DISCLOSEABLE TRANSACTION DISPOSAL OF 55% EQUITY INTEREST IN A SUBSIDIARY

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 liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock Code: 0598) DISCLOSEABLE TRANSACTION DISPOSAL OF 55% EQUITY INTEREST IN A SUBSIDIARY DISPOSAL OF 55% EQUITY INTEREST IN A SUBSIDIARY On 25 October 2018, the Vendors, being two wholly-owned subsidiaries of the Company, entered into the Sale and Purchase Agreement with the Purchasers pursuant to which the Vendors agreed to sell and the Purchasers agreed to buy in aggregate 55% equity interest in CM Loscam, an indirect wholly-owned subsidiary of the Company as of the date of this announcement, for an aggregate consideration of RMB2,475 million. Upon Completion, CM Loscam will cease to be a subsidiary of the Company. On the same day, the Vendors, the Purchasers and CM Loscam also entered into the Shareholders Agreement which sets out, among other things, the rights and obligations of the Vendors and the Purchasers as shareholders of CM Loscam after Completion. LISTING RULES IMPLICATIONS As the highest of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Disposal is more than 5% but less than 25%, the Disposal is subject to the reporting and announcement requirements but exempt from the independent Shareholders approval requirements under Chapter 14 of the Listing Rules. INTRODUCTION CM Loscam is an indirect wholly-owned subsidiary of the Company as of the date of this announcement. On 25 October 2018, the Vendors, being the legal and beneficial owners of CM Loscam and wholly-owned subsidiaries of the Company, entered into the Sale and Purchase Agreement with the Purchasers pursuant to which the Vendors agreed to sell and the Purchasers - 1 -

2 agreed to buy in aggregate 55% equity interest in CM Loscam for an aggregate consideration of RMB2,475 million. On the same day, the Vendors, the Purchasers and CM Loscam also entered into the Shareholders Agreement which sets out, among other things, the rights and obligations of the Vendors and the Purchasers as shareholders of CM Loscam after Completion. Principal terms of the Sale and Purchase Agreement and the Shareholders Agreement are set out below. THE SALE AND PURCHASE AGREEMENT Date: 25 October 2018 Parties: Subject matter: Consideration: (i) China Merchants Shipping, being the legal owner and registered shareholder of CM Loscam and as one of the Vendors; (ii) China Merchants Logistics, being the beneficial owner of CM Loscam through a trust agreement, and as the other Vendor; (iii) CITIC Capital Maneuver, as one of the Purchasers; and (iv) FV Pallet, as the other Purchaser As at the date of the Sale and Purchase Agreement, CM Loscam has one issued share in its share capital. CM Loscam is to issue 99 new shares to China Merchants Shipping and after completion of such issue, the Vendors are to sell 33 shares (representing 33% then issued share capital) to CITIC Capital Maneuver and 22 shares (representing 22% then issued share capital) to FV Pallet. The aggregate consideration for the Sale Shares is RMB2,475 million, RMB1,485 million of which is payable by CITIC Capital Maneuver and RMB990 million by FV Pallet. The consideration is to be payable in US$ on the Completion Date. On the date of the Sale and Purchase Agreement, each of the Purchasers delivered an irrevocable letter of credit issued by a bank in the amount of US$42,803,407 (in the case of CITIC Capital Maneuver) and US$28,535,605 (in the case of FV Pallet) (each, a Letter of Credit ), representing 20% of their respective consideration in RMB. The Vendors agree not to cash or otherwise request for payment under the Letters of Credit before the Completion Date and will terminate the relevant Letter of Credit after the relevant Purchaser has made its payment in full at Completion

3 The Company conducted a tender by invitation process for the disposal of shares in CM Loscam. The consideration represents the price offered by the Purchasers in such tender process, which was also the highest binding bid price received. After taking into account the audited consolidated net asset value of CM Loscam as at 30 June 2018 and key multiples commonly used in assessing the value of a company, including the price earnings ratio and EV/ EBITDA ratio, of a comparable company operating in the same segment that are available in the public domain, the Directors considered the consideration to be fair and reasonable. Conditions precedent: Completion is conditional upon: (a) approval having been obtained from or no objection having been raised by the State Administration for Market Regulation of the PRC ( 中國國家市場監督管理總局 ) in accordance with the PRC Anti-Monopoly Law; (b) the Foreign Investment Review Board of Australia having approved the transaction contemplated under the Sale and Purchase Agreement in accordance with Australia s foreign investment policy; (c) each Purchaser having provided the following to the Vendors (i) evidence of its bank balance showing that sufficient funds are available to satisfy its payment obligation with respect to the consideration under the Sale and Purchase Agreement; and (ii) on the date of the Sale and Purchase Agreement, (x) the Letter of Credit and (y) equity commitment letter(s) signed by certain parties related to such Purchaser which agree to provide or procure the provision of fund to such Purchaser to satisfy its payment obligation with respect to the consideration and the break fee under the Sale and Purchase Agreement; (d) the issue of 99 new shares of CM Loscam to China Merchants Shipping having been completed; (e) the representations and warranties made by each of the Purchasers are true, accurate and not misleading and there is no material breach of certain undertakings made by the Purchasers set out in the Sale and Purchase Agreement; - 3 -

4 (f) the key representations and warranties made by each of the Vendors are true, accurate and not misleading and there is no material breach of certain undertakings made by the Vendors set out in the Sale and Purchase Agreement; and (g) simultaneous completion of the disposal of the 33% and 22% equity interest in CM Loscam to CITIC Capital Maneuver and FV Pallet, respectively. Conditions (a), (b) and (g) can only be waived by the Vendors and the Purchasers, conditions (c) and (e) can only be waived by China Merchants Logistics and conditions (d) and (f) can only be waived by the Purchasers. Completion: Termination: Completion will take place on the 4th Business Day (or another day otherwise agreed by the parties) after the condition (a) under Conditions precedent above has been satisfied (or waived), provided that all the other conditions precedent are also satisfied or waived (as the case may be) on the Completion Date. The Sale and Purchase Agreement may terminate with respect to each party: (a) automatically if Completion does not take place by the Long Stop Date; (b) by all parties in writing at any time before Completion; (c) by the Purchasers, acting collectively, if the Vendors are in material breach of certain key representations and warranties or certain undertakings set out in the Sale and Purchase Agreement or do not fulfill their completion obligations and such breach is not capable of being remedied or is not remedied within the specified period (in any event by the Long Stop Date), or condition (d) under Conditions precedent above is not fulfilled by Completion; or (d) by the Vendors if either Purchaser is in material breach of certain representations and warranties or certain undertakings or do not fulfill their completion obligations set out in the Sale and Purchase Agreement and such breach is not capable of being remedied or is not remedied within the specified period (in any event by the Long Stop Date)

5 Break fee: If the conditions (a) and (b) under Conditions precedent above have been satisfied by the Long Stop Date but: THE SHAREHOLDERS AGREEMENT (a) the Purchasers elect to terminate the Sale and Purchase Agreement in accordance with paragraph (c) under Termination above, the Vendors are required to pay to each Purchaser 2% of their respective consideration under the Sale and Purchase Agreement; or (b) the Vendors elect to terminate the Sale and Purchase Agreement in accordance with paragraph (d) under Termination above, the defaulting Purchaser(s) is(are) required to pay to the Vendors 2% of the consideration payable by it under the Sale and Purchase Agreement. The break fee receivable by one party may be applied to set off the amount payable by that party arising out of the breach of any warranties, undertakings or covenants under the Sale and Purchase Agreement. The substantive terms of the Shareholders Agreement are to take effect upon Completion. Date: 25 October 2018 Parties: Board composition: Veto rights: (i) China Merchants Shipping; (ii) China Merchants Logistics; (iii) CITIC Capital Maneuver; (iv) FV Pallet; and (v) CM Loscam The board of CM Loscam comprises seven directors. China Merchants Shipping is entitled to nominate three directors including the chairman of the board who has the casting vote and each Purchaser is entitled to nominate two directors. Certain corporate actions must be approved by at least one director nominated by China Merchants Shipping, including the provision of certain guarantee or loans; approval of internal management policies; change of auditor, material accounting policies, chief executive officer or chief financial officer; adoption or amendment of senior management incentive plan and certain fund raising activities

6 Approval from the Vendors is required in general meetings for, among other things, change of business scope, constitutional documents and share capital structure; provision of guarantee for the obligations of any third party; merger or spin-off; winding-up or dissolution; material assets acquisition, disposal or restructuring; profit distribution. Restriction on transfer of shares: Unless with prior written approval of the Vendors and subject to the exceptions in respect of transfers to related parties set out in the Shareholders Agreement, neither Purchaser may (either directly or indirectly) transfer, sell, create mortgage, charge, pledge or other encumbrances on or otherwise dispose of any shares held by it to (a) another Purchaser or entities connected with such Purchaser; or (b) (before the discharge in full in accordance with the Shareholders Agreement of any guarantee or entrusted loan provided by the Vendors or parties connected with it to CM Loscam or its subsidiaries) any third party. Any such transfer approved by the Vendors is subject to the right of first offer of the non-transferring shareholders of CM Loscam. Any transfer of shares in CM Loscam by any shareholders is subject to right of first offer and (if such right of first offer is not exercised) the tag along rights of the non-transferring shareholders. Upon expiry of four (4) years after the Completion, any shareholder(s) holding 50% or more of issued shares who wishes to sell their shares to any third party, after going through the right of first offer procedures, has the drag along right to require the nontransferring shareholders to sell their shares to the relevant third party purchaser on the same terms. The selling shareholder who exercises the drag along right is not precluded from selling its shares if the Vendors do not complete the sale of its shares for reasons other than the default of the selling shareholder. If the Vendors remain a shareholder of CM Loscam under this situation, it will no longer have veto rights on material assets disposal/ acquisition/restructuring, profit distribution, fund raising, senior management incentive plan and change of chief executive officer or chief finance officer of CM Loscam as set out above

7 Anti-dilution/pre-emptive right: No new equity securities may be issued by CM Loscam to any third party without first being offered to the existing shareholders in accordance with their respective shareholding percentage immediately prior to such offering, unless otherwise agreed by the existing shareholders or the issue is made pursuant to the employee incentive plan (if any) of CM Loscam. The Purchasers agree to contribute the shares held by them to such employee incentive plan so that the shareholding of the Vendors will not be diluted. INFORMATION ON CM LOSCAM AND FINANCIAL EFFECT OF THE DISPOSAL CM Loscam is principally engaged in the business of leasing, maintenance, cleaning, disposal of residual value, wholesale, commission agency and exports and imports services with respect to pallets, pallet cages/racks, baskets/boxes for fresh or raw goods, containers for less-than-containerload goods and accessory equipment, and the provision of consulting and technical services with respect to the pooling, sharing and returnable packaging solutions of such goods in Australia, New Zealand, Southeast Asia and Greater China regions. As at 30 June 2018, the audited consolidated net asset value of CM Loscam, based on its audited financial statements prepared in accordance with PRC GAAP, is RMB2, million. The following is the audited consolidated financial information on CM Loscam, based on its audited financial statements prepared in accordance with PRC GAAP, for the two financial years ended 31 December 2016 and 2017: For the For the financial financial year ended year ended 31 December 31 December (RMB 000 ) (RMB 000 ) Net profit before tax 269, ,926 Net profit after tax 191, ,567 Upon Completion, CM Loscam will cease to be a subsidiary of the Company. Based on the consideration under the Sale and Purchase Agreement for the 55% equity interest in CM Loscam and the audited consolidated net asset value and exchange differences on translation of financial statements of foreign operations of CM Loscam as at 30 June 2018, the Group is expected to record, after deducting the associated transaction expenses, a gain of approximately RMB915.5 million (excluding the tax effect) from the Disposal. The actual gain on the Disposal may be different from the above estimated figure and will be determined based on the final financial position of CM Loscam and its subsidiaries and the exchange rates of relevant currencies on the Completion Date

8 The consideration to be received by the Group from the Disposal is intended to be utilised towards general working capital and capital expenditures in its core business, such as investment in the construction of logistics infrastructure. INFORMATION ON THE PARTIES AND REASONS FOR AND BENEFITS OF THE DISPOSAL Information on the parties The Group is a leading integrated logistics service provider in China whose principal businesses include freight forwarding, logistics, storage and terminal services, logistics equipment leasing and other services including trucking, shipping and express services. China Merchants Shipping is principally engaged in freight, passenger transport, warehousing, shipping agency and business investment and China Merchants Logistics is principally engaged in contract logistics, trucking, cold chain logistics and international supply chain logistics and equipment leasing. CITIC Capital Maneuver is an investment holding company owned by a fund advised by the private equity arm of CITIC Capital Holdings Limited, which is an alternative investment management and advisory company with assets under management exceeding US$25 billion. The core businesses of CITIC Capital Holdings Limited and its subsidiaries include private equity, real estate, structured investment and finance and asset management. FV Pallet is an investment holding company owned by a fund advised/managed by FountainVest Partners, which is a private equity investment firm with assets under management exceeding US$4.5 billion and primarily invests in consumer retails, media and internet, healthcare, industrial services and other sectors. To the best of the Directors knowledge, information and belief having made all reasonable enquiry, each of (a) CITIC Capital Maneuver, its holding fund and CITIC Capital Holdings Limited; and (b) FV Pallet, its holding fund and FountainVest Partners, is a third party independent of the Company and its connected persons (as defined under the Listing Rules). Reasons for and benefits of the Disposal As stated in the Company s interim report for the six months ended 30 June 2018, the Group continues to implement its strategy of building its network and one-stop supply chain services while working on integrating and improving efficiency of its major resources. While the business of CM Loscam does not provide logistics services, its operations are complementary to the operations of the Group. The introduction of privately-owned strategic investors who will own a majority interest in CM Loscam upon the completion of the Disposal can provide greater flexibility for the development and growth of the business of CM Loscam (for example, through the introduction of employee incentive schemes in line with relevant market practice) in which the Group can continue to - 8 -

9 participate through its retained shareholding. At the same time, the Disposal would also generate cash inflow for the Group, which may be deployed by the Group in accordance with its overall development plan and strategy. Accordingly, the Directors (including the independent non-executive Directors), after considering the terms of the Sale and Purchase Agreement, are of the view that that the terms of the Sale and Purchase Agreement are fair and reasonable and the transaction contemplated thereunder is in the interests of the Company and its Shareholders as a whole. LISTING RULES IMPLICATIONS As the highest of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Disposal is more than 5% but less than 25%, the Disposal is subject to the reporting and announcement requirements but exempt from the independent Shareholders approval requirements under Chapter 14 of the Listing Rules. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions have the following meanings: associates Board Business Day CM Loscam China Merchants Logistics China Merchants Shipping the meaning ascribed thereto in the Listing Rules the board of Directors of the Company any day other than a Saturday, Sunday or other day on which commercial banks in the PRC or Hong Kong are required or authorized by law or executive order to be closed or on which a tropical cyclone warning no. 8 or above or a black rainstorm warning signal is hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m. Hong Kong time China Merchants Loscam International Holdings Co., Limited 招商路凱國際控股有限公司, a company incorporated in the British Virgin Islands with limited liability and an indirectly wholly-owned subsidiary of the Company 招商局物流集團有限公司 (China Merchants Logistics Holdings Company Limited*), a company incorporated in the PRC and a direct wholly-owned subsidiary of the Company China Merchants Shipping and Enterprises Company Limited 招商局船務企業有限公司, a company incorporated in Hong Kong with limited liability and a direct wholly-owned subsidiary of China Merchants Logistics - 9 -

10 China Merchants CITIC Capital Maneuver Company Completion Completion Date Director(s) Disposal EBITDA EV FV Pallet Group Listing Rules Long Stop Date PRC Purchasers 招商局集團有限公司 (China Merchants Group Limited*), a state wholly-owned enterprise established under the laws of the PRC under direct control of the State-owned Assets Supervision and Administration Commission of the State Council of the PRC CITIC Capital Maneuver Holdings Limited, an exempt company incorporated in Cayman Islands with limited liability 中國外運股份有限公司 (Sinotrans Limited), a joint stock limited company incorporated in the People s Republic of China with limited liability, whose H shares are listed on the Hong Kong Stock Exchange the completion of the transactions contemplated under the Sale and Purchase Agreement the date of Completion director(s) of the Company disposal of an aggregate of 55% equity interest in CM Loscam under the Sale and Purchase Agreement Earnings before interest, taxes, depreciation and amortization Enterprise value FV Pallet Leasing Holding Ltd, a company incorporated in the Cayman Islands with limited liability the Company, its subsidiaries and its jointly controlled entities the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange 5:00 p.m.(hong Kong time) on 31 December 2018, or such other time/date as may be determined by the Vendors in writing but in any event must not be later than 5:00 p.m. (Hong Kong time) on 28 February 2019 the People s Republic of China which, for the purpose of this announcement, excludes Hong Kong SAR, Macau SAR and Taiwan collectively, CITIC Capital Maneuver and FV Pallet

11 RMB Sale and Purchase Agreement Sale Shares Share(s) Shareholder(s) Shareholders Agreement Stock Exchange Vendors Renminbi, the lawful currency of the PRC the agreement dated 25 October 2018 entered into between the Vendors and the Purchasers with respect to the sale and purchase of 55% equity interest in CM Loscam an aggregate of 55% equity interest in CM Loscam after the issue of 99 new shares in CM Loscam to its existing shareholder which are the subject of the Disposal H Share(s) and Domestic Share(s) holder(s) of the Shares the agreement dated 25 October 2018 entered into between the Vendors, the Purchasers and CM Loscam The Stock Exchange of Hong Kong Limited collectively, China Merchants Shipping and China Merchants Logistics By order of the Board of Sinotrans Limited Li Shichu Joint Company Secretary Beijing, 25 October 2018 As at the date of this announcement, the board of directors of the Company comprises Wang Hong (Chairman), Song Dexing (Vice Chairman), Li Guanpeng (executive director), Song Rong (executive director), Wang Lin (executive director), Wu Xueming (executive director), Jerry Hsu (non-executive director), and four independent non-executive directors, namely Wang Taiwen, Meng Yan, Song Haiqing and Li Qian