Issue of Convertible Bonds
Beijing Datang Power Generation Com
04 September 2003
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, 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
announcement.
This announcement is not an offer to sell or the solicitation of an offer to buy
any securities and neither this announcement nor anything herein forms the basis
for any contract or commitment whatsoever. Neither this announcement nor any
copy thereof may be taken into or distributed in the United States. Securities
may not be offered or sold in the United States absent registration or an
exemption from registration under the Securities Act of 1933, as amended.
Beijing Datang Power Generation Company Limited does not intend to register any
part of the proposed offering in the United States. The securities described
herein will be sold in accordance with all applicable laws and regulations.
This communication is directed only at (i) persons outside the United Kingdom;
or (ii) persons having professional experience in matters relating to
investments who fall within the definition of 'investment professionals' in
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2001; or (iii) high net worth bodies corporate, unincorporated
associations and partnerships and trustees of high value trusts as described in
Article 49(2) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2001. The Bonds will only be available to such persons and
persons within the United Kingdom who receive this communication (other than
persons falling within (ii) and (iii) above) should not rely on or act upon this
communication.
In connection with this issue, UBS Investment Bank may (to the extent permitted
by applicable laws) over-allot or effect transactions with a view to supporting
the market price of the Bonds at a level higher than that which might otherwise
prevail for a limited period after the issue date. However, there is no
obligation on UBS Investment Bank. Such stabilising, if commenced, may be
discontinued at any time, and must be brought to an end after a limited period.
(Incorporated as a Sino-foreign joint stock limited company in
the People's Republic of China with limited liability)
Proposed Issue of Convertible Bonds due 2008
Summary
Further to the announcements dated 25 March 2002 and 9 May 2003, the Directors
are pleased to announce that the Company and UBS Investment Bank, together with
the other Managers, have entered into the Subscription Agreement in connection
with the issue of the Bonds by the Company with an aggregate principal amount of
US$153.8 million. The Bonds will be in the form of US dollar denominated
convertible bonds and which are convertible into new H Shares with a nominal
value of RMB1.00 each in the registered capital of the Company. The Company has
applied for the listing of the Bonds on the Luxembourg Stock Exchange and will
subsequently apply for the listing of the Bonds on the Official List of the UK
Listing Authority and for such Bonds to be admitted to trading on the London
Stock Exchange's market for listed securities.
The Bonds will be offered only to professional and institutional investors, who
are not connected to the directors, chief executive or substantial shareholders
of the Company or its subsidiaries or associates of any of them, outside the
United States in reliance on Regulation S under the Securities Act. None of the
Bonds are being offered to the public in Hong Kong or will be placed to any
connected persons (as defined in the Listing Rules) of the Company. No Bonds
will be offered within the PRC (excluding Hong Kong).
The Company will apply to the Hong Kong Stock Exchange for the listing of, and
permission to deal in, the Conversion Shares. Application will also be made to
list the Conversion Shares on the Official List of the UK Listing Authority and
for such Conversion Shares to be admitted to trading on the London Stock
Exchange's market for listed securities.
The net proceeds of the issue of the Bonds are estimated to be approximately
US$149 million, of which the Company intends to use approximately US$100 million
to finance its foreign exchange requirements for purchasing essential imported
equipment necessary for use in its power plants, and the balance will be used to
refinance part of its current foreign exchange borrowings.
Due to the price sensitive nature of the transactions contemplated in this
announcement, shareholders and investors are advised to exercise caution when
dealing in the securities of the Company.
Introduction
Further to the announcements dated 25 March 2002 and 9 May 2003, the Directors
are pleased to announce that the Company and UBS Investment Bank, together with
the Managers, have entered into the Subscription Agreement in connection with
the issue of the Bonds by the Company with an aggregate principal amount of
US$153.8 million.
Subscription Agreement
Date: 3 September 2003
Parties: Company
UBS Investment Bank
The other Managers
UBS Investment Bank is the sole bookrunner and lead manager in respect of the
subscription and issue of the Bonds.
Subject to the fulfillment of the conditions and other provisions specified in
the Subscription Agreement, UBS Investment Bank and the other Managers have
severally agreed, amongst other things, to subscribe and pay for the Bonds in
accordance with the Subscription Agreement.
The Bonds will be offered only to professional and institutional investors, who
are not connected to the directors, chief executive or substantial shareholders
of the Company or its subsidiaries or associates of any of them, outside the
United States in reliance of Regulation S under the Securities Act. None of the
Bonds are being offered to the public in Hong Kong or will be placed to any
connected persons (as defined in the Listing Rules) of the Company. No Bonds
will be offered within the PRC (excluding Hong Kong).
Conditions of the Subscription Agreement
The Subscription Agreement is conditional on the fulfillment of various
conditions, including:
(a) the Luxembourg Stock Exchange having agreed to list the Bonds;
(b) the Hong Kong Stock Exchange having granted the approval for the listing
of, and permission to deal in, the Conversion Shares; and
(c) the trust deed constituting the Bonds and other documentation ancillary to
the issue of the Bonds having been duly executed;
or in the case of (a) and (b), the Managers being satisfied that each such
listing will be granted.
The Subscription Agreement may be terminated in certain circumstances occurring
prior to completion, in particular, UBS Investment Bank may (on behalf of the
Managers (after prior consultation with the Company, where practicable)) by
notice to the Company, terminate the Subscription Agreement at any time before
the time on the Closing Date when payment for the Bonds would otherwise be due
under the Subscription Agreement in any of the following circumstances:-
(i) if there shall have come to the notice of the Managers any breach of, or
any event rendering untrue or incorrect in any material respect, any of the
warranties and representations contained in the Subscription Agreement or any
failure to perform any of the covenants or agreements of the Company in the
Subscription Agreement;
(ii) if, in the opinion of UBS Investment Bank, there shall have occurred any
of the following events: (i) a suspension or a material limitation in trading in
securities generally on the New York Stock Exchange, London Stock Exchange,
Luxembourg Stock Exchange and/or the Hong Kong Stock Exchange; (ii) a suspension
or a material limitation in trading in the Company's securities on the London
Stock Exchange, Luxembourg Stock Exchange and/or the Hong Kong Stock Exchange;
(iii) a general moratorium on commercial banking activities in New York, London,
the PRC and/or Hong Kong declared by the relevant authorities or a material
disruption in commercial banking or securities settlement or clearance services
in the United States, the United Kingdom, Luxembourg, the PRC or Hong Kong or
(iv) a change or development involving a prospective change in taxation
affecting the Company, the Bonds and the Conversion Shares or the transfer
thereof;
(iii) if, in the opinion of UBS Investment Bank, there shall have been such a
change in national or international financial, political or economic conditions
or currency exchange rates or exchange controls as would in its view be likely
to prejudice materially the success of the offering and distribution of the
Bonds or dealings in the Bonds in the secondary market; or
(iv) if any of the conditions specified in the Subscription Agreement has not
been satisfied or waived by UBS Investment Bank on behalf of the Managers.
Subject to the foregoing, the Subscription Agreement is expected to be
completed, and the Bonds to be issued, on or before the Closing Date.
Certain undertakings relating to the Subscription Agreement
The Company has given certain undertakings in favour of the Managers under the
Subscription Agreement, including, amongst others, that neither the Company nor
any person acting on its behalf will issue, offer, sell, contract to sell or
otherwise dispose of any interest in any H Shares or securities of the same
class as the Bonds and the Shares or any securities (other than preferred stock)
convertible into, exchangeable for or which carry rights to subscribe or
purchase the Bonds, the H Shares or securities of the same class as the Bonds,
the H Shares or other instruments representing interests in the Bonds, the H
Shares or other securities of the same class as them, or announce or otherwise
make public an intention to do any of the foregoing, in any such case without
the prior written consent of the Lead Manager on behalf of the Managers between
the Pricing Date and the date which is 180 days after the Closing Date (both
dates inclusive).
Principal Terms of the Bonds
The principal terms of the Bonds, which will be constituted by the Trust Deed,
are summarised as follows:
Issue: Up to US$153.8 million in principal amount of
Bonds.
Issue price: 100 per cent. of the principal amount of the
Bonds.
Interest: The Bonds will bear interest from (and including)
the Closing Date at the rate, of 0.75 per cent.
per annum of the principal amount of the Bonds,
payable semi-annually in arrears in equal
instalments on 9 March and 9 September in each
year, commencing 9 March 2004.
Conversion Rights: Subject to as otherwise provided in the Terms and
Conditions, Bondholders have the right at any time
from 20 October 2003 up to the close of business
on the date falling 7 days prior to the Final
Maturity Date to convert the Bonds into H Shares
(both days inclusive).
Conversion Price: The initial conversion price at which an H Share
will be issued on conversion is, HK$5.558 per H
Share, representing a premium of 30 per cent. of
the closing price of the H Shares on 3 September
2003. The conversion price will be subject to
adjustment as provided in the Terms and
Conditions.
Maturity: Unless previously redeemed, converted or purchased
and cancelled in the circumstances referred to in
the Terms and Conditions, the Bonds will be
redeemed at their principal amount on the Final
Maturity Date.
Redemption at the Option of the Company: On or after 23 September 2006 and prior to 25
August 2008, the Company may redeem the Bonds in
whole but not in part only at their principal
amount, together with interest accrued to the
Redemption Date if (a) the closing price of the H
Shares for each of 20 consecutive trading days,
the last of which occurs not more than 5 days
prior to the date the notice of redemption is
published is at least 130 per cent. of the
Conversion Price then in effect and the closing
price of the H Shares translated into US dollars
at the average prevailing rate for each of 20
consecutive trading days, the last of which occurs
not more than 5 days prior to the date the notice
of redemption is published is at least 130 per
cent. of the Conversion Price then in effect
translated into US dollars at a fixed rate of
HK$7.799 = US$1.00; or (b) at least 90 per cent.
in principal amount of the Bonds has already been
converted, redeemed or purchased and cancelled.
Redemption at the Option of the Bondholders: Bondholders may require the Company to redeem
their Bonds: (a) on 9 September 2006 at their
principal amount; and (b) at any time following a
Relevant Event at their principal amount, together
with accrued interest to the Relevant Event Put
Date.
Tax redemption and Bondholders' Tax Option: In the event the Company becomes obliged to pay
any New Additional Amounts and such New Additional
Amounts cannot be avoided by the use of reasonable
measures, the Company may give notice to redeem
the Bonds at their principal amount together with
interest accrued to the date fixed for redemption.
Upon receipt of such notice, a Bondholder may
elect not to have its Bonds redeemed by the
Company, in which case such holder will not be
entitled to receive payment of any New Additional
Amounts.
Form: The Bonds will be issued in registered form in the
denomination of US$1,000. The Bonds will be
represented by beneficial interest in a Global
Certificate which will be registered in the name
of a nominee of, and shall be deposited on or
about the Closing Date with a common depositary
for Clearstream and Euroclear.
Status: The Bonds will constitute direct, unconditional,
unsecured and unsubordinated obligations of the
Company and will rank pari passu and without any
preference or priority among themselves, and with
all other outstanding direct, unconditional
unsecured and unsubordinated obligations of the
Company, present and future, but in the event of
insolvency of the Company, only to the extent
permitted by mandatory provisions of applicable
law.
Listing and trading of the Bonds: Application has been made to list the Bonds on the
Luxembourg Stock Exchange. Within three months of
such listing, the Company will make an application
to list the Bonds on the Official List of the UK
Listing Authority for such Bonds to be admitted to
trading on the London Stock Exchange's market
for listed securities pursuant to the mutual
recognition procedures of the UK Listing Authority's
Listing Rules. No other application will be
made for the listing of, and permission to deal
in, the Bonds on any other stock exchange.
Listing and trading of the H Shares: The H Shares are listed and traded on the Hong
Kong Stock Exchange and are listed on the Official
List of the UK Listing Authority and traded on the
London Stock Exchange's market for listed
securities. Application will be made to list the
Conversion Shares on the Hong Kong Stock Exchange
and the Official List of the UK Listing Authority
and for such Conversion Shares to be admitted to
trading on the London Stock Exchange's market
for listed securities.
Conversion Shares
For illustrative purposes and assuming a conversion price of HK$5.558 per H
Share (based on, for the purpose of this illustration, a premium of 30 per cent.
to a closing price of the H Shares on 3 September 2003, the aggregate principal
amount of the Bonds of US$153.8 million are convertible into approximately 215.9
million new H Shares representing approximately 4.2 per cent. of the existing
issued share capital of the Company and approximately 4.0 per cent. of the
issued share capital of the Company as enlarged by the issue of the Conversion
Shares.
Following the same assumptions, the following table sets out the shareholding
structure of the Company as at 31 August 2003 and after full conversion of the
Bonds.
Shareholders Class of Shares % of shareholding of % of shareholding of
the existing issued the enlarged issued
share capital of the share capital of the
Company Company upon full
Conversion of the
Bonds*
China Datang Corporation Domestic Shares 35.43% 34%
Beijing International Power Development Domestic Shares 13.01% 12.49%
and Investment Company
Hebei Construction Investment Company Domestic Shares 13.01% 12.49%
Tianjin Jinneng Investment Company Domestic Shares 10.84% 10.41%
Holders of H Shares H Shares 27.71% 30.61%
* Assuming that there are no other changes to their existing
shareholding other than as a result of the full conversion of the Bonds.
The Conversion Shares will be issued pursuant to the special resolutions of the
holders of the Shares of the Company, the holders of the Domestic Shares of the
Company and the holders of the H Shares of the Company, in each case passed on
10 May 2002 and 10 July 2003.
Use of Proceeds
The net proceeds of the proposed issue of the Bonds are estimated to be
approximately US$149 million, of which the Company intends to use approximately
US$100 million to finance part of its foreign exchange requirements for
purchasing essential imported equipment necessary for use in its power plants
and the balance will be used to refinance part of its current foreign exchange
borrowings.
Due to the price sensitive nature of the transactions contemplated in this
announcement. Shareholders and investors are advised to exercise caution when
dealing in the securities of the Company.
Definitions
In this announcement, the following expressions have the following meanings,
unless the context otherwise requires:
'Additional Amounts' any taxes, duties, assessments or governmental
charges other than those required by law payable
by the Company by way of principal and interest
(as relevant) as will result in the receipt by the
Bondholders of the amounts which would have been
receivable in the absence of any such withholding
or deduction
'Beijing Datang Group' the Company and its consolidated subsidiaries
'BIPDIC' (Beijing International Power Development
Investment Company)
'Bondholders' the holders of the Bonds
'Bonds' up to US$153.8 million in principal amount of
bonds proposed to be issued by the Company which
are convertible into new H Shares
'CDT' (China Datang Corporation)
'Clearstream' Clearstream Banking, sociIfetIfe anonyme or any
successor securities clearing agency
'Closing Date' 9 September 2003 or such other date as may be
agreed by the Company and UBS Investment Bank
'Company' (Beijing Datang Power Generation Company Limited),
incorporated as a Sino-foreign joint stock limited
company in the PRC with limited liability
'Conversion Shares' the H Shares to be issued upon conversion of the
Bonds
'Directors' the directors of the Company
'Domestic Shares' Renminbi denominated ordinary shares with nominal
value of RMB1.00 each in the registered capital of
the Company which are currently held by CDT,
BIPDIC, HCIC and TJIC in the proportion of 35.43
per cent., 13.01 per cent., 13.01 per cent. and
10.84 per cent. respectively
'Euroclear' Euroclear Bank S.A./N.V. as operator of the
Euroclear System or any successor securities
clearing agency
'Final Maturity Date' the date falling on the fifth anniversary of the
Closing Date
'Global Certificate' a permanent global certificate in registered form
'H Shares' Renminbi denominated overseas listed foreign
shares issued by the Company with a nominal value
of RMB1.00 each in the registered capital of the
Company, which are subscribed for and traded in
Hong Kong dollars and for which listing and
dealing are permitted on the Hong Kong Stock
Exchange and on the Official List of the UK
Listing Authority and admitted to trading on the
London Stock Exchange's market for listed
securities
'HCIC' (Hebei Construction Investment Company)
'HK$' or 'Hong Kong dollars' the lawful currency of the Hong Kong Special
Administrative Region of the People's Republic
of China
'Hong Kong Stock Exchange' The Stock Exchange of Hong Kong Limited
'Listing Rules' the Rules Governing the Listing of Securities on
the Hong Kong Stock Exchange
'London Stock Exchange' London Stock Exchange plc
'Luxembourg Stock Exchange' the Luxembourg Stock Exchange
'Majority Shareholder' such person(s) for the time being holding or
controlling, directly or indirectly, in aggregate
at least 30 per cent. of the voting rights of the
Company
'Managers' UBS Investment Bank and the other managers named
in the Subscription Agreement, who are not
connected to the directors, chief executive or
substantial shareholders of the Company or its
subsidiaries or associates of any of them
'New Additional Amounts' Additional Amounts which the Company has or will
become obliged to pay exceeding the Additional
Amounts payable by the Company as a result of a
withholding for or a deduction of any taxes,
duties, assessments or governmental charges for
payments in respect of the Bonds pursuant to the
laws and regulations of the PRC or Hong Kong as of
the Pricing Date as a result of any change in, or
amendment to, the laws or regulations of the PRC
or Hong Kong, or any change in the application or
official interpretation of such laws or
regulations, which change or amendment becomes
effective on or after the Pricing Date
'PRC' the People's Republic of China
'Pricing Date' 3 September 2003
'Redemption Date' the date specified in the Redemption Notice
'Redemption Notice' the notice given by the Company to the Trustee and
the Bondholders which shall not be given on a date
less than 30 days nor more than 60 days of the
date on which the Company intends to redeem the
Bonds
'Relevant Event' either:
(a) a Majority Shareholder of the Company
transfers, sells, assigns, conveys or otherwise
disposes of ('Transfer') all or part of its
voting rights in the Company to another person(s)
and the credit rating of the Company is downgraded
by S&P as a result of such Transfer; or
(b) the Company consolidates or amalgamates
with, or merges with or into another entity and
the credit rating of the resulting surviving or
transferee entity is downgraded by S&P as a result
of such consolidation, amalgamation or merger; or
(c) the Company or any of its Relevant
Subsidiaries transfers or disposes of all or a
substantial part of its assets to another entity
which is not a member of the Beijing Datang Group
other than as a result of a consolidation,
amalgamation or merger set out in paragraph (b)
above
'Relevant Event Put Date' the fourteenth day after the expiry of a period of
30 days following the occurrence of a Relevant
Event, or, if later, a period of 30 days following
the date upon which notice is given to Bondholders
by the Company of the occurrence of a Relevant
Event
'Relevant Subsidiaries' any subsidiary of the Company, which as at the
date of the Relevant Event, either (a) is
contributing at least 10 per cent. of the gross
revenue of the Company; or (b) has assets whose
value is at least 10 per cent. of the value of the
total assets of the Company
'RMB' or 'Renminbi' Renminbi Yuan, the lawful currency of the PRC
'S&P' Standard & Poor's Rating Services, a division
of the McGraw-Hill Group of Companies, Inc.
'Securities Act' the United States Securities Act of 1933 (as
amended)
'Shares' the H Shares and the Domestic Shares
'Subscription Agreement' a conditional subscription agreement entered into
between the Company and the Managers in relation
to the subscription of the Bonds with an aggregate
principal amount of US$153.8 million
'Terms and Conditions' the terms and conditions of the Bonds to be
scheduled to the Trust Deed
'TJIC' (Tianjin Jinneng Investment Company)
'Trust Deed' the trust deed to be entered into between the
Company and the Trustee
'Trustee' J.P. Morgan Corporate Trustee Services Limited
'UBS Investment Bank' UBS AG
'UK' the United Kingdom of Great Britain and Northern
Ireland
'UK Listing Authority' Financial Services Authority in its capacity as
competent authority under the Financial Services
and Markets Act 2000
'United States' or 'US' United States of America
'US$' or 'US dollars' United States dollars, the lawful currency of the
United States
'voting rights' all the voting rights currently exercisable at a
general meeting of the Company whether or not
attributable to the registered capital of the
Company
By order of the Board
Yang Hongming
Executive Director and Company Secretary
3 September 2003, Beijing
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