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in reliance upon the whole or any part of the contents of this announcement.
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 00144)
CONNECTED TRANSACTION
FORMATION OF JOINT VENTURES IN CONNECTION WITH
INVESTMENT IN THE DJIBOUTI INTERNATIONAL FREE TRADE ZONE
SUMMARY
The Board is pleased to announce that on 16 January 2017, the Company entered
into (i) the Asset Company Shareholders Agreement with, inter alia, CMID and
Cheer Signal in relation to the Asset Joint Venture and (ii) the O&M Shareholders
Agreement with, inter alia, CMID, Cheer Signal, PDA and IZP in relation to the
O&M Joint Venture, in each case, in connection with the proposed investment in
the Djibouti International Free Trade Zone.
Each of the Company, CMID and Cheer Signal shall have a 40%, 40% and 20%
interest in the the Asset Joint Venture, respectively and each of the Company,
CMID, Cheer Signal, PDA and IZP shall have a 26.7%, 26.7%, 13.3%, 25% and
8.3% interest in the O&M Joint Venture, respectively.
Each of CMID and Cheer Signal is an associate of CMG, the ultimate holding
company of the Company, and therefore connected persons of the Company.
Accordingly, the Asset Company Shareholders Agreement and the O&M
Shareholders Agreement constitute connected transactions of the Company under
the Listing Rules. Furthermore, as the Asset Company Shareholders Agreement and
the O&M Shareholders Agreement are inter-related, the two agreements will be
aggregated and treated as if they were one transaction.
Since the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in
respect of aggregate commitment by the Company under the Asset Company
Shareholders Agreement and the O&M Shareholders Agreement exceed 0.1% but
are below 5%, the transactions are therefore exempt from the circular (including
independent financial advice) and shareholders’ approval requirements under
Chapter 14A of the Listing Rules.
— 1 —
BACKGROUND
The Board is pleased to announce that on 16 January 2017, the Company entered into
the Asset Company Shareholders Agreement and the O&M Shareholders Agreement
in relation to the Asset Joint Venture and O&M Joint Venture in connection with the
proposed investment in the new Djibouti International Free Trade Zone.
1
THE ASSET COMPANY SHAREHOLDERS AGREEMENT
The key terms of the Asset Company Shareholders Agreement are set out below:
Date:
16 January 2017
Parties:
(1)
(2)
(3)
(4)
Purpose and scope of
business:
The Asset Joint Venture is a company incorporated in
Hong Kong and is formed as a platform for the parties
to co-invest into the Djibouti Asset Company.
The Company
CMID
Cheer Signal
Asset Joint Venture
The Djibouti Asset Company shall be established for
the purpose of investing in and financing the
development rights to develop commercial and
infrastructure
projects
within
the
Djibouti
International Free Trade Zone. The Asset Joint
Venture will have a 30% interest in the Djibouti Asset
Company and Great Horn and PDA shall have a 60%
and 10% interest in the Djibouti Asset Company,
respectively.
Shareholding:
The share capital of the Asset Joint Venture shall
initially comprise of 10,000 shares of which, each of
the Company, CMID and Cheer Signal shall hold
4,000, 4,000 and 2,000 shares, respectively,
representing 40%, 40% and 20% of the total number
of issued shares of the Asset Joint Venture,
respectively. The respective amounts to be paid by
each of the Company, CMID and Cheer Signal for the
subscription of the shares of the Asset Joint Venture
are
HKD4,000,
HKD4,000
and
HKD2,000,
respectively.
— 2 —
Initial investments in
Djibouti Asset
Company:
The parties agreed that the initial investments to be
made by the Asset Joint Venture to the Djibouti Asset
Company shall be USD30,000,000 (equivalent to
approximately HKD234,000,000) and shall be borne
by the shareholders of the Asset Joint Venture in
accordance with their respective shareholding in the
Asset Joint Venture. Accordingly, each of the
Company, CMID and Cheer Signal has agreed to
contribute
USD12,000,000
(equivalent
to
approximately HKD93,600,000), USD12,000,000
(equivalent to approximately HKD93,600,000) and
USD6,000,000
(equivalent
to
approximately
HKD46,800,000) towards such initial investment.
Board of directors:
The board of directors of the Asset Joint Venture will
comprise four directors. Each of the Company, CMID
and Cheer Signal is entitled to appoint one director
and the remaining director shall be appointed jointly
by the Company and CMID. The quorum for any
board meeting shall be three directors and any
resolutions to be passed by the board of directors of
the Asset Joint Venture shall be passed by a majority
of directors present.
Shareholders voting
and reserved matters:
The following matters shall require the approval of all
the directors and by shareholders holding at least 85%
of the total number of issued shares of the Asset Joint
Venture: (i) amendment to the business scope of the
Asset Joint Venture; (ii) fundamental change to the
business plan; (iii) winding up of the Asset Joint
Venture; (iv) disposal of all or substantially all of the
assets of the Asset Joint Venture; and (v) agreement or
arrangement between the Asset Joint Venture on the
one hand, and its shareholders, directors or managers
on the other hand.
Appointment of
directors to the
Djibouti Asset
Company:
For so long as the Asset Joint Venture is entitled to
nominate three directors to the board of directors of
the Djibouti Asset Company, the parties agreed that
each of the Company and CMID shall be entitled to
nominate one director, and the remaining director
shall be appointed jointly by the Company and CMID.
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As at the date of this announcement, the Asset Joint Venture has not yet
commenced any business operations.
2
THE O&M SHAREHOLDERS AGREEMENT
The key terms of the O&M Shareholders Agreement are set out below:
Date:
16 January 2017
Parties:
(1)
(2)
(3)
(4)
(5)
(6)
Purpose and scope of
business:
The O&M Joint Venture is a company incorporated in
Hong Kong and is formed as a platform for the parties
to co-invest into the Djibouti O&M Company.
The Company
CMID
Cheer Signal
PDA
IZP
O&M Joint Venture
The Djibouti O&M Company shall be established for
the purpose of operating and managing the Djibouti
International Free Trade Zone and certain commercial
and infrastructure projects within the Djibouti
International Free Trade Zone. The O&M Joint
Venture will have a 60% interest in the Djibouti O&M
Company and the remaining 40% interest shall be
held by Great Horn.
Shareholding:
The share capital of the O&M Joint Venture shall
initially comprise of 1,200,000 shares of which, each
of the Company, CMID, Cheer Signal, PDA and IZP
shall hold 320,400, 320,400, 159,600, 300,000 and
99,600 shares, respectively, representing 26.7%,
26.7%, 13.3%, 25% and 8.3% of the total number of
issued shares of the O&M Joint Venture, respectively.
The respective amounts that have been paid by each
of the Company, CMID, Cheer Signal, PDA and IZP
for the subscription of the shares in the O&M Joint
Venture
are
USD320,400
(equivalent
to
approximately
HKD2,499,120),
USD320,400
(equivalent to approximately HKD2,499,120),
USD159,600
(equivalent
to
approximately
HKD1,244,880),
USD300,000
(equivalent
to
approximately HKD2,340,000) and USD99,600,
(equivalent
to
approximately
HKD776,880)
respectively.
— 4 —
Board of directors:
The board of directors of the O&M Joint Venture will
comprise seven directors. Each of CMID and PDA is
entitled to appoint two directors and each of the
Company, Cheer Signal and IZP is entitled to appoint
one director. Resolutions to be passed by the board of
directors of the O&M Joint Venture shall be passed by
a majority of directors present.
Appointment of
directors to the
Djibouti O&M
Company:
For so long as the O&M Joint Venture is entitled to
nominate five directors to the board of directors of
the Djibouti O&M Company, the parties agreed that
CMID shall be entitled to nominate two directors and
each of the Company, Cheer Signal and PDA shall be
entitled to nominate one director.
As at the date of this announcement, the O&M Joint Venture has not yet commenced
any business operations.
REASONS FOR THE TRANSACTION
The core business of the Group includes port and port-related business. The Group
has, in recent years, been actively exploring and, as and when deemed appropriate,
capturing available opportunities overseas as one of the means to effectively add new
growth drivers to its existing and sustainably growing ports business. In particular,
the Group has over the years invested into the Port of Djibouti (including its
acquisition of a 23.5% interest in Port De Djibouti S.A. in 2012), which lies
strategically at the mouth of Red Sea thus making it an ideal transshipment hub for
maritime cargoes passing in and out of East Africa, offers long-term growth potential
as the economic momentum in the proximity intensifies over time. Complementing
the Group’s investment in Port De Djibouti, the Company, Great Horn, DPFZA,
CMID, CMSIZ, PDA and IZP entered into the Investment Agreement on 15
November 2016 in relation to the proposed investment and development of the
Djibouti International Free Trade Zone. The Investment Agreement sets out the
framework in accordance with which the parties are to cooperate and to set up the
relevant vehicles to jointly implement the design, phased development, construction
and operation of the Djibouti International Free Trade Zone and the establishment of
the various joint venture companies, namely the Asset Joint Venture, the O&M Joint
Venture, the Djibouti Asset Company and the Djibouti O&M Company is one of the
conditions to the Investment Agreement and will be conducted in accordance with the
principles set out in the Investment Agreement. Furthermore, under the Investment
Agreement and subject to certain retention of powers by DPFZA, DPFZA shall grant,
and shall procure the Djibouti government to grant and co-ordinate with the
competent government authorities to grant the Djibouti Asset Company, among
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others, the following rights in relation to the Djibouti International Free Trade Zone:
land use rights, development rights, exclusive rights to plan, zone, operate, manage
and promote the Djibouti International Free Trade Zone. To safeguard the interest of
the parties, the Investment Agreement also provides for the right of a party (other
than DPFZA and Great Horn) to exit from their investment in the event of a default
by DPFZA and also the right of DPFZA to buy out a defaulting party’s interest, in
both cases, at a fair market value to be determined by an independent third party. The
investment and development of the Djibouti International Free Trade Zone will
largely promote economic development of Djibouti and is a replication of the China
Merchants group’s “Port-Zone-City” development model which has demonstrated
huge success in Shekou. Djibouti’s ports development (including Port De Djibouti
S.A.) will also benefit from such a project.
Taking into account of the above, the Directors, including the independent
non-executive Directors, are of the view that the Asset Company Shareholders
Agreement and the O&M Shareholders Agreement have been entered into on normal
commercial terms and in the ordinary and usual course of business of the Group and
that the terms of the Asset Company Shareholders Agreement and the O&M
Shareholders Agreement are fair and reasonable and in the interests of the Company
and its shareholders as a whole.
None of the Directors have a material interest in the Asset Company Shareholders
Agreement and the O&M Shareholders Agreement, nor are they required to abstain
from voting on the relevant board resolutions.
GENERAL INFORMATION
Cheer Signal is a company incorporated in Hong Kong and its principal activities are
construction, development and operation of communities, industrial zone and cruise
industries. Cheer Signal is a wholly-owned subsidiary of CMSIZ.
CMID is a company incorporated in the British Virgin Islands and a subsidiary of
CMG, the ultimate holding company of the Company. CMID’s principal activities are
management of CMG’s certain assets and international investment.
CMSIZ is a company incorporated in the PRC and its principal activities are the
development and operation in Shekou Industrial Zone and property development and
investment in Shekou, Shenzhen, the PRC. It is an indirect subsidiary of CMG.
— 6 —
Great Horn is a company incorporated in Djibouti and is a subsidiary of DPFZA.
Great Horn’s principal activities are investments in Djibouti and holding the related
interests.
IZP is a company established in the PRC and ultimately controlled by its legal
representative Mr. Luo Feng. Its principal activities are research and development of
computer hardware and software, consultancy services and trade.
PDA is a company established in the PRC and wholly-owned by the Dalian Municipal
Government. Its principal activities are operation, construction, management,
investment of port and other port related business. PDA is the controlling
shareholders of Dalian Port (PDA) Company Limited, a joint stock limited company
incorporated in the PRC with limited liability, whose H shares and A shares are listed
on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively,
and in which the Company has an approximately 21.05% interest.
To the best of the Directors’ knowledge, information and belief having made all
enquiries, save as disclosed above, each of Great Horn, IZP and PDA and each of
their respective ultimate beneficial owners are third parties independent of the
Company and the connected persons of the Company.
LISTING RULES IMPLICATIONS
Each of CMID and Cheer Signal is an associate of CMG, the ultimate holding
company of the Company, and therefore connected persons of the Company.
Accordingly, the Asset Company Shareholders Agreement and the O&M
Shareholders Agreement constitute connected transactions of the Company under the
Listing Rules. Furthermore, as the Asset Company Shareholders Agreement and the
O&M Shareholders Agreement are inter-related, the two agreements will be
aggregated and treated as if they were one transaction.
Since the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in
respect of aggregate commitment by the Company under the Asset Company
Shareholders Agreement and the O&M Shareholders Agreement exceed 0.1% but are
below 5%, the transactions are therefore exempt from the circular (including
independent financial advice) and shareholders’ approval requirements under Chapter
14A of the Listing Rules.
— 7 —
DEFINITIONS
In this announcement, unless the context otherwise requires, the following
expressions shall have the following meanings:
“Asset Company
Shareholders
Agreement”
the shareholders agreement entered into among, inter
alia, the Company, CMID and Cheer Signal on 16
January 2017 in relation to the Asset Joint Venture
“Asset Joint Venture”
Lac Assal Investment Holding Company Limited (阿薩
勒湖投資控股有限公司), a company incorporated in
Hong Kong and formed by the parties to the Asset
Company Shareholders Agreement for the purpose of
investment into the Djibouti Asset Company
“associates”
has the meaning ascribed to this term under the Listing
Rules
“Board”
the board of Directors of the Company
“Cheer Signal”
Cheer Signal Investment Limited (喜銓投資有限公司),
a company incorporated in Hong Kong and a subsidiary
of CMG
“CMG”
China Merchants Group Limited (招商局集團有限公
司), a company incorporated in the PRC and the
ultimate holding company of the Company
“CMID”
China Merchants Investment Development Company
Limited
(招商局投資發展有限公司),
a
company
incorporated in the British Virgin Islands and a
subsidiary of CMG
“CMSIZ”
China Merchants Shekou Industrial Zone Company
Limited (招商局蛇口工業區有限公司), a company
incorporated in the PRC and an indirect subsidiary of
CMG, the ultimate holding company of the Company.
“Company”
China Merchants Port Holdings Company Limited (招商
局港口控股有限公司), a company incorporated in Hong
Kong and whose shares are listed on the Main Board of
The Stock Exchange of Hong Kong Limited
“connected person”
has the meaning ascribed to this term under Rule
14A.06 of the Listing Rules
— 8 —
“Directors”
the directors of the Company
“Djibouti Asset
Company”
Khor Ambado Free Zone Company FZCO, a free zone
limited liability company incorporated in Djibouti
established for the purpose of investing in and financing
the development rights to develop commercial and
infrastructure projects within the Djibouti International
Free Trade Zone
“Djibouti O&M
Company”
International Djibouti Industrial Parks Operation
FZCO, a free zone limited liability company
incorporated in Djibouti established for the purpose of
operation of the Djibouti International Free Trade Zone
and developing certain commercial and infrastructure
projects within the Djibouti International Free Trade
Zone
“DPFZA”
Djibouti Ports & Free Zones Authority, the sole
government authority in charge of the administration
and the control of all the free zones and ports in
Djibouti
“Great Horn”
Great Horn Investment Holdings SAS, a company
incorporated in Djibouti and a subsidiary of DPFZA
“Group”
the Company and its subsidiaries
“HKD”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the
PRC
“Investment
Agreement”
the investment agreement entered into among the
Company, DPFZA, Great Horn, CMID, CMSIZ, PDA
and IZP in respect of the Djibouti International Free
Trade Zone
“IZP”
IZP (China) Network Technologies Co., Ltd. (億贊普(中
國)網絡技術有限公司), a company incorporated in the
PRC
“Listing Rules”
the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited
— 9 —
“O&M Joint Venture”
East Aden Holding Company Limited (東方亞丁投資控
股有限公司), a company incorporated in Hong Kong
and formed by the parties to the O&M Shareholders
Agreement for the purpose of investment into the
Djibouti O&M Company
“O&M Shareholders
Agreement”
the shareholders agreement entered into among, inter
alia, the Company, CMID, Cheer Signal PDA and IZP
on 16 January 2017 in relation to the O&M Joint
Venture
“PDA”
Port of Dalian Group Co., Ltd. (大連港集團有限公司),
also known as Dalian Port Corporation Limited, a
limited liability company established in the PRC and
wholly-owned by Dalian Municipal Government, and
the controlling shareholder of Dalian Port
“PRC”
the People’s Republic of China
“subsidiary (ies)”
has the meaning ascribed to it under the Listing Rules
“USD”
United States dollars, the lawful currency of the United
States of America
“%”
per cent.
For reference only, an exchange rate of USD1.00 to HKD7.80 has been used for the
conversion of United States dollars into Hong Kong dollars in this announcement.
By Order of the Board
China Merchants Port Holdings Company Limited
Li Xiaopeng
Chairman
Hong Kong, 16 January 2017
As at the date of this announcement, the Board comprises Mr. Li Xiaopeng, Mr. Hu Jianhua, Mr. Wang
Hong, Mr. Hua Li, Mr. Bai Jingtao, Mr. Wang Zhixian, Mr. Zheng Shaoping and Ms. Shi Wei as
executive directors; and Mr. Kut Ying Hay, Mr. Lee Yip Wah Peter, Mr. Li Kwok Heem John, Mr. Li Ka
Fai David and Mr. Bong Shu Ying Francis as independent non-executive directors.
— 10 —