AI assistant
Dida Inc. Capital/Financing Update 2004
Preview isn't available for this file type.
Download source fileThe Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
CHINA SHIPPING DEVELOPMENT COMPANY LIMITED
中海發展股份有限公司
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 1138)
PROPOSAL FOR THE ISSUE OF BONDS CONVERTIBLE
INTO NEW A SHARES OF THE COMPANY
The Board is pleased to announce the proposal for the Company to issue RMB 2 billion (approximately HK$ 1,869,158,879) in principal amount of Convertible Bonds convertible into new A Shares of the Company. The Convertible Bonds are proposed to be in the form of RMB denominated convertible bonds. An application is expected to be made to have the Convertible Bonds listed on the Shanghai Stock Exchange. The Convertible Bonds are expected to be offered to legal and natural persons in the PRC (save for those who are prohibited by PRC laws, rules and/or regulations from subscribing for them and excluding for this purpose, Hong Kong, Taiwan and Macau ), who are not connected persons of the Company as defined in the Listing Rules, and the existing shareholders of A Shares will be entitled to a priority right to subscribe for the Convertible Bonds, by virtue of and in proportion to their A Shareholdings. There will be a public offering of the Convertible Bonds in the PRC only. No offering document will be issued or circulated in Hong Kong or to any member of the public in Hong Kong.
The Board is of the view that the Bonds Issue will allow the Company to take advantage of the current favorable low interest rate environment, thereby lowering the Company’s overall funding cost.
The Company proposes to convene the EGM on 17 August 2004 to consider and, if thought fit, approve the Bonds Issue. A notice convening the EGM will be published shortly and will be despatched to the H shareholders of the Company separately. A circular containing, amongst other things, the letter from the Chairman of the Board and the notice of EGM will be despatched to the shareholders of the Company as soon as practicable.
PROPOSED BONDS ISSUE
The board (the “Board”) of directors (the “Directors”) of China Shipping Development Company Limited (the “Company”) is pleased to announce its proposal to issue RMB 2 billion (approximately HK$1,869,158,879) in principal amount of the bonds convertible into new A shares of RMB1 each (“A Shares”) of the Company (“Convertible Bonds”). The Convertible Bonds are proposed to be in the form of RMB-denominated convertible bonds. An application is expected to be made to have the Convertible Bonds listed on the Shanghai Stock Exchange. The Convertible Bonds are expected to be offered to legal and natural persons in the People’s Republic of China (“PRC”) (save for those who are prohibited by PRC laws, rules and/or regulations from subscribing for them and excluding for this purpose, the Hong Kong Special Administrative Region (“Hong Kong”), Taiwan and the Macau Special Administrative Region (“Macau”)), who are not connected persons of the Company as defined in the Listing Rules, and the existing shareholders of A Shares will be entitled to a priority right to subscribe for the Convertible Bonds, by virtue of and in proportion to their A Shareholdings. There will be a public offering of the Convertible Bonds in the PRC only. No offering document in respect of the Convertible Bonds will be issued or circulated in Hong Kong or to any member of the public in Hong Kong.
The proposed issue of the Convertible Bonds (“Bonds Issue”) will be conditional on, amongst other things, (i) the obtaining of approval of the shareholders of the Company at an extraordinary general meeting of the Company which is currently proposed to be convened and held on 17 August 2004 (“EGM”); (ii) the obtaining of the relevant approvals from the China Securities and Regulatory Commission (“CSRC”); (iii) the granting of approval for the listing of the Convertible Bonds on the Shanghai Stock Exchange; and (iv) the granting by the Shanghai Stock Exchange of approval for the listing of and permission to deal in the new A Shares to be issued upon conversion (if any) of the Convertible Bonds.
SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSED BONDS ISSUE
The current proposed principal terms and conditions of the Bonds Issue are summarized as follows (such terms and conditions will have to be approved by CSRC and be finalised in the relevant offering memorandum):
| Total issuing amount: | RMB 2 billion |
| Bond maturity: | 5 years |
| Issue price: | According to the par value of the Convertible Bonds |
| Coupon rate: | Fixed rate with interests being paid annually. The range of interest rates is preliminarily estimated to be between 1.0% to 2.7% per annum, with the upper limit being subject to any adjustment of the bank deposit interest rate of the People’s Bank of China. The actual interest rate will be determined by the Board as authorized by the shareholders of the Company in a general meeting after consultation with the lead underwriter and in accordance with state policies, market conditions and the requirements of the Company. |
| Interest and principal repayment (prior to conversion or redemption): | The interest will be paid annually. The principal will be repaid together with the last installment of interest, after the fifth anniversary of the issue of the Convertible Bonds in accordance with the repayment procedure set out in the relevant offering memorandum. |
| Conversion price: | The initial conversion price of the Convertible Bonds will be the arithmetic mean of the closing prices of the A Shares for the 30 trading days immediately before the issue of the relevant offering memorandum, with an upward margin of 0.1% to 10% and rounded up to cents. |
| Conversion price will be subject to adjustment in the event of: bonus issues of shares, conversion of common reserve into share capital, issue or placing of new shares, division of the Company, merger or capital reduction and other events which would have an impact on the capital structure of or shareholders’ interests in the Company. | |
| During the conversion period of the Convertible Bonds, in the event that the closing prices of the A Shares for at least 20 trading days out of any 30 consecutive trading days are lower than 90% of the then conversion price, the Board is entitled to make downward adjustment of not more than 10% of the conversion price, provided that the adjusted conversion price shall not be lower than the higher of the arithmetic mean of the closing prices of the A Shares for the 20 trading days immediately before the meeting of the Board held to consider and approve any said conversion price adjustment and the audited net asset value per share as at the end of the most recent accounting year. In the event that the downward adjustment of the conversion price is more than 10% of the then conversion price, the Board shall put forward the same adjustment in a resolution for the shareholders of the Company to consider and if though fit, approve in a general meeting, subject to the aforementioned proviso for the adjusted conversion price. | |
| Conversion mechanism | Applications to convert to A Shares may be made by the holders of the Convertible Bonds at any time in accordance with the conditions set out in the relevant offering memorandum at the conversion price then effective during the conversion period where processing of the conversion applications are not suspended. Holders of the Convertible Bonds may convert all or part of the Convertible Bonds. |
| Conversion period | At any time from and including the day immediately after the expiry of the six months period commencing from the issue of the Convertible Bonds, up to and including the fifth aniversary of the issue of the Convertible Bonds |
| Redemption at the option of the Company | During the conversion period of the Convertible Bonds, in the event that the closing price of the A Shares in any 30 consecutive trading days shall be higher than 130% of the then conversion price, the Company shall be entitled to redeem all or part of the Convertible Bonds then outstanding, immediately following the expiry of the aforementioned 30 consecutive trading days period, in accordance with the specified redemption procedure, at the nominal value of the Convertible Bonds plus the interest (together with accrued interest). |
| Redemption at the option of the holders of the Convertible Bonds | During the conversion period of the Convertible Bonds, in the event that the closing prices of the A Shares in any 30 consecutive trading days shall be lower than 80% of the then conversion price, the holders of the Convertible Bonds may require the Company to redeem all or part of the Convertible Bonds held by them as at the redemption date (as set out in the relevant redemption notice) at 103% of the nominal values of the Convertible Bonds (together with accrued interest). |
| If the shareholders of the Company approve a change in the use of proceeds from the issue of the Convertible Bonds or CSRC deems that there has been a change in the use of the same proceeds, the holders of the Convertible Bonds may require the Company to redeem all or part of the Convertible Bonds held by them at 102% of the nominal values of the Convertible Bonds (together with accrued interest). | |
| During the period between the 59th and the 60th month, commencing from the date of issue of the Convertible Bonds, the holders of the Convertible Bonds may require the Company to redeem all or part of the Convertible Bonds held by them at prices which do not exceed 110% of the nominal value of the Convertible Bonds (together with accrued interest). | |
| Target subscribers: | Citizens holding valid and legal proof of identity of his/her PRC citizenship and PRC legal persons (save for those who are prohibited by PRC laws, rules and/or regulations from subscribing for the Convertible Bonds), who are not connected persons of the Company as defined in the Listing Rules. |
| Listing of bonds: | An application is expected to be made to the Shanghai Stock Exchange for the listing of the Convertible Bonds on the Shanghai Stock Exchange. |
The timing of the Bonds Issue will be determined by the Board after careful consideration and taking into account the prevailing market conditions and all other relevant factors at the time. The actual terms and conditions of the Convertible Bonds will be determined by the Board prior to the Bonds Issue. The details of the terms and conditions of the Convertible Bonds which will be published in Shanghai Securities News and Shanghai Securities Journal on 21 June 2004 are for indicative purpose only and may or may not be altered.
PROPOSED USE OF PROCEEDS
The proceeds of the Bonds Issue in the sum of RMB 2 billion ( before deducting expenses) are expected to be used to finance the following projects:
(a) the construction of six 57,300 tons dry bulk cargo carriers (as to approximately RMB700,740,000);
(b) the construction of two 42,000 tons refined/crude oil tankers (as to approximately RMB315,220,000);
(c) the construction of four 75,000 tons oil tankers (as to approximately RMB375,980,000); and
(d) the purchase of two large second-hand very large crude carriers (as to approximately RMB538,200,000),
and approximately RMB110,000,000 will be used to supplement the working capital requirement of fourteen vessels.
Any further funds which the Company requires for financing the above projects will be sourced from elsewhere by the Company.
REASONS FOR THE BONDS ISSUE
The Board has carefully considered different financing options for the funding requirements of the Company. It believes that the Bonds Issue is the most appropriate option for the Company for the following reasons:
(a) the Bonds Issue would allow the Company to take advantage of the current favorable low interest rate environment, thereby lowering the Company’s overall funding cost;
(b) the Bonds Issue, as a convertible bond issue, would generally allow the Company to pay a lower interest coupon payment than for a straight bond issue; and
(c) the Bonds Issue would not lead to any immediate dilution of the Company’s basic earnings per share which would arise in the case of a new issue of A Shares.
IMPACT OF THE BONDS ISSUE ON CAPITAL STRUCTURE OF THE COMPANY
Upon conversion of the Convertible Bonds, there would be an increase in the number of A Shares held by the public. Shareholders’ equity interest in the Company will be diluted as a result of the exercise of the conversion rights attached to the Convertible Bonds. The exact size of the above increase will depend upon the final terms of the Convertible Bonds, including, amongst other terms, the conversion price at which the Convertible Bonds will be converted into A Shares. It is currently contemplated that the initial conversion price will be determined with reference to a premium over the average closing price of A Shares for a certain period of trading days immediately prior to the issue of the relevant offering memorandum. The final terms of the Convertible Bonds are expected to be determined only after the completion of a roadshow and “book-building” offering process. The aggregate amount of A Shares to be issued upon full conversion of the Convertible Bonds are not expected to exceed 20% of the domestic shares of the Company in issue as at the date of the EGM.
For illustrative purposes only, assuming full conversion of the Convertible Bonds and that the conversion price equals to RMB8.86 (being the average closing price of the A Shares for the last 5 trading days ending on 18 June 2004, with an upward margin of 0.1%), the percentage of shareholding of the existing shareholders of the Company are follows:
| Percentage of shareholding immediately before conversion in full of the Convertible Bonds | Percentage of shareholding immediately after conversion in full of the Convertible Bonds | |
| Non-listed domestic shares A Shares H shares | 50.51% 10.52% 38.97% 100% | 47.30% 16.21% 36.49% 100% |
Further announcements will be made once the terms and conditions of the Convertible Bonds are determined.
Any new A Shares to be issued upon conversion of the Convertible Bonds will rank pari passu with, and within the same class as the A Shares in issue on the relevant conversion date in all respects, save in respect of entitlement to dividends and other distributions which will depend on, inter alia, the conversion date(s) for the Convertible Bonds.
EXTRAORDINARY GENERAL MEETING
Under the Company Law of the PRC and the Company's articles of association, the Bonds Issue is subject to the approval of the shareholders of the Company. It is proposed that a special resolution for the approval of the Bonds Issue will be put to the shareholders of the Company for their consideration at the EGM. The notice of the EGM will be published shortly and will be despatched to the holders of the Company’s H shares separately. A circular setting out details of the Bonds Issue and notice of the EGM will be despatched to the shareholders of the Company as soon as practicable.
Upon approval of the Bonds Issue at the EGM, the issue of the Convertible Bond will still be subject to the approval of CSRC. The timing of the Bonds Issue shall be subject to the approval of CSRC, as well as the bond market conditions in the PRC. Further announcement will be made by the Company when the CSRC’s approval has been obtained and the maturity period and the coupon rate of the Convertible Bonds have been fixed.
For the purposes of the EGM, the register of members of the Company will be closed from 17 July 2004 to 17 August 2004 (both days inclusive), during which no transfer of shares will be registered. Accordingly, holders of H shares of the Company and holders of domestic shares of the Company (includind A Shares) whose names appear on the register of members of the Company at the close of business on 16 July 2004 shall have the right to attend the EGM.
GENERAL
The Board confirms that same as disclosed above, the Board is not aware of any matter discloseable under the general obligation imposed by Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), which is or may be of a price sensitive nature.
| By the order of the Board of China Shipping Development Company Limited Yao Qiaohong Company Secretary |
18 June 2004
Shanghai
The People’s Republic of China
* As at the date of this announcement, the Board of Directors of the Company is comprised of Mr. Li Shaode, Mr. Sun Zhitang, Mr. Wang Daxiong, Mr. Yan Mingyi and Mr. Yao Zuozhi as executive directors, Mr. Xie Rong, Mr. Hu Honggao and Mr. Zhou Zhanqun as independent non-executive directors.
Note: Unless otherwise specified, the conversion of RMB into HK$ is based on the exchange rate of HK$1.00=RMB1.07.
Please also refer to the published version of this announcement in The Standard.