the DFIC Qingdao Group was approximately RMB1,152,084,766.

DFIC Ningbo

DFIC Ningbo is a limited liability company established in the PRC and is principally engaged in the manufacturing of dry freight and specialised containers.

The financial information of DFIC Ningbo for the two financial years ended 31 December 2019 and 2020, prepared in accordance with Hong Kong Financial Reporting Standards, was as follows:

	For the year ended	For the year ended
	31 December	31 December
	2019	2020
	(unaudited)	(unaudited)
	RMB	RMB
Net profit/(loss) before taxation	(55,905,472.11)	35,236,773.00
Net profit/(loss) after taxation	(58,113,275.43)	30,562,556.73

The unaudited net asset value of DFIC Ningbo as at 31 December 2020 was approximately RMB482,349,853.

Universal Technology

Universal Technology is a limited liability company established in the PRC and is principally engaged in the provision of technical and development services of container manufacturing.

The financial information of Universal Technology for the two financial years ended 31 December 2019 and 2020, prepared in accordance with Hong Kong Financial Reporting Standards, was as follows:

	For the year ended	For the year ended
	31 December	31 December
	2019	2020
	(unaudited)	(unaudited)
	RMB	RMB
Net profit/(loss) before taxation	240,758.72	9,254,681.18
Net profit/(loss) after taxation	240,758.72	7,547,716.71

The unaudited net asset value of Universal Technology as at 31 December 2020 was approximately RMB36,151,882.

Pursuant to Rules 14.58(6) and (7) of the Listing Rules, the Company is required to disclose the above financial information relating to the Target Companies in this announcement. Pursuant to Rule 10 of the Takeovers Code, disclosure of unaudited financial information of the Target Companies constitute profit forecasts and should be reported on in accordance with Rule 10 of the Takeovers Code, and the reports must be included in this announcement in accordance with Rule 10.4 of the Takeovers Code. Due to the time constraint in issuing this announcement in compliance with Chapters 14 and 14A of the Listing Rules, the parties have encountered practical difficulties in meeting the reporting requirements under Rule 10 of the Takeovers Code for the purpose of this announcement. The financial information of the Target Companies does not meet the standard required under Rule 10 of the Takeovers Code. Shareholders and potential investors of the Company are advised to exercise caution in placing reliance on the financial information of each of the Target Companies in assessing the merits and demerits of the Proposed Acquisition. The financial information of the Target Companies will be reported on by the Company’s financial advisers and auditors in the next document to be sent to the Shareholders pursuant to Rule 10 of the Takeovers Code, which is expected to be the circular in relation to, among other things, the Proposed Acquisition to be despatched to the Shareholders.

Information on the parties to the Acquisition Agreement

Information on the Group

The Company is a joint stock limited 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 shipping and industry-related leasing businesses, manufacturing of containers and provision of investment and financial services.

Information on COSCO SHIPPING Investment

COSCO SHIPPING Investment is a company incorporated in Hong Kong with limited liability and an indirect a wholly-owned subsidiary of COSCO SHIPPING. It is principally engaged in providing integrated financial services and investment in financial assets.

COSCO SHIPPING is a company incorporated under the laws of the PRC, and is a state-owned enterprise controlled by the State-owned Assets Supervision and Administration Commission of the State Council of the PRC. 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.

II. PROPOSED NON-PUBLIC ISSUANCE OF A SHARES TO RAISE ANCILLARY FUNDS

The Board is pleased to announce that, on 27 January 2021, the Board has approved the Proposed Non-public Issuance of A Shares to raise ancillary funds simultaneously with the Proposed Acquisition. The total amount of ancillary funds to be raised thereunder shall not exceed 100% of the final consideration for the Proposed Acquisition and the number of A Shares to be issued shall not exceed 30% of the issued share capital of the Company prior to completion of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares.

The Proposed Non-public Issuance of A Shares is subject to the approval of the CSRC and the completion of the Proposed Acquisition, but the Proposed Acquisition is not conditional on the completion of the Proposed Non-public Issuance of A Shares.

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

Class and par value of A Shares with a par value of RMB1.00 each. Shares to be issued:

Target subscribers: The Proposed Non-public Issuance of A Shares will be carried out by way of non-public issue of A Shares to not more than 35 specific target subscribers (including China Shipping).

As at the date of this announcement, apart from the CS Subscription Agreement, the Company has not entered into any agreement with any potential subscribers in respect of the Proposed Non-public Issuance of A Shares. It is currently expected that the other subscribers under the Proposed Non-public Issuance of A Shares will not be the connected persons of the Company and the subscription by those other subscribers under the Proposed Non-public Issuance of A Shares will not trigger a general offer obligation of those other subscribers under the Takeovers Code.

Number of A Shares to be issued:

The total amount of ancillary funds to be raised under the Proposed Non-public Issuance of A Shares shall not exceed 100% of the final consideration for the Proposed Acquisition and the number of A Shares to be issued shall not exceed 30% of the issued share capital of the Company prior to completion of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares.

China Shipping undertakes to subscribe for such number of A Shares for an amount of RMB600 million and not more than the limit of the proceeds to be raised under the Proposed Non-public Issuance of A Shares as approved by the CSRC.

The number of A Shares to be issued under the Proposed Non-public Issuance of A Shares will be adjusted if there occurs any ex-right or ex-dividend event (such as distribution of dividend, bonus issue, rights issue or capitalization issue) between the Price Determination Date and the date of issuance of the A Shares under the Proposed Non-public Issuance of A Shares in accordance with the applicable PRC laws and regulations.

Price Determination Date, pricing principles and issue price:

Subject to satisfaction of the conditions precedent of the Proposed Non-public Issuance of A Shares as further detailed below and after completion of the Proposed Acquisition, the Company shall determine to commence the Proposed Non-public Issuance of A Shares based on the proposal for use of proceeds and market conditions and the Offering Period of the Proposed Non-public Issuance shall commence accordingly. The Proposed Nonpublic Issuance of A Shares will be conducted by way of a price inquiry process conducted in accordance with the requirements under the Rules for the Implementation of Non-public Issuance of Shares by Listed Companies (《上市公司非公開發行股票實施細則》), which involves the issuance of invitation for subscription to eligible specific target subscribers after obtaining approval documents from the CSRC (as further set out in the section headed “IMPLICATIONS UNDER THE TAKEOVERS CODE – Special Deal in relation to the Proposed Non-public Issuance of A Shares”). The Price Determination Date shall be the first date of the Offering Period.

The issue price shall not be lower than the Benchmark Price, being (i) 80% of the Average Trading Price; or (ii) the Floor Price (being the latest audited net asset per Share of the Company before the issuance of A Shares under the Proposed Non-public Issuance of A Shares), whichever is higher. According to the annual report of the Company for the year ended 31 December 2019, the audited net asset per Share of the Company as at 31 December 2019 was approximately RMB2.09.

The final issue price will be determined by negotiations between the Board and its authorized person(s) with the authorization by the Shareholders at the EGM and the PRC independent financial adviser (the lead underwriter) based on the price inquiry results in accordance with the relevant PRC laws and regulations.

The specific time of issuance of the Proposed Non-public Issuance of A Shares shall be determined by the Company and the PRC independent financial adviser (the lead underwriter) based on the proposal for use of proceeds and market conditions.

The Benchmark Price will be adjusted if there occurs any ex-right or ex-dividend event (such as distribution of dividend, bonus issue, rights issue, capitalization issue) between the Price Determination Date and the date of issuance of the Proposed Non-public Issuance of A Shares in accordance with the applicable PRC laws and regulations.

All the target subscribers will subscribe for the A Shares under the Proposed Non-public Issuance of A Shares at the same issue price in cash. China Shipping will not participate in the price inquiry exercise for the Proposed Non-public Issuance of A Shares, but 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 Proposed Non-public Issuance of A Shares:

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

(i) the approval of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares by the Board and the Independent Shareholders at the EGM and the Class Meetings;

(ii) the approval of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares by the competent state-owned assets supervision and administrative authorities;
(iii) the approval of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares by the CSRC; and
(iv) the obtaining of the Whitewash Waiver and the consent to the Special Deal from the Executive.

In particular, with respect to condition precedent set out in paragraph (i) above, in the context of the Special Deal, Independent Shareholders refer to all H Shareholders (other than (a) COSCO SHIPPING and its associates and parties acting in concert with it (including the participants of the Asset Management Plan in respect of the H Shares held thereunder); and (b) those who are involved in or interested in the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal).

None of the conditions above may be waived by any party to the 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 Proposed Non-public Issuance of A Shares.

None of the conditions precedent has been fulfilled as at the date of this announcement. It is currently expected that the condition precedent set out in paragraph (i) above (in respect of the approval by the Board only) will be fulfilled by the time of the entering into of the Supplemental Agreement.

As the Proposed Non-public Issuance of A Shares is for the purpose of raising ancillary funds in connection with the Proposed Acquisition, the CSRC will not approve the Proposed Non-public Issuance of A Shares without approving the Proposed Acquisition. Further, the Company will only commence the Proposed Non-public Issuance of A Shares after completion of the Proposed Acquisition.

Lock-up period:

China Shipping shall not transfer the A Shares subscribed under the Proposed Non-public Issuance of A Shares within 36 months from the date of completion of the Proposed Non-public Issuance of A Shares.

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

Place of listing of the A Shares to be issued:

Use of proceeds:

The A Shares to be issued under the Proposed Non-public Issuance of A Shares will be listed and traded on the Shanghai Stock Exchange.

The net proceeds from the Proposed Non-public Issuance of A Shares (after deducting all applicable costs and expenses incurred in connection with the Proposed Non-public Issuance of A Shares) are intended to be used for the development of the projects of the Target Companies and the replenishment of the working capital of the Company. Further announcement(s) will be made by the Company in respect of the specific use and allocation of the net proceeds.

The Proposed Acquisition is not conditional upon the completion of the Proposed Non-public Issuance of A Shares. The result of the Proposed Non-public Issuance of A Shares shall not affect the completion of the Proposed Acquisition.

If the Proposed Non-public Issuance of A Shares does not proceed or the actual proceeds to be raised from the Proposed Non-public Issuance of A Shares are less than the proposed use of proceeds, the Company will make up for the shortfall by utilizing its internal resources or other means of financing. The Company may make appropriate adjustments as to the order of priority, allocation amount and methods in respect of the proposed use of proceeds based on the net proceeds actually raised.

Specific mandate to issue 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.

Distribution of profit:

Upon completion of the Proposed Non-public Issuance of A Shares, the existing Shareholders and the holders of the new A Shares to be issued under the Proposed Non-public Issuance of A Shares will be entitled to share the Company’s cumulative undistributed profits prior to completion of the Proposed Non-public Issuance of A Shares based on their respective proportion of shareholding and have the same right to distributions or dividends.

Rights of the A Shares The A Shares to be issued under the 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.

III. CONNECTED TRANSACTION – CS SUBSCRIPTION AGREEMENT

The principal terms of the CS Subscription Agreement are as follows:

Date: 27 January 2021 Parties: (1) the Company, as the issuer; and (2) China Shipping, as the subscriber. Number of A Shares China Shipping has agreed to subscribe for such number of to be issued: A Shares in cash based on the final issue price of A Shares under the Proposed Non-public Issuance of A Shares, for an amount of RMB600 million. If the total amount of issuance under the Proposed Non-public Issuance of A Shares as approved by the CSRC is less than RMB600 million, the subscription amount of China Shipping shall be accordingly adjusted according to such approved issuance amount.

The number of A Shares to be issued to China Shipping shall be determined based on (i) the final subscription amount, divided by (ii) the final issue price of A Shares under the Proposed Non-public Issuance of A Shares (rounded down to the nearest whole number).

As the final issue price of A Shares under the Proposed Non-public Issuance of A Shares has not been determined, the number of A Shares to be issued to China Shipping cannot be determined as at the date of this announcement. For illustration purpose only, assuming that the issue price of the Proposed Non-public Issuance of A Shares is the same as the issue price of the Consideration Shares of RMB2.51 per A Share and China Shipping will subscribe for an amount of RMB600 million, 239,043,824 A Shares, representing approximately 2.06% of the existing total issued share capital of the Company as at the date of this announcement, will be issued to China Shipping under the Proposed Non-public Issuance of A Shares. As the Company will only commence the Proposed Non-public Issuance of A Shares after completion of the Proposed Acquisition, it is expected that the CS Subscription under the Proposed Nonpublic Issuance of A Shares will not result in the voting rights held by COSCO SHIPPING and parties acting in concert with it in the Company to increase by more than 2% based on the then total issued share capital of the Company (on a fully diluted basis). Please refer to the section headed “EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY” for further details of the impact on the shareholding of the Company.

Subscription price, pricing principles and method of payment:

The subscription price shall not be lower than the Benchmark Price.

The final subscription price will be equivalent to the final issue price under the Proposed Non-public Issuance of A Shares, which will be determined by negotiations between the Board and its authorized person(s) with the authorization by the Shareholders at the EGM and the PRC independent financial adviser (the lead underwriter) based on the price inquiry results in accordance with the relevant PRC laws and regulations.

China Shipping will not participate in the price inquiry exercise for the Proposed Non-public Issuance of A Shares, but will accept the price inquiry results and subscribe for the A Shares at the same issue price as other target subscribers. If the issue price cannot be determined through the price inquiry exercise, China Shipping shall subscribe for the A Shares at the Benchmark Price.

The CS Subscription is conditional upon:

Conditions precedent:

(i) the approval of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares by the Board and the Independent Shareholders at the EGM and the Class Meetings;
(ii) the approval by the internal governing bodies of China Shipping;
(iii) the approval of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares by the competent state-owned assets supervision and administrative authorities;
(iv) the approval of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares by the CSRC; and
(v) the obtaining of the Whitewash Waiver and the consent to the Special Deal from the Executive.

In particular, with respect to condition set out in paragraph (i) above, in the context of the Special Deal, Independent Shareholders refer to all H Shareholders (other than (a) COSCO SHIPPING and its associates and parties acting in concert with it (including the participants of the Asset Management Plan in respect of the H Shares held thereunder); and (b) those who are involved in or interested in the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal).

None of the conditions above may be waived by any party to the CS Subscription Agreement and therefore, if any of the conditions above is not satisfied, the Company will not proceed with the CS Subscription Agreement.

As at the date of this announcement, the condition precedent as set out in paragraph (ii) above has been fulfilled.

Lock-up period:

China Shipping undertakes not to transfer the A Shares subscribed under the Proposed Non-public Issuance of A Shares within 36 months from the date of completion of the Proposed Non-public Issuance of A Shares.

Information on the parties to the CS Subscription Agreement

Information on the Group

The Company is a joint stock limited 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 shipping and industry-related leasing businesses, manufacturing of containers and provision of investment and financial services.

Information on China Shipping

China Shipping is a company incorporated under the laws of the PRC, and a wholly-owned subsidiary of COSCO SHIPPING. The scope of business of China Shipping includes coastal and ocean cargo transportation, container transportation, import and export business and international freight agency business.

IV. EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

As at the date of this announcement, (i) the total issued share capital of the Company is 11,608,125,000 Shares, which comprises 7,932,125,000 A Shares (inclusive of 79,627,003 A Shares repurchased and held by the Company as treasury shares for implementation of the A Share Option Incentive Scheme pursuant to the Company Law of the PRC and the Articles of Association, further details of which are set out in the announcement of the Company dated 24 January 2019 and the circular of the Company dated 1 February 2019) and 3,676,000,000 H Shares; and (ii) there are 78,220,711 outstanding Share Options granted under the A Share Option Incentive Scheme, upon exercise of which, 78,220,711 A Shares will be transferred by the Company (out of the aforementioned treasury shares of the Company) to the holders of the Share Options. The exercise of the Share Options will not result in any change in the total issued share capital of the Company.

For illustration purpose, set out below is the shareholding structure of the Company:

(i) as at the date of this announcement;
(ii) immediately after completion of the Proposed Acquisition (assuming that (a) the final consideration for the Proposed Acquisition is RMB3,104 million; (b) there will not be any adjustments to the issue price of the Consideration Shares of RMB2.51 per Consideration Share; and (c) there will be no change in the total issued share capital of the Company and no exercise of the Share Options since the date of this announcement save for the issue of the A Shares pursuant to the Acquisition Agreement); and

(iii) immediately after completion of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares (assuming that (a) the final consideration for the Proposed Acquisition is RMB3,104 million; (b) there will not be any adjustments to the issue price of the Consideration Shares of RMB2.51 per Consideration Share; (c) the issue price of the Proposed Non-public Issuance of A Shares is the same as the issue price of the Consideration Shares; (d) China Shipping will be the only subscriber under the Proposed Non-public Issuance of A Shares for RMB600 million; and (e) there will be no change in the total issued share capital of the Company and no exercise of the Share Options since the date of this announcement save for the issue of the A Shares pursuant to the Acquisition Agreement and under the Proposed Non-public Issuance of A Shares):

Name of Shareholder Class of Shares Shareholding as at the date of this announcement Number of Shares Approximate percentage of the issued A Share capital (%) Approximate percentage of the total issued share capital (%) COSCO SHIPPING, its associates and parties acting in concert with it (Note 1) COSCO SHIPPING A 47,570,789 0.60 0.41 China Shipping A 4,410,624,386 55.60 38.00 COSCO SHIPPING Investment A – – – Ocean Fortune Investment Limited H 100,944,000 – 0.87 Asset Management Plan (Note 2) H 6,900,000 – 0.06 Sub-total (Note 3) 4,566,039,175 – 39.33 Treasury shares held by the Company A 79,627,003 1.00 0.69 Public A Shareholders A 3,394,302,822 42.80 29.25 Public H Shareholders H 3,568,156,000 – 30.74 Total (Note 3) 11,608,125,000 100.00 100.00	Shareholding immediately after completion of the Proposed Acquisition Number of Shares Approximate percentage of the issued A Share capital (%) Approximate percentage of the total issued share capital (%) 47,570,789 0.52 0.37 4,410,624,386 48.10 34.33 1,236,653,386 13.49 9.63 100,944,000 – 0.79 6,900,000 – 0.05 5,802,692,561 – 45.18 79,627,003 0.87 0.62 3,394,302,822 37.02 26.43 3,568,156,000 – 27.78 12,844,778,386 100.00 100.00	Shareholding immediately after completion of the Proposed Acquisition and the 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 (%) 47,570,789 0.51 0.36 4,649,668,210 49.42 35.54 1,236,653,386 13.14 9.45 100,944,000 – 0.77 6,900,000 – 0.05 6,041,736,385 – 46.18 79,627,003 0.85 0.61 3,394,302,822 36.08 25.94 3,568,156,000 – 27.27 13,083,822,210 100.00 100.00	Shareholding immediately after completion of the Proposed Acquisition and the 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 (%) 47,570,789 0.51 0.36 4,649,668,210 49.42 35.54 1,236,653,386 13.14 9.45 100,944,000 – 0.77 6,900,000 – 0.05 6,041,736,385 – 46.18 79,627,003 0.85 0.61 3,394,302,822 36.08 25.94 3,568,156,000 – 27.27 13,083,822,210 100.00 100.00
			46.18
			0.61 25.94 27.27
			100.00

Notes:

As at the date of this announcement, 47,570,789 A Shares, representing approximately 0.41% of the total issued share capital of the Company, are held by COSCO SHIPPING, 4,410,624,386 A Shares, representing approximately 38.00% of the total issued share capital of the Company, are held by China Shipping, and 100,944,000 H Shares, representing approximately 0.87% of the total issued share capital of the Company, are held by Ocean Fortune Investment Limited, an indirect wholly-owned subsidiary of COSCO SHIPPING.

As at the date of this announcement, 6,900,000 H Shares, representing approximately 0.06% of the total issued share capital of the Company, are held under the Asset Management Plan voluntarily invested by Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui (each of whom is an executive Director) and certain other existing and former supervisor, senior management and employees of the Company, who are considered to be acting in concert with COSCO SHIPPING.
The approximate percentage figures are rounded to the nearest two decimal places and therefore, may not add up to 100% due to rounding.

V. 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.

VI. REASONS FOR AND BENEFITS OF PROPOSED ACQUISITION, PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND CS SUBSCRIPTION

Proposed Acquisition

As disclosed in the announcement of the Company dated 6 May 2020, as the Target Companies are principally engaged in design, research and development, manufacture, sales and delivery of containers and the related businesses, in order to address any potential competition between the Group and the COSCO SHIPPING Group, COSCO SHIPPING has provided an undertaking that, among other things, within three years after completion of the acquisition by COSCO SHIPPING Investment of the Target Companies, the COSCO SHIPPING Group will transfer the equity interests in the Target Companies to the Company at a fair and reasonable market price through appropriate means and procedures in accordance with applicable laws. The consideration for the acquisition by COSCO SHIPPING Investment of the Target Companies in 2019 was approximately RMB3,502 million.

The Proposed Acquisition is expected to bring synergies to the container manufacturing business of the Group, enhancing the Group’s manufacturing capabilities for delivering different types of containers, including specialized and refrigerated containers, as well as supplementing and optimizing the geographical layout of the container manufacturing business of the Group in Northern and Eastern China region (where the Target Companies are geographically based). It is also expected that the market share of the container manufacturing business of the Group will increase as a result of the Proposed Acquisition.

Accordingly, the Proposed Acquisition is in line with the strategic development objectives of the Group, being the development of its shipping and industry-related leasing business, container manufacturing business and investment and related service business.

The terms of the Acquisition Agreement and the transactions contemplated thereunder were agreed after arm’s length negotiations between the parties thereto. The Directors (other than the Independent Board Committee, who will express its views after considering the advice from the Independent Financial Adviser) consider that the Acquisition Agreement and the transactions contemplated thereunder are on normal commercial terms which are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole.

Proposed Non-public Issuance of A Shares and CS Subscription

The proceeds to be raised from the Proposed Non-public Issuance of A Shares are proposed to be used for the development of the projects of the Target Companies and the replenishment of the working capital of the Company, which would improve the overall financial position and facilitate the future development of the Group.

In addition, the CS Subscription demonstrates the confidence China Shipping places in the Company and China Shipping’s continuous support to the Company’s future development, which are conducive to boosting the confidence of the Shareholders and potential investors in the Company.

The terms of the CS Subscription Agreement were agreed after arm’s length negotiations between the Company and China Shipping. The Directors (other than the Independent Board Committee, who will express its views after considering the advice from the Independent Financial Adviser) consider that the Proposed Non-public Issuance of A Shares, the CS Subscription Agreement and the transactions contemplated thereunder are on normal commercial terms which are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole.

VII. IMPLICATIONS UNDER THE LISTING RULES

Proposed Acquisition

CS Subscription

China Shipping is a controlling shareholder of the Company and therefore a connected person of the Company.

Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, all being executive Directors, and Mr. Huang Jian, Mr. Liang Yanfeng and Mr. Ip Sing Chi, all being non-executive Directors, hold directorship(s) or act as senior management in COSCO SHIPPING and/or its associates, and were nominated by China Shipping to the Board. Mr. Cai Hongping, an independent nonexecutive Director, also serves as an external director of COSCO SHIPPING Investment. Accordingly, Mr. Wang Daxiong, Mr. Liu Chong, Mr. Xu Hui, Mr. Huang Jian, Mr. Liang Yanfeng, Mr. Ip Sing Chi and Mr. Cai Hongping have therefore abstained from voting on the relevant Board resolutions approving the Proposed Acquisition, the Proposed Non-public Issuance of A Shares and the CS Subscription. Save as aforementioned, none of the other Directors has a material interest in the Proposed Acquisition, the Proposed Non-public Issuance of A Shares and the CS Subscription. Therefore, no other Director has abstained from voting on such Board resolutions.

VIII. IMPLICATIONS UNDER THE TAKEOVERS CODE

Application for Whitewash Waiver

Immediately following completion of the Proposed Acquisition, assuming that (i) the final consideration for the Proposed Acquisition is RMB3,104 million; (ii) there will not be any adjustments to the issue price of the Consideration Shares of RMB2.51 per Consideration Share; and (iii) there will be no change in the total issued share capital of the Company and no exercise of the Share Options since the date of this announcement save for the issue of the A Shares pursuant to the Acquisition Agreement, the aggregate shareholding of and the aggregate voting rights held by COSCO SHIPPING and parties acting in concert with it in the Company will increase to approximately 45.18% and approximately 45.46%, respectively, representing the maximum shareholding and voting rights held by COSCO SHIPPING and parties acting in concert with it in the Company immediately following completion of the Proposed Acquisition based on the foregoing assumptions. The difference between the percentage of shareholding and the percentage of the voting rights is due to the 79,627,003 A Shares repurchased and held by the Company as treasury shares, which do not carry any voting rights, for implementation of the A Share Option Incentive Scheme. Upon the entering into of the Supplemental Agreement (which is currently expected to be in or around late April 2021), further announcement(s) will be made by the Company in respect of, among other things, the final consideration of the Proposed Acquisition, the number of the Consideration Shares proposed to be issued and further information on the effect on the shareholding and voting rights held by COSCO SHIPPING and parties acting in concert with it in the Company as a result of the Proposed Acquisition.

Accordingly, completion of the Proposed Acquisition is conditional upon, among other things, the Whitewash Waiver being granted by the Executive and approved by the Independent Shareholders. An application will be made by COSCO SHIPPING to the Executive for the granting of the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, will be subject to (i) the approval of the Whitewash Waiver by at least 75% of the independent votes that are cast either in person or by proxy at the EGM; and (ii) the approval of the Proposed Acquisition by more than 50% of the independent votes that are cast either in person or by proxy at the EGM as required under the Takeovers Code. The Proposed Acquisition will not proceed if the Whitewash Waiver is not obtained or if the Whitewash Waiver is not approved by the Independent Shareholders.

As at the date of this announcement, the Company does not believe that the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription and the Special Deal give rise to any concerns in relation to compliance with other applicable rules or regulations (including the Listing Rules). If a concern should arise after the release after this announcement, the Company will endeavor to resolve the matter to the satisfaction of the relevant authority as soon as possible but in any event before the despatch of the circular in relation to, among other things, the Whitewash Waiver. The Company notes that the Executive may not grant the Whitewash Waiver if the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription and the Special Deal do not comply with other applicable rules and regulations.

As at the date of this announcement, other than the 39.61% voting rights in the Company controlled by COSCO SHIPPING and parties acting in concert with it, an aggregate of 4,480,200 Share Options held by Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, the executive Directors, the Proposed Acquisition, the CS Subscription, neither COSCO SHIPPING nor parties acting in concert with it:

(i) holds, owns, controls or directs any shares, convertible securities, warrants, options or derivatives in respect of the securities in the Company;
(ii) has secured an irrevocable commitment to vote in favour of or against the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Whitewash Waiver and/or the Special Deal;
(iii) has any arrangement (whether by way of option, indemnity or otherwise) or contracts in relation to the Shares or COSCO SHIPPING which might be material to the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Whitewash Waiver and/or the Special Deal;
(iv) has any agreement or arrangement to which COSCO SHIPPING or parties acting in concert with it is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Whitewash Waiver and/or the Special Deal;
(v) has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company;
(vi) save for the consideration for the issue of A Shares under the Proposed Non-public Issuance of A Shares, there is no other consideration or benefit in whatever form paid or to be paid by COSCO SHIPPING and parties acting in concert with it to the Company or any party acting in concert with it in connection with the Proposed Non-public Issuance of A Shares;
(vii) save for the Consideration Shares to be issued by the Company to COSCO SHIPPING Investment under the Proposed Acquisition, there is no other consideration or benefit in whatever form paid or to be paid by the Company and parties acting in concert with it to COSCO SHIPPING or any party acting in concert with it in connection with the Proposed Acquisition;
(viii) save for the Proposed Non-public Issuance of A Shares, there is no understanding, arrangement, agreement or special deal between COSCO SHIPPING or parties acting in concert with it on the one hand, and the Company and any parties acting in concert with it on the other hand; and
(ix) save for the Proposed Non-public Issuance of A Shares, there is no understanding, arrangement, agreement or special deal between (1) any Shareholder; and (2)(a) COSCO SHIPPING and parties acting in concert with it; or (b) the Company, its subsidiaries or associated companies.

On 9 November 2020, 47,570,789 A Shares, representing approximately 0.41% of the total issued share capital of the Company, were transferred from China Shipping (a wholly-owned subsidiary of COSCO SHIPPING) to COSCO SHIPPING. Save for the entering into of the Agreement of Intent, the Acquisition Agreement and the CS Subscription, neither COSCO SHIPPING nor any parties acting in concert with it has acquired or disposed of any voting rights of the Company or has dealt for value in any shares, convertible securities, warrants, options or derivatives in respect of the securities in the Company in the six-month period prior to and including 13 January 2021, being the date on which the Company first made an announcement in respect of the Proposed Acquisition, and up to and including the date of this announcement. COSCO SHIPPING and parties acting in concert with it will not acquire or dispose of any voting rights of the Company after the date of this announcement until the completion of the Proposed Acquisition and the CS Subscription and for six months after the date of the EGM and the Class Meetings.

Special Deal in relation to the Proposed Non-public Issuance of A Shares

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 relevant PRC laws, regulations and regulatory requirements, the scope of the target subscribers under the 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 ShanghaiHong Kong Stock Connect). According to the PRC Legal Advisers, the aforementioned scope of target subscribers is in compliance with the relevant PRC laws, regulations and regulatory requirements.

In addition, the identity of the target subscribers (other than China Shipping) cannot be pre-determined as at the date of this announcement and will only be determined after completion of the abovementioned price inquiry process, which will only be conducted after the obtaining of the approval in respect of the Proposed Non-public Issuance of A Shares from the Shareholders at the EGM and the Class Meetings and the CSRC and the commencement of the Offering Period of the Proposed Non-public Issuance of A Shares in accordance with the relevant PRC laws and regulations. Pursuant to the abovementioned PRC regulatory requirements, (i) investors who have submitted a letter of intent in respect of the Proposed Non-public Issuance of A Shares to the Company after this announcement (which may or may not be a Shareholder); and (ii) the top 20 Shareholders as at the date immediately preceding the commencement of the Offering Period will be invited to subscribe for A Shares under the Proposed Non-public Issuance of A Shares, and their subscription (or any other subscriber who is a Shareholder) may be accepted by the Company. Accordingly, the Proposed Non-public Issuance of A Shares will constitute a Special Deal under Rule 25 of the Takeovers Code which is not capable of being extended to all Shareholders and requires the consent of the Executive. Such consent, if granted, will be subject to (i) the Independent Financial Adviser publicly stating that in its opinion the terms of the Special Deal are fair and reasonable and (ii) the approval of the Special Deal by the Independent Shareholders by way of poll at the H Shares Class Meeting. COSCO SHIPPING and its associates and parties acting in concert with it (including the participants of the Asset Management Plan in respect of the H Shares held thereunder) and those who are involved in or interested in the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal will be required to abstain from voting on the resolution to be proposed at the H Shares Class Meeting to approve the Special Deal.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

GENERAL

EGM AND CLASS MEETINGS

A circular containing, among other things, (i) further details of the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal; (ii) a letter from the Independent Board Committee to the Independent Shareholders containing its recommendation in respect of the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal; (iii) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its recommendation in respect of the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal; (iv) the financial information of the Target Companies; (v) certain other information required under the Listing Rules and the Takeovers Code; and (vi) the notice of the EGM and the Class Meetings is expected to be despatched to the Shareholders on or before 21 May 2021, which is more than 15 business days after the publication of this announcement as required under the Listing Rules and more than 21 days of the date of this announcement as required under Rule 8.2 of the Takeovers Code, as the terms of the Proposed Acquisition and the Proposed Non-public Issuance of A Shares will only be finalized in or around late April 2021 and more time is needed for the preparation of certain information to be included in the circular. The Company will apply to the Executive for the consent to extend the time for the despatch of the circular and further announcement(s) will be made in compliance with the requirements of the Listing Rules and the Takeovers Code.

RESUMPTION OF TRADING IN A SHARES

DEFINITIONS

Unless the context requires otherwise, capitalized 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

“A Shares Class Meeting”

the class meeting of the A Shareholders

“A Shareholder(s)”

holder(s) of A Share(s)

“A Share Option the A Share option incentive scheme of the Company adopted Incentive Scheme” at the extraordinary general meeting and the class meetings of the Company held on 5 March 2020
“Acquisition Agreement”
the agreement dated 27 January 2021 entered into between the Company and COSCO SHIPPING Investment in relation to the Proposed Acquisition
“Agreement of Intent Announcement”
the announcement of the Company dated 13 January 2021 in relation to, among other things, the potential acquisition of the Target Assets
“Articles of Association”
the articles of association of the Company
“Asset Management Plan”
the asset management plan voluntarily invested by Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui (each of whom is an executive Director) and certain other existing and former supervisor, senior management and employees of the Company, further details of which are set out in the announcement of the Company dated 24 November 2016
“Asset Valuation Report”
the asset valuation report in respect of the Target Assets to be issued by China Tong Cheng
“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) 80% of the Average Trading Price; or (ii) the Floor Price, whichever is higher
“Board”

the board of directors of the Company

“China Shipping”

“China Tong Cheng”
“Class Meetings”
“Company”
“connected person(s)”
“Consideration Share(s)”
“controlling shareholder”
“COSCO SHIPPING”
“COSCO SHIPPING Group”
“COSCO SHIPPING Investment”
“CS Subscription”
“CS Subscription Agreement”

China Shipping Group Company Limited[#] (中國海運集團有限公司), a PRC state-owned enterprise, the controlling shareholder of the Company and a wholly-owned subsidiary of COSCO SHIPPING

China Tong Cheng Assets Appraisal Co., Ltd. (中通誠資產評估有限公司), a qualified asset appraisal agency in the PRC

the A Shares Class Meeting and the H Shares Class Meeting

COSCO SHIPPING Development Co., Ltd.[#] (中遠海運發展股份有限公司), a joint stock limited company established in the PRC, the H shares and A shares of which are listed on Main Board of the Hong Kong Stock Exchange (Stock Code: 02866) and the Shanghai Stock Exchange (Stock Code: 601866), respectively
has the meaning ascribed to it under the Listing Rules
the new A Share(s) to be allotted and issued by the Company to COSCO SHIPPING Investment pursuant to the Acquisition Agreement as consideration payable to COSCO SHIPPING Investment for the Proposed Acquisition
has the meaning ascribed to it under the Listing Rules
China COSCO SHIPPING Corporation Limited[#] (中國遠洋海運集團有限公司), a PRC state-owned enterprise and an indirect controlling shareholder of the Company
COSCO SHIPPING, its subsidiaries and/or its associates (excluding the Group)

COSCO SHIPPING Investment Holdings Co., Ltd.[#] (中遠海運投資控股有限公司), formerly known as COSCO SHIPPING Financial Holdings Co., Ltd. (中遠海運金融控股有限公司), a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of COSCO SHIPPING

the proposed subscription of A Shares by China Shipping pursuant to the CS Subscription Agreement

the subscription agreement dated 27 January 2021 entered into 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 RMB600 million and not more than the limit of the proceeds to be raised under the Proposed Nonpublic Issuance of A Shares as approved by the CSRC

“CSRC”	China Securities Regulatory Commission (中國證券監督管理
	委員會)
“Director(s)”	the director(s) of the Company
“DFIC Ningbo”	Dong Fang International Container (Ningbo) Co., Ltd.#(寰宇
	東方國際集裝箱（寧波）有限公司) (formerly known as Ningbo
	Pacific Container Co., Ltd.#(寧波太平貨櫃有限公司)), a
	company established in the PRC with limited liability and a
	wholly-owned subsidiary of COSCO SHIPPING Investment as
	at the date of this announcement
“DFIC Qidong”	Dong Fang International Container (Qidong) Co., Ltd.#(寰宇
	東方國際集裝箱（啟東）有限公司) (formerly known as Qidong
	Singamas Energy Equipment Co., Ltd.#(啟東勝獅能源裝備
	有限公司)), a company established in the PRC with limited
	liability and a wholly-owned subsidiary of COSCO SHIPPING
	Investment as at the date of this announcement
“DFIC Qingdao”	Dong Fang International Container (Qingdao) Co., Ltd.
	(寰宇東方國際集裝箱（青島）有限公司) (formerly known
	as Qingdao Pacific Container Co., Ltd.#(青島太平貨櫃有
	限公司)), a company established in the PRC with limited
	liability and a wholly-owned subsidiary of COSCO SHIPPING
	Investment as at the date of this announcement
“DFIC Qingdao Group”	DFIC Qingdao and Dong Fang International Port (Qidong) Co.,
	Ltd.#(寰宇東方國際港務（啟東）有限公司) (formerly known
	as Qidong Pacific Port Co., Ltd.#(啟東太平港務有限公司)),
	a company established in the PRC with limited liability and a
	wholly-owned subsidiary of DFIC Qingdao as at the date of
	this announcement
“EGM”	the extraordinary general meeting of the Company to be
	convened to consider and, if thought fit, approve, among other
	things, (i) the Proposed Acquisition; (ii) the Proposed Non-
	public Issuance of A Shares; (iii) the CS Subscription; (iv) the
	Specific Mandates; (v) the Whitewash Waiver; and (vi) the
	Special Deal
“Executive”	the Executive Director of the Corporate Finance Division of
	the SFC or any delegates of the Executive Director
“Floor Price”	the latest audited net asset per Share of the Company before the
	issuance of A Shares under the Proposed Non-public Issuance
	of A Shares
“Group”	the Company and its subsidiaries

the Company and its subsidiaries

“H Share(s)”

“H Shares Class Meeting”
“H Shareholder(s)”
“Hong Kong”
“Hong Kong Stock Exchange”
“Independent Board Committee”
“Independent Financial Adviser”
“Independent Shareholders”
“Listing Rules”
“Offering Period”

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

the class meeting of the H Shareholders

holder(s) of H Share(s)

the Hong Kong Special Administrative Region of the PRC

The Stock Exchange of Hong Kong Limited
the independent board committee of the Company comprising Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong and Ms. Zhang Weihua, each being an independent nonexecutive Director, which is formed to advise the Independent Shareholders on the Proposed Acquisition, the Proposed Nonpublic Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal in accordance with the Listing Rules and the Takeovers Code
the independent financial adviser to be appointed by the Company, with the approval of the Independent Board Committee, to advise the Independent Board Committee and the Independent Shareholders in respect of the Proposed Acquisition, the Proposed Non-public Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal
Shareholders other than (i) COSCO SHIPPING and parties acting in concert with it; (ii) Shareholders who have become a subscriber under the Proposed Non-public Issuance of A Shares; and (iii) all other parties (if any) who are interested in or involved in the Proposed Acquisition, the Proposed Nonpublic Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and the Special Deal, and in the context of the Special Deal, Independent Shareholders refer to all H Shareholders (other than (a) COSCO SHIPPING and its associates and parties acting in concert with it (including the participants of the Asset Management Plan in respect of the H Shares held thereunder); and (b) those who are involved in or interested in the Proposed Acquisition, the Proposed Nonpublic Issuance of A Shares, the CS Subscription, the Specific Mandates, the Whitewash Waiver and/or the Special Deal)

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

the period commencing the Proposed Non-public Issuance of A Shares as determined by 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
“PRC Legal Advisers”	Grandall Law Firm (Shanghai), the PRC legal advisers to the
	Company
“Price Determination Date”	the first day of the Offering Period of the Proposed Non-public
	Issuance of A Shares
“Pricing Benchmark Date”	the date of the announcement of the resolutions of the Board in
	respect of the Proposed Acquisition, being 27 January 2021
“Proposed Acquisition”	the proposed acquisition of the Target Assets from COSCO
	SHIPPING Investment pursuant to the Acquisition Agreement
“Proposed Non-public Issuance	the proposed non-public issuance of A shares to not more than
of A Shares”	35 specific target subscribers (including China Shipping)
“Restructuring”	the overall restructuring proposal of the Company involving the
	Proposed Acquisition and the Proposed Non-public Issuance of
	A Shares
“RMB”	Renminbi, the lawful currency of the PRC
“SFC”	the Securities and Futures Commission of Hong Kong
“Share(s)”	A Share(s) and H Share(s)
“Share Option(s)”	the share option(s) granted under the A Share Option Incentive
	Scheme
“Shareholder(s)”	holder(s) of Share(s)
“Special Deal”	the Proposed Non-public Issuance of A Shares which
	constitutes a special deal under Rule 25 of the Takeovers Code
“Specific Mandate(s)”	the specific mandates to be sought from the Independent
	Shareholders at the EGM and the Class Meetings to issue
	(i) the Consideration Shares pursuant to the Acquisition
	Agreement; and (ii) the A Shares under the Proposed
	Non-public Issuance of A Shares

“Supplemental Agreement” the supplemental agreement to the Acquisition Agreement to be entered into between the Company and COSCO SHIPPING Investment in or around late April 2021 based on current expectation “Takeovers Code” the Hong Kong Code on Takeovers and Mergers

“Target Assets” 100% of the equity interests in the Target Companies

“Target Companies” “trading day(s)”

collectively, DFIC Qidong, DFIC Qingdao, DFIC Ningbo and Universal Technology

a day on which the Shanghai Stock Exchange is open for dealing or trading in securities

“Universal Technology”

Shanghai Universal Logistics Technology Co., Ltd.[#] (上海寰宇物流科技有限公司) (formerly known as Singamas Container Holdings (Shanghai) Limited[#] (勝獅貨櫃管理(上海) 有限公司)), a company established in the PRC with limited liability and a wholly-owned subsidiary of COSCO SHIPPING Investment as at the date of this announcement

“Valuation Benchmark Date” 31 December 2020

“Whitewash Waiver”

a waiver from the Executive pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code in respect of the obligations of COSCO SHIPPING to make a mandatory general offer for all the securities of the Company not already owned or agreed to be acquired by COSCO SHIPPING and parties acting in concert with it which would otherwise arise as a result of the issue of the Consideration Shares under the Proposed Acquisition

“%”

per cent

By order of the Board COSCO SHIPPING Development Co., Ltd. Cai Lei Joint Company Secretary

Shanghai, the People’s Republic of China 27 January 2021

As at the date of this announcement, the Board comprises Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, being executive Directors, Mr. Huang Jian, Mr. Liang Yanfeng and Mr. Ip Sing Chi, being non-executive Directors, and Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong and Ms. Zhang Weihua, being independent non-executive Directors.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement the omission of which would make any statement in this announcement misleading.

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 2021

50782_rns_2021-01-27_b8c75fb2-b929-49b8-a34a-ba818c0c7d14.pdf

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

(1) MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT

(2) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES TO RAISE ANCILLARY FUNDS

(3) CONNECTED TRANSACTION – CS SUBSCRIPTION AGREEMENT (4) APPLICATION FOR WHITEWASH WAIVER (5) SPECIAL DEAL AND

(6) RESUMPTION OF TRADING IN A SHARES

MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT

PROPOSED NON-PUBLIC ISSUANCE OF A SHARES TO RAISE ANCILLARY FUNDS

CONNECTED TRANSACTION – CS SUBSCRIPTION AGREEMENT

IMPLICATIONS UNDER THE LISTING RULES

Proposed Acquisition

CS Subscription

IMPLICATIONS UNDER THE TAKEOVERS CODE

Application for Whitewash Waiver

Special Deal in relation to the Proposed Non-public Issuance of A Shares

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

GENERAL

EGM AND CLASS MEETINGS

RESUMPTION OF TRADING IN A SHARES

I. MAJOR AND CONNECTED TRANSACTION – ACQUISITION AGREEMENT

Subject matter:

Consideration:

Issue of Consideration Shares:

Lock-up period:

Conditions precedent:

Completion:

Effectiveness of the Acquisition Agreement:

Termination:

Information on the Target Companies

DFIC Qidong

DFIC Qingdao

DFIC Ningbo

Universal Technology

Information on the parties to the Acquisition Agreement

Information on the Group

Information on COSCO SHIPPING Investment

II. PROPOSED NON-PUBLIC ISSUANCE OF A SHARES TO RAISE ANCILLARY FUNDS

Lock-up period:

III. CONNECTED TRANSACTION – CS SUBSCRIPTION AGREEMENT

Conditions precedent:

Lock-up period:

Information on the parties to the CS Subscription Agreement

Information on the Group

Information on China Shipping

IV. EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

V. FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

VI. REASONS FOR AND BENEFITS OF PROPOSED ACQUISITION, PROPOSED NON-PUBLIC ISSUANCE OF A SHARES AND CS SUBSCRIPTION

Proposed Acquisition

Proposed Non-public Issuance of A Shares and CS Subscription

VII. IMPLICATIONS UNDER THE LISTING RULES

Proposed Acquisition

CS Subscription

VIII. IMPLICATIONS UNDER THE TAKEOVERS CODE

Application for Whitewash Waiver

Special Deal in relation to the Proposed Non-public Issuance of A Shares

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

GENERAL

EGM AND CLASS MEETINGS

RESUMPTION OF TRADING IN A SHARES

DEFINITIONS

“H Share(s)”

For identification purpose only.

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COSCO SHIPPING Development Co., Ltd. Capital/Financing Update 2021