Datang Intl H Regulatory News (DAT)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibilityfor the contents of this announcement, make no representation as to its accuracy or completeness andexpressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance uponthe whole or any part of the contents of this announcement. DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 00991) ANNOUNCEMENT CONTINUING CONNECTED TRANSACTIONS FUEL PURCHASE FRAMEWORK AGREEMENT On 23 December 2014, the Company entered into the Fuel Purchase Framework Agreement with XilinhaoteMining Company, pursuant to which the Company and certain of its subsidiaries agreed to purchasecoal from Xilinhaote Mining Company with a maximum aggregate annual transaction amount of approximatelyRMB886 million for a term of one year commencing from 1 January 2015 to 31 December 2015. LISTING RULES IMPLICATIONS As at the date of this announcement, CDC is the controlling shareholder of the Company, which togetherwith its subsidiaries hold approximately 34.71% of the issued share capital of the Company. Since ChinaDatang Coal Industry Company, a wholly-owned subsidiary of CDC, holds 40% equity interest in XilinhaoteMining Company, Xilinhaote Mining Company is therefore a connected person of the Company. The transactioncontemplated under the Fuel Purchase Framework Agreement constitutes continuing connected transactionsof the Company. Since one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules)in respect of the transaction amount of the Fuel Purchase Framework Agreement is higher than 0.1% andbelow 5% and all the other applicable percentage ratios are below 5%, the Fuel Purchase FrameworkAgreement and the transactions contemplated thereunder are only subject to the reporting and announcementrequirements, but do not require the approval by the independent shareholders of the Company under Chapter14A of the Listing Rules. FUEL PURCHASE FRAMEWORK AGREEMENT Date: 23 December 2014 Parties: The Company and Xilinhaote Mining Company Major terms 1. Subject matter: The Company and its subsidiaries agreed to purchase coal from Xilinhaote Mining Company during the term of the agreement. The parties may, from time to time during the term of the agreement, enter into specific purchase contracts in respect of the purchase of coal by the Company and its subsidiaries, and such specific purchase contracts shall be subject to the terms of the Fuel Purchase Framework Agreement. 2. Consideration: To be determined in the ordinary course of business on normal commercial terms on the basis of arm's length negotiation according to the prevailing market conditions. 3. Settlement and payment: Settlement shall be made by the parties according to the settlement invoice which were confirmed by both parties. 4. Term: One year, commencing from 1 January 2015 to 31 December 2015. 5. The Fuel Purchase Framework Agreement becomes effective when they are duly signed by both parties. Annual cap and pricing policy It is expected that the annual cap of transaction amount in respect of the Fuel Purchase FrameworkAgreement for the year ending 31 December 2015 is RMB886 million, which is determined with referenceto (i) the anticipated quantity of coal to be purchased by the Company and its subsidiaries fromXilinhaote Mining Company for the year ending 31 December 2015; and (ii) the estimated marketprice of coal. As set out in earlier section of this announcement, the consideration for the purchase of coal underthe Fuel Purchase Framework Agreement is to be determined with reference to the market price of coaland on normal commercial terms on the basis of arm's length negotiation according to prevailing marketconditions. The Company has also taken into account the following factors in determination of theconsideration: 1. Purchase costs of coal of the Company, including purchase costs of coal, vessel leasing costs, port development fee, insurance expenses, laboratory fee, business tax and other expenses. 2. Professional departments of the Company are responsible for collecting market prices of coal and making reference with the market trends of the last three years for determination of pricing. 3. The selling price of the fuel company is determined after discussion in fuel management team meeting of the Company with reference to the purchase cost of the fuel company, coal consumption of its power generation companies, as well as trends of the pan-Bohai and international prices changes. The Company also negotiates with its power generation companies so as to determine the purchasing price of coal for 2015. According to the anticipated volume of coal demanded by the Company and its subsidiaries for theirproduction for the year ending 31 December 2015, as well as the results of negotiation between theparties, it is expected that the annual cap for the year ending 31 December 2015 is substantiallyhigher than the historical transaction amount. Historical transaction amounts For the eleven months ended 30 November 2014, the transaction amount for the purchase of coal fromXilinhaote Mining Company by the Company and its subsidiaries was approximately RMB432 million. For the year ended 31 December 2013, the transaction amount for the purchase of coal from XilinhaoteMining Company by the Company and its subsidiaries was approximately RMB301 million. For the year ended 31 December 2012, the transaction amount for the purchase of coal from XilinhaoteMining Company by the Company and its subsidiaries was approximately RMB475 million. REASONS FOR AND BENEFITS OF ENTERING INTO THE FUEL FRAMEWORK AGREEMENT The purchase of coal by the Company and its subsidiaries from Xilinhaote Mining Company can fullyleverage the advantage of securing coal supply from a specialised coal company, thereby effectivelysecuring the production coal of the coal-to-chemical enterprises and certain power generationenterprises of the Company, and exhibit the Company and its subsidiaries' advantage of economy-of-scaleof procurement, so as to exercise control over the expenses of the relevant enterprises, and to increaseXilinhaote Mining Company's operating revenue and overall profitability of the Company. The Directors (including the views of the independent non-executive Directors) are of the view thatthe terms of the Fuel Purchase Framework Agreement are fair and reasonable, have been entered intoafter arm's length negotiation between all parties thereto and determined on normal commercialterms and is in the interests of the Company and the shareholders as a whole. INFORMATION ON THE PARTIES TO THE AGREEMENT 1. The Company is principally engaged in the construction and operation of power plants, the sale of electricity and thermal power, the repair and maintenance of power equipment and power related technical services. The Company's main service areas are in the PRC. 2. CDC was established on 9 March 2003 with registered capital of RMB18.009 billion. It is principally engaged in the development, investment, construction, operation and management of power energy, organisation of power (thermal) production and sales; manufacture, repair and maintenance of power equipment; power technology development and consultation; power engineering, contracting and consultation of environmental power engineering; development of new energy as well as development and production of power related coal resources. 3. Xilinhaote Mining Company is a subsidiary of the Company. It is principally engaged in import and export trading, sale of mining products (excluding exclusively controlled products), earth and rock stripping, technological consultation and services of mining products. The equity structure of Xilinhaote Mining Company is: the Company holds 60% equity interest in Xilinhaote Mining Company, while China Datang Coal Industry Company holds 40% equity interest in Xilinhaote Mining Company. LISTING RULES IMPLICATIONS As at the date of this announcement, CDC is the controlling shareholder of the Company, which togetherwith its subsidiaries hold approximately 34.71% of the issued share capital of the Company. Since ChinaDatang Coal Industry Company, a wholly-owned subsidiary of CDC, holds 40% equity interest in XilinhaoteMining Company, Xilinhaote Mining Company is therefore a connected person of the Company. Thetransactions contemplated under the Fuel Purchase Framework Agreement constitute continuing connectedtransactions of the Company. Since one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules)in respect of the transaction amount of the Fuel Purchase Framework Agreement is higher than 0.1% and below5% and all the other applicable percentage ratios are below 5%, the Fuel Purchase Framework Agreement andthe transactions contemplated thereunder are only subject to the reporting and announcement requirements,but do not require the approval by the independent shareholders of the Company under Chapter 14A ofthe Listing Rules. None of the Directors has material interest in the Fuel Purchase Framework Agreement. Those connectedDirectors, including Chen Jinhang, Hu Shengmu and Liang Yongpan, have abstained from voting at the Boardmeeting for approval of the relevant transaction in accordance with the requirements of the Listing Rulesof the Shanghai Stock Exchange. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions have thefollowing meanings: "Board" the board of Directors "CDC" China Datang Corporation, a state-owned enterprise established under the laws of the PRC and is the controlling shareholder of the Company which, together with its subsidiaries, own approximately 34.71% of the issued share capital of the Company as at the date of this announcement "China Datang Coal China Datang Coal Industry Company, Ltd., a wholly-owned subsidiary of CDCIndustry Company" "Company" Datang International Power Generation Company, Ltd., a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, whose H Shares are listed on the Stock Exchange and the London stock exchange and whose A Shares are listed on the Shanghai stock exchange "connected has the meaning ascribed to it under the Listing Rulesperson(s)" "Directors" the director(s) of the Company "Fuel Purchase the coal sale and purchase framework agreement dated 23 December 2014 enteredFramework Agreement" into between the Company and Xilinhaote Mining Company "Listing Rules" The Rules Governing the Listing of Securities on The Stock Exchange "PRC" the People's Republic of China "RMB" Renminbi, the lawful currency of the PRC "Stock Exchange" The Stock Exchange of Hong Kong Limited "Xilinhaote Inner Mongolia Datang International Xilinhaote Mining Company Ltd., a controllingMining Company" subsidiary of the Company, details of which are set out in the section entitled "Information on the Parties to the Agreement" "%" percent By Order of the Board Zhou Gang Secretary to the Board Beijing, the PRC, 23 December 2014 As at the date of this announcement, the Directors of the Company are: Chen Jinhang, Hu Shengmu, Wu Jing, Liang Yongpan, Zhou Gang,Cao Xin, Cai Shuwen, Liu Haixia, Guan Tiangang, Yang Wenchun,Dong Heyi*, Ye Yansheng*, Zhao Jie*, Jiang Guohua*, Feng Genfu* * Independent non-executive Directors