Air China Regulatory News (AIRC)

1 Nov 2007 07:02

Air China Ld01 November 2007 The Stock Exchange of Hong Kong Limited takes no responsibility for the contentsof this announcement, makes no representation as to its accuracy or completenessand expressly disclaims any liability whatsoever for any loss whatsoever arisingfrom or in reliance upon the whole or any part of the contents of thisannouncement. AIR CHINA (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code: 753) PROPOSED OFFERING OF ADDITIONAL A SHARES At the meetings of the Board held on 30 October and 31 October 2007, the Boardresolved to authorize the Company to issue and offer not more than 400 million AShares representing approximately 5.10% of the A Shares and approximately 3.26%of the total shares of the Company currently in issue, respectively, subject toobtaining the necessary approvals from the shareholders of the Company at anextraordinary general meeting to be convened and approvals from the relevant PRCauthorities. The Company intends to utilize the proceeds from the Offering to part financethe Company's acquisition of 15 Boeing 787 aircraft, 24 Airbus 320 seriesaircraft and 15 Boeing 737 series aircraft and also to utilize up to RMB1.5billion out of the proceeds to supplement the working capital of the Company. The Offering and its details are subject to approval by the shareholders andrelevant PRC authorities. There is no assurance that the Offering will proceed.Investors are advised to exercise caution in dealing in the H Shares. Furtherdetails of the Offering will be disclosed by the Company when the Offeringmaterializes. The Company hereby announces that at the meetings of the Board held on 30October and 31 October 2007, the Board resolved to authorize the Company toissue and offer not more than 400 million A Shares representing approximately5.10% of the A Shares and approximately 3.26% of the total shares of the Companycurrently in issue, respectively, subject to obtaining the necessary approvalsfrom the shareholders of the Company at an extraordinary general meeting to beconvened and approvals from the relevant PRC authorities. 1. General Information on the Offering The Additional A Shares shall be offered to public investors in the PRC andother investors as approved by the CSRC unless otherwise prohibited byapplicable laws, regulations and policies. The Offering will be conducted via acombination of "online" and "offline" offerings (within the meaning ofrelevant PRC laws and regulations), pursuant to which the Additional A Shareswill be offered through the trading system of the Shanghai Stock Exchange andthrough placement by the underwriter for the Offering, respectively. TheOffering will contain two tranches, namely the Domestic Rights Issue and theDomestic Public Offering (as defined below). Part of the Additional A Sharesunder the Offering (the size of which is to be determined by the Board and thelead underwriter for the Offering) will be made available to all registeredholders of A Shares, whose names appear on the register of members of theCompany on the Registration Date, on a pro rata basis in terms of the number ofA Shares which are not subject to lock-up as stipulated by the PRC laws andregulations for their preferential subscription (the "Domestic Rights Issue").The remaining portion of the Additional A Shares and the portion not taken upin the Domestic Rights Issue will be issued to public investors and otherinvestors as approved by the CSRC unless otherwise prohibited by applicablelaws, regulations and policies (the "Domestic Public Offering"). Theactual size of the Domestic Rights Issue and the Domestic Public Offering willbe announced by the Company when it is determined in due course. According tothe proposed terms of the Offering, the Company expects that 6,206,678,909 AShares currently directly and indirectly held by the China National AviationHolding Company, the controlling shareholder of the Company, are not entitled toparticipate in the Domestic Rights Issue as these shares are subject to athree-year controller's lock-up until mid 2009 imposed by applicable PRCregulations. The Additional A Shares are expected to be listed on the Shanghai StockExchange. The offer price of the Additional A Shares will be determined by theagreement between the Board on behalf of the Company and the lead underwriterfor the Offering but in any event shall not be less than the lower of (i) theaverage price of the existing shares of the Company for the 20 trading daysimmediately prior to the publication of the offering document in respect of theOffering; and (ii) the average price of the existing shares of the Company forthe trading day immediately prior to the publication of such offering document.When determining the offer price, the view of prospective investors in thesecurities markets will also be considered. Upon the completion of the Offering,both existing and new shareholders of the Company will be entitled to theaccumulative distributable profits of the Company. The Board proposes that the shareholders' approval of the Offering, ifgranted at the EGM, shall be valid for 12 months from the date of the grantingthe approval as long as the underlying general mandate continues in force or hasbeen renewed. The Board also proposes the EGM shall authorize the Board todetermine matters relating to the Offering at its discretion and with fullauthority, including but not limited to the timing, exact amount of offershares, offering mechanism, pricing mechanism, offer price, scope of offereesand allocation basis, etc. 2. Use of Proceeds Assuming the completion of the Offering, the Company intends to utilize theproceeds from the Offering to part finance the Proposed Projects and also toutilize up to RMB1.5 billion out of the proceeds to supplement the workingcapital of the Company. The Board proposes that the proceeds from the Offering shall also be applied toany payment due in relation to the Proposed Projects or to repay any outstandingbank loan in relation to the Proposed Projects that occurred before thecompletion of the Offering. The Board also proposes that the EGM shall authorizethe Board to determine the particular projects, priority and fund allocationwhen applying the proceeds to the Proposed Projects. The Company has entered into respective aircraft purchase agreement inconnection with the Proposed Projects. Further information on the purchases ofthe 15 Boeing 787 aircraft, 15 Boeing 737 series aircraft and 24 Airbus 320series aircraft of the Proposed Project is set out in the announcements made bythe Company dated 8 August 2005, 19 April 2006 and 14 June 2006, respectively. The feasibility of the investment in the Proposed Projects by the proceeds fromthe Offering and a special report on the use of proceeds from the previous issueof shares by the Company will be proposed by the Board to the EGM for approval. The Company believes that the Offering will provide the Company with fundsrequired for further increasing the operation capacity and strengthening thecore competency of the Company. 3. Shareholders' Approval at the EGM and Other Approvals The shareholders of the Company have granted a general mandate (within themeaning of the Hong Kong Listing Rules) to the Board at the annual generalmeeting held on 30 May 2007. Pursuant to that general mandate, the Board has thepowers to allot and issue and deal with such amount of additional shares of theCompany that does not exceed 20% of each of the existing domestic shares and HShares in issue at the date of the grant of the general mandate. To date, theCompany has not issued any shares of the Company pursuant to the generalmandate. However, when the Board exercises the general mandate to issue theAdditional A Shares, the relevant PRC laws and regulations require that afurther shareholders' approval in respect of the Offering be given by way ofa special resolution at a shareholders' general meeting. Accordingly, the EGM will be convened by the Company to approve matters relatingto the Offering as disclosed above. The notice of the EGM and a circularcontaining details of the proposed Offering will be dispatched in due course. It should be noted that, in addition to the approval being sought from theshareholders of the Company, the Offering is also subject to approvals by theCSRC and other relevant regulatory authorities including but not limited to theapproval by the Shanghai Stock Exchange as far as the listing of and dealings inthe Additional A Shares on the Shanghai Stock Exchange is concerned. If any connected person of the Company (within the meaning of the Hong KongListing Rules) subscribes any of the Additional A Shares under the Offering, theCompany will comply with the relevant requirements under the Hong Kong ListingRules. 4. Effect of the Offering on the Company's Shareholding Structure The following table sets out the shareholding structure of the Company as at thedate of this announcement and immediately after the completion of the Offering,assuming that in aggregate 400 million Additional A Shares are issued under theOffering and no other change to the shareholding structure: As at the date of this announcement Immediately after the completion of the Offering Number of Number of shares in issue % shares in issue % A Shares 7,845,678,909 64.04% 8,245,678,909 65.18%H Shares 4,405,683,364 35.96% 4,405,683,364 34.82% Total 12,251,362,273 100% 12,651,362,273 100% The Offering and its details are subject to approval by the shareholders andrelevant PRC authorities. There is no assurance that the Offering will proceed.Investors are advised to exercise caution in dealing in the H Shares. Furtherdetails of the Offering will be disclosed by the Company when the Offeringmaterializes. Definitions "Additional A Shares" not more than 400 million A Sharesthat the Board resolved to authorize the Company to issue and offer, subject toobtaining the necessary approvals by the shareholders of the Company andrelevant PRC authorities "A Shares" the ordinary shares in theshare capital of the Company with a nominal value of RMB1.00 each, which aresubscribed for and traded in RMB on the Shanghai Stock Exchange "Board" the board of directors of the Company "Company" Air China Limited "CSRC" China Securities Regulatory Commission "EGM" an extraordinary general meeting of the Company to be convened "H Shares" overseas listed foreign shares in the share capital of the Company which are listed on The Hong Kong Stock Exchange Limited and are admitted to the Official List of the UK Listing Authority and are admitted for trading on the market for listed securities of the London Stock Exchange "Hong Kong Listing Rules" Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited "Offering" the proposed issue and offering of the Additional A Shares, more details of which are disclosed in thisannouncement "PRC" the People's Republic of China excluding, for the purpose of this announcement only, Hong Kong, Macau and Taiwan "Proposed Projects" the acquisition of 15 Boeing 787 aircraft, 24 Airbus 320 series aircraft and 15 Boeing 737 series aircraft by the Company, which the Board proposes to apply the proceeds of the Offering to part finance "Registration Date" the date for ascertaining the entitlement of such holders of A Shares to apply for the Additional A Shares under the Offering on a preferential basis, which will be determined and announced by the Company in due course By order of the Board Huang Bin Li Man Kit Joint Company Secretaries Beijing, the PRC 31 October 2007 As at the date of this announcement, the Directors of the Company are Messrs LiJiaxiang, Kong Dong, Wang Shixiang, Yao Weiting, Christopher Dale Pratt, ChenNan Lok, Philip, Ma Xulun, Cai Jianjiang, Fan Cheng, Hu Hung Lick, Henry*, WuZhipan*, Zhang Ke* and Jia Kang*. * Independent non-executive Director of the Company This information is provided by RNS The company news service from the London Stock Exchange