Dida Inc. - Capital/Financing Update 2011

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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)

CONTINUING CONNECTED TRANSACTIONS

NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

14.60(1) 14A.56(1)

As disclosed in the Company’s announcement dated 22 October 2009 the Company entered into the Financial Services Framework Agreement on 22 October 2009 with China Shipping, pursuant to which China Shipping shall procure CS Finance Company to provide the Group with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services; and (iv) other financial services as approved by CBRC. The annual caps for the years ending 31 December 2010, 2011 and 2012 for the provision of deposit services and loan services were set out in the 2009 Announcement.

In light of the Company’s increase in its investment in vessels, the Company expects that the demand for deposit and loan services from CS Finance Company for the remaining period ending 31 December 2011 and the year ending 31 December 2012 will exceed the annual caps previously set out in the 2009 Announcement.

As such and subject to obtaining Independent Shareholders’ approval, on 30 March 2011, the Company entered into (i) the Termination Agreement with China Shipping pursuant to which both parties agreed to terminate the Financial Services Framework Agreement, and (ii) the New Financial Services Framework Agreement with CS Finance Company pursuant to which CS Finance Company will provide the Group with the same services described in the Financial Services Framework Agreement with revised annual caps for the years ending 31 December 2011 and 2012.

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LISTING RULE IMPLICATIONS

As at the date of this announcement, China Shipping is beneficially interested in 1,578,500,000 Domestic shares, representing approximately 46.36% of the existing issued share capital of the Company and is therefore its controlling shareholder. As such, China Shipping is a connected person of the Company within the meaning of the Listing Rules. CS Finance Company, 45% of which is owned by China Shipping, is an associate of China Shipping. Therefore the transactions pursuant to the New Financial Services Framework Agreement constitute continuing connected transactions for the Company. In respect of the provision of deposit services under the New Financial Services Framework Agreement, the applicable percentage ratios under Chapter 14 of the Listing Rules are more than 5% on an annual basis and the annual consideration exceeds HK$10,000,000. Therefore, such transactions constitute continuing connected transactions of the Company that are subject to the reporting, annual review, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

14A.56(3)

In respect of the provision of the loan services under the New Financial Services Framework Agreement, pursuant to Rule 14A.65(4) of the Listing Rules, such transactions are exempt from all reporting, announcement and Independent Shareholders’ approval requirements.

In respect of the provision of settlement services and other financial services under the New Financial Services Framework Agreement, any future transaction that may take place between the Group and CS Finance Company in respect of such services is expected to be less than 0.1% based on the applicable percentage ratios under Chapter 14 of the Listing Rules. Accordingly, pursuant to Rule 14A.31(2) of the Listing Rules, such transactions are exempt from all reporting, announcement and Independent Shareholders’ approval requirements. Should such transactions exceed the exemption threshold in future, the Group will re-comply with the applicable Listing Rules. A circular in accordance with the requirements of the Listing Rules is currently expected to be dispatched no later than 21 April 2011 to the H Shareholders containing, among other things, (1) details of the New Financial Services Framework Agreement; (2) a letter from the Independent Board Committee with its recommendation to the Independent Shareholders; (3) a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders and (4) the notice of the General Meeting. The Company will make further announcements should there be any delay in dispatch of the circular.

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NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

Background Information

As disclosed in the Company’s announcement dated 22 October 2009, the Company entered into the Financial Services Framework Agreement on 22 October 2009 with China Shipping pursuant to which China Shipping shall procure CS Finance Company to provide the Group with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services and (iv) other financial services as approved by CBRC. The annual caps for the years ending 31 December 2011 and 2012 for the provision of deposit services and loan services were set out in the 2009 Announcement.

In light of the Company’s increase in its investments in vessels, the Company expects that the demand for deposit and loan services from CS Finance Company for the remaining period ending 31 December 2011 and the year ending 31 December 2012 will exceed the annual caps previously set out in the 2009 Announcement.

As such and subject to obtaining Independent Shareholders’ Approval, on 30 March 2011, the Company entered into (i) the Termination Agreement with China Shipping pursuant to which both parties agreed to terminate the Financial Services Framework Agreement, and (ii) the New Financial Services Framework Agreement with CS Finance Company pursuant to which CS Finance Company will provide the Group with the same services described in the Financial Services Framework Agreement with revised annual caps for the years ending 31 December 2011 and 2012.

Major terms of the New Financial Services Framework Agreement

Date: 30 March 2011 Parties: CS Finance Company (as provider of services) The Company (as recipient of services)

Pricing

Under the New Financial Services Framework Agreement:

(i) CS Finance Company shall accept deposits from the Group at interest rates not lower, and thus no less favourable, than (a) the lower limit of the relevant rates stipulated by PBC for the same type of deposits; (b) the interest rates offered by any independent third party for the same type of deposits; or (c) the interest rates at which CS Finance Company accepts from any independent third party for the same type of deposits;

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(ii) CS Finance Company shall provide loans to the Group at interest rates not higher, and thus no less favourable, than (a) the upper limit of the relevant rates stipulated by PBC for the same type of loan; (b) the interest rates offered by any independent third party for the same type of loan; or (c) the interest rates at which CS Finance Company charges any independent third party with the same credit rating for the same type of loan;
(iii) The fees charged by CS Finance Company for the provision of settlement services to the Group shall not be higher, and thus no less favourable, than the fees charged by an independent third party for the same type of services at the time; and
(iv) The fees charged by CS Finance Company for the provision of other financial services to the Group shall not be higher, and thus no less favourable, than (a) the upper limit (if applicable) of the fees stipulated by PBC to be charged for the same type of services; (b) the fees charged by any independent third party for the same type of services; or (c) the fees charged by CS Finance Company for the same type of services on any independent third party with the same credit rating.

Annual Caps

Based on internal estimates, the Directors propose to set the annual caps for the years ending 31 December 2011 and 2012 for the continuing connected transactions under the New Financial Services Framework Agreement as follows:

				Annual caps	set out in	set out in
		Proposed annual		the 2009 Announcement
		caps for	the year	for the year ending
		ending 31	December	31 December
		2011	2012	2011		2012
		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
(1)	Maximum daily outstanding
	balance of deposits
	(including accrued interest
	and handling fee) to be
	placed by the Group with
	CS Finance Company	3,000,000	3,500,000	3,000,000	3,500,000
(2)	Maximum daily outstanding
	balance of loans (including
	accrued interest and
	handling fee) to be granted
	by CS Finance Company to
	the Group	3,000,000	3,000,000	1,700,000	1,900,000

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In arriving at such revised annual caps, the Directors have considered the following factors:

(i) The historical figures of the maximum daily outstanding balance of deposits (including accrued interest and handling fee) placed by the Group with commercial banks for the 3 years ending 31 December 2010 was approximately RMB2,781,048,000 (approximately HK$3,233,776,744), approximately RMB2,898,353,000 (approximately HK$3,370,177,907) and approximately RMB1,086,902,000 (approximately HK$1,263,839,535), respectively;
(ii) The historical figures of the maximum daily outstanding balance of loans (including accrued interest and handling fee) granted by commercial banks to the Group for the 3 years ending 31 December 2010 was approximately RMB6,466,387,000 (approximately HK$7,519,054,651), approximately RMB6,907,284,000 (approximately HK$8,031,725,581) and approximately RMB7,487,804,000 (approximately HK$8,706,748,837), respectively;
(iii) The historical figures of the maximum daily outstanding balance of deposits (including accrued interest and handling fee) placed by the Group with CS Finance Company for the year ending 31 December 2010 was approximately RMB1,756,582,000 (approximately HK$2,042,537,210); and
(iv) The historical figures of the maximum daily outstanding balance of loans (including accrued interest and handling fee) granted by CS Finance Company to the Group for the year ending 31 December 2010 was approximately RMB 1,475,618,000 (approximately HK$1,715,834,883).

The proposed annual caps as revised above have been determined based on (i) the above historical figures; (ii) the Group’s expectation of capital needs for the period from now up to 31 December 2012 due to the Group’s increase in its investments in vessels and (iii) CS Finance Company’s financial ability.

Payment Terms

The payment terms are dependent on the type of financial services to be provided and are determined at the time when such financials services are entered into. The Group expect such terms of payment to be consistent with market terms for the relevant type of financial services.

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Term

Subject to the approval being obtained from the Independent Shareholders, the New Financial Services Framework Agreement will be effective from the date when all conditions precedent under the New Financial Services Framework Agreement are satisfied to 31 December 2012. Unless either party requests not to renew the New Financial Services Framework Agreement during such term, the New Financial Services Framework Agreement will be automatically renewed for another three years from 1 January 2013.

REASONS FOR AND BENEFITS OF ENTERING INTO THE NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

As the Group has been increasing the scale of its investments in vessels, the Group expects its capital needs for the next two years to increase accordingly. The PRC commercial banks has tightened the size of credit due to macro-economic factors, whereas the terms and conditions provided by CS Finance Company under the New Financial Services Framework Agreement to the Group are generally no less favourable than those provided by independent third parties.

Furthermore, the Group is not restricted under the New Financial Services Framework Agreement to approach, and in fact may choose, any bank or financial institution to satisfy its financial service needs. Its criteria in making the choice could be made on costs and quality of services. Therefore, the Group may, but is not obliged to, continue to use CS Finance Company’s services if the service quality provided continues to be competitive. Having such flexibility afforded under the New Financial Services Framework Agreement, the Group is able to better manage its current capital and cashflow position. In addition, it is also expected that CS Finance Company will provide more efficient settlement services to the Group, as compared to independent third-party banks.

In light of the above circumstances, the Directors (other than the independent non-executive Directors who will defer their recommendation to Independent Shareholders until they have received the recommendation of the Independent Financial Adviser referred to below) consider that the terms of the above transactions are fair and reasonable, on normal commercial terms, and that it is in the best interest of the Company and its Shareholders as a whole to enter into the New Financial Services Framework Agreement with CS Finance Company.

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LISTING RULE IMPLICATIONS

In respect of the provision of deposit services under the New Financial Services Framework Agreement, the applicable percentage ratios are more than 5% on an annual basis and the annual consideration exceeds HK$10,000,000. Therefore, such transactions constitute continuing connected transactions of the Company that are subject to the reporting, annual review, announcement and Independent Shareholders’ approval requirements under the Listing Rules.

China Shipping, the controlling shareholder of the Company, and its associates, will abstain from voting at the General Meeting in relation to the Termination Agreement and the New Financial Services Framework Agreement.

The Independent Board Committee has been appointed to advise the Independent Shareholders, and the Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders, as to whether

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the terms of the above transactions under the New Financial Services Framework Agreement are fair and reasonable and whether such transactions are in the interests of the Company and its Shareholders as a whole and in respect of the revised annual caps under the New Financial Services Framework Agreement.

A circular in accordance with the requirements of the Listing Rules is currently expected to be dispatched no later than 21 April 2011 to the H Shareholders containing, among other things, (1) details of the New Financial Services Framework Agreement; (2) a letter from the Independent Board Committee with its recommendation to the Independent Shareholders; (3) a letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders and (4) the notice of the General Meeting. The Company will make further announcements should there be any delay in dispatch of the circular.

INFORMATION ABOUT THE COMPANY AND CS FINANCE COMPANY

The business scope of the Company mainly involves coastal, ocean and Yangtze River cargo transportation, oil transportation, chartering, cargo agency and cargo transportation agency. The business scope of CS Finance Company includes the provision of financial and financing advisory services, credit verification services and related consulting and agency services.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions have the following meanings:

“2009 Announcement” the announcement dated 22 October 2009 published by the Company in relation to, among other things, the Financial Services Framework Agreement
“A Shares” PRC-listed Domestic Shares in the share capital of the Company, with a par value of RMB1.00 each, which are subscribed for and traded in RMB and listed on the Shanghai Stock Exchange
“associate” has the meaning ascribed thereto under the Listing Rules
“Board” the board of Directors “CBRC” China Banking Regulatory Commission

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“China Shipping”
中國海運（集團）總公司 (China Shipping (Group) Company), a PRC state-owned enterprise and the controlling shareholder of the Company, currently holding 46.36% of the registered capital of the Company and owns 45% of CS Finance Company
“Company”
China Shipping Development Company Limited (中海發展股份有限公司) a joint stock limited company incorporated in the PRC with limited liability, whose H Shares have been listed on the Main Board of the Stock Exchange since 1994 and whose A Shares have been listed on the Shanghai Stock Exchange since 2002
“CSCL”
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 the Stock Exchange and the Shanghai Stock Exchange respectively, and in which China Shipping has approximately 49.03% shareholding interest
“CS Finance Company” China Shipping Finance Company Limited (中國海運財務有限責任公司), a limited liability company established by the Company, China Shipping, Guangzhou Maritime Transport, CSCL and CS Haisheng in the PRC pursuant to the investment agreement dated 13 February 2009
“CS Haisheng”
China Shipping (Hainan) Haisheng Shipping and Enterprise Co., Ltd (中海（海南）海盛船務股份有限公司), a joint stock limited company established in the PRC whose A shares are listed on the Shanghai Stock Exchange, and in which China Shipping has approximately 27.49% shareholding interest
“Directors”
the directors of the Company.
“Domestic Shares”
domestic shares of RMB1.00 each in the registered capital of the Company

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“Financial Services Framework Agreement”
the financial services framework agreement dated 22 October 2009 between the Company and China Shipping, pursuant to which China Shipping shall procure CS Finance Company to provide the Group with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services and (iv) other financial services as approved by CBRC
“General Meeting”
general meeting of the Shareholders to be convened by the Company and expected to be no later than 7 June 2011 to consider and, if thought fit, to approve, among other things, the Termination Agreement and the New Financial Services Framework Agreement
“Group”
the Company and its existing subsidiaries
“Guangzhou Maritime Transport”
Guangzhou Maritime Transport (Group) Co. Ltd. (廣州海運（集團）有限公司), a limited liability company incorporated in the PRC and a wholly-owned subsidiary of China Shipping
“H Shares”
H shares of par value RMB1.00 each in the share capital of the Company, being overseas listed foreign invested shares
“HK$”
the lawful currency of Hong Kong dollars
“Hong Kong” Hong Kong Special Administrative Region of the PRC
“Independent Board Messrs. Zhu Yongguang, Gu Gongyun, Zhang Jun and Committee” Lu Wenbin
“Independent Financial Adviser”
TC Capital Asia Limited, the independent financial adviser appointed to make the relevant recommendation to the Independent Board Committee and the Independent Shareholders in relation to the transactions, being a registered investment adviser and dealer under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Independent the Shareholders other than China Shipping and its Shareholder(s)” associates
“Listing Rules”
Rules Governing the Listing of Securities on the Stock Exchange

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“New Financial the new financial services framework agreement dated Services Framework 30 March 2011 entered into between the Company and Agreement” CS Finance Company, pursuant to which CS Finance Company will provide the Group with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services; and (iv) other financial services as approved by CBRC
“PBC” People’s Bank of China (中國人民銀行) “PRC” the People’s Republic of China “RMB” Renminbi Yuan, the lawful currency of the PRC “Shareholder(s)” shareholder(s) of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Termination the termination agreement dated 30 March 2011 entered Agreement” into between the Company and China Shipping, pursuant to which both parties agree to terminate the Financial Services Framework Agreement

Note: Unless otherwise specified and for illustration purpose only, the conversion of RMB into HK$ is based on the exchange rate HK$1.00=RMB0.86.

By order of the Board of

China Shipping Development Company Limited Yao Qiaohong Company Secretary

Shanghai, the People’s Republic of China

30 March 2011

As at the date of this announcement, the Board of Directors of the Company comprises of Mr. Li Shaode, Mr. Ma Zehua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Zhang Guofa and Mr. Qiu Guoxuan as executive Directors, and Mr. Zhu Yongguang, Mr. Gu Gongyun, Mr. Zhang Jun and Mr. Lu Wenbin as independent non-executive Directors.

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AI assistant

Dida Inc. Capital/Financing Update 2011

50671_rns_2011-03-30_8a3c1db1-ebe2-4a4b-90a5-a1e4bd08fb78.pdf

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

CONTINUING CONNECTED TRANSACTIONS

NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

LISTING RULE IMPLICATIONS

NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

Background Information

Major terms of the New Financial Services Framework Agreement

Annual Caps

Payment Terms

REASONS FOR AND BENEFITS OF ENTERING INTO THE NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

LISTING RULE IMPLICATIONS

INFORMATION ABOUT THE COMPANY AND CS FINANCE COMPANY

DEFINITIONS

By order of the Board of

China Shipping Development Company Limited Yao Qiaohong Company Secretary

Shanghai, the People’s Republic of China

30 March 2011

AI assistant

Dida Inc. — Capital/Financing Update 2011

50671_rns_2011-03-30_8a3c1db1-ebe2-4a4b-90a5-a1e4bd08fb78.pdf

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

CONTINUING CONNECTED TRANSACTIONS

NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

LISTING RULE IMPLICATIONS

NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

Background Information

Major terms of the New Financial Services Framework Agreement

Annual Caps

Payment Terms

REASONS FOR AND BENEFITS OF ENTERING INTO THE NEW FINANCIAL SERVICES FRAMEWORK AGREEMENT

LISTING RULE IMPLICATIONS

INFORMATION ABOUT THE COMPANY AND CS FINANCE COMPANY

DEFINITIONS

By order of the Board of

China Shipping Development Company Limited Yao Qiaohong Company Secretary

Shanghai, the People’s Republic of China

30 March 2011

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