Dida Inc. — Capital/Financing Update 2006

Nov 2, 2006

The 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.

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

(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

Issue of Convertible Bonds

The Board is pleased to announce the conditional proposal for the Company to issue Convertible Bonds in principal amount of RMB 2 billion Yuan (approximately HK$ 1.94 billion) convertible into new A Shares. The initial conversion price of the A Shares which may fall to be issued upon conversion of the Convertible Bonds will be the higher of the arithmetic mean of the closing prices of the A Shares for the 20 trading days immediately before the issue of the relevant offering memorandum and the weighted average trading price of the A shares on the trading day immediately preceding the issue of the aforesaid memorandum, with an upward margin of 10% to 20% and rounded up to cents. The Convertible Bonds are proposed to be in the form of RMB denominated convertible bonds. The issue of the Convertible Bonds is conditional upon, among other things, the completion of Vessel Acquisitions. An application is expected to be made to have the Convertible Bonds listed on the Shanghai Stock Exchange. The Bond issue is underwritten by a syndicate led by China International Capital Corporation Limited.

Offer of Convertible Bonds to be made in the PRC only

The Convertible Bonds are expected to be offered to natural persons, legal persons, securities investment funds and other investors who have complied with the relevant laws and regulations and who are holders of securities accounts opened at the Shanghai Branch of China Securities Depositary and Clearing Corporation Limited (save for those prohibited by PRC laws and regulations). Existing shareholders of A Shares will be entitled to subscribe for the Convertible Bonds pro rata their shareholdings of A Shares and in priority to others who are not shareholders. 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.

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Use of proceeds

The purpose of the issue of the Convertible Bonds is to enable the Company to fund the proposed Vessel Acquisitions. Further funds required for the Vessel Acquisitions will be financed by bank loans and/or general working capital. In case the Convertible Bonds are not issued or the Bond Issue has not been completed at the time when the Company is required to make payments for the Vessel Acquisitions, the Company will meet such payments through bank loans and/or general working capital.

EGM and Class Meetings

The Company proposes to convene the EGM, a class meeting for shareholders of H shares and a class meeting for shareholders of A shares separately and expected to be no later than 31 December 2006 and, if thought fit, approve the Bond Issue. Notices convening the EGM and the respective class meetings will given to the H shareholders and A shareholders of the Company separately.

PROPOSED BOND ISSUE

The board (the “ Board ”) of directors (the “ Directors ”) of China Shipping Development Company Limited (the “ Company ”) is pleased to announce its conditional proposal to issue Convertible Bonds (“ Bond Issue ”) in principal amount of RMB 2 billion Yuan (approximately HK$1.94 billion) (“ Convertible Bonds ”) convertible into new A shares of RMB1.0 Yuan each (“ A Shares ”) of the Company. The initial conversion price of the A Shares which may fall to be issued upon conversion of the Convertible Bonds will be the higher of the arithmetic mean of the closing prices of the A Shares for the 20 trading days immediately before the issue of the relevant offering memorandum and the weighted average trading price of the A shares on the trading day immediately preceding the issue of the aforesaid memorandum, with an upward margin of 10% to 20% and rounded up to cents. The Convertible Bonds are proposed to be in the form of RMB denominated convertible bonds. The Bond issue is underwritten by a syndicate led by China International Capital Corporation Limited.

OFFER OF CONVERTIBLE BONDS TO BE MADE IN THE PRC ONLY

The Convertible Bonds are expected to be offered to natural persons, legal persons, securities investment funds and other investors who have complied with the relevant laws and regulations, who are holders of securities accounts opened at the Shanghai Branch of China Securities Depositary and Clearing Corporation Limited (save for those prohibited by the Peoples Republic of China (“ PRC ”) laws and regulations). Existing shareholders of A Shares will be entitled to subscribe for the Convertible Bonds pro rata their shareholdings of A Shares and in priority to others who are not shareholders. 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 proposed issue of the Convertible Bonds (“ Bond Issue ”) is conditional upon, amongst other things, (i) completion of the acquisition of the assets in the 42 vessels (the “Vessel Acquisitions” ), further details of which are set out in the announcement of the Company dated 1 November 2006;(ii) the obtaining of approval of the shareholders of the Company at the extraordinary general

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meeting (“ EGM ”) and the respective class meetings of H shareholders and A shareholders of the Company which is expected to be convened no later than 31 December 2006; and (iii) the obtaining of the relevant approvals from the China Securities and Regulatory Commission (“ CSRC ”).

SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSED BOND ISSUE

The current proposed principal terms and conditions of the Bond 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:

Bond maturity:

RMB 2 billion Yuan (approximately HK$1.94 billion) 5 years

Issue price:

According to the face value of the Convertible Bonds which will be issued in integral principal amounts of RMB100 Yuan (approximately HK$97.09) with 10 Convertible Bonds with an aggregate principal amount of RMB1,000 Yuan (approximately HK$970.87) forming one board lot

Coupon rate:

The range of interest rates is preliminarily estimated to be between 1.30% to 2.70% 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 sponsor (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 (prior to conversion or redemption) will be repaid at 105% of the face value of the Convertible Bonds (inclusive of 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 higher of the arithmetic mean of the closing prices of the A Shares for the 20 trading days immediately before the issue of the relevant offering memorandum and the weighted average trading price of the A shares on the trading day immediately preceding the issue of the aforesaid memorandum, with an additional upward margin of 10% to 20% and rounded up to cents.

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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 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 85% of the then conversion price, the Board is entitled to propose a special resolution to the shareholders of the Company in a general meeting for a downward adjustment of the conversion price. 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 shareholders of the Company held to consider and approve the said conversion price adjustment and the weighted average trading price of the A Shares on the trading day immediately preceding the aforesaid general meeting.

• Conversion mechanism

• Applications to convert to A Shares may be made by the holders of the Convertible Bonds at any time during the conversion period 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 completion of issue of the Convertible Bonds, up to and including the fifth anniversary of the issue of the Convertible Bonds

• Redemption on maturity

The Company shall redeem all outstanding Convertible Bonds on maturity at 105% of the nominal value of the Convertible Bonds (inclusive of accrued interest)

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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 20 consecutive trading days shall be equal to or 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 20 consecutive trading days period, in accordance with the specified redemption procedure, at 103% of the nominal value of the Convertible Bonds (inclusive of 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 75% 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 at 105% of the nominal values of the Convertible Bonds (inclusive of 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 material 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 103% of the nominal values of the Convertible Bonds (inclusive of accrued interest).

Target subscribers:

Natural persons, legal persons, securities investment funds and other investors who have complied with the relevant laws and regulations, who are holders of securities accounts opened at the Shanghai Branch of China Securities Depositary and Clearing Corporation Limited (save for those prohibited by PRC laws and regulations).

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 Bond 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 Bond Issue. The details of the terms and conditions of the Convertible Bonds which will be published in Shanghai Securities News and China Securities Journal on 2 November 2006 are for indicative purpose only and may or may not be altered.

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PROPOSED USE OF PROCEEDS

The purpose of the issue of the Convertible Bonds is to enable the Company to fund the proposed Vessel Acquisitions. Further funds required for the Vessel Acquisitions will be financed by bank loans and/or general working capital. In case the Convertible Bonds are not issued or the Bond Issue has not been completed at the time when the Company is required to make payments for the Vessel Acquisitions, the Company will meet such payments through bank loans and/or general working capital.

REASONS FOR THE BOND ISSUE

The Board has carefully considered different financing options for the funding requirements of the Company. It believes that the Bond Issue is the most appropriate option for the Company for the following reasons:

• (a) the Bond Issue would allow the Company to take advantage of the current favorable low interest rate environment, thereby lowering the Company’s overall funding cost and improving the capital structure;

• (b) the Bond 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 Bond 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 BOND 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 in number of A Shares 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 higher of the average closing price of A Shares for a certain period of trading days immediately prior to the issue of the relevant offering memorandum and the weighted average price of the A shares on the trading day immediately preceding the issue of the aforesaid memorandum. The final terms of the Convertible Bonds are expected to be determined only after the completion of a roadshow and agreed between the underwriting syndicate and the Company.

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There is no minimum floor conversion price. For illustrative purposes only, assuming full conversion of the Convertible Bonds and that the conversion price equals to RMB9.22 Yuan (being the average closing price of the A Shares for the last 5 trading days ending on 31 October 2006 before the suspension of trading in the shares on 1 November 2006, with an upward margin of 10%), 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 Number of Shares immediately before conversion in full of the Convertible Bonds Percentage of shareholding immediately after conversion in full of the Convertible Bonds Number of Shares immediately after conversion in full of the Convertible Bonds (’000) (’000) China Shipping* 47.46% 1,578,500 48.90% 1,732,621 A Shares (public) 13.57% 451,500 14.52% 514,298 H shares (public) 38.97% 1,296,000 36.58% 1,296,000 Public 52.54% 1,747,500 51.1% 1,810,298 100% 3,326,000 100% 3,542,919	Percentage of shareholding immediately before conversion in full of the Convertible Bonds Number of Shares immediately before conversion in full of the Convertible Bonds Percentage of shareholding immediately after conversion in full of the Convertible Bonds Number of Shares immediately after conversion in full of the Convertible Bonds (’000) (’000) China Shipping* 47.46% 1,578,500 48.90% 1,732,621 A Shares (public) 13.57% 451,500 14.52% 514,298 H shares (public) 38.97% 1,296,000 36.58% 1,296,000 Public 52.54% 1,747,500 51.1% 1,810,298 100% 3,326,000 100% 3,542,919	Percentage of shareholding immediately before conversion in full of the Convertible Bonds Number of Shares immediately before conversion in full of the Convertible Bonds Percentage of shareholding immediately after conversion in full of the Convertible Bonds Number of Shares immediately after conversion in full of the Convertible Bonds (’000) (’000) China Shipping* 47.46% 1,578,500 48.90% 1,732,621 A Shares (public) 13.57% 451,500 14.52% 514,298 H shares (public) 38.97% 1,296,000 36.58% 1,296,000 Public 52.54% 1,747,500 51.1% 1,810,298 100% 3,326,000 100% 3,542,919	Percentage of shareholding immediately before conversion in full of the Convertible Bonds Number of Shares immediately before conversion in full of the Convertible Bonds Percentage of shareholding immediately after conversion in full of the Convertible Bonds Number of Shares immediately after conversion in full of the Convertible Bonds (’000) (’000) China Shipping* 47.46% 1,578,500 48.90% 1,732,621 A Shares (public) 13.57% 451,500 14.52% 514,298 H shares (public) 38.97% 1,296,000 36.58% 1,296,000 Public 52.54% 1,747,500 51.1% 1,810,298 100% 3,326,000 100% 3,542,919	Percentage of shareholding immediately before conversion in full of the Convertible Bonds Number of Shares immediately before conversion in full of the Convertible Bonds Percentage of shareholding immediately after conversion in full of the Convertible Bonds Number of Shares immediately after conversion in full of the Convertible Bonds (’000) (’000) China Shipping* 47.46% 1,578,500 48.90% 1,732,621 A Shares (public) 13.57% 451,500 14.52% 514,298 H shares (public) 38.97% 1,296,000 36.58% 1,296,000 Public 52.54% 1,747,500 51.1% 1,810,298 100% 3,326,000 100% 3,542,919
	52.54%	1,747,500	51.1%	1,810,298
	100%	3,326,000	100%	3,542,919

• China Shipping currently holds 47.46% of domestic shares of the Company which are subject to an undertaking not to transfer such shares until and including 29 December 2008. As the Convertible Bonds are being offered on a pro rata basis to existing shareholders of “A” Shares in priority to other eligible persons, this percentage of shareholding immediately after conversion in full of the Convertible Bonds assumes that China Shipping will take up its priority right to subscribe for its pro rata share of the Convertible Bonds. China Shipping has not made a decision whether or not to subscribe for the Convertible Bonds and if it does not, its percentage shareholdings immediately after conversion in full of the Convertible Bonds will be approximately 44.55% and that of the holders of A Shares will be approximately 18.87%.

The Directors do not currently expect that the Bond Issue will adversely affect the minimum number of shares of the Company and H Shares which are, under the Listing Rules, required to be held by members of the public. If there is such adverse effect, the Company intends to adopt necessary measures to meet the relevant requirement. Upon full conversion of the Convertible Bonds, there will not, by reason only of such conversion, result in any change in control of the Company. If there is such adverse effect, the Company intends to adopt necessary measures to meet such requirement. Further announcements will be made once the terms and conditions of the Convertible Bonds are determined and the relevant offering memorandum is issued.

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.

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EGM AND CLASS MEETINGS

Under the Company Law of the PRC and the Company’s articles of association, the Bond Issue is subject to the approval of the shareholders of the Company. It is proposed that a special resolution for the approval of the Bond Issue and amendments to the articles of association of the Company primarily as a result of the proposed Bond Issue to take into account new A shares to be issued upon conversion will be put to the shareholders of the Company for their consideration at the EGM and the respective class meetings of the holders of A shares and H Shares. In relation to the Bond Issue, the relevant resolutions can be categorised into (a) approval of the use of proceeds of the Bond Issue and (b) the terms of the Convertible Bond. China Shipping (Group) Company, the controlling shareholder of the Company, is obliged to abstain from voting on the resolutions on the use of proceeds. If that resolution is not passed, the Bond Issue will not proceed. Save for the aforesaid, China Shipping (Group) Company may vote on the resolution approving the terms of the Bond Issue. The notice of the EGM and the respective class meetings will be given to the holders of the Company’s H shares and A shares separately.

Upon approval of the Bond Issue at the EGM and the respective class meetings, the issue of the Convertible Bond will still be subject to the approval of CSRC. The timing of the Bond 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.

This announcement is made in compliance with the simultaneous dissemination of information requirement under Rule 13.09(2) of the Listing Rules as well as pursuant to the Rule 13.52(1) of the Listing Rules. The Company’s A shares are listed on the Shanghai Stock Exchange, and it has made an announcement similar to this announcement at the Shanghai Stock Exchange.

By the order of the Board of China Shipping Development Company Limited Yao Qiaohong Company Secretary

1 November 2006 Shanghai The People’s Republic of China

Note: Unless otherwise specified, the conversion of RMB into HK$ is based on the exchange rate of HK$1.00=RMB1.03.

As at the date of this announcement, the Board of Directors of the Company is comprised of Mr. Li Shaode, Mr. Wang Daxiong, Mr. Zhang Guofa, Mr. Mao Shijia and Mr. Wang Kunhe as executive directors, Mr. Yao Zuozhi as non-executive director, Mr. Xie Rong, Mr. Hu Honggao and Mr. Zhou Zhanqun as independent non-executive directors.

Please also refer to the published version of this announcement in The Standard.

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