XD Inc. — Capital/Financing Update 2014

Sep 29, 2014

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim 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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DISCLOSEABLE TRANSACTION FINANCE LEASE AGREEMENT

On 29 September 2014, the Company entered into a Finance Lease Agreement with Huarong Company, pursuant to which the Company conducted finance lease (direct lease) with Huarong Company in respect of the Equipment for a term of 3 years, and the financing amount was RMB310 million.

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, Huarong Company is a third party independent of the Company and its connected persons.

The transaction contemplated under the Finance Lease Agreement constitutes a discloseable transaction for the Company under the Listing Rules and is subject to the notification and announcement requirement under Chapter 14 of the Listing Rules.

THE FINANCE LEASE AGREEMENT

The Board announces that, on 29 September 2014, the Company entered into a Finance Lease Agreement with Huarong Company, pursuant to which, the Company conducted finance lease (direct lease) with Huarong Company in respect of the Equipment for a term of 3 years, and the financing amount was RMB310 million.

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Date

29 September 2014

Parties

Lessor : Huarong Company Lessee : the Company

Subject matter of the lease

The Company’s No. 1 and No.2 furnaces of 2700mm production line, related equipment in furnace area and other assets located in No.1 of Gangcheng Avenue, Economic & Technological Development Zone, Changshou District, Chongqing, PRC. The finance amount of RMB310 million was determined after arm’s length negotiation between the Company and Huarong Company with reference to the lease cost and the lease interest rate.

Finance amount payments and principal terms

Pursuant to the Finance Lease Agreement, Huarong Company will lease and the Company shall rent the Equipment at the aggregate consideration of approximately RMB310 million, which shall be paid by the Company to Huarong Company. The Equipment will be leased to the Company for a period of 3 years commencing from the date on which Huarong Company pays the consideration for the purchase of the equipment to the Company.

The lease rent to be paid by the Company to Huarong Company is calculated based on the lease cost and the lease interest rate. The total lease cost is RMB310 million. The monthly interest rate of the Finance Lease Agreement is 5.125‰ at the time of execution of the Finance Lease Agreement. Except for the initial rental payment, the first rental installment day shall be on the tenth day of the third month after the commencement date of leasing, and each rental installment shall be paid on the corresponding day of every three months thereafter, totaling 12 installments. No leasing principal will be paid for the first and second installments, and RMB31 million will be paid as the leasing principal for each of the third to twelfth installments.

The lease payment and the interest rate have been agreed after arm’s length negotiation between the parties with reference to the prevailing market practice.

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Ownership of the Equipment

During the term of lease, the ownership of the lease subject lies with Huarong Company; upon expiry of the term of lease, the ownership of the lease subject shall be transferred to the Company after the Company pays the full purchase price to Huarong Company on time.

GUARANTEE

Chonggang Holding is the guarantor to the Finance Lease Agreement.

REASONS AND BENEFITS FOR FINANCE LEASE AGREEMENT

The financing of RMB310 million by way of leaseback type finance leasing of the Equipment to Huarong Company is to supplement the working capital for the production and operation needs of the Company. The Directors are of the view that the terms in respect of the Finance Lease Agreement are fair and reasonable and are in the interest of the Company and the shareholders of the Company as a whole.

INFORMATION ON THE COMPANY

The Company is principally engaged in the manufacture and sale of steel products such as medium-gauge steel plates, steel sections and wire rods.

INFORMATION ON HUARONG COMPANY

Huarong Company is principally engaged in financial leasing business approved by the China Banking Regulatory Commission. To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiry, Huarong Company and its ultimate beneficial owners are Independent Third Parties.

GENERAL

The Finance Lease Agreement constitutes discloseable transaction of the Company and is subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

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DEFINITIONS

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

“Board” the board of Directors “Chonggang Holding” Chongqing Iron & Steel (Group) Company Limited, a state-owned limited liability company established in the PRC and the controlling Shareholder of the Company (as defined in the Listing Rules) “Company” Chongqing Iron & Steel Company Limited, a company incorporated in the PRC with limited liability and the shares of which are listed on the Stock Exchange “Director(s)” the director(s) of the Company “Equipment” No. 1 and No.2 furnaces of 2700mm production line, related equipment in furnace area and other assets located in No.1 of Gangcheng Avenue, Economic & Technological Development Zone, Changshou District, Chongqing, PRC

“Finance Lease Agreement” the finance lease agreement dated 29 September 2014 entered into between the Company and Huarong Company “Huarong Company” China Huarong Financial Leasing Co., Ltd., a company incorporated in PRC with limited liability “Independent Third Parties” any person who himself is, and (in the case of corporate entity) its ultimate beneficial owners are, to the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, third parties independent of the Company and its connected persons

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“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

“PRC”

the People’s Republic of China

“RMB”

Renminbi Yuan, the lawful currency of the PRC

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

By order of the Board Chongqing Iron & Steel Company Limited You Xiao An Secretary to the Board

Chongqing, the PRC, 30 September 2014

As at the date of this announcement, the Directors of the Company are: Mr. Zhu Jian Pai (Non-executive Director), Mr. Zhou Hong (Non-executive Director), Mr. Li Ren Sheng (Executive Director), Mr. Guan Zhao Hui (Executive Director), Mr. Zhang Li Quan (Executive Director), Mr. Zhang Guo Lin (Independent Non-executive Director), Mr. Liu Tian Ni (Independent Non-executive Director) and Mr. Ran Mao Sheng (Independent Nonexecutive Director).

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