BOE.L Regulatory News (BOE)

9 Aug 2005 07:00

Air China Ld09 August 2005 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 LIMITED (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code: 753) (1) MAJOR TRANSACTION: PURCHASE OF 15 BOEING 787 AIRCRAFT AND (2) RESUMPTION OF TRADING The Company hereby announces that on 8 August 2005 the Company and AIE enteredinto the Boeing Aircraft Purchase Agreement with Boeing Company, pursuant towhich the Company has agreed to purchase 15 Boeing 787 aircraft from BoeingCompany. CNAHC, which currently directly owns approximately 51.16% of the total issuedshare capital of the Company, has approved the Transaction. CNAHC does not haveany interest in the Transaction other than as a shareholder of the Company. The Transaction constitutes a major transaction of the Company under the ListingRules. At the request of the Company, trading in the shares of the Company onthe Hong Kong Stock Exchange was suspended with effect from 12:01 p.m. on 8August 2005 pending the release of this announcement. The Company has appliedto the Hong Kong Stock Exchange for resumption of trading in the shares of theCompany with effect from 9:30 a.m. on 9 August 2005. BOEING AIRCRAFT PURCHASE AGREEMENT On 28 January 2005 the Company announced that a framework agreement had beenentered into between the Company, other Contracting Chinese Airlines, CASGC, andBoeing Company in respect of the intent of the Contracting Chinese Airlines topurchase certain Boeing 7E7 aircraft from Boeing Company. The Company hereby announces that on 8 August 2005 the Company and AIE enteredinto the Boeing Aircraft Purchase Agreement with Boeing Company, pursuant towhich the Company has agreed to purchase 15 Boeing 787 (which was formerly knownas Boeing 7E7) aircraft from Boeing Company. The details of the Transaction are summarized as follows: Date of the Transaction: 8 August 2005 Parties to the Transaction: (i) the Company, as the purchaser, the principal business activity of which is air passenger, air cargo and airline-related services; (ii) AIE, as the import agent for the Company; and (iii) Boeing Company, as the vendor, one of whose principal business activity is aircraft manufacturing. The Company confirms that, to the best of the Directors' knowledge,information and belief having made all reasonable enquiry, Boeing Company andeach of the ultimate beneficial owner of Boeing Company are independent thirdparties and not connected persons (as defined in the Listing Rules) of theCompany. Aircraft to be acquired: Boeing Aircraft, i.e.15 Boeing 787 aircraft Consideration: According to the information provided to the Company by Boeing Company, thecatalog price of the Boeing Aircraft in aggregate is approximately US$2.16billion. The aggregate consideration payable for the Boeing Aircraft, which isdetermined after arm's length negotiation between the parties, is lower thansuch catalog price. As the relevant percentage ratio under Rule 14.07 of the Listing Rules for theTransaction is above 25% but less than 100%, the Transaction constitutes a majortransaction and is therefore subject to approval by the Company'sshareholders under the Listing Rules. Payment and delivery terms: The aggregate consideration for the acquisition of Boeing Aircraft is payable bycash in instalments. The Company is expecting to take delivery of the BoeingAircraft in stages from mid 2008 to end 2010. Source of funding: The Transaction will be funded through cash generated from the Company'sbusiness operations, commercial bank loans and other debt instruments of theCompany. No proceeds from the Company's global offering in December 2004 willbe used to finance the Transaction. REASONS FOR AND BENEFITS OF THE TRANSACTION The Boeing Aircraft will expand the fleet capacity of the Company and they willprincipally serve long distance international destinations in North America,Europe and Australia. The Company expects the Boeing Aircraft will deliver morecost-efficient performance and provide more comfortable services to passengers. The Directors believe that the terms of the Transaction are fair and reasonableand in the interests of the shareholders of the Company as a whole. FURTHER INFORMATION CNAHC currently directly owns approximately 51.16% of the total issued sharecapital of the Company. Each of CNAHC and its associates (as defined in theListing Rules) does not have any interest in the Transaction other than as ashareholder of the Company (where applicable). No shareholder of the Company isrequired to abstain from voting if the Company was to convene a general meetingfor the approval of the Transaction. CNAHC has approved the Transaction by wayof a written approval pursuant to Rule 14.44 of the Listing Rules. The Companyshall, pursuant to the Listing Rules, dispatch a circular containing theinformation required under the Listing Rules in relation to the Transactionwithin 21 days after the publication of this announcement. SUSPENSION AND RESUMPTION OF TRADING At the request of the Company, trading in the shares of the Company on the HongKong Stock Exchange was suspended with effect from 12:01 p.m. on 8 August 2005pending the release of this announcement. The Company has applied to the HongKong Stock Exchange for resumption of trading in the shares of the Company witheffect from 9:30 a.m. on 9 August 2005. DEFINITION In this announcement, unless the context otherwise requires, the following termsshall have the following meanings: "AIE" Air China Group Import and Export Trading Co., a company incorporated in the People's Republic of China and a wholly-owned subsidiary of the Company "Boeing Aircraft" 15 Boeing 787 aircraft to be purchased by the Company pursuant to the Boeing Aircraft Purchase Agreement "Boeing Aircraft Purchase Agreement" the aircraft purchase agreement dated 8 August 2005 pursuant to which the Company has agreed to purchase and Boeing Company has agreed to sell the Boeing Aircraft "Boeing Company" Boeing Company, a company incorporated in Delaware of the United States "CASGC" China Aviation Supplies Import and Export Group Corporation, a company incorporated in the People's Republic of China "Company" Air China Limited, a company incorporated in the People's Republic of China with primary listing on The Stock Exchange of Hong Kong Limited and secondary listing on the Official List of the UK Listing Authority "Contracting Chinese Airlines" several major Chinese airline companies, including, among others, the Company, China Eastern Airlines Corporation Limited and China Southern Airlines Company Limited, which are parties to a framework agreement with Boeing Company dated 28 January 2005 in respect of the intent of purchase of certain Boeing 7E7 aircraft "CNAHC" China National Aviation Holding Company, a company incorporated in the People's Republic of China "Director(s)" the director(s) of the Company "Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited "Listing Rules" The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited "Transaction" the acquisition by the Company of the Boeing Aircraft pursuant to the Boeing Aircraft Purchase Agreement By order of the Board Air China Limited Zheng Baoan Li Man Kit Joint Company Secretaries Beijing, 8 August 2005 As at the date of this announcement, the Directors of the Company are Messrs LiJiaxiang, Kong Dong, Wang Shixiang, Yao Weiting, David Muir Turnbull, Ma Xulun,Cai Jianjiang, Fan Cheng, Hu Hung Lick, Henry*, Wu Zhipan* and Zhang Ke*. *Independent non-executive Director of the Company This information is provided by RNS The company news service from the London Stock Exchange