CONTINUING CONNECTED TRANSACTIONS

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liabilities whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (incorporated in the People s Republic of China with limited liability) (Stock code: 598) CONTINUING CONNECTED TRANSACTIONS Further to the Company s voluntary announcement dated 24 February 2009, the Company announces that it has entered into a master services agreement with each of the Connected Joint Venture Partners. The Company proposes to seek Independent Shareholders approval of the Non-exempt Continuing Connected Transactions subject to the New Caps in relation to the Non-Exempt Continuing Connected Transactions. Sinotrans Group Company, the controlling shareholder of the Company owning approximately 57.93% interest in the Company at the date of this announcement and which is not required to abstain from voting at the general meeting of the Company as it is independent of and not an associate of the relevant connected persons identified in this announcement has confirmed that if a vote were required for the Non-exempt Continuing Connected Transactions under Chapter 14A of the Listing Rules, it would vote in favour of any resolution that may be put to the Shareholders to approve the Non-exempt Continuing Connected Transactions on the basis disclosed below up to the New Caps. A circular containing, among other things, details of the Non-exempt Continuing Connected Transactions, the advice of the IFA and the recommendations of the Independent Board Committee, together with a notice convening the EGM of the Company to approve the Non- Exempt Continuing Connected Transactions subject to the New Caps will be despatched to the Shareholders as soon as practicable. Reference is made to the Company s voluntary announcement dated 24 February 2009 in relation to certain continuing connected transactions of the Company. 1

2 I. NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS WHICH REQUIRE REPORTING, ANNOUNCEMENT AND INDEPENDENT SHAREHOLDERS APPROVAL The Group has business relationships with certain joint venture partners of the Group and its associates which constitute continuing connected transactions. The Group intends to continue its business relationships with 日本通運株式會社 (Nippon Express Co., Ltd.*), 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*), Korean Airlines and 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.*). Each of the above Connected Joint Venture Partners are connected persons of the Company solely by reason that each of them is a substantial shareholder of certain non-wholly owned subsidiaries of the Company, further particulars relating to which are included in the notes to the table below. To the best of the Directors knowledge, information and belief having made all reasonable enquiries, apart from Korean Airlines approximately 6.04% interest in 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*) disclosed in 韓進海運有限公司 s (Hanjin Shipping Co. Ltd.*) 2007 annual report, none of the Connected Joint Venture Partners are connected with each other. Provision and receipt of transportation To comply with the requirements of the Listing Rules, the Company has on 9 April 2009 entered into a master services agreement with each of the following Connected Joint Venture Partners, namely, (i) 日本通運株式會社 (Nippon Express Co., Ltd.*); (ii) 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*); (iii) Korean Airlines; and (iv) 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.*), for the provision and receipt of transportation (including freight forwarding services, shipping agency, storage and terminal services). The term of the master services agreement with each of the above Connected Joint Venture Partners is for a term of 3 years commencing on 1 January 2009 and ending on 31 December The master services agreements provide that services must be charged at the market price charged by independent third parties on normal commercial terms. The Directors (excluding the independent non-executive Directors whose views are to be included in the shareholders circular to be issued by the Company as mentioned in this announcement) are of the view that the terms of the master services agreements signed by the relevant Connected Joint Venture Partners are fair and reasonable so far as the Shareholders are concerned and in the interest of the Company and its Shareholders as a whole. 2

3 The table below sets out the turnover/expenses of the Group attributable to the transactions with each of the following Connected Joint Venture Partners and its associates during 2006, 2007 and 2008 and the maximum cap for the value of transportation and logistic services to be provided and received by the Group respectively (in respect of which Independent Shareholders approval is proposed to be sought at the EGM) with each of the following Connected Joint Venture Partners and its associates for the years 2009, 2010 and 2011: Amount (RMB) Cap 2010 Cap 2011 Cap (Note 1) (Note 1) (Note 1) 日本通運株式會社 (Nippon Express Co., Ltd.*) (Notes 2, 3, 7 & 9) Provision of transportation Receipt of transportation 86,490, ,580,000 74,690, ,000, ,000, ,000,000 23,130,000 35,550,000 40,360,000 87,000, ,000, ,000,000 Total 109,620, ,130, ,050, ,000, ,000, ,000,000 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*) (Notes 2, 4, 7 & 8) Provision of transportation Receipt of transportation 37,940,000 21,300,000 18,860,000 30,000,000 40,000,000 50,000, ,410, ,930, ,250,000 1,710,000,000 2,220,000,000 2,880,000,000 Total 361,350, ,230, ,110,000 1,740,000,000 2,260,000,000 2,930,000,000 Korean Airlines (Notes 2, 5, 7&8) Provision of transportation Receipt of transportation 20,000 20,000 13,000 40,000 60,000 90,000 13,730,000 8,470, ,370, ,000, ,060,000 1,370,000,000 Total 13,750,000 8,490, ,383, ,040, ,120,000 1,370,090,000 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd*) (Notes 2, 6, 7&8) Provision of transportation Receipt of transportation 17,360,000 25,580,000 17,350,000 34,000,000 45,000,000 58,000, ,000, ,840, ,460, ,000, ,000, ,000,000 Total 128,360, ,420, ,810, ,000, ,000, ,000,000 Notes: 1. These figures represent the estimated maximum cap in respect of transactions of the relevant type which the Group will undertake during the relevant financial years in respect of which independent shareholders approval is proposed to be sought at the EGM. The actual amount of transaction may be different. Taking into account the bases for the determination of the caps as detailed below, the Board (other than members of the Independent Board Committee whose views will be included in the shareholders circular to be issued by the Company as mentioned in this announcement) considers that the New Caps set out above are fair and reasonable. 2. The relevant estimates have been determined by reference to (i) the historical value of the transactions with the Connected Joint Venture Partners and their associates for the years 2006, 2007 and 2008; and (ii) the plans and requirements of the Group, after allowing a buffer for the inherent volatility of business in the transportation industry and perceived increase in demand for the Group s services generally with the continued economic growth of the PRC and the implementation of the Group s strategy to expand its domestic operations and overseas network and, as customers seek the services of the more established and financially sound transportation providers such as the Group to manage perceived risks associated with the current global economic downturn. 3

4 3. 日本通運株式會社 (Nippon Express Co., Ltd.*) is a substantial shareholder of a non-wholly owned subsidiary of the Company, owning 49% interest in such subsidiary. Based on the information provided to the Company by 日本通運株式會社 (Nippon Express Co., Ltd.), it is engaged in the business of provision of transportation and logistic services. 4. 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*) is a substantial shareholder of a subsidiary of the Company, owning 49% interest in such subsidiary. Based on the information provided to the Company by 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*), it is engaged in the business of provision of transportation and logistic services. 5. Korean Airlines is a substantial shareholder of a subsidiary of the Company, owning 25% interest in such subsidiary. Based on the information provided to the Company by Korean Airlines, it is engaged in the business of international air cargo transportation, aircraft and related machinery repair and aircraft rental services. 6. 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.*) is a substantial shareholder of a subsidiary of the Company, owning 49% interest in such subsidiary. Based on the information provided to the Company by 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.*), it is engaged in the business of provision of transportation and logistic services. 7. Payment for the provision and receipt of the above services will be made by cash in accordance with the standard terms of sale or provision of services of the provider from time to time. 8. 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*), Korean Airlines and 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.*) which were previously not connected persons of the Company became connected persons of the Company on 20 June 2005, 3 December 2007 and 16 January 2004, respectively as a result of forming new joint ventures with subsidiaries of the Company and thereby becoming a substantial shareholder of such joint venture (which is a subsidiary of the Company). Prior to the date of this announcement, these continuing connected transactions have only been announced in the Company s voluntary announcement dated 24 February Before becoming connected persons of the Company, these entities and their associates have been conducting ordinary and usual course of business transactions with members of the Group. 9. The continuing connected transactions with 日本通運株式會社 (Nippon Express Co., Ltd.*) for the three years ended 31 December 2008 were the subject of the Company s announcements dated 13 June 2006 and 27 March The relevant annual caps as disclosed in the Company s announcement dated 13 June 2006 were revised pursuant to the Company s announcement dated 27 March 2007, and which are set out as follows: Amount (RMB) Revised annual cap in respect of provision of transportation 102,000, ,000, ,500,000 Revised annual cap for receipt of transportation 25,500,000 38,300,000 57,400,000 4

5 As the percentage ratios of the New Caps in respect of the Non-exempt Continuing Connected Transactions with each of the above Connected Joint Venture Partners and its associate set out in the above table exceeds 2.5% on an annual basis, the above Nonexempt Continuing Connected Transactions and the relevant New Caps are in accordance with Chapter 14A of the Listing Rules, subject to the reporting, announcement and Independent Shareholders approval requirements under the Listing Rules. Independent Shareholders approvals are proposed to be sought in respect of the above Non-exempt Continuing Connected Transactions. Receipt of aircraft maintenance and repair services To comply with the requirements of the Listing Rules, the Company has on 9 April 2009 entered into a master services agreement with Korean Airlines for the receipt of aircraft maintenance and repair services. The master services agreement provides that services offered by Korean Airlines and its associates to members of the Group must be charged at the market price charged by the independent third parties on normal commercial terms (in the same region). The term of such agreement is for a term of 3 years commencing on 1 January 2009 and ending on 31 December The Directors (excluding the independent non-executive Directors whose views are to be included in the shareholders circular to be issued by the Company as mentioned in this announcement) are of the view that the terms of the master services agreement signed with Korean Airlines as described above are fair and reasonable so far as the Shareholders are concerned and in the interest of the Company and its Shareholders as a whole. The Group received aircraft maintenance and repair services from Korean Airlines for the second half of The table below sets out the turnover/expenses of the Group attributable to the transaction with Korean Airlines and its associates during 2008 and the maximum cap for the value of aircraft maintenance and repair services to be received by the Group with Korean Airlines and its associates for the years 2009, 2010 and 2011: Amount (US$) Cap 2010 Cap 2011 Cap (Note 1) (Note 1) (Note 1) Korean Airlines (Notes 2, 3 & 4) Receipt of aircraft maintenance and repair services 680,000 15,500,000 22,250,000 23,050,000 Notes: 1. These figures represent the estimated maximum cap in respect of transaction of the relevant type which the Group will undertake during the relevant financial years in respect of which independent shareholders approval is proposed to be sought at the EGM. The actual amount of transaction may be different. Taking into account the bases for the determination of the caps as detailed below, the Board (other than members of the Independent Board Committee whose views will be included in the shareholders circular to be issued by the Company as mentioned in this announcement) considers that the New Caps set out above are fair and reasonable. 2. The relevant estimates have been determined by reference to the prevailing market prices of the maintenance and repairing services after arm s length negotiation with Korean Airlines and its associates. 5

6 3. Korean Airlines is a substantial shareholder of a subsidiary of the Company, owning 25% interest in such subsidiary. Based on the information provided to the Company by Korean Airlines, it is engaged in the business of international air cargo transportation, aircraft and related machinery repair and aircraft rental services. Korean Airlines which was previously not a connected person of the Company became a connected person of the Company as a result of forming joint ventures with subsidiaries of the Company and thereby becoming a substantial shareholder of such joint venture (which is a subsidiary of the Company). Before becoming a connected person of the Company, Korean Airlines and its associates have been conducting ordinary and usual course of business transactions with members of the Group. 4. Payment for the provision and receipt of the above services will be made by cash in accordance with the standard terms of sale or provision of services of the provider from time to time. As the percentage ratios of the New Caps in respect of the Non-exempt Continuing Connected Transaction with Korean Airlines and its associates set out in the table above exceed 2.5% on an annual basis, the above Non-exempt Continuing Connected Transaction and the relevant New Caps are in accordance with Chapter 14A of the Listing Rules, subject to the reporting, announcement and independent shareholders approval requirements under the Listing Rules. Independent Shareholders approval are proposed to be sought in respect of the above Non-exempt Continuing Connected Transaction. II. REASONS AND BENEFITS FOR THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS The Group is principally engaged in the business of freight forwarding services, express services, shipping agency services, storage and terminal services, marine transportation and trucking services. Certain Non-exempt Continuing Connected Transactions have been taking place since the Company became listed on the Stock Exchange in the year 2003 and in many of the cases described above, before the relevant Connected Joint Venture Partners became a connected person of the Company. The continuation of these Non-exempt Continuing Connected Transactions is essential for the continued operation and growth of the business of the Group. Some of the transportation and logistic services required by the Group will enable the Group to provide end-to-end transportation to customers covering locations in which the Group does not have operations. In addition, the Group is also able to provide services to the Connected Joint Venture Partners who are not in the same line of business or who do not operate in the areas in which the Group has its core operations. Accordingly, the Directors consider that the terms of the Nonexempt Continuing Connected Transactions are fair and reasonable so far as the Shareholders are concerned and in the interest of the Company and its Shareholders as a whole. III. GENERAL An Independent Board Committee comprising Sun Shuyi, Lu Zhengfei and Miao Yuexin, being all independent non-executive Directors, has been constituted to advise the Independent Shareholders as to whether the terms of the Non-exempt Continuing Connected Transactions and the New Caps are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and its Shareholders as a whole. The Independent Board Committee will also advise the 6

7 Independent Shareholders on how to vote at the EGM on the resolution in respect of the Non-exempt Continuing Connected Transactions and New Caps, after taking into account the recommendations of the IFA. The IFA will be appointed by the Company to advise the Independent Board Committee as to whether each of the Non-exempt Continuing Connected Transactions and the New Caps are on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and its shareholders of the Company as a whole. A circular containing, among other things, details of the Non-exempt Continuing Connected Transactions and the New Caps, the advice of the IFA and the recommendations of the Independent Board Committee, together with a notice convening the extraordinary general meeting of the Company to approve the Nonexempt Continuing Connected Transactions subject to the New Caps will be despatched to the Shareholders as soon as practicable. Sinotrans Group Company, the controlling shareholder of the Company owning approximately 57.93% interest in the Company at the date of this announcement and which is not required to abstain from voting at the general meeting of the Company as it is independent of and not an associate of the relevant connected persons identified in this announcement has confirmed that if a vote were required for the Non-exempt Continuing Connected Transactions under Chapter 14A of the Listing Rules, it would vote in favour of any resolution that may be put to the Shareholders to approve the Non-exempt Continuing Connected Transactions on the aforesaid basis up to the New Caps. The votes of Independent Shareholders in the EGM will be taken by poll. 7

8 IV. DEFINITIONS The following defined terms are used in this announcement: associates Board Company Connected Joint Venture Partner(s) Director(s) has the meaning ascribed thereto in the Listing Rules the board of Directors Sinotrans Limited, a company incorporated in the People s Republic of China with limited liability, the shares of which are listed on the Stock Exchange 日本通運株式會社 (Nippon Express Co., Ltd.*), 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*), Korean Airlines and 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.*), each being a joint venture partner of the Group or an associate of a joint venture partner of the Group and a connected person of the Company the director(s) of the Company EGM the extraordinary general meeting of the Company to be convened to approve the Non-exempt Continuing Connected Transactions Group IFA Independent Board Committee Independent Shareholders Korean Airlines Listing Rules the Company and its subsidiaries the independent financial advisor of the Company a board committee comprising of the independent non-executive Directors of the Company to be constituted to make recommendations to the Independent Shareholders in respect of the New Caps Shareholders other than 日本通運株式會社 (Nippon Express Co., Ltd.*), 韓進海運有限公司 (Hanjin Shipping Co. Ltd.*), Korean Airlines and 以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.*) and their respective associates 大韓航空有限公司 (Korean Airlines Co., Ltd.*), a substantial shareholder of an indirect non-wholly owned subsidiary of the Company the Rules Governing the Listing of Securities on the Stock Exchange New Cap(s) the maximum value of Non-exempt Continuing Connected Transactions for each of the three years ending 31 December 2011 as set out in this announcement 8

9 Non-exempt Continuing Connected Transactions percentage ratio(s) PRC RMB Sinotrans Group Company Shareholder(s) Stock Exchange US$ the continuing connected transactions between the Group and the Connected Joint Venture Partners, which are subject to Independent Shareholders approval, further details of which are set out in the section headed Non-exempt Continuing Connected Transaction which Require Reporting, Announcement and Independent Shareholders Approval has the meaning ascribed thereto in Chapter 14 of the Listing Rules the People s Republic of China Renminbi, the lawful currency of the PRC China National Foreign Trade Transportation (Group) Corporation ( 中國對外貿易運輸集團總公司 ), the controlling shareholder of the Company owning approximately 57.93% interest in the Company holder(s) of shares of the Company The Stock Exchange of Hong Kong Limited United States dollars, the lawful currency of the United States of America By order of the Board Sinotrans Limited Gao Wei Company Secretary Beijing, 9 April 2009 As at the date of this announcement, the executive Directors of the Company are Zhao Huxiang, Zhang Jianwei, Tao Suyun and Li Jianzhang; and non-executive Directors of the Company are Yang Yuntao, Liu Jinghua, Jerry Hsu and Peter Landsiedel; and independent non-executive Directors of the Company are Sun Shuyi, Lu Zhengfei and Miao Yuexin. * For identification purposes only 9