AI assistant
COSCO SHIPPING Development Co., Ltd. — M&A Activity 2016
Nov 11, 2016
50782_rns_2016-11-11_ac73693f-ff92-410e-9703-87dbc7c801a8.pdf
M&A Activity
Open in viewerOpens in your device viewer
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
中海集裝箱運輸股份有限公司 * China Shipping Container Lines Company Limited
(A joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 02866)
CONNECTED TRANSACTION
ACQUISITION OF THE ENTIRE EQUITY INTEREST IN ZHUHAI SHIPPING CORPORATION LIMITED
The Board is pleased to announce that on 11 November 2016, the Company and the Vendors entered into the Sale and Purchase Agreement, pursuant to which the Company conditionally agreed to purchase, and the Vendors conditionally agreed to sell, the entire equity interest in the Target Company for an aggregate Consideration of RMB70,835,900 (approximately HK$80,752,926).
As at the date of this announcement, the equity interest of the Target Company is held by Vendor A as to 90% and Vendor B as to 10%. Upon Completion, the Target Company will become a wholly-owned subsidiary of the Company.
LISTING RULES IMPLICATIONS
As at the date of this announcement, China Shipping and its associates control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 100,944,000 H Shares, representing approximately 39.02% of the total issued share capital of the Company. Accordingly, China Shipping is a controlling shareholder of the Company and therefore a connected person of the Company.
As at the date of this announcement, Vendor B is a wholly-owned subsidiary of Vendor A, which in turn is a wholly-owned subsidiary of China Shipping. Accordingly, each of Vendor A and Vendor B is an associate of China Shipping and a connected person of the Company, and the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.
As one or more applicable percentage ratios calculated in respect of the Listing Rules in respect of the Acquisition are more than 0.1% but less than 5%, the Acquisition is subject to the reporting and announcement requirements but is exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.
1
INTRODUCTION
The Board is pleased to announce that on 11 November 2016, the Company and the Vendors entered into the Sale and Purchase Agreement, pursuant to which the Company conditionally agreed to purchase, and the Vendors conditionally agreed to sell, the entire equity interest in the Target Company for an aggregate Consideration of RMB70,835,900 (approximately HK$80,752,926).
As at the date of this announcement, the equity interest of the Target Company is held by Vendor A as to 90% and Vendor B as to 10%. Upon Completion, the Target Company will become a wholly-owned subsidiary of the Company.
THE SALE AND PURCHASE AGREEMENT
The principal terms of the Sale and Purchase Agreement are as follows:
Date
11 November 2016
Parties
-
(1) The Company;
-
(2) Vendor A; and
-
(3) Vendor B.
Subject matter
The Company conditionally agreed to purchase, and the Vendors conditionally agreed to sell, the entire equity interest in the Target Company in accordance with the terms and conditions of the Sale and Purchase Agreement.
Consideration
The aggregate Consideration payable by the Purchaser to the Vendors for the Acquisition under the Sale and Purchase Agreement is RMB70,835,900 (approximately HK$80,752,926), of which:
-
(1) RMB63,752,300 (approximately HK$72,677,622) shall be payable by the Company to Vendor A; and
-
(2) RMB7,083,600 (approximately HK$8,075,304) shall be payable by the Company to Vendor B.
2
The Consideration shall be payable by the Company to the Vendors upon the fulfilment of the following conditions, unless otherwise agreed:
-
(1) all Conditions having been fulfilled;
-
(2) there having been no material adverse change in respect of the circumstances (including business, operations, assets and debts) of the Target Company since the Reference Date, save for any changes arising from the matters already disclosed by the Vendors to the Company before the execution of the Sale and Purchase Agreement; and
-
(3) there being no breach of the Sale and Purchase Agreement, and the declarations, representations and warranties given by each party under the Sale and Purchase Agreement remaining effective.
The Consideration shall be payable by the Company in cash within 20 business days after the fulfilment of all the aforementioned conditions to the designated accounts of the Vendors.
The Consideration for the Acquisition was determined after arm’s length negotiations between the Company and the Vendors with reference to the valuation of the entire equity interest of the Target Company as shown in the Valuation Report, being RMB70,835,900 (approximately HK$80,752,926) as at the Reference Date.
The Acquisition will be funded by the internal resources of the Group.
Conditions
The Sale and Purchase Agreement shall become effective upon the fulfilment of the following Conditions:
-
(1) each of the Company and the Vendors having completed all internal approval procedures for the execution and performance of the Sale and Purchase Agreement in accordance with its articles of association in force and the requirements under the applicable listing rules;
-
(2) the Target Company having obtained consent from the relevant internal authority for the Acquisition; and
-
(3) the SASAC or any of its authorized departments having granted the applicable approval for the Acquisition.
3
Completion
The Vendors shall cooperate with the Company to complete the registration procedures of the Target Company with the relevant administrative authority for industry and commerce in the PRC within 30 days after the full payment of the Consideration.
Completion shall take place upon the payment of the Consideration by the Company and the issuance of the new business license of the Target Company by the relevant administrative authority for industry and commerce, each pursuant to the terms of the Sale and Purchase Agreement.
INFORMATION ON THE TARGET COMPANY
The Target Company is a limited liability company established under the laws of the PRC and is principally engaged in the business of ship leasing. In addition, the Target Company holds 1.55% of the entire issued share capital of China Everbright Bank as at the date of this announcement.
Based on the financial statements of the Target Company prepared in accordance with the generally accepted accounting principles in the PRC, the financial information of the Target Company for each of the two years ended 31 December 2014 and 2015 was approximately as follows:
| For the year ended | 31 December | |
|---|---|---|
| 2014 | 2015 | |
| (RMB) | (RMB) | |
| (audited) | (audited) | |
| Profit before taxation and extraordinary items | 2,585,724 | 2,066,825 |
| (approximately | (approximately | |
| HK$2,947,725) | HK$2,356,181) | |
| Profit after taxation and extraordinary items | 1,922,709 | 1,550,119 |
| (approximately | (approximately | |
| HK$2,191,888) | HK$1,767,136) |
The audited net asset value and the audited total asset value of the Target Company as at 31 October 2016 was approximately RMB70,835,925 (approximately HK$80,752,955) and approximately RMB2,762,520,354 (approximately HK$3,149,273,204), respectively.
According to the Valuation Report, the valuation of the entire equity interest of the Target Company as at the Reference Date, being 31 October 2016, was RMB70,835,900 (approximately HK$80,752,926), which was determined based on the asset-based approach.
As at the date of this announcement, the registered capital of the Target Company is RMB21,033,540 (approximately HK$23,978,236). The original costs of the Target Company to Vendor A and Vendor B are equivalent to the capital contributions made by Vendor A and Vendor B of RMB18,930,186 (approximately HK$21,580,412) and RMB2,103,354 (approximately HK$2,397,824), respectively.
4
INFORMATION ON THE GROUP
The Company is a joint stock company established under the laws of the PRC with limited liability, the H Shares of which are listed on the Main Board of the Stock Exchange and the A Shares of which are listed on the Shanghai Stock Exchange.
The Group is principally engaged in providing integrated financial services with diversified leasing businesses such as vessel leasing, container leasing and non-shipping finance leasing, supply chain finance, shipping insurance, logistic infrastructure investment and other financial assets investment services.
INFORMATION ON CHINA SHIPPING
China Shipping is a large shipping conglomerate involved in import and export business, trading, coastal and ocean cargo transportation, dry bulk cargo transportation, supply of food for vessels, management of docks and other services in relation to the above, and operates in different regions of the PRC and across the world.
INFORMATION ON THE VENDORS
Vendor A
Vendor A is a limited liability company established under the laws of the PRC and is principally engaged in the provision of various shipping-related services, including carrier and freight services, ship maintenance and repair services, and shipping equipment leasing.
As at the date of this announcement, Vendor A is a wholly-owned subsidiary of China Shipping.
Vendor B
Vendor B is a limited liability company established under the laws of the PRC and is principally engaged in the provision of various shipping-related services, including carrier and freight services, logistics agency services and storage agency services.
As at the date of this announcement, Vendor B is a wholly-owned subsidiary of Vendor A.
REASONS FOR AND BENEFITS OF THE ACQUISITION
The Group has been focusing on the provision of various ship leasing and shipping-related financing services. As aforementioned, the Target Company is principally engaged in the business of ship leasing. In addition, the Target Company holds 1.55% of the entire issued share capital of China Everbright Bank. The Acquisition presents an opportunity for the Group to diversify and expand its existing business. It is expected that the Acquisition would facilitate the realization of the business strategy of the Group and create investment returns to the Group, which would in turn enhance the competitiveness of the Group and create higher value to the Shareholders as a whole.
The Directors (including the independent non-executive Directors) are of the view that the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder have been entered into on normal commercial terms in the ordinary and usual course of business of the Group that are fair and reasonable and the Acquisition is in the interests of the Company and the Shareholders as a whole.
5
Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, all being executive Directors, hold directorship(s) or act as senior management in China Shipping and its associates, and Mr. Feng Boming, Mr. Chen Dong and Mr. Huang Jian, all being non-executive Directors were nominated by China Shipping to the Board. Accordingly, Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong, Mr. Xu Hui, Mr. Feng Boming, Mr. Chen Dong and Mr. Huang Jian have therefore abstained from voting on the relevant Board resolutions approving the Acquisition. As at the date of this announcement, none of the aforementioned Directors hold any Shares. Save as aforementioned, none of the other Directors has a material interest in the Acquisition and hence no other Director has abstained from voting on such Board resolutions.
LISTING RULES IMPLICATIONS
As at the date of this announcement, China Shipping and its associates control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 100,944,000 H Shares, representing approximately 39.02% of the total issued share capital of the Company. Accordingly, China Shipping is a controlling shareholder of the Company and therefore a connected person of the Company.
As at the date of this announcement, Vendor B is a wholly-owned subsidiary of Vendor A, which in turn is a wholly-owned subsidiary of China Shipping. Accordingly, each of Vendor A and Vendor B is an associate of China Shipping and a connected person of the Company, and the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.
As one or more applicable percentage ratios calculated in respect of the Listing Rules in respect of the Acquisition are more than 0.1% but less than 5%, the Acquisition is subject to the reporting and announcement requirements but is exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.
As Completion is subject to the fulfilment of the Conditions, the Acquisition may or may not proceed. Shareholders and potential investors should exercise caution in dealing with the securities of the Company.
DEFINITIONS
Unless the context requires otherwise, capitalized terms used in this announcement shall have the meanings as follow:
-
“A Share(s)” the domestic share(s) in the ordinary share capital of the Company with a par value of RMB1.00 each, which are listed on the Shanghai Stock Exchange
-
“Acquisition” the proposed acquisition of the entire equity interest in the Target Company by the Company pursuant to the Sale and Purchase Agreement
-
“associate(s)” has the meaning ascribed to it under the Listing Rules
-
“Board” the board of Directors of the Company
6
| “China Everbright Bank” | China Everbright Bank Company Limited, a joint stock limited |
|---|---|
| company established in the PRC, whose H shares and A shares are | |
| listed on Main Board of the Stock Exchange (Stock Code: 6818) and | |
| the Shanghai Stock Exchange (Stock Code: 601818), respectively | |
| “China Shipping” | 中國海運（集團）總公司(China Shipping (Group) Company#), a |
| state-owned enterprise of the PRC and controlling shareholder of the | |
| Company | |
| “Company” | China Shipping Container Lines Company Limited* (中海集裝箱 |
| 運輸股份有限公司), a joint stock limited company established in | |
| the PRC, whose H Shares and A Shares are listed on Main Board | |
| of the Stock Exchange (Stock Code: 2866) and the Shanghai Stock | |
| Exchange (Stock Code: 601866), respectively | |
| “Completion” | completion of the Sale and Purchase Agreement in accordance with |
| the terms and conditions as set out therein | |
| “Conditions” | the condition(s) precedent to Completion, as more particularly set |
| out in the section headed “Conditions” of this announcement | |
| “connected person(s)” | has the meaning ascribed to it under the Listing Rules |
| “Consideration” | the aggregate consideration payable by the Company to the Vendors |
| for the Acquisition under the Sale and Purchase Agreement, being | |
| RMB70,835,900 (approximately HK$80,752,926) | |
| “controlling shareholder” | has the meaning ascribed to it under the Listing Rules |
| “Director(s)” | director(s) of the Company |
| “Group” | the Company and its subsidiaries |
| “H Share(s)” | the overseas listed foreign shares in the ordinary share capital of the |
| Company with a par value of RMB1.00 each, which are listed on | |
| Main Board of the Stock Exchange | |
| “Hong Kong” | the Hong Kong Special Administrative Region of the PRC |
| “HK$” | Hong Kong dollars, the lawful currency of Hong Kong |
| “Listing Rules” | the Rules Governing the Listing of Securities on The Stock |
| Exchange of Hong Kong Limited | |
| “PRC” | the People’s Republic of China excluding, for the purpose of this |
| announcement, Hong Kong, the Macau Special Administrative | |
| Region of the PRC and Taiwan | |
| “Reference Date” | 31 October 2016, being the audit and valuation reference date for |
| the entire equity interest in the Target Company under the Sale and | |
| Purchase Agreement | |
| “RMB” | Renminbi, the lawful currency of the PRC |
7
| “Sale and Purchase | the Sale and Purchase Agreement dated 11 November 2016 entered |
|---|---|
| Agreement” | into between the Company and the Vendors in relation to the |
| Acquisition | |
| “SASAC” | State-owned Assets Supervision and Administration Commission of |
| the State Council of the PRC | |
| “Share(s)” | A Share(s) and H Share(s) |
| “Shareholder(s)” | holder(s) of Share(s) |
| “Stock Exchange” | The Stock Exchange of Hong Kong Limited |
| “Target Company” | 珠海船務企業有限公司(Zhuhai Shipping Corporation Limited#), a |
| limited liability company established in the PRC | |
| “Vendor A” | 中遠海運（廣州）有限公司(COSCO Shipping (Guangzhou) Co., |
| Ltd.#), a limited liability company established under the laws of the | |
| PRC and a wholly-owned subsidiary of China Shipping | |
| “Vendor B” | 廣州振興船務有限公司 (Guangzhou Zhenxing Shipping Co., Ltd.#), |
| a limited liability company established under the laws of the PRC | |
| and a wholly-owned subsidiary of Vendor A | |
| “Vendors” | collectively, Vendor A and Vendor B |
| “%” | per cent |
By order of the Board China Shipping Container Lines Company Limited Yu Zhen Joint Company Secretary
Shanghai, the PRC 11 November 2016
For the purpose of this announcement, translations of RMB into HK$ or vice versa have been calculated by using an exchange rate of RMB1.00 equal to HK$1.14. Such exchange rate has been used, where applicable, for the purpose of illustration only and does not constitute a representation that any amounts were, may have been or will be exchanged at such rate or any other rates or at all.
As at the date of this announcement, the Board comprises of Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, being executive Directors, Mr. Feng Boming, Mr. Huang Jian and Mr. Chen Dong, being non-executive Directors, and Mr. Cai Hongping, Mr. Tsang Hing Lun, Ms. Hai Chi Yuet and Mr. Graeme Jack, being independent non-executive Directors.
- The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “China Shipping Container Lines Company Limited”.
# For identification purpose only.
8