Discloseable Transaction
Datang Intl Power Generation Co Ld
19 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 be
taken, 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 POWER
GENERATION CO., LTD., you should at once hand this circular to the purchaser or
the transferee or to the bank, licensed securities dealer or other agent through
whom the sale or transfer was effected, for transmission to the purchaser or
transferee.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this circular, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising from
or 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 Generation
Co., Ltd. is set out on pages 3 to 7 of this circular.
19 July 2006
CONTENT
Page
DEFINITIONS 1
LETTER FROM THE BOARD
Introduction 3
Investment Agreement 4
Information relating to Tashan Power Company 5
Information relating to the Group 5
Information relating to Datong Coal Mine 6
Reasons for and benefits of entering into the Investment Agreement 6
Discloseable transaction 6
General 6
APPENDIX - GENERAL INFORMATION 8
DEFINITIONS
In this circular, unless the context otherwise requires, the following
expressions 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 Avenue
Mr. Yang Hongming Xuanwu District
Beijing, 100053
Non-executive Directors: PRC
Mr. Zhai Ruoyu (Chairman)
Mr. Hu Shengmu Principal place of business
Mr. Fang Qinghai in Hong Kong:
Mr. Liu Haixia c/o Simmons & Simmons
Ms. Guan Tiangang 35th Floor, Cheung Kong Center
Mr. Su Tiegang 2 Queen's Road Central
Mr. Ye Yonghui Central
Mr. Tong Yunshang Hong Kong
Independent non-executive Directors:
Mr. Xie Songlin
Mr. Xu Daping
Mr. Liu Chaoan
Mr. Yu Changchun
Mr. 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 Investment
Agreement with Datong Coal Mine for the purposes of planning, constructing and
operating the Tashan Power Plant Project by establishing Tashan Power Company.
Pursuant to the Investment Agreement, the Company and Datong Coal Mine agreed to
contribute to the registered capital of Tashan Power Company, which is
approximately 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 Plant
Project, in the proportions of 40% and 60%, respectively.
According to the Listing Rules, as the consideration ratio (as defined in Rule
14.07 of the Listing Rules) is more than 5% but less than 25%, the transaction
contemplated under the Investment Agreement constitutes a discloseable
transaction for the Company. The Investment Agreement is therefore subject to
the notification and publication requirements as set out in Rules 14.34 to 14.39
of the Listing Rules.
The purpose of this circular is to provide you with further information on the
Investment Agreement and other information in compliance with the requirements
of 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 to
contribute to the registered capital of Tashan Power Company in the proportions
of 40% and 60%, respectively, for the purposes of planning, constructing, and
operating the Tashan Power Plant Project.
The total investment amount of the Tashan Power Plant Project is expected to be
approximately RMB5,420,000,000 (equivalent to approximately
HK$5,211,538,461.53), which is subject to verification by the relevant
governmental authorities in the PRC, 20% of which is the registered capital of
Tashan Power Company, i.e. approximately RMB1,084,000,000 (equivalent to
approximately HK$1,042,307,692.30). 40% (equivalent to approximately
HK$416,923,076.92) and 60% (equivalent to approximately HK$625,384,615.38) of
the registered capital of Tashan Power Company will be contributed in cash by
the Company and Datong Coal Mine, respectively.
Pursuant to the Investment Agreement, the initial portion of the registered
capital of Tashan Power Company is RMB216,800,000 (equivalent to approximately
HK$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 approximately
HK$125,076,923.07) will be paid by Datong Coal Mine, respectively, at the time
of the establishment of Tashan Power Company. The remainder of the registered
capital will be fully paid by the parties within two years of the date of
business registration of Tashan Power Company with the relevant PRC authorities
in proportion to their respective capital contributions. As at the Latest
Practicable Date, no contribution to the registered capital of Tashan Power
Company has been made by the parties to the Investment Agreement. The Company's
contribution to the registered capital of Tashan Power Company will be funded by
its internal resources.
Pursuant to the Investment Agreement, all funds required for the construction of
the Tashan Power Plant Project will be funded by the registered capital of
Tashan Power Company and third party borrowings in the PRC and in the latter
case, each of the Company and Datong Coal Mine will severally guarantee such
borrowings in proportion to their respective capital contributions in Tashan
Power Company if so required. In the event of any future guarantee or borrowings
by the Company to Tashan Power Company, the Company will comply with the
relevant 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 the
Investment Agreement obtained their internal approvals for the investments under
the Investment Agreement, which, as at the date of this circular, have all been
obtained.
Other major terms
The term of business operation of Tashan Power Company is proposed to be 30
years 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 established
for the purposes of planning, constructing and operating the Tashan Power Plant
Project, which is located in the southwestern part of Datong City, Shanxi
Province, the PRC.
The Tashan Power Plant Project, consisting of two 600MW-level coal-fired power
generating units, is planned to have a total power generating capacity of
1,200MW. Comprising desulphurisation facilities, the Tashan Power Plant Project
is an energy-efficient and environmental-friendly power plant. All the power
generated from the Tashan Power Plant Project will be transmitted to the North
China Power Grid. The Tashan Power Plant Project is subject to verification by
the relevant governmental authorities in the PRC. The construction of the Tashan
Power Plant Project will commence immediately upon completion of such
verification, and the Tashan Power Plant Project is expected to commence
operation after 24 months of construction.
Upon the establishment of Tashan Power Company, it will be owned as to 40% by
the Company and 60% by Datong Coal Mine. Therefore, Tashan Power Company will be
treated 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 power
plants, the sale of electricity and thermal power, and the repair, testing and
maintenance of power equipment and power related technical services, with its
present main operation in the PRC.
INFORMATION RELATING TO DATONG COAL MINE
Datong Coal Mine was incorporated in the PRC in 1985 with limited liability and
has a registered capital of RMB5,511,175,600. Its principal business includes
production and processing of coal, the import of raw materials and related
technology for the manufacture of its products and the export of
self-manufactured products such as mechanical products and chemical products and
related technology.
To the best of the Directors' knowledge, information and belief having made all
reasonable enquiries, each of Datong Coal Mine and its ultimate beneficial owner
is a third party who is not a connected person of the Company and is independent
of 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 to
reasonably adjust their power generating structures and to construct mine-mouth
power plants for coal-fired power generation, so as to protect the environment
and strengthen the economy. Further, as the power generation capacity in North
China cannot satisfy the demand of the rapidly developing economy in the region
due to limited resources and environmental constraints, there are considerable
economic benefits achieved by the construction of mine-mouth power plants such
as the Tashan Power Plant Project. As the Tashan Power Plant Project will be
constructed at a mine-mouth with abundant supplies of coal resources, the Board
believes that the cooperation with Datong Coal Mine in constructing and
operating the Tashan Power Plant Project would reduce the cost of coal resources
and the cost of coal transportation necessary for operating the Tashan Power
Plant Project and would therefore enhance the operating profits of the Group as
a whole.
In view of the above, the Directors (including the independent non-executive
Directors) believe that the Investment Agreement is on normal commercial terms
and the terms of the Investment Agreement are fair and reasonable and in the
interests of the Shareholders as a whole.
DISCLOSEABLE TRANSACTION
According to the Listing Rules, as the consideration ratio (as defined in Rule
14.07 of the Listing Rules) is more than 5% but less than 25%, the transaction
contemplated under the Investment Agreement constitutes a discloseable
transaction for the Company which is subject to the notification and publication
requirements 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 the
assets and liabilities of the Company as a result of the establishment of Tashan
Power Company upon completion of the Investment Agreement.
Your attention is also drawn to the general information as set out in the
appendix 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 Rules
for the purpose of giving information with regard to the Company. The Directors
collectively and individually accept full responsibility for the accuracy of the
information contained in this circular and confirm, having made all reasonable
enquiries that to the best of their knowledge and belief, there are no other
facts the omission of which would make any statement in this circular
misleading.
DISCLOSURE OF INTERESTS
Directors, chief executive and supervisors of the Company
(i) As at Latest Practicable Date, none of the Directors, supervisors and
chief executive of the Company have any interests and short positions in the
shares, underlying shares and/or debentures (as the case may be) of the Company
or any of its associated corporations (within the meaning of the SFO) which was
required to be notified to the Company and the Stock Exchange pursuant to
Divisions 7 and 8 of Part XV of the SFO (including interest and short position
which any such Director, chief executive or supervisor is taken or deemed to
have under such provisions of the SFO) or which was required to be entered into
the register required to be kept by the Company under section 352 of the SFO or
which was otherwise required to be notified to the Company and the Stock
Exchange pursuant to the Model Code for Securities Transactions by Directors of
Listed Issuers in the Listing Rules.
(ii) As at the Latest Practicable Date, none of the Directors, proposed
Directors, supervisors or proposed supervisors of the Company has any direct or
indirect interest in any assets which have since 31 December 2005 (being the
date to which the latest published audited financial statements of the Company
were made up) been acquired or disposed of by or leased to any member of the
Group, or are proposed to be acquired or disposed of by or leased to any member
of the Group.
Substantial shareholders of the Company
As at Latest Practicable Date, so far as the Directors are aware, each of the
following persons, not being a Director, chief executive or supervisor of the
Company, had an interest in the Shares which falls to be disclosed to the
Company and the Stock Exchange under the provisions of Division 2 and 3 of Part
XV of the SFO:
Percentage to
total issued Percentage to Percentage
to
Class of No. of share capital total Issued total Issued
of
Name 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) owner
Beijing 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
of
Name 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
Limited
HSBC Halbis Partners H Shares 119,236,000 (L) Beneficial 2.31 - 8.33 (L)
owner
(Hong Kong) Limited
J.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, all
non-executive Director, is an employee of China Datang Corporation.
2. Each of Mr. Liu Haixia and Ms. Guan Tiangang, both non-executive
Director, 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 Tianjin
Jinneng Investment Company.
Save as disclosed above and so far as the Directors are aware, as at the Latest
Practicable Date, no other person had an interest or short position in the
Company's shares or underlying shares (as the case may be) which would fall to
be disclosed to the Company and the Stock Exchange under the provisions of
Divisions 2 and 3 of Part XV of the SFO.
Substantial shareholders in other members of the Group
Percentage of
Name of subsidiary Name of shareholder shareholding
Inner 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 Characters
Tianjin Datang International Panshan Tianjin Jinneng Investment Company 25%
Power Generation Company Limited Chinese Characters
Chinese Characters
Shanxi Datang Shentou Power Tianjin Jinneng Investment Company 40%
Generation Company Limited Chinese Characters
Chinese Characters
Shanxi Datang International Yungang Shanxi Jinneng Hezhong Investment 20%
Thermal Power Company Limited and Guarantee Company Limited
Chinese Characters Chinese Characters
Yunnan Datang International Honghe Yunnan Development and Investment 15%
Power Generation Company Limited Company Limited
Chinese Characters Chinese Characters
Yunnan Xiaolongtan Mining Bureau 10%
Chinese Characters
Gansu 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 Characters
Hebei Datang International Tangshan Tangshan Construction Investment 20%
Thermal Power Company Limited Company
Chinese Characters Chinese Characters
Percentage of
Name of subsidiary Name of shareholder shareholding
Yunnan 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 Characters
Yunnan Datang International Beijing State Power Anrong Power 25%
Lixianjiang Hydropower Investment Company Limited
Development Company Limited Chinese Characters
Chinese Characters
Shanxi Datang International Yuncheng Shanxi Huafu Power Investment 20%
Power Generation Company Limited Company Limited
Chinese Characters Chinese Characters
Jiangsu Datang International Lusigang Nantong Zhonghe Holding Company 10%
Power Generation Company Limited Limited
Chinese Characters Chinese Characters
Guangdong Datang International Beijing China Power Huaze 12%
Chaozhou Power Generation Investment Company Limited
Company Limited Chinese Characters
Chinese Characters
Fujian 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 of
Name of subsidiary Name of shareholder shareholding
Chongqing 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 Characters
Yunnan 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 Characters
Hebei 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 Latest
Practicable Date, no other person, not being a Director, chief executive or
supervisor of the Company, was directly or indirectly interested in 10% or more
of the nominal value of any class of share capital carrying rights to vote in
all 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's
supervisors was materially interested in any contract or arrangement subsisting
as at the date of this circular which is significant to the business of the
Group.
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 proposed
service contract with any member of the Group (excluding contracts expiring or
determinable 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 its
subsidiaries, or their respective associates has interests in the businesses
which compete or are likely to compete, either directly or indirectly, with the
businesses of the Company and its subsidiaries.
LITIGATION
No member of the Company and its subsidiaries is at present engaged in any
litigation or arbitration of material importance to the Company and its
subsidiaries and no litigation or claim of material importance to the Company
and its subsidiaries is known to the Directors or the Company to be pending or
threatened 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, Hong
Kong.
(d) The Hong Kong share registrar and transfer office of the Company is
Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183
Queen's Road East, Wanchai, Hong Kong.
(e) The secretary of the Company is Mr. Yang Hongming, who is a senior
economist and had graduated from North China Power College.
(f) The Company has been using its best endeavour in finding a suitable
candidate to assume the position of qualified accountant, as required under Rule
3.24 of the Listing Rules (the 'Rule'), since the effective date of the Rule.
Due to the practical difficulties in finding a candidate who has relevant
experience in the power industry, the Company has yet to appoint a qualified
accountant as required under the Rule and the Company will continue to use its
best endeavour in finding a suitable candidate to assume such position as soon
as practicable.
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