EGM Circular

RNS Number : 5344S

Air China Ld

10 September 2010

 



NOTICE OF EXTRAORDINARY GENERAL MEETING

中國國際航空股份有限公司

  AIR CHINA LIMITED

(a joint stock limited company incorporated in the People's Republicof China with limited liability)

(Stock Code: 753)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting ("EGM") of Air China Limited (the "Company") will be held at the Conference Room, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC at 10:00 a.m. on 28 October 2010 to consider and, if thought fit, to pass the following resolution.

ORDINARY RESOLUTION:

To consider and approve the continuing connected transactions between the Company and Cathay Pacific Airways Limited (the "Transaction").

For more details with respect to the Transaction,please refer to Appendix I.

By Order of the Board

Air China Limited

Chairman
Kong Dong

Beijing, the PRC, 10 September2010

As at the date of this notice, the directors of the Company are Mr. Kong Dong, Ms. Wang Yinxiang, Mr. Wang Shixiang, Mr. Cao Jianxiong, Mr.Christopher Dale Pratt, Mr. Cai Jianjiang, Mr. Fan Cheng, Mr. Hu Hung Lick, Henry*, Mr. Zhang Ke*, Mr. Jia Kang* and Mr. Fu Yang*.

*    Independent non-executive Director of the Company

Notes:

1.       Closure of register of members and eligibility for attending the EGM

Holders of H shares of the Company are advised that the register of members of the Company will close from 28 September 2010 to 28 October 2010 (both days inclusive), during which time no transfer of H shares of the Company will be effected and registered. In order to qualify for attendance at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company's H Share registrar, Computershare Hong Kong Investor Services Limited, by 4:00 p.m. on 27 September 2010.

Shareholders of the Company whose names appear on the register of members of the Company at the close of business on 27 September 2010 are entitled to attend the EGM.

2.       Notice of attendance

H-share shareholders who intend to attend the EGM should completeand lodge the accompanying notice of attendanceand return it to the Company's H Share registrar on or before Friday, 8 October 2010. The notice of attendance may be delivered by hand, by post or by fax to the Company's H share registrar. Completion and return of the notice of attendance do not affect the right of a shareholder to attend the EGM. However, the failure to return the notice of attendance may result in an adjournment of the EGM, if the number of shares carrying the right to vote represented by the shareholders proposing to attend the EGM by returning the notice of attendance does not reach more than half of the total number of shares of the Company carrying the right to vote at the EGM.

3.       Proxy

Every shareholder who has the right to attend and vote at the EGM is entitled to appoint one or more proxies, whether or not they are members of the Company, to attend and vote on his/her behalf at the EGM.

A proxy shall be appointed by an instrument in writing. Such instrument shall be signed by the appointer or his attorney duly authorised in writing. If the appointer is a legal person, then the instrument shall be signed under a legal person's seal or signed by its director or an attorney duly authorised in writing. The instrument appointing the proxy shall be depositedat the Company's H share registrar for holders of H shares not less than 24 hours before the time specified for the holding of the EGM. If the instrument appointing the proxy is signed by a person authorised by the appointer, the power of attorney or other document of authority under which the instrument is signed shall be notarised. The notarised power of attorney or other document of authority shall be deposited together and at the same time with the instrument appointing the proxy at the Company's H share registrar.

4.       Other businesses

(i)      The EGM is expected to last for two hours. Shareholders and their proxies attending the meeting shall be responsible for their own traveling and accommodation expenses.

(ii)     The address of Computershare Hong Kong Investor Services Limited is:

17M Floor

Hopewell Centre

183 Queen's Road East

Wanchai

Hong Kong

Tel No.: (852) 2862 8628

Fax No.: (852) 2865 0990

AIR CHINA LIMITED

(a joint stock limited company incorporated in

the People's Republic of China with limited liability)

(Stock Code: 753)

CATHAY PACIFIC

AIRWAYS LIMITED

(Incorporated in Hong Kong with limited liability)

(Stock Code: 293)

Joint Announcement

Continuing ConnectedTransactions

Reference is made to the joint announcement dated 26th June 2008 issued by Air China and Cathay Pacific in connection with the Framework Agreement entered into between Air China and Cathay Pacific on 26th June 2008. The Framework Agreement will be renewed on 1st October 2010 for a term of three years from 1st January 2011 to 31st December 2013.

As Air China is a substantial shareholder and therefore a connected person of Cathay Pacific, the Transactions constitute continuing connected transactions for Cathay Pacific under Rule 14A.14 of the Listing Rules and are subject to reporting, annual review and announcement requirements under Rule 14A.35.

As Cathay Pacific is a substantial shareholder and therefore a connected person of Air China, the Transactions constitute continuing connected transactions for Air China under Rule 14A.14 of the Listing Rules and are subject to reporting, annual review and announcement requirements under Rule 14A.35.

Framework Agreement dated 26th June 2008 and to be renewed on 1st October 2010

Parties:                  (1)    Air China

(2)   Cathay Pacific

Background and Particulars

Reference is made to the joint announcement dated 26th June 2008 issued by Air China and Cathay Pacific in connection with the Framework Agreement entered into between Air China and Cathay Pacific on 26th June 2008.

As Air China is a substantial shareholder and therefore a connected person of Cathay Pacific, the Transactions constitute continuing connected transactions for Cathay Pacific under Rule 14A.14 of the Listing Rulesand are subject to reporting, annual review and announcement requirements under Rule 14A.35.

As Cathay Pacific is a substantial shareholder and therefore a connected person of Air China, the Transactions constitute continuing connected transactions for Air China under Rule 14A.14 of the Listing Rules and are subject to reporting, annual review and announcement requirements under Rule 14A.35.

The Framework Agreement provides the framework under which Relevant Agreements between members of Air China Group on the one hand and members of Cathay Pacific Group on the other hand are entered into, renewed and extended.The Transactions (under the Relevant Agreements) are transactions between members of Air China Group on the one hand and members of Cathay Pacific Group on the other hand arising from joint venture arrangements for the operation of passenger air transportation, code sharing arrangements, interline arrangements, aircraft leasing, frequent flyer programmes, the provision of airline catering, ground support and engineering services and other services agreed to be provided and other transactions agreed to be undertaken under the Framework Agreement.

The Framework Agreement will be automatically renewed on 1st October2010 for a term of three years from 1st January 2011 to 31st December 2013. Under its terms, it is automatically renewed for successive periods of three years after its initial expiry date unless 
either party to it gives to the other notice of termination of not less than three months expiring on any 31st December.

The annual caps

The annual caps for the Transactions have been determined by reference to the actual payments in respect of the Transactions in the two years ended 31st December 2009 and the forecast payments in respect of the Transactions to be made by Air China Group to Cathay Pacific Group, and by Cathay Pacific Group to Air China Group, having regard, inter alia, to the projections of Air China Group and Cathay Pacific Group in respect of their fleet sizes, the delivery schedules of new aircraft which they have ordered, aircraft utilisation and other operating parameters.

The Air China Directors estimate that the amounts payable by Cathay Pacific Group to Air China Group, and payable by Air China Group to Cathay Pacific Group, in respect of the Transactions will not exceed the annual caps set out below.

The Cathay Pacific Directors estimate that the amounts payable by Air China Group to Cathay Pacific Group, and payable by Cathay Pacific Group to Air China Group, in respect of the Transactions will not exceed the annual caps set out below.

Payable by Air China Group to Cathay Pacific Group:

2008      2009       2010       2011      2012       2013

(HK$ million)                                   Actual     Actual        Cap        Cap        Cap        Cap

Transactions                                          245        164         900        900         900         900

Payable by Cathay Pacific Group to Air China Group:

2008      2009       2010       2011      2012       2013

(HK$ million)                                   Actual     Actual        Cap        Cap        Cap        Cap

Transactions                                          388        305         900        900         900         900

Air China and Cathay Pacific estimate that, within the annual caps above, the annual amounts payable by Air China Group to Cathay Pacific Group and the annual amounts payable by Cathay Pacific Group to Air China Group in respect of passenger air transportation cooperation, aircraft leasing, and the provision of airline catering and ground support services willnot exceed HK$300 million, HK$250 million and HK$215 million respectively, and the annual amounts for the other transactions entered into under the Framework Agreement will not exceed HK$135 million.

Reasons for, and benefitsof, the Transactions

The cooperation between Air China Group and Cathay Pacific Group is expected to continue to further the development of Beijing Capital International Airport and Hong Kong International Airport as gateways to and hubs for Mainland China and will assist Air China Group and Cathay Pacific Group in their efforts to optimise the allocation of operating resources.

Connection between the parties

Air China, by virtue of its 29.99% shareholding in Cathay Pacific, is a substantial shareholder and therefore a connected person of Cathay Pacific under the Listing Rules.

Cathay Pacific, by virtue of its 19.27% shareholding in Air China, is a substantial shareholder and therefore a connected person of Air China under the Listing Rules.

Compliance with Listing Rules

As the highest of the relevant percentage ratios as defined under Rule 14.07 of the Listing Rules (other than the profits ratio) in respect of the annual caps applicable to the Transactions will,on an annual basis, be more than 0.1% but less than 5%, the Transactions constitute continuing connectedtransactions for each of AirChina and Cathay Pacific and are subject to announcement, annual review and reporting requirements under Rule 14A.35 of the Listing

Rules, but exempt from the independentshareholders' approval requirements. However, pursuant to the listing rules of the Shanghai Stock Exchange, the Transactionsshall be subject to independent shareholders' approval at Air China's general meeting.

Each of Air China and Cathay Pacific will comply with the continuing obligations under Rules14A.37-41 of the Listing Rules and will re-comply with the relevant Listing Rules if the annual caps are exceeded, when the Framework Agreement is renewed or when there is a material change to its terms.

Opinion of the directors

The Air China Directors, including the independent non-executive directors, consider that the Framework Agreement is on normal commercial terms, that its terms are fair and reasonable and in the interests of Air China and its shareholders as a whole and that renewal of the Framework Agreement is in the ordinary and usual course of Air China's business.

The Cathay Pacific Directors, including the independent non-executive directors, consider that the Framework Agreement are on normal commercial terms, that its terms are fair and reasonable and in the interests of Cathay Pacific and its shareholders as a whole and that renewal of the Framework Agreement is in the ordinary and usual course of Cathay Pacific's business.

Kong Dong, Cai Jianjiang, Fan Cheng and Christopher Pratt, being directors of Cathay Pacific, are materially interested in the Transactions and have abstained from voting on the relevant board resolutions of Air China in respect of the Transactions.

Christopher Pratt, Kong Dong, Cai Jianjiang, Fan Cheng and Zhang Lan, being directors and/or chief executives of Air China, are materially interested in the Transactions and have abstained from voting on the relevant board resolutions of Cathay Pacific in respect of the Transactions.

Directors of Air China

As at the date of this announcement, the Air China Directors are:

Non-Executive Directors:Kong Dong (Chairman), Wang Yinxiang, Wang Shixiang,Cao  
        Jianxiong, ChristopherPratt;

Executive Directors: Cai Jianjiang, Fan Cheng; and

Independent Non-Executive Directors: Hu Hung Lick Henry, Zhang Ke, Jia Kang and Fu Yang.

Directors of Cathay Pacific

As at the date of this announcement, the Cathay Pacific Directors are:

Executive Directors:Christopher Pratt (Chairman), James Barrington, James E. Hughes- 
        Hallett, John Slosar and Tony Tyler;

Non-Executive Directors:Cai Jianjiang, Fan Cheng, James W.J. Hughes-Hallett, Peter 
        Kilgour, Kong Dong, Ian Shiu, Merlin Swire and Zhang Lan; and

Independent Non-Executive Directors: Irene Lee, Jack So, Tung Chee Chen and Peter Wong.

Definitions

"Air China"                                        Air China Limited, a  company incorporated in the People's Republic of China, whose H shares are listed on the Stock Exchange as its primary listing venue and on the Official List of the UK Listing Authority as its secondary listing venue, and whose A shares are listed on the Shanghai Stock Exchange. The principal activity of AirChina is the operation of scheduled airline services.

"Air China Directors"                          The directorsof Air China.

"Air China Group"                              Air China and its subsidiaries.

"Cathay Pacific"                                 Cathay Pacific Airways Limited, a company incorporated in Hong Kong and listed on the Stock Exchange, the principal activity of which is the operation of scheduled airline services.

"Cathay Pacific Directors"                  The directorsof Cathay Pacific.

"Cathay Pacific Group"                      Cathay Pacific and its subsidiaries, including Dragonair.

"Dragonair"                                       Hong Kong Dragon Airlines Limited, a wholly owned subsidiary of Cathay Pacific, the principal activity of which is the operation of scheduled airline services.

"Framework Agreement"                    The framework agreement dated 26th June 2008 between Air China and Cathay Pacific under which a framework is provided for entry into the Relevant Agreements.

"Listing Rules"                                   The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

"Relevant Agreements"                        Agreements between members of the Air China Group on the one hand and members of the Cathay Pacific Group on the other hand in respect of the Transactions.

"Stock Exchange"                             The Stock Exchange of Hong Kong Limited.

"Transactions"                                  Transactions between members of Air China Group on the one hand and members of Cathay Pacific Group on the other hand arising from joint venture arrangements for the operation of passenger air transportation, code sharing arrangements, interline arrangements, aircraft leasing, frequent flyer programmes, the provision of airline catering, ground support and engineering services and other services agreed to be provided and other transactions agreed to be undertaken under the Framework Agreement.

By Order of the Board Air China Limited Huang Bin       Tam Shuit Mui Joint Company Secretaries Beijing, 10th September 2010

By Order of the Board Cathay Pacific Airways Limited David Fu Company Secretary Hong Kong, 10th September 2010

 

END

 

 

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