Liaoning Port Co., Ltd. — Proxy Solicitation & Information Statement 2007

Aug 9, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manger, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Dalian Port (PDA) Company Limited, you should at once hand this circular to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

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大連港股份有限公司 Dalian Port (PDA) Company Limited*

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 2880)

DISCLOSEABLE TRANSACTION FORMATION OF A JOINT VENTURE

A letter from the board of directors of the Company is set out on pages 3 to 7 of this circular.

* for identification purpose only 9 August, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

CONTENTS

Page Definitions ............................................................................................................................. 1 Letter from the Board ......................................................................................................... 3 Apendix – General Information ......................................................................................... 8

DEFINITIONS

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

"associate(s)"	has the meaning ascribed to it under the Listing Rules;
"Board"	the Company's board of Directors;
"Company"	大連港股份有限公司(Dalian Port (PDA) Company
	Limited), a sino-foreign joint stock limited company
	incorporated in the PRC with H shares listed and
	traded on the main board of the Stock Exchange;
"CSTD"	中海碼頭發展有限公司(China Shipping Terminal
	Development Company Limited), a company
	incorporated in the PRC with limited liability;
"CSTD HK"	China Shipping Terminal Development (Hong Kong)
	Company Limited, a company incorporated in Hong
	Kong with limited liability;
"DPC"	大連港集裝箱股份有限公司(Dalian Port Container
	Co., Ltd.), a joint stock limited liability company
	incorporated in the PRC and a 90.99% owned
	subsidiary of the Company;
"Directors"	the directors of the Company;
"Group"	the Company and its subsidiaries;
"Hong Kong"	Hong Kong Special Administrative Region of the
	PRC;
"JV Contract"	the joint venture contract dated 19 July 2007 between
	the JV Parties in respect of the establishment of the JV
	Enterprise;
"JV Enterprise"	a sino-foreign equity joint venture enterprise which
	will be established in the PRC pursuant to the terms of
	the JV Contract;
"JV Parties"	DPC, CSTD, CSTD HK and NYK;
"Latest Practicable Date"	6 August, 2007, being the latest practicable date prior
	to the printing of this circular for ascertaining certain
	information included in this circular;
"Listing Rules"	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited;

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DEFINITIONS

"NYK"	Nippon Yusen Kabushiki Kaisha, a corporation
	registered under the laws of Japan;
"PRC"	the People’s Republic of China (for the purpose of this
	circular, excluding Hong Kong Special Administrative
	Region, Macau Special Administrative Region and
	Taiwan);
"RMB"	renminbi, the lawful currency of the PRC;
"SFO"	Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong);
"Shareholders"	the shareholders of the Company;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited; and
"%"	per cent.

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LETTER FROM THE BOARD

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大連港股份有限公司 Dalian Port (PDA) Company Limited*

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 2880)

Directors: Executive Directors: Sun Hong (Chairman) Zhang Fengge Jiang Luning (General Manager) Su Chunhua

Registered Office: Xingang Commercial Building Dayao Bay Dalian Free Trade Zone PRC

Non-executive Director: Lu Jianmin Independent Non-executive Directors: Yang Zan Zhang Xianzhi Ng Ming Wah, Charles

Place of business in PRC: Room 2401, Times Building No. 7, Gangwan Street Zhongshan District Dalian, Liaoning PRC 9 August, 2007

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION FORMATION OF JOINT VENTURE

INTRODUCTION

Reference is made to the Company's announcement dated 19 July 2007, in which the Directors announced that on 19 July 2007, DPC (a 90.99% owned subsidiary of the Company) entered into the JV Contract with CSTD, CSTD HK and NYK relating to the formation of the JV Enterprise for the purposes of investing in, constructing, managing and operating the Phase-3 container terminal in Dayao Bay, Dalian, the PRC. The JV Enterprise will be owned as to 40% by DPC, 30% by CSTD, 10% CSTD HK and the remaining 20% by NYK. As the relevant percentage ratios of the Company’s share of the total capital commitment in respect of the JV Enterprise exceed 5% but are less than 25% for the Company, the formation of the JV Enterprise constitutes a discloseable transaction for the Company. The purpose of this circular is to provide you with further information on the transaction.

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LETTER FROM THE BOARD

THE JV CONTRACT

The principal terms of the JV Contract are set forth below:

Date: 19 July 2007

Parties: DPC, CSTD, CSTD HK and NYK

Purpose:

To invest in, construct, manage and operate the Phase-3 container terminal in Dayao Bay, Dalian, the PRC.

Name of the JV Enterprise: 大連國際集裝箱碼頭有限公司 (Dalian International Container Terminal Co., Ltd.)

The name of the JV Enterprise is subject to the registration with the State Administration for Industry and Commerce.

Place of incorporation: The PRC

Equity interest: The equity interests in the JV Enterprise to be held by the JV Parties are:

DPC 40% CSTD 30% CSTD HK 10% NYK 20% ------------------------Total 100%

Total investment:

RMB4.0 billion, 35% of which shall be the registered capital of the JV Enterprise and the remaining 65% shall be funded by means of loan financing or other means to be determined by the board of the JV Enterprise.

The registered capital of the JV Enterprise shall amount to RMB1.4 billion representing 35% of the total investment, and 40% out of which, i.e. RMB560 million, shall be contributed by DPC. Such amount of registered capital shall be paid by way of two equal installments. The first installment shall be paid within 30 days from the date of the JV Enterprise's first board meeting which will be held within 15 days of issuance of the business license of the JV Enterprise while the remaining installment shall be paid within two years of issuance of the business license of the JV Enterprise.

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LETTER FROM THE BOARD

Pursuant to the terms of the JV Contract, the difference between the total investment amount and the registered capital of the JV Enterprise shall be funded by means of loan financing or other means to be determined by the board of the JV Enterprise. In the event that the JV Parties are required to provide financial support to the JV Enterprise, the JV Parties shall provide guarantees in proportion to their respective interests in the JV Enterprise. In this respect, the highest possible amount to be funded by DPC shall be RMB1.04 billion.

The investment amount to be contributed by DPC will be funded by cash from internal resources.

• Scope of business: Construction, operation and management of container terminal; container and other cargos loading, discharge, transport, stacking, storage, transshipment and multimodal transport; container repair and cleaning; stuffing and unstuffing of the containers; container management; electronic data interchange (EDI) service and operation of container freight station (CFS); free trade storage of import and export cargos, supervision of export goods; investment in constructing and operating auxiliary facilities relating to terminal business such as container yard and warehouse and other business allowed by the relevant laws of the PRC.

Board of directors:

• It shall consist of five directors, two of whom shall be nominated by DPC, two by CSTD and CSTD HK, and one by NYK. The chairman of the board shall be appointed by CSTD.

• Management organization: The JV Enterprise shall establish a management organization which will be responsible for the daily management and operation of the JV Enterprise. The management organization of the JV Enterprise includes: one general manager nominated by DPC, one executive deputy general manager nominated by CSTD and one deputy general manager (in charge of finance) nominated by NYK.

Term:

50 years

The formation of the JV Enterprise is subject to the approval of the relevant PRC government authorities. The financial results of the JV Enterprise will be accounted for on an equity basis in the Company’s financial statements.

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LETTER FROM THE BOARD

REASONS FOR AND BENEFIT OF ENTERING INTO THE JV CONTRACT

Development of infrastructure is in line with the PRC’s long-term policy for social and economic development. It is believed that there will be potential growth for container transportation in the PRC, in particular in the Northeastern Region of the PRC where the Phase-3 container terminal is to be constructed, to meet the anticipated foreign and domestic trade growth and freight movements.

Both CSTD and CSTD HK are subsidiaries of China Shipping (Group) Company (‘‘China Shipping’’, together with its subsidiaries the ‘‘China Shipping Group’’). China Shipping is a shipping conglomerate that operates across different regions, sectors and countries. NYK is one of the world’s largest integrated global logistics enterprises offering ocean, land, and air transportation services. The Board considers that it is in the interests of the Company to join forces with CSTD, CSTD HK and NYK to develop Phase-3 container terminal in Dayao Bay, Dalian, the PRC. Phase-1 container terminal commenced operations in 1999. It has 7 berths with the total handling capacity of 2.3 million TEUs. Phase-2 container terminal commenced operations in 2005. Currently it has 4 berths with the total capacity of 1.35 million TEUs. Phase-3 container terminal is expected to commence operations in 2008.

The terms of the JV Contract were negotiated on an arm’s length basis and were determined on normal commercial terms. The Directors, including the independent nonexecutive Directors, believes that the terms of the JV Contract are fair and reasonable and in the best interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE JV CONTRACT ON THE GROUP

The formation of the JV Enterprise will have minimal immediate effect on the Group’s earnings, after taking into account that the JV Enterprise will be in its pre-operating stage in the current year and the foregone interest income associated with the contribution of registered capital to be funded by cash from the Group’s internal resources.

Pursuant to the JV Contract, DPC is required to contribute (i) RMB280 million within 30 days from the date of the JV Enterprise’s first board meeting which will be held within 15 days of issuance of the business license of the JV Enterprise; and (ii) RMB280 million within two years of issuance of the business license of the JV Enterprise. It is agreed that the difference between the total investment amount and the registered capital shall be funded by means of loan financing or other means to be determined by the board of the JV Enterprise. In the event that the JV Parties are required to provide financial support to the JV Enterprise, the JV Parties shall provide guarantees in proportion to their respective interests in the JV Enterprise. In this respect, the highest possible amount to be funded by DPC shall be RMB1.04 billion.

No accountants’ report on the JV Enterprise has been prepared as the JV Enterprise has yet to be established. The formation of the JV Enterprise has no immediate significant impact on the net assets, net tangible assets, assets and liabilities of the Group.

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LETTER FROM THE BOARD

INFORMATION ON THE GROUP, CSTD, CSTD HK AND NYK

The principal activities of the Group are: (i) the provision of terminal and logistics services for oil products and liquefied chemicals; (ii) the provision of terminal and logistics services for containers; and (iii) the provision of port value-added services including tugging, tallying and IT services. DPC is a 90.99% owned subsidiary of the Company and principally engaged in container terminal operations, logistics services and port investment in the PRC.

Both CSTD and CSTD HK are subsidiaries of China Shipping. The principal business of CSTD is port investment, warehouse, port facilities and equipments related financial leasing. The principal business of CSTD HK includes construction, investment, operation, management of container terminals and cargo terminals, vessel chartering and property investment.

NYK is one of the world’s largest integrated global logistics enterprises offering ocean, land, and air transportation services and its shares are listed on various stock exchanges in Japan including Tokyo, Osaka, and Nagoya.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, none of CSTD, CSTD HK and NYK is a connected person of the Company as defined under the Listing Rules.

GENERAL

Your attention is also drawn to the further information contained in the Appendix to this circular.

Yours faithfully, SUN Hong Chairman

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GENERAL INFORMATION

APPENDIX

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading.

DISCLOSURE OF INTERESTS

1. Directors interests in securities

As at the Latest Practicable Date, as far as the Company is aware, none of the Directors or chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies had been notified to the Company and the Stock Exchange.

2. Substantial shareholders' interests in securities

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336 of the SFO and, so far as was known to the Directors or chief xxecutive of the Company, the persons or entities, other than a Director or chief executive of the Company, who had an interest or a short position in the shares or the underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company, or of any other company which is a subsidiary of the Company, or in any options in respect of such share capital were as follows:

		Number of shares/		As a % of relevant class	As a % of
	Class of	underlying shares		of share	total share
Name of Shareholder	shares	held	Capacity	capital1	capital2
Dalian Port Corporation	Domestic	1,816,815,000	Beneficial	97.5%	62.09%
Limited	shares	(long position)	owner
Nippon Yusen Kabushiki	H shares	114,800,000	Interest of	10.80%	3.92%
Kaisha		(long position)	controlled
			corporation

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APPENDIX

GENERAL INFORMATION

N.Y.K. Line Group	H shares	114,800,000	Interest of	10.80%	3.92%
(Hong Kong) Limited		(long position)	controlled
			corporation
N.Y.K. Line (Hong	H shares	114,800,000	Beneficial	10.80%	3.92%
Kong) Limited		(long position)	owner
Fidelity International	H Shares	98,159,000	Beneficial	9.24%	3.35%
Limited		(long position)	owner
The Capital Group	H shares	95,374,000	Beneficial	8.98%	3.26%
Companies, Inc.		(long position)	owner
The National Social	H shares	82,426,000	Beneficial	7.76%	2.82%
Security Fund Council		(long position)	owner
of the PRC
China Shipping (Group)	H shares	73,610,000	Interest of	6.93%	2.52%
Co., Ltd.		(long position)	controlled
			corporation
China Shipping (Hong	H shares	73,610,000	Interest of	6.93%	2.52%
Kong) Holdings Co,		(long position)	controlled
Limited			corporation
China Shipping Terminal	H shares	73,610,000	Beneficial	6.93%	2.52%
Development (Hong		(long position)	owner
Kong) Holdings
Company Limited
JPMorgan Chase & Co.	H shares	65,246,000	Beneficial	6.14%	2.23%
		(long position)	owner	(long	(long
		22,174,000		position)	position)
		（lending pool）		2.09%	0.76%
				（lending	（lending
				pool）	pool）
Indus Capital Partners,	H shares	63,818,000	Interest of	6.01%	2.18％
LLC		(long position)	controlled
			corporation
Kasowitz Sheldon	H shares	63,818,000	Interest of	6.01%	2.18％
Fenton		(long position)	controlled corporation
Kowitz David Nathan	H shares	63,818,000	Beneficial	6.01%	2.18％
		(long position)	owner

Notes:

1. The relevant class of share capital: Domestic shares – 1,863,400,000 shares, H shares – 1,062,600,000 shares.

2. Total share capital: 2,926,000,000 shares.

Save as disclosed herein so far as is known to the Directors, as at the Latest Practicable Date, no person (not being a Director or chief executive of the Company) had an interest or a short position in the shares or the underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were, directly or indirectly, interested in 10% or more of the

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GENERAL INFORMATION

APPENDIX

nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company, or of any other company which is a subsidiary of the Company, or in any options in respect of such share capital.

SERVICE CONTRACT

Each of the Directors and supervisors of the Company has entered into a service contract with the Company for a term of not more than three years, which can be terminated by either party by giving a prior written notice of three months to the other party.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or proposed Directors had any existing or proposed service contract with the Company or any member of the Group (excluding contracts expiring or determinable by the relevant employer within one year without payment of compensation other than statutory compensation).

INTEREST IN COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors or their respective associates has any interest in other business which competes or is likely to compete with the business of the Group.

LITIGATION

As at the Latest Practicable Date, neither the Company nor any other members of the Group was engaged in any litigation or arbitration of material importance and, as far as the Directors are aware, no litigation or claim of material importance is pending or threatened against the Company or any other members of the Group.

MISCELLANEOUS

• (a) The joint company secretaries of the Company are Ms. Ma Jinru and Mr. Lee Kin Yu, Arthur. Mr. Lee is a member of the American Institute of Certified Public Accountants and the Hong Kong Institute of Certified Public Accountants.

• (b) The registered office of the Company is situated at Xingang Commercial Building, Dayao Bay, Dalian Free Trade Zone, PRC. The branch share registrars of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Rooms 1712-16 Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

• (c) The English text of this document shall prevail over the Chinese text in the case of inconsistency.

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