Datang Intl H Regulatory News (DAT)

19 Jul 2006 09:54

Datang Intl Power Generation Co Ld19 July 2006 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt as to any aspect of this circular or as to the action to betaken, you should consult your licensed securities dealer, bank manager,solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in DATANG INTERNATIONAL POWERGENERATION CO., LTD., you should at once hand this circular to the purchaser orthe transferee or to the bank, licensed securities dealer or other agent throughwhom the sale or transfer was effected, for transmission to the purchaser ortransferee. The Stock Exchange of Hong Kong Limited takes no responsibility for the contentsof this circular, makes no representation as to its accuracy or completeness andexpressly disclaims any liability whatsoever for any loss howsoever arising fromor in reliance upon the whole or any part of the contents of this circular. DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) DISCLOSEABLE TRANSACTION A letter from the board of directors of Datang International Power GenerationCo., Ltd. is set out on pages 3 to 7 of this circular. 19 July 2006 CONTENT PageDEFINITIONS 1LETTER FROM THE BOARDIntroduction 3Investment Agreement 4Information relating to Tashan Power Company 5Information relating to the Group 5Information relating to Datong Coal Mine 6Reasons for and benefits of entering into the Investment Agreement 6Discloseable transaction 6General 6APPENDIX - GENERAL INFORMATION 8 DEFINITIONS In this circular, unless the context otherwise requires, the followingexpressions have the following meanings: "associate(s)" has the meaning ascribed to it under the Listing Rules"Board" the board of Directors"Company" Datang International Power Generation Co., Ltd. (Chinese Characters), a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, the H Shares are listed on the Stock Exchange and the London Stock Exchange"connected person" has the meaning ascribed to it under the Listing Rules"Datong Coal Mine" Datong Coal Mine Group Co., Ltd. (Chinese Characters), a limited liability company incorporated in the PRC"Director(s)" the director(s) of the Company"Domestic Shares" the ordinary shares issued by the Company, with a nominal value of RMB1.00 each, which are subscribed for or credited as paid up in Renminbi"Group" the Company and its subsidiaries"H Shares" the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each and are listed on the Stock Exchange and the London Stock Exchange"HK$" Hong Kong dollar(s), the lawful currency of Hong Kong"Hong Kong" the Hong Kong Special Administrative Region of the PRC"Investment Agreement" the investment agreement dated 29 June 2006 entered into between the Company and Datong Coal Mine in respect of the establishment of Tashan Power Company"Latest Practicable Date" 13 July 2006, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular"Listing Rules" Rules Governing the Listing of Securities on the Stock Exchange"London Stock Exchange" The London Stock Exchange Limited"MW" megawatts"PRC" the People's Republic of China"RMB" Renminbi, the lawful currency of the PRC"SFO" the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)"Share(s)" the ordinary share(s) of the Company with a nominal value of RMB1.00 each, comprising Domestic Shares and H Shares"Shareholder(s)" the holder(s) of the Share(s)"Stock Exchange" The Stock Exchange of Hong Kong Limited"subsidiary" has the meaning ascribed to it under the Listing Rules"Tashan Power Company" Tongmei Datang International Tashan Power Co., Ltd. (Chinese Characters)"Tashan Power Plant Project" Tashan Power Plant Project, which will consist of two 600MW-level coal-fired power generating units"%" per cent. For the purpose of this circular, HK$1.00 is equivalent to RMB1.04. LETTER FROM THE BOARD Datang International Power Generation Co., Ltd. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) Executive Directors: Registered office:Mr. Zhang Yi No. 482 Guanganmennei AvenueMr. Yang Hongming Xuanwu District Beijing, 100053Non-executive Directors: PRCMr. Zhai Ruoyu (Chairman)Mr. Hu Shengmu Principal place of businessMr. Fang Qinghai in Hong Kong:Mr. Liu Haixia c/o Simmons & SimmonsMs. Guan Tiangang 35th Floor, Cheung Kong CenterMr. Su Tiegang 2 Queen's Road CentralMr. Ye Yonghui CentralMr. Tong Yunshang Hong Kong Independent non-executive Directors:Mr. Xie SonglinMr. Xu DapingMr. Liu ChaoanMr. Yu ChangchunMr. Xia Qing 19 July 2006 To the Shareholders Dear Sir or Madam, DISCLOSEABLE TRANSACTION INTRODUCTION On 4 July 2006, the Board announced that the Company entered into the InvestmentAgreement with Datong Coal Mine for the purposes of planning, constructing andoperating the Tashan Power Plant Project by establishing Tashan Power Company.Pursuant to the Investment Agreement, the Company and Datong Coal Mine agreed tocontribute to the registered capital of Tashan Power Company, which isapproximately RMB1,084,000,000 (equivalent to approximately HK$1,042,307,692.30)being 20% of the estimated total investment amount of the Tashan Power PlantProject, in the proportions of 40% and 60%, respectively. According to the Listing Rules, as the consideration ratio (as defined in Rule14.07 of the Listing Rules) is more than 5% but less than 25%, the transactioncontemplated under the Investment Agreement constitutes a discloseabletransaction for the Company. The Investment Agreement is therefore subject tothe notification and publication requirements as set out in Rules 14.34 to 14.39of the Listing Rules. The purpose of this circular is to provide you with further information on theInvestment Agreement and other information in compliance with the requirementsof the Listing Rules. INVESTMENT AGREEMENT Date 29 June 2006 Parties (i) the Company; and (ii) Datong Coal Mine. Amount of total investment and registered capital of Tashan Power Company Pursuant to the Investment Agreement, the Company and Datong Coal Mine agreed tocontribute to the registered capital of Tashan Power Company in the proportionsof 40% and 60%, respectively, for the purposes of planning, constructing, andoperating the Tashan Power Plant Project. The total investment amount of the Tashan Power Plant Project is expected to beapproximately RMB5,420,000,000 (equivalent to approximatelyHK$5,211,538,461.53), which is subject to verification by the relevantgovernmental authorities in the PRC, 20% of which is the registered capital ofTashan Power Company, i.e. approximately RMB1,084,000,000 (equivalent toapproximately HK$1,042,307,692.30). 40% (equivalent to approximatelyHK$416,923,076.92) and 60% (equivalent to approximately HK$625,384,615.38) ofthe registered capital of Tashan Power Company will be contributed in cash bythe Company and Datong Coal Mine, respectively. Pursuant to the Investment Agreement, the initial portion of the registeredcapital of Tashan Power Company is RMB216,800,000 (equivalent to approximatelyHK$208,461,538.46), of which 40% (equivalent to approximately HK$83,384,615.38)will be paid by the Company and 60% (equivalent to approximatelyHK$125,076,923.07) will be paid by Datong Coal Mine, respectively, at the timeof the establishment of Tashan Power Company. The remainder of the registeredcapital will be fully paid by the parties within two years of the date ofbusiness registration of Tashan Power Company with the relevant PRC authoritiesin proportion to their respective capital contributions. As at the LatestPracticable Date, no contribution to the registered capital of Tashan PowerCompany has been made by the parties to the Investment Agreement. The Company'scontribution to the registered capital of Tashan Power Company will be funded byits internal resources. Pursuant to the Investment Agreement, all funds required for the construction ofthe Tashan Power Plant Project will be funded by the registered capital ofTashan Power Company and third party borrowings in the PRC and in the lattercase, each of the Company and Datong Coal Mine will severally guarantee suchborrowings in proportion to their respective capital contributions in TashanPower Company if so required. In the event of any future guarantee or borrowingsby the Company to Tashan Power Company, the Company will comply with therelevant requirements under the Listing Rules if and when necessary. Effective date of the Investment Agreement The Investment Agreement became effective when the respective parties to theInvestment Agreement obtained their internal approvals for the investments underthe Investment Agreement, which, as at the date of this circular, have all beenobtained. Other major terms The term of business operation of Tashan Power Company is proposed to be 30years from the date of the business license of Tashan Power Company. INFORMATION RELATING TO TASHAN POWER COMPANY Pursuant to the Investment Agreement, Tashan Power Company will be establishedfor the purposes of planning, constructing and operating the Tashan Power PlantProject, which is located in the southwestern part of Datong City, ShanxiProvince, the PRC. The Tashan Power Plant Project, consisting of two 600MW-level coal-fired powergenerating units, is planned to have a total power generating capacity of1,200MW. Comprising desulphurisation facilities, the Tashan Power Plant Projectis an energy-efficient and environmental-friendly power plant. All the powergenerated from the Tashan Power Plant Project will be transmitted to the NorthChina Power Grid. The Tashan Power Plant Project is subject to verification bythe relevant governmental authorities in the PRC. The construction of the TashanPower Plant Project will commence immediately upon completion of suchverification, and the Tashan Power Plant Project is expected to commenceoperation after 24 months of construction. Upon the establishment of Tashan Power Company, it will be owned as to 40% bythe Company and 60% by Datong Coal Mine. Therefore, Tashan Power Company will betreated as an associate company but not a subsidiary of the Company. INFORMATION RELATING TO THE GROUP The Group is principally engaged in the development and operation of powerplants, the sale of electricity and thermal power, and the repair, testing andmaintenance of power equipment and power related technical services, with itspresent main operation in the PRC. INFORMATION RELATING TO DATONG COAL MINE Datong Coal Mine was incorporated in the PRC in 1985 with limited liability andhas a registered capital of RMB5,511,175,600. Its principal business includesproduction and processing of coal, the import of raw materials and relatedtechnology for the manufacture of its products and the export ofself-manufactured products such as mechanical products and chemical products andrelated technology. To the best of the Directors' knowledge, information and belief having made allreasonable enquiries, each of Datong Coal Mine and its ultimate beneficial owneris a third party who is not a connected person of the Company and is independentof the Company and connected persons of the Company. REASONS FOR AND BENEFITS OF ENTERING INTO THE INVESTMENT AGREEMENT The PRC state has in recent years encouraged power generating enterprises toreasonably adjust their power generating structures and to construct mine-mouthpower plants for coal-fired power generation, so as to protect the environmentand strengthen the economy. Further, as the power generation capacity in NorthChina cannot satisfy the demand of the rapidly developing economy in the regiondue to limited resources and environmental constraints, there are considerableeconomic benefits achieved by the construction of mine-mouth power plants suchas the Tashan Power Plant Project. As the Tashan Power Plant Project will beconstructed at a mine-mouth with abundant supplies of coal resources, the Boardbelieves that the cooperation with Datong Coal Mine in constructing andoperating the Tashan Power Plant Project would reduce the cost of coal resourcesand the cost of coal transportation necessary for operating the Tashan PowerPlant Project and would therefore enhance the operating profits of the Group asa whole. In view of the above, the Directors (including the independent non-executiveDirectors) believe that the Investment Agreement is on normal commercial termsand the terms of the Investment Agreement are fair and reasonable and in theinterests of the Shareholders as a whole. DISCLOSEABLE TRANSACTION According to the Listing Rules, as the consideration ratio (as defined in Rule14.07 of the Listing Rules) is more than 5% but less than 25%, the transactioncontemplated under the Investment Agreement constitutes a discloseabletransaction for the Company which is subject to the notification and publicationrequirements as set out in Rules 14.34 to 14.39 of the Listing Rules. GENERAL No gain or loss by the Company will arise and there will be no impact on theassets and liabilities of the Company as a result of the establishment of TashanPower Company upon completion of the Investment Agreement. Your attention is also drawn to the general information as set out in theappendix of this circular. By Order of the Board Datang International Power Generation Co., Ltd. Yang Hongming Company Secretary APPENDIX GENERAL INFORMATION RESPONSIBILITY STATEMENT This circular includes particulars given in compliance with the Listing Rulesfor the purpose of giving information with regard to the Company. The Directorscollectively and individually accept full responsibility for the accuracy of theinformation contained in this circular and confirm, having made all reasonableenquiries that to the best of their knowledge and belief, there are no otherfacts the omission of which would make any statement in this circularmisleading. DISCLOSURE OF INTERESTS Directors, chief executive and supervisors of the Company (i) As at Latest Practicable Date, none of the Directors, supervisors andchief executive of the Company have any interests and short positions in theshares, underlying shares and/or debentures (as the case may be) of the Companyor any of its associated corporations (within the meaning of the SFO) which wasrequired to be notified to the Company and the Stock Exchange pursuant toDivisions 7 and 8 of Part XV of the SFO (including interest and short positionwhich any such Director, chief executive or supervisor is taken or deemed tohave under such provisions of the SFO) or which was required to be entered intothe register required to be kept by the Company under section 352 of the SFO orwhich was otherwise required to be notified to the Company and the StockExchange pursuant to the Model Code for Securities Transactions by Directors ofListed Issuers in the Listing Rules. (ii) As at the Latest Practicable Date, none of the Directors, proposedDirectors, supervisors or proposed supervisors of the Company has any direct orindirect interest in any assets which have since 31 December 2005 (being thedate to which the latest published audited financial statements of the Companywere made up) been acquired or disposed of by or leased to any member of theGroup, or are proposed to be acquired or disposed of by or leased to any memberof the Group. Substantial shareholders of the Company As at Latest Practicable Date, so far as the Directors are aware, each of thefollowing persons, not being a Director, chief executive or supervisor of theCompany, had an interest in the Shares which falls to be disclosed to theCompany and the Stock Exchange under the provisions of Division 2 and 3 of PartXV of the SFO: Percentage to total issued Percentage to Percentage to Class of No. of share capital total Issued total Issued ofName of Shareholder Share Shares held Capacity the Company Domestic H Shares Shares (%) (%) (%)China Datang Corporation (Note Domestic 1,828,768,200 Beneficial 35.43 49 -1) Shares (L) ownerBeijing Energy Investment Domestic 671,792,400 (L) Beneficial 13.01 18 -(Group) Shares owner Company (Note 2) Percentage to total issued Percentage to Percentage to Class of No. of share capital total Issued total Issued ofName of Shareholder Share Shares held Capacity the Company Domestic H Shares Shares (%) (%) (%)Hebei Construction Investment Domestic 671,792,400 (L) Beneficial 13.01 18 - Shares owner Company (Note 3)Tianjin Jinneng Investment Domestic 559,827,000 (L) Beneficial 10.84 15 - Shares owner Company (Note 4)Templeton Asset Management H Shares 187,280,320 (L) Beneficial 3.63 - 13.09 (L) owner LimitedHSBC Halbis Partners H Shares 119,236,000 (L) Beneficial 2.31 - 8.33 (L) owner (Hong Kong) LimitedJ.P. Morgan Chase & Co. H Shares 100,090,646 (L) Beneficial 1.94 - 6.99 (L) owner 70,250,000 (P) 1.36 - 4.91 (P) (L) means long position (S) means short position (P) means lending pool Notes: 1. Each of Mr. Zhai Rouyu, Mr. Hu Shengmu and Mr. Fang Qinghai, allnon-executive Director, is an employee of China Datang Corporation. 2. Each of Mr. Liu Haixia and Ms. Guan Tiangang, both non-executiveDirector, is an employee of Beijing Energy Investment (Group) Company. 3. Each of Mr. Su Tiegang and Mr. Ye Yonghui, both non-executive Director,is an employee of Hebei Construction Investment Company. 4. Mr. Tong Yunshang, a non-executive Director, is an employee of TianjinJinneng Investment Company. Save as disclosed above and so far as the Directors are aware, as at the LatestPracticable Date, no other person had an interest or short position in theCompany's shares or underlying shares (as the case may be) which would fall tobe disclosed to the Company and the Stock Exchange under the provisions ofDivisions 2 and 3 of Part XV of the SFO. Substantial shareholders in other members of the Group Percentage ofName of subsidiary Name of shareholder shareholdingInner Mongolia Datang International Beijing Power Investment 25% Tuoketuo Power Generation (Group) Company Limited Company Limited Chinese Characters Chinese Characters Inner Mongolia Mengdian 15% Huaneng Thermal Power Company Limited Chinese CharactersTianjin Datang International Panshan Tianjin Jinneng Investment Company 25% Power Generation Company Limited Chinese Characters Chinese CharactersShanxi Datang Shentou Power Tianjin Jinneng Investment Company 40% Generation Company Limited Chinese Characters Chinese CharactersShanxi Datang International Yungang Shanxi Jinneng Hezhong Investment 20% Thermal Power Company Limited and Guarantee Company Limited Chinese Characters Chinese CharactersYunnan Datang International Honghe Yunnan Development and Investment 15% Power Generation Company Limited Company Limited Chinese Characters Chinese Characters Yunnan Xiaolongtan Mining Bureau 10% Chinese CharactersGansu Datang Liancheng Power State Power Development Company 25% Generation Company Limited Limited Chinese Characters Chinese Characters Gansu Power Construction and 20% Investment Company Limited Chinese CharactersHebei Datang International Tangshan Tangshan Construction Investment 20% Thermal Power Company Limited Company Chinese Characters Chinese Characters Percentage ofName of subsidiary Name of shareholder shareholdingYunnan Datang Nalan Hydropower Honghezhou Development and 20% Development Company Investment Company Limited Chinese Characters Chinese Characters Jinping Power Company Limited 15% Chinese Characters Beijing Huake Power Engineering 14% and Technology Company Limited Chinese CharactersYunnan Datang International Beijing State Power Anrong Power 25% Lixianjiang Hydropower Investment Company Limited Development Company Limited Chinese Characters Chinese CharactersShanxi Datang International Yuncheng Shanxi Huafu Power Investment 20% Power Generation Company Limited Company Limited Chinese Characters Chinese CharactersJiangsu Datang International Lusigang Nantong Zhonghe Holding Company 10% Power Generation Company Limited Limited Chinese Characters Chinese CharactersGuangdong Datang International Beijing China Power Huaze 12% Chaozhou Power Generation Investment Company Limited Company Limited Chinese Characters Chinese CharactersFujian Datang International Ningde Fujian Hesheng Group Company 25% Power Generation Company Limited Limited Chinese Characters Chinese Characters Mindong Power Investment Company 10% Limited Chinese Characters Shanxi Huafu Power Investment 10% Company Limited Chinese Characters Percentage ofName of subsidiary Name of shareholder shareholdingChongqing Datang International Chongqing Hangyun Construction 24.5% Wulong Hydropower Development Development Company Limited Company Limited Chinese Characters Chinese Characters Chongqing Dingtai Power (Group) 24.5% Company Limited Chinese CharactersYunnan Datang International Wenshan Yunnan Wenshan Power Company 25% Hydropower Development Limited Company Limited Chinese Characters Chinese Characters State Power Kunming Survey and 15% Design Research Institute Chinese CharactersHebei Datang International Wangtan Hebei Construction Investment 30% Power Co., Ltd. Company Chinese Characters Chinese Characters Save as disclosed above and so far as the Directors are aware, as at the LatestPracticable Date, no other person, not being a Director, chief executive orsupervisor of the Company, was directly or indirectly interested in 10% or moreof the nominal value of any class of share capital carrying rights to vote inall circumstances at general meetings of any other member of the Group. INTEREST IN CONTRACT As at Latest Practicable Date, none of the Directors or the Company'ssupervisors was materially interested in any contract or arrangement subsistingas at the date of this circular which is significant to the business of theGroup. SERVICE CONTRACT As at the Latest Practicable Date, none of the Directors, proposed directors,supervisors or proposed supervisors of the Company had any existing or proposedservice contract with any member of the Group (excluding contracts expiring ordeterminable by the Company within one year without payment of compensation(other than statutory compensation)). DIRECTORS' INTERESTS IN COMPETING BUSINESS As at the Latest Practicable Date, none of the directors of the Company and itssubsidiaries, or their respective associates has interests in the businesseswhich compete or are likely to compete, either directly or indirectly, with thebusinesses of the Company and its subsidiaries. LITIGATION No member of the Company and its subsidiaries is at present engaged in anylitigation or arbitration of material importance to the Company and itssubsidiaries and no litigation or claim of material importance to the Companyand its subsidiaries is known to the Directors or the Company to be pending orthreatened by or against any member of the Company and its subsidiaries. MISCELLANEOUS (a) The English text of this circular shall prevail over the Chinese text. (b) The registered and head office of the Company is situated at No. 482,Guanganmennei Avenue, Xuanwu District, Beijing, the PRC. (c) The place of business of the Company in Hong Kong is at c/o Simmons &Simmons, 35th Floor, Cheung Kong Center, 2 Queen's Road Central, Central, HongKong. (d) The Hong Kong share registrar and transfer office of the Company isComputershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183Queen's Road East, Wanchai, Hong Kong. (e) The secretary of the Company is Mr. Yang Hongming, who is a senioreconomist and had graduated from North China Power College. (f) The Company has been using its best endeavour in finding a suitablecandidate to assume the position of qualified accountant, as required under Rule3.24 of the Listing Rules (the "Rule"), since the effective date of the Rule.Due to the practical difficulties in finding a candidate who has relevantexperience in the power industry, the Company has yet to appoint a qualifiedaccountant as required under the Rule and the Company will continue to use itsbest endeavour in finding a suitable candidate to assume such position as soonas practicable. This information is provided by RNS The company news service from the London Stock Exchange