Datang Intl H Regulatory News (DAT)

14 Jun 2006 07:00

Datang Intl Power Generation Co Ld14 June 2006 The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes norepresentation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any losshowsoever arising from or in reliance upon the 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: 991) Major Transaction INVESTMENT AGREEMENT The Board is pleased to announce that on 13 June 2006, the Company entered into the Investment Agreement with GantouHydropower for the purposes of planning, constructing and operating the Projects by establishing Datang Gandian.Pursuant to the Investment Agreement, the Company and Gantou Hydropower agreed to contribute to the registered capitalof Datang Gandian in the proportions of 80% and 20%, respectively. MAJOR TRANSACTION According to the Listing Rules, as each of the asset ratio and consideration ratio (as defined in Rule 14.07 of theListing Rules) is more than 25%, the transaction contemplated under the Investment Agreement constitutes a majortransaction for the Company. The Investment Agreement is therefore subject to the notification, publication andshareholders' approval requirements as set out in Rules 14.34 to 14.40 of the Listing Rules. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, neither of GantouHydropower, its ultimate beneficial owners or their associates hold any Share(s). Accordingly, no Shareholder isrequired to abstain from voting at the EGM to approve the Investment Agreement. A circular containing details of the Investment Agreement and a notice of the EGM will be despatched to theShareholders as soon as practicable. THE INVESTMENT AGREEMENT Date: 13 June 2006Parties: (1) the Company; and (2) Gantou Hydropower. Major terms of the Investment Agreement Amount of total investment and registered capital of Datang Gandian Pursuant to the Investment Agreement, the Company and Gantou Hydropower agreed to contribute to the registered capitalof Datang Gandian in the proportions of 80% and 20%, respectively, for the purposes of planning, constructing, andoperating the Projects. The total investment amount of the Projects is expected to be approximately RMB22,500,000,000 (equivalent toapproximately HK$21,634,615,384.60), which is subject to verification by the relevant governmental authorities in thePRC, of which approximately RMB14,500,000,000 (equivalent to approximately HK$13,942,307,692.30) will be invested inthe Changheba Hydropower Project and approximately RMB8,000,000,000 (equivalent to approximately HK$7,692,307,692.30)will be invested in the Huangjinping Hydropower Project. Out of the expected total investment amount of approximately RMB22,500,000,000, 20% of which is the registered capitalof Datang Gandian, i.e. approximately RMB4,500,000,000 (equivalent to approximately HK$4,326,923,076.92), which will becontributed in cash by the Company and Gantou Hydropower in the proportions of 80% (equivalent to approximatelyHK$3,461,538,461.53) and 20% (equivalent to approximately HK$865,384,615.38), respectively. The Investment Agreementdoes not stipulate a time limit within which both parties must fully contribute to the registered capital of DatangGandian and it is expected that both parties will contribute their respective shares to the registered capital ofDatang Gandian in stages in line with the construction progress of the Projects and in compliance with relevant PRClaws. As at the date of this announcement, no contribution to the registered capital of Datang Gandian has been made bythe parties to the Investment Agreement. The Company's contribution to the registered capital of Datang Gandian will befunded by its internal resources. Pursuant to the Investment Agreement, all funds required for the construction of the Projects will be funded by theregistered capital of Datang Gandian and third party borrowings in the PRC and in the latter case, each of the Companyand Gantou Hydropower will severally guarantee such borrowings in proportion to their respective capital contributionsin Datang Gandian if so required, and Datang Gandian will in turn counter-guarantee the obligations of the Company andGantou Hydropower by pledging its assets or income. In the event of any future guarantee or borrowings by the Companyto Datang Gandian, it will comply with the relevant requirements under the Listing Rules if and when necessary. Effective date of the Investment Agreement The Investment Agreement will become effective when the respective parties to the Investment Agreement have obtainedtheir internal approvals from their shareholders for the investments. Other major terms The term of business operation of Datang Gandian is proposed to be 30 years from the date of the business license ofDatang Gandian. INFORMATION RELATING TO DATANG GANDIAN Pursuant to the Investment Agreement, Datang Gandian will be established for the purposes of planning, constructing andoperating the Projects which comprise the Changheba Hydropower Project and the Huangjinping Hydropower Project, both ofwhich are located in Kangding County, Ganzi Prefecture, Sichuan Province, the PRC. The Projects are planned to have a total power generating capacity of 3,400MW, which is contributed by the ChanghebaHydropower Project with four 650MW-level hydropower generating units and the Huangjinping Hydropower Project with four200MW-level hydropower generating units. All of the power generated from the Projects will be transmitted to theCentral China Power Grid (including the Sichuan Power Grid and the Chongqing Power Grid) or directly to the East ChinaPower Grid. The development of the Projects is subject to verification by the relevant governmental authorities in thePRC. Upon the establishment of Datang Gandian, it will be owned as to 80% by the Company and 20% by Gantou Hydropower, andit will then become a subsidiary of the Company. INFORMATION RELATING TO THE GROUP The Group is principally engaged in the development and operation of power plants, the sale of electricity and thermalpower, and the repair, testing and maintenance of power equipment and power related technical services, with itspresent main operation in the PRC. INFORMATION RELATING TO GANTOU HYDROPOWER Gantou Hydropower was incorporated in the PRC on 13 March 2006 with limited liability and has a registered capital ofRMB1,000,000,000. Its principal business includes investments in hydropower projects. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, each of GantouHydropower and its ultimate beneficial owner is a third party who is not connected person of the Company and isindependent of the Company and connected persons of the Company. REASONS FOR AND BENEFITS OF THE ENTERING INTO THE INVESTMENT AGREEMENT The entering into of the Investment Agreement represents the Company's implementation of its strategy in developing itshydropower business. The Projects have abundant supplies of hydropower resources and promising power generationtargets. In accordance with the plan announced by the State Grid Corporation of China, the Sichuan Power Grid will beconnected with the East China Power Grid, and there is a rapid growth in the demand for power in East China due to theeconomic development in the area. As such, it is anticipated that there will be a growing demand for power generationin the market for the Projects. The Board believes that the Projects could take advantage of the growing demand forelectricity in East China and Central China which in turn would enhance the operating profits of the Company as awhole. In view of the above, the Directors (including the independent non-executive Directors) believe that the InvestmentAgreement is on normal commercial terms and the terms of the Investment Agreement are fair and reasonable and in theinterests of the Shareholders as a whole. MAJOR TRANSACTION According to the Listing Rules, as each of the asset ratio and consideration ratio (as defined in Rule 14.07 of theListing Rules) is more than 25%, the transaction contemplated under the Investment Agreement constitutes a majortransaction for the Company which is subject to the notification, publication and shareholders' approval requirementsas set out in Rules 14.34 to 14.40 of the Listing Rules. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, neither of GantouHydropower, its ultimate beneficial owners or their associates hold any Share(s). Accordingly, no Shareholder isrequired to abstain from voting at the EGM to approve the Investment Agreement. DESPATCH OF CIRCULAR A circular containing details of the Investment Agreement and a notice of the EGM will be despatched to theShareholders as soon as practicable. DEFINITIONS For the purposes of this announcement, capitalised items appearing herein shall, unless the context otherwise admits,have the meanings set out below: "associate" has the meaning ascribed to it under the Listing Rules "Board" the board of Directors "Changheba Hydropower Project" Sichuan Daduhe Changhebe Hydropower Project which will consist of four 650MW-level hydropower generating units "Company" Datang International Power Generation Co., Ltd. ("Chinese Words"), 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 "Datang Gandian" Sichuan Datang International Ganzi Hydropower Development Co., Ltd. ("Chinese Words"), a limited liability company to be incorporated in the PRC "Director(s)" director(s) of the Company "Domestic Shares" 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"EGM" the extraordinary general meeting of the Company to be held to consider and, if thought fit, to approve the Investment Agreement "Gantou Hydropower" Ganzi Prefecture Gantou Hydropower Development Co., Ltd. ("Chinese Words"), a limited liability company incorporated in Ganzi Prefecture, Sichuan Province, the PRC "Group" the Company and its subsidiaries "HK$" Hong Kong dollars and cents, the lawful currency of Hong Kong "Hong Kong" the Hong Kong Special Administrative Region of the PRC "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 "Huangjinping Hydropower Project" Sichuan Daduhe Huangjinping Hydropower Project which will consist of four 200MW-level hydropower generating units "Investment Agreement" the investment agreement dated 13 June 2006 entered into between the Company and Gantou Hydropower in respect of the establishment of Datang Gandian "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 "Projects" the Changheba Hydropower Project and the Huangjinping Hydropower Project "RMB" Renminbi, the lawful currency of the PRC "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 "%" per cent. By Order of the Board Yang Hongming Company Secretary Beijing, the PRC, 13 June 2006 As at the date of this announcement, the Directors are: Zhai Ruoyu, Zhang Yi, Hu Shengmu, Fang Qinghai, Yang Hongming, Liu Haixia, Guan Tiangang, Su Tiegang, Ye Yonghui, TongYunshang, Xie Songlin*, Xu Daping*, Liu Chaoan*, Yu Changchun* and Xia Qing* * independent non-executive Directors For the purpose of this announcement, HK$1.00 is equivalent to RMB1.04. This information is provided by RNS The company news service from the London Stock Exchange