Dida Inc. — Regulatory Filings 2000

Jan 3, 2000

Listed Company Information

CHINA SHIP DEV<1138> - Announcement 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. CHINA SHIPPING DEVELOPMENT COMPANY LIMITED (a joint stock limited company incorporated in the People's Republic of China with limited liability) CONNECTED TRANSACTIONS The board of directors (the "Board") of China Shipping Development Company Limited (the "Company") is pleased to announce that the Company has entered into a series of transactions with certain associates of China Shipping (Group) Company (the "Group Company"). The Group Company is the controlling shareholder of the Company, holding approximately 56.45 per cent. of the issued share capital of the Company, as defined in Chapter 14 of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"). Particulars of these transactions are set forth below:- First, the Company and China Shipping Passenger Transportation Company Limited ("CS Passenger Transportation") entered into a sale and purchase agreement (the "First Sale and Purchase Agreement") on 30th December 1999 for the sale of "Senhai 3" and "Senhai 4" (together, the "Sale Vessels") to CS Passenger Transportation. The selling price for each of the Sale Vessels was RMB7,200,000 (approximately HK$6,729,120). Second, the Company and China Shipping International Trading Co., Ltd. ("CS International Trading") entered into a sale and purchase agreement (the "Second Sale and Purchase Agreement") on 30th December 1999 for the sale of "Yau Yi 12", a dry bulk cargo vessel, to CS International Trading. The selling price for "Yau Yi 12" was RMB2,000,000 (approximately HK$1,869,200). Third, the Company and China Shipping Container Lines Company Limited ("CS Container Lines") entered into a bareboat charterparty (the "First Bareboat Charterparty") on 30th December 1999 whereby the Company has leased to CS Container Lines four dry bulk cargo vessels, namely "Zhenfen 17", "Zhenfen 18", "Zhenfen 19" and "Zhenfen 20" (together, the "Zhenfen Vessels") for a term of one year commencing from 30th December 1999. The aggregate charter payment will be RMB18,980,000 (approximately HK$17,738,708). Fourth, the Company and CS Container Lines entered into another bareboat charterparty (the "Second Bareboat Charterparty") on 30th December 1999 whereby the Company has leased to CS Container Lines "Xiang Zhu", a container carrier, for a term of one year commencing from 30th December 1999. The aggregate charter payment will be US$1,168,000 (approximately HK$9,110,400). Fifth, the Company and CS Container Lines entered into a third bareboat charterparty (the "Third Bareboat Charterparty") on 30th December 1999 whereby the Company continues to lease to CS Container Lines four container carriers, namely "Xiang Xing", "Xiang Wang", "Xiang Xiu" and "Xiang Da" (together, the "Chartered Container Carriers"), for a term of one year commencing from 1st January 2000. The aggregate charter payment will be US$3,549,990 (approximately HK$27,689,922). CS Passenger Transportation and CS International Trading are wholly-owned subsidiaries of the Group Company and hence connected persons of the Company as defined in Chapter 14 of the Listing Rules. CS Container Lines is an associate of the Company and the Group Company and hence a connected person of the Company as defined in Chapter 14 of the Listing Rules. Each of the First and Second Sale and Purchase Agreements and the First, Second and Third Bareboat Charterparties constitutes a connected transaction of the Company as defined in Chapter 14 of the Listing Rules. As the aggregate consideration of the First and Second Sale and Purchase Agreements and the aggregate consideration of the First, Second and Third Bareboat Charterparties fall within the scope of Rule 14.25(1) of the Listing Rules, they do not require the approval of the independent shareholders (the "Independent Shareholders") of the Company. The terms and conditions of each of the above agreements have been negotiated on an arm's length basis and on normal commercial terms. The Board (including the independent non-executive directors (the "Independent Directors") of the Company) considers each of the above agreements to be fair and reasonable, and beneficial to the Company. Particulars of the connected transactions under each of the above agreements are set forth below, and will also be disclosed in the Company's annual report for the relevant financial year. 1. DISPOSAL OF VESSELS (A) The First Sale and Purchase Agreement dated 30th December 1999 Parties Vendor: The Company Purchaser: CS Passenger Transportation The Sale Vessels The vessels "Senhai 3" and "Senhai 4" (Vessel Grade: CCS) are dry bulk cargo vessels, were constructed in 1981 by Dalian Shipyard, which is an independent third party, and were transferred to the Company in November 1994 from Shanghai Shipping (Group) Company ("Shanghai Shipping"), the former controlling shareholder of the Company, as part of the restructuring for listing of the Company's H Shares on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The purchase price for each of the Sale Vessels was RMB9,750,000 (approximately HK$9,112,350), and was settled in consideration of the shares issued by the Company prior to listing. The Sale Vessels were commissioned into service in 1981, and each with a gross tonnage of 10,907 tonnes. The construction cost of each of the Sale Vessels was RMB15,800,000 (approximately HK$14,766,680). The audited net book value of each of the Sale Vessels as at 31st December 1998 was RMB4,668,300 (approximately HK$4,362,993). Selling price Under the First Sale and Purchase Agreement, the aggregate selling price of the Sale Vessels was RMB14,400,000 (approximately HK$13,458,240). The selling price of the Sale Vessels was determined after arm's length negotiations with reference to the market value of vessels of similar conditions in the PRC. CS Passenger Transportation settled the selling price of the Sale Vessels in full by way of cash on 31st December 1999, being the date of delivery of the Sale Vessels to CS Passenger Transportation. (B) The Second Sale and Purchase Agreement dated 30th December 1999 Parties Vendor: The Company Purchaser: CS International Trading "Yau Yi 12" The vessel "Yau Yi 12" (Vessel Grade: CCS) is a dry bulk cargo vessel, was constructed in 1982 by a shipyard in Pakistan, which is an independent third party, and was transferred to the Company in November 1994 from Shanghai Shipping as part of the restructuring for listing of the Company's H Shares on the Stock Exchange. The purchase price for "Yau Yi 12" was RMB8,800,000 (approximately HK$8,224,480), and was settled in consideration of the shares issued by the Company prior to listing. "Yau Yi 12" was commissioned into service in 1982 with a gross tonnage of 4,456 tonnes. The construction cost of "Yau Yi 12" was RMB12,742,931 (approximately HK$11,909,543). The audited net book value of "Yau Yi 12" as at 31st December 1998 was RMB4,860,000 (approximately HK$4,542,156). The operation of "Yau Yi 12" has been suspended since March 1998 principally due to certain corrosions on the vessel's main body steel plate and heat diffusion defect in the engine. The Company has intended to sell "Yau Yi 12" since that time at a price of approximately RMB2,500,000 (approximately HK$2,336,500), but no buyer was willing to acquire the vessel. Selling price Under the Second Sale and Purchase Agreement, the selling price of "Yau Yi 12" was RMB2,000,000, (approximately HK$1,869,200), and was determined after arm's length negotiations with reference to the market value of vessels of similar conditions in the PRC. CS International Trading settled the selling price of "Yau Yi 12" in full by way of cash on 31st December 1999, being the date of delivery of "Yau Yi 12" to CS International Trading. (C) Reasons for, and benefits of, the disposal of vessels Owing to the decreasing demand in the PRC dry bulk cargo transportation market, the Sale Vessels have been operating at approximately 76 per cent. of their respective full capacities since the beginning of this year. The Board is of the view that the Company has no present need to use the Sale Vessels as dry bulk cargo vessels for PRC domestic transportation. As the Sale Vessels will be used by CS Passenger Transportation for shipping routes in northern China, the Board is of the view that there will be no competition between the Company and CS Passenger Transportation following completion of the sale. "Yau Yi 12" was operating for more than 17 years and its operation has been suspended since March 1998 principally due to its outdated and defective appliances and limited shipping capacity of approximately 4,456 tonnes, both of which are not suitable for modern dry bulk cargo transportation. Thus the Board considers that, as part of the improvement in the composition of the Company's fleet, disposing " Yau Yi 12" at a reasonable price is in the best interest of the Company and is not expected to have any adverse impact on the composition of the Company's fleet. The transaction also enables the Company to receive cash of RMB 2,000,000 (approximately HK$1,869,200) immediately for its working capital purpose. CS International Trading intends to sell "Yau Yi 12" to independent third parties. As the Company is not engaging in selling vessel business activities, the Board (including the Independent Directors) considers appropriate to enter into the transaction with CS International Trading. "Yau Yi 12" will not be used for dry bulk cargo transportation. (D) Use of proceeds The Company has no present plan to use the proceeds in any new capital projects or acquisition of new vessels. The amount of RMB16,400,000 (approximately HK$15,327,440) will form part of the Company's cash and bank balances to be used as its working capital. (E) General The selling price of the Sale Vessels and "Yau Yi 12" represented approximately 0.3 per cent. and 0.04 per cent., respectively, of the latest audited value of the Company's consolidated net tangible assets of RMB4,789,046,000 (approximately HK$4,475,842,392) as at 31st December 1998. As the aggregate consideration of the disposal of these vessels falls within the scope of Rule 14.25(1) of the Listing Rules, they do not require the approval of the Independent Shareholders. The Board (including the Independent Directors) considers the terms and conditions of the First and the Second Sale and Purchase Agreements to be fair and reasonable, and beneficial to the Company. 2. BAREBOAT CHARTERPARTIES (A) The First Bareboat Charterparty dated 30th December 1999 Parties Lessor: The Company Lessee: CS Container Lines The Zhenfen Vessels The Zhenfen Vessels, namely "Zhenfen 17", "Zhenfen 18", "Zhenfen 19" and "Zhenfen 20", are dry bulk cargo vessels, were constructed in Xin Gang Shipyard in Shanghai, an independent third party, and were acquired by the Company in June 1995 upon completion of their construction. The aggregate construction cost of the Zhenfen Vessels was approximately RMB430,168,000 (approximately HK$402,035,013). Each of the Zhenfen Vessels was commissioned into service in June 1995, and has a gross tonnage of 18,112 tonnes. Delivery and redelivery of the Zhenfen Vessels Under the First Bareboat Charterparty, the Zhenfen Vessels were delivered to CS Container Lines on 30th December 1999 and will be redelivered to the Company on 29th December 2000. Upon redelivery, an independent inspector acceptable to the Company and CS Container Lines will inspect each of the Zhenfen Vessels. The cost of the inspections shall be borne equally by the Company and CS Container Lines. The Company shall, at the time of redelivery of each of the Zhenfen Vessels, take delivery and purchase all unused bunker oil, lubricating oil and other supplies on board each of the Zhenfen Vessels in accordance with the then prevailing market price. Charter payment Under the First Bareboat Charterparty, CS Container Lines will pay to the Company an aggregate charter payment of RMB18,980,000 (approximately HK17,738,708). The average daily charter payment for each of the Zhenfen Vessels is RMB13,000 (approximately HK$12,150). The monthly charter payment during the charter period shall be payable in advance by CS Container Lines on the first working day of each month. The charter payment is determined with reference to the international rates of bareboat charterparty of similar term for similar vessels, and the Board (including the Independent Directors) considers the terms and conditions to be fair and reasonable, and beneficial to the Company. Period of the First Bareboat Charterparty The First Bareboat Charterparty has been effective from 30th December 1999, and will expire on 29th December 2000. Maintenance and insurance During the charter period of the First Bareboat Charterparty, CS Container Lines shall:- (i) be responsible for all necessary minor repairs of each of the Zhenfen Vessels; and (ii) insure each of the Zhenfen Vessels against marine, war and compensation risks in such forms as the Company shall approve in writing. (B) The Second Bareboat Charterparty dated 30th December 1999 Parties Lessor: The Company Lessee: CS Container Lines "Xiang Zhu" "Xiang Zhu" is a container carrier with 514 TEU. "Xiang Zhu" was constructed by Braila Shipyard in Romania, which is an independent third party, and was acquired by the Company in March 1998 upon completion of its construction. The construction cost of "Xiang Zhu" was RMB109,512,000 (approximately HK$102,349,915), "Xiang Zhu" was commissioned into service in March 1998, and has a gross tonnage of 8,637 tonnes. Delivery and redelivery of "Xiang Zhu" Under the Second Bareboat Charterparty, "Xiang Zhu" were delivered to CS Container Lines on 30th December 1999 and will be redelivered to the Company on 29th December 2000. Upon redelivery, an independent inspector acceptable to the Company and CS Container Lines will inspect "Xiang Zhu". The cost of the inspections shall be borne equally by the Company and CS Container Lines. The Company shall, at the time of redelivery of "Xiang Zhu", take delivery and purchase all unused bunker oil, lubricating oil and other supplies on board "Xiang Zhu" in accordance with the then prevailing market price. Charter payment Under the Second Bareboat Charterparty, CS Container Lines will pay to the Company an aggregate charter payment of US$1,168,000 (approximately HK$9,110,400). The average daily charter payment for "Xiang Zhu" is US$3,200 (approximately HK$24,960). The monthly charter payment during the charter period shall be payable in advance by CS Container Lines on the first working day of each month. The charter payment is determined with reference to the international rates of bareboat charterparty of similar term for similar vessels, and the Board (including the Independent Directors) considers the terms and conditions to be fair and reasonable, and beneficial to the Company. Period of the Second Bareboat Charterparty The Second Bareboat Charterparty has been effective from 30th December 1999, and will expire on 29th December 2000. Maintenance and insurance During the charter period of the Second Bareboat Charterparty, CS Container Lines shall:- (ii) be responsible for all necessary minor repairs of "Xiang Zhu"; and (iii) insure "Xiang Zhu" against marine, war and compensation risks in such forms as the Company shall approve in writing. (C) The Third Bareboat Charterparty dated 30th December 1999 Lessor: The Company Lessee: CS Container Lines The Chartered Container Carriers The Chartered Container Carriers, namely "Xiang Xing", "Xiang Wang", "Xiang Xiu" and "Xiang Da", were all constructed by Daedong Shipbuilding Company Limited in Fushan, the Republic of Korea, which is an independent third party. The Chartered Container Carriers were acquired by the Company upon completion of their construction. "Xiang Xing" and "Xiang Wang" were constructed and commissioned into service in 1995 and each of these two vessels has a gross tonnage of 4,960 tonnes. The construction cost of each of "Xiang Xing" and "Xiang Wang" was RMB90,055,000 (approximately HK$84,165,403). "Xiang Xiu" and "Xiang Da" were constructed and commissioned into service in 1994 and each of these two vessels has a gross tonnage of 4,018 tonnes. The construction cost of each of "Xiang Xiu" and "Xiang Da" was RMB76,248,318 (approximately HK$71,261,678) and RMB75,507,806 (approximately HK$70,569,595), respectively. Delivery and redelivery of the Chartered Container Carriers The original bareboat charterparty (as disclosed in the Company's announcement dated 23rd April 1999) expired on 31st December 1999. Under the Third Bareboat Charterparty, the Company continues to lease to CS Container Lines the Chartered Container Carriers for a term of one year commencing from 1st January 2000. Charter payment Under the Third Bareboat Charterparty, CS Container Lines will pay to the Company an aggregate charter payment of US$3,549,990 (approximately HK$27,689,922). The average daily charter payment for each of "Xiang Xing" and "Xiang Wang" is US$2,761 (approximately HK$21,535) and for each of "Xiang Xiu" and "Xiang Da" is US$2,102 (approximately HK$16,396). The monthly charter payment for each of the Chartered Container Carriers during the charter period will be payable in advance by CS Container Lines on the first working day of each month. The charter payment is determined with reference to the international rates of bareboat charterparty of similar term for similar vessels, and the Board (including the Independent Directors) considers the terms and conditions to be fair and reasonable, and beneficial to the Company. Period of the Third Bareboat Charterparty The Third Bareboat Charterparty has been effective from 1st January 2000 and will expire on 31st December 2000. Other terms of the Third Bareboat Charterparty The other terms and conditions of the Third Bareboat Charterparty are identical to the bareboat charterparty in respect of the Chartered Container Carriers as disclosed in the Company's announcement dated 23rd April 1999. (D) Reasons for, and benefits of, the First, Second and the Third Bareboat Charterparties As disclosed in the Company's 1999 interim report and its announcement dated 12th November 1999, the business of CS Container Lines has undergone rapid development and it has attained profitability in the second half of this year. CS Container Lines now operates two Far East-Europe container transportation routes, one China-Australia route and one transportation route from Far East to west coast of the United States. The Company's principal business operations include oil transportation and dry bulk cargo transportation, but not container transportation. During 1999, the original bareboat charterparty in respect of the Chartered Container Carriers generated additional charter fee income to the Company. Owing to the decreasing demand in the PRC dry bulk cargo transportation market, the Board (including the Independent Directors) considers that leasing the Zhenfen Vessels, "Xiang Zhu" vessel and the Chartered Container Carriers to CS Container Lines will fully utilise the shipping capacity of the Company's fleet and will generate additional charter fee income to the Company. As the Company owns a 25 per cent. interest in CS Container Lines and is entitled to the same percentage of CS Container Lines' profits, the Board is also of the view that the above bareboat charterparty arrangements will assist further business development of CS Container Lines, which will also benefit the Company. The above bareboat charterparty arrangements will not affect the operations and efficiency of the Company's fleet. (E) General As CS Container Lines is a connected person of the Company, each of the First, Second and Third Bareboat Charterparties constitutes a connected transaction of the Company as defined in Chapter 14 of the Listing Rules. The aggregate consideration in these three transactions is RMB58,355,477 (approximately HK$54,539,028) representing approximately 1.22 per cent. of the latest audited value of the Company's consolidated net tangible assets of RMB4,789,046,000 (approximately HK$4,475,842,392) as at 31st December 1998. As the aggregate consideration in these transactions falls within the scope of Rule 14.25(1) of the Listing Rules, they do not require the approval of the Independent Shareholders. The business of the Company mainly involves coastal, ocean and Yangtze River cargo transportation, international passenger transportation, chartering, cargo agency and cargo transportation agency. By order of the Board China Shipping Development Company Limited Ye Yumang Company Secretary Shanghai, the People's Republic of China 3rd January 2000