SNP.L Regulatory News (SNP)

28 Sep 2007 07:00

China Petroleum & Chemical Corp28 September 2007 (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code: 0386) ANNOUNCEMENT PROPOSED ISSUANCE OF RMB BONDS WITH WARRANTS IN MAINLAND CHINA The Board of Directors of Sinopec Corp. announces that at the board meeting heldon 27 September 2007, resolutions in relation to (I) the proposal for theissuance of RMB Bonds with Warrants in the Mainland China; (II) the feasibilityof projects to be invested with the proceeds from the proposed issuance; and(III) the description prepared by the Board of Directors on the use of theproceeds from the previous issuance were duly passed after the close of tradingon 27 September 2007. The proposed issue of Bonds with Warrants is subject to(i) approval of Shareholders at the EGM; and (ii) approval of the CSRC. I. THE PROPOSAL FOR THE ISSUANCE OF BONDS WITH WARRANTS In accordance with the relevant provisions of the Company Law of the People'sRepublic of China, the Securities Law of the People's Republic of China, and theAdministrative Measures for the Issuance of Securities by Listed Companiesissued by the CSRC, the Board of Directors of Sinopec Corp. conducted a reviewand took the view that Sinopec Corp. has satisfied the criteria for the issuanceof Bonds with Warrants in the Mainland China. The Board of Directors consideredand approved the proposal for the issuance of the Bonds with Warrants withdetails as follows: 1. Issuance Size This issuance of Bonds with Warrants will be in an amount of not more thanRMB30,000,000,000 with no more than 300,000,000 certificates of bonds to beissued. It will be proposed at the EGM to authorise the Board of Directors,subject to the condition that the aggregate amount of the proceeds raised afterfull exercise of the warrants attached to the bonds shall not exceed the totalamount of the bonds proposed to be issued, to determine the details of the sizeof issuance and the number of warrants attached to the bonds in accordance withmarket conditions. 2. Issuance Price The Bonds with Warrants will be issued at par with a nominal value of RMB100each. The warrants attached to the bonds are to be distributed to thesubscribers of the bonds on a pro rata basis without any additional fees. 3. Issuance Target, Method of Issuance and Arrangement of Saleto Existing Shareholders The issuance target is institutional investors having maintained Shareholders'account for ordinary shares in RMB (A Shares) at the Shanghai Stock Exchange andthe public investors (except for those prohibited under the laws and regulationsof the State). Existing holders of Sinopec Corp.'s A Shares are entitled topreferential subscription rights in respect of the proposed issue of the Bondswith Warrants. Not less than 60% of the proposed issuance will be reserved forpreferential subscription for existing holders of Sinopec Corp.'s A Shares. Theremaining portion and the portion not taken up by existing holders of SinopecCorp.'s A Shares will be issued to qualified investors according to marketcondition. 4. Term of the Bonds Six years since the date of issuance of the Bonds with Warrants. 5. Interest Rate of the Bonds with Warrants It will be proposed at the EGM to authorise the Board of Directors to determinethe interest rate and the method of determining the interest rate according tomarket conditions together with the main underwriter(s). The interest rate willbe disclosed in the Offering Memorandum for the Bonds with Warrants. 6. Term and Method of Repayment for Principal and Interest Interest will be paid once a year after the date of issuance. Within fivetrading days after the expiry date of the Bonds with Warrants, Sinopec Corp.will repay all the matured bonds according to the nominal value of the bondstogether with interest accrued for the period concerned. 7. Term of Redemption If the application of the proceeds from the proposed issuance of bonds issubstantially different from the application of proceeds disclosed in theOffering Memorandum (the "Change"), and the Change can be regarded as a changeof use of proceeds according to the relevant regulations of the CSRC or regardedby the CSRC as a change of use of proceeds, then the holders of the bonds areentitled to demand redemption of the bonds by Sinopec Corp. at the nominal valuetogether with the interest accrued for the period concerned for one time. 8. Guarantee It will be proposed at the EGM to authorise the Board of Directors to determinewhether the proposed issuance of the Bonds with Warrants requires a guarantee byChina Petrochemical Corporation in accordance with the market conditions, and tocomplete the relevant matters accordingly. 9. Term of the Warrants Twenty four (24) months since the listing of the warrants at the Shanghai StockExchange in the PRC. 10. Conversion Period of the Warrants The holders of the warrants are entitled to exercise the warrants five (5)trading days prior to the end of the term of the warrants. 11. Proportion of Exercise Rights for the Warrants The proportion of exercise rights for the warrants attached to this proposedissuance is 2:1. Two warrants represent the conversion rights to one A shareissued by Sinopec Corp. 12. Exercise Price of the Warrants The exercise price of warrants which represents one A share of Sinopec Corp.will be determined according to the following principles: the exercise priceshall not be lower than the average price of: Sinopec Corp.'s A Shares as quotedfor twenty (20) trading days before the date of issuance of the OfferingMemorandum and the average price of Sinopec Corp.'s A Shares one (1) trading daybefore the date of issuance of the Offering Memorandum, Sinopec Corp.'s H Sharesas quoted for twenty (20) trading days before the date of issuance of theOffering Memorandum and the average price of Sinopec Corp.'s H Shares one (1)trading day before the date of issuance of the Offering Memorandum. The detailsof the exercise price and the method of determination will be proposed at theEGM to authorize the Board of Directors for determination in accordance with themarket conditions, relevant regulations and negotiations with the mainunderwriter(s) to the extent of the scope set out hereinabove. 13. Adjustment of the exercise price of the warrants During the term of the warrants, in the event that the trading of A Shares ofSinopec Corp. is on ex-rights or ex-dividend basis, the exercise price and theproportion of exercise rights for the warrants shall be adjusted accordingly. (1) When the trading of A Shares of Sinopec Corp. is on ex-rightsbasis, the exercise price and the proportion of exercise rights for the warrantsshall be adjusted according to the formula as follows: New exercise price = Existing exercise price x (the reference price of A Sharesof Sinopec Corp. on the ex-rights day / the closing price of A Shares of SinopecCorp. on the trading day before the ex-rights day); New proportion of exercise rights = Existing proportion of exercise rights x(the closing price of A Shares of Sinopec Corp. on the trading day before theex-rights day / the reference price of A Shares of Sinopec Corp. on theex-rights day). (2) When the trading of A Shares of Sinopec Corp. is onex-dividend basis, the proportion of exercise rights for the warrants remainedunchanged, and the exercise price shall be adjusted according to the formula asfollows: New exercise price = Existing exercise price x (the reference price of A Sharesof Sinopec Corp. on the ex-dividend day / the closing price of A Shares ofCompany on the trading day before the ex-dividend day). 14. Use of Proceeds from the Proposed Issuance The proceeds from the issuance of the bonds will be applied to theSichuan-to-East China Gas Project, Tianjin 1 million tpa ethylene project,Zhenhai 1 million tpa ethylene project, and to the repayment of bank borrowings.The proceeds from the exercise of the Warrants will be applied to the Tianjin 1million tpa ethylene project, Zhenhai 1 million tpa ethylene project, Wuhan 0.8million tpa ethylene project, Shengli Oilfield key production capacityconstruction and production capacity construction on the new Tahe Oilfied areas. In the event that the proceeds raised from this issuance are not sufficient tofinance these projects, or the availability of the proceeds is not consistentwith the progress of these projects, Sinopec Corp. will complete the investmentin the projects with its own resources, bank borrowings or by other ways of debtfinancing. Once the proceeds are sufficient, Sinopec Corp. will prioritise theiruse according to the needs of the projects stated above. Any surplus from theproceeds raised will be applied to repay bank borrowings and supplement workingcapital. Sinopec Corp. will maintain a separate account for the proceeds as determined bythe Board of Directors so as to administer the proceeds under a separate depositsystem. 15. Validity of the Resolution The resolutions approving the proposed issuance of the Bond with Warrants to bepassed at the EGM will be valid for twelve months, starting from the date of thepassing of the resolutions. 16. Authorisations to the Board of Directors to complete mattersrelated to the Proposed Issuance (1) Subject to the laws, regulations and other regulatorydocuments and to the extent of the scope as permitted by the Articles ofAssociation, the Board of Directors will be authorised to determine the specificterms and proposal prior to the proposed issuance in accordance with therequirements of the regulatory authorities and in view of the actual conditionsof Sinopec Corp., to formulate and implement the final proposal for the Bondswith Warrants and to decide on the timing of such issuance. (2) The Board of Directors will be authorised to determine thespecific arrangements on the use of proceeds as stated above, for instance, ifthe Chinese government announces new regulations in relation to the issue ofBonds with Warrants, or the regulatory agencies have new requirements, or thereare changes in market conditions, the Board of Directors will, subject to theapplicable laws in Mainland China at that time, adjust the issuance proposal anduse of proceeds accordingly; (3) The Board of Directors will be authorised to produce, amend,file the application materials of the proposed issuance according to therequirements of the securities regulatory agencies; (4) The Board of Directors will be authorised to amend,supplement, execute, submit, report and implement the agreements, contracts anddocuments (including but not limited to guarantee contracts and underwriting andsponsorship agreements) during the course of the proposed issuance; (5) After the period for exercising the warrants, the Board ofDirectors will be authorised to amend the relevant provisions of the Articles ofAssociation, and to complete the filing and change of registration in accordancewith the actual exercise conditions; (6) The Board of Directors will be authorised to determine thesponsors (lead underwriters) and other intermediaries of the proposed issuance; (7) The Board of Directors will be authorised to complete mattersrelating to the listing of the Bonds with Warrants; (8) The Board of Directors will be authorised to complete othermatters relating to the proposed issuance. The proposed Issuance of Bonds with Warrants is subject to the obtaining of theapprovals from Shareholders at the EGM and the approval of the CSRC. II. THE FEASIBILITY OF THE PROJECTS TO BE INVESTED WITH THE PROCEEDS FROMTHE PROPOSED ISSUANCE The proceeds from the issuance of the bonds will be applied to theSichuan-to-East China Gas Project, Tianjin 1 million tpa ethylene project,Zhenhai 1 million tpa ethylene project, and to the repayment of bank borrowings.The proceeds from the exercise of the Warrants will be applied to the Tianjin 1million tpa ethylene project, Zhenhai 1 million tpa ethylene project, Wuhan 0.8million tpa ethylene project, Shengli Oilfield key production capacityconstruction and production capacity construction on the new Tahe Oilfied areas.Announcement on the details of the use of proceeds will be made in due course. The Board of Directors of Sinopec Corp. is of the view that the projectsproposed to be invested in through the proposed issuance are in line with thestrategic development of Sinopec Corp. Once the projects commence operation,they will help Sinopec Corp. further develop its core businesses, increase itsscale of operation, and enhance its competitiveness and capability forsustainable development. The use of proceeds of the proposed issuance ispractical and feasible. 1. Use of proceeds from the issuance of the bonds (i) Sichuan-to-East China Gas Project The Sichuan-to-East China Gas Project was listed as one of the major projectsduring the 11th Five-Year Plan of China. The State Council approved the"Sichuan-to-East China Gas Project" in April 2007. The NDRC officially approvedthe project by NDRC Energy Approval No. (2007)795. In June 2007, the StateCouncil approved that a national steering group for the engineering constructionof the Sichuan-to-East China Gas Project was to be established. In August 2007,the construction of the project commenced. The Sichuan-to-East China Gas Projectmainly consists of three parts with a total investment of approximately RMB 62.7billion, namely the development of Puguang Gas Field, the construction ofPuguang Natural Gas Purification Plant and the construction of pipeline for theSichuan-to-East China Gas Project. (ii) Tianjin 1 million tpa ethylene project The feasibility report of the Tianjin ethylene project mainly consists of a onemillion tpa ethylene project was approved by the NDRC in December 2005 pursuantto NDRC Industrial Approval No. (2005)2772. The project mainly consists of: a 1million tpa ethylene project, 12.5 million tpa refinery expansion, supportingthermal power modification and public utility projects. The total investment ofthe project is approximately RMB 20.8 billion. (iii) Zhenhai 1 million tpa ethylene project The feasibility report of the Zhenhai ethylene project was approved by the NDRCin March 2006 pursuant to NDRC Industrial Approval No. (2006)444. The projectmainly consists of the construction of 11 main plants and supporting facilitiesfor the project. The total investment of the project is approximately RMB 21.9billion. (iv) Repayment of bank borrowings The proceeds raised from the issuance of the bonds will be used to repay bankloans borrowed in relation to the business operation of Sinopec corp. ofapproximately RMB 4 billion, in order to optimize the debt structure of SinopecCorp. 2. Use of proceeds from the exercise of the Warrants (i) Tianjin 1 million tpa ethylene project and Zhenhai 1 million tpa ethyleneproject A portion of the proceeds raised through the exercise of the Warrants will stillbe applied to the Tianjin 1 million tpa ethylene project and Zhenhai 1 milliontpa ethylene project. (ii) Wuhan ethylene project The Wuhan ethylene project consists of 0.8 million tpa ethylene project, 0.3million tpa low-density polythene project and the supporting engineering andstorage and transportation system etc. The Wuhan ethylene project was approvedby the NDRC in April 2007 pursuant to NDRC Industrial Approval No. (2007)690.The total investment of the project is approximately RMB 15.1 billion. (iii) Shengli Oilfied Key oil production capacity expansion project The Shengli Oilfied Key oil production capacity expansion project mainlyconsists of: shallow water production capacity construction, old areasadjustment and modification and low oil level capacity exploration. (iv) Production capacity construction on the new areas of Tahe Oilfied The Production capacity construction on the new areas of Tahe Oilfied projectwill construct another 2 million tpa production capacity. The proceeds appliedto the project will be approximately RMB 5.5 billion. (v) Supplement working capital Any surplus from the proceeds raised will be applied to supplement the workingcapital of Sinopec Corp.. III. THE DESCRIPTION PREPARED BY THE BOARD OF DIRECTORS ON THE USEOF PROCEEDS FROM THE PREVIOUS ISSUANCE "Special Report on the Use of Proceeds from the Previous Issuance of ChinaPetroleum & Chemical Corporation" was issued by KPMG Huazhen on 27 September2007 to set out Sinopec Corp.'s use of proceeds from the previous issuance. IV. IMPLICATION UNDER THE HONG KONG LISTING RULES At the annual general meeting of Sinopec Corp. held on 29 May 2007, theShareholders granted a general mandate to the Board of Directors to issue, allotand deal with Shares not exceeding 3,356,097,600 H Shares and 13,984,390,200Domestic Shares, being 20% of each of its existing H Shares and Domestic Sharesof Sinopec Corp. in issue as at the date of the special resolution. To date,Sinopec Corp. has not issued any Shares under the general mandate. The Board of Directors proposes to issue the Bonds with Warrants in the MainlandChina pursuant to the general mandate. Sinopec Corp. confirms that new A Sharesto be issued for exercising the warrants, when aggregated with all other equitysecurities which remain to be issued on the exercise of the subscription rightsshall not exceed 20% of the total share capital of the Company at the time ofissuing the warrants. The term of the Warrants is twenty four months since thelisting of the Warrants on the Shanghai Stock Exchange. Accordingly, theproposed issuance of Bonds with Warrants is in compliance with Rule 15.02 of theListing Rules. No further approval from Shareholders is needed under the HongKong Listing Rules. Sinopec Corp. confirms that if China Petrochemical Corporation, Sinopec Corp.'scontrolling shareholder, exercises its right and subscribes for the Bonds withWarrants under the proposed issuance, it will comply with the reporting,announcement and independent shareholders' approval requirements under Chapter14A of the Listing Rules (if applicable). As far as Sinopec Corp is aware,having made all reasonable inquiry, no Shareholder which has a material interestis required to abstain from voting at the EGM. Sinopec Corp. further confirms that all investors, except China PetrochemicalCorporation, are third parties independent of Sinopec Corp. and its connectedpersons. V. IMPLICATION UNDER PRC LAWS AND REGUALTIONS Under the relevant PRC laws and regulations, the proposed issuance of Bonds withWarrants is subject to (i) approval from Shareholders at the EGM; and (ii)approvals from the relevant PRC regulatory authorities. VI. DEFINITIONS In this announcement, the following expressions have the following meaningunless the context requires otherwise: "A Shares" Renminbi-denominated ordinary domestic shares with nominal value of RMB 1.00 each in the share capital of Sinopec Corp. and which are listed on the Shanghai Stock Exchange"Articles of Association" the articles of association of Sinopec Corp."Board of Directors" the board of directors of Sinopec Corp."Bonds with Warrants" up to RMB 30 billion in the principal amount of bonds with detachable warrants which are convertible into new A Shares of Sinopec Corp., proposed to be issued by Sinopec Corp. within the Mainland China and to be listed on the Shanghai Stock Exchange"CSRC" the China Securities Regulatory Commission of the PRC"Domestic Shares" Shares issued by Sinopec Corp. under PRC law, the par value of which is denominated in Renminbi, and which are subscribed for in Renminbi"EGM" the extraordinary general meeting of Sinopec Corp. to be held on 15 November 2007 at 9:00 a.m. at Crowne Plaza Beijing-Park View Wuzhou, No.8 North Si Huan Zhong Road, Chaoyang District, Beijing, the PRC."H Shares" overseas listed foreign shares in the Sinopec Corp.'s share capital, with a nominal value of RMB 1.00 each, which are listed on the Hong Kong Stock Exchange"Hong Kong" the Hong Kong Special Administrative Region of the PRCHong Kong Listing Rules the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Ltd"Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited"Mainland China" the PRC excluding the Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan"NDRC" the National Development and Reform Commission"Offering Memorandum" the offering memorandum in relation to the proposed issuance of the Bonds with Warrants"PRC" the People's Republic of China"RMB" Renminbi, the lawful currency of PRC"Share(s)" the H Share(s) and A Share(s) of Sinopec Corp."Shareholders" holders of the Shares"Sinopec Corp." China Petroleum & Chemical Corporation"State Council" The State Council of the PRC"Warrants" detachable warrants that comes with the Bonds with Warrants, convertible into new A Shares of Sinopec Corp. By Order of the Board China Petroleum & Chemical Corporation Chen Ge Secretary to the Board of Directors Beijing, PRC, 27 September 2007 As at the date of this Announcement, the directors of Sinopec Corp are Messrs.Su Shulin*, Zhou Yuan*, Wang Tianpu#, Zhang Jianhua#, Wang Zhigang#, DaiHouliang#, Fan Yifei*, Yao Zhongmin*, Shi Wanpeng+, Liu Zhongli+ and Li Deshui+. # Executive Directors * Non-executive Directors + Independent Non-executive Directors This information is provided by RNS The company news service from the London Stock Exchange