Datang International Power Generation Co : DATANG INTERNATIONAL POWER GENERATION COMPANY LD - Connected Transaction and Discloseable Transaction

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. DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 00991) ANNOUNCEMENT CONNECTED TRANSACTION & DISCLOSEABLE TRANSACTION ENTRUSTED LOAN FRAMEWORK AGREEMENT On 15 October 2013, the third meeting of the eighth session of the Board considered and approved the provision of the Entrusted Loan of not more than RMB6 billion to Duolun Coal Chemical Company. On 15 October 2013, the Company and Energy and Chemical Company entered into the Entrusted Loan Framework Agreement with Datang Finance Company and Duolun Coal Chemical Company in relation to the provision of the Entrusted Loan by the Company or Energy and Chemical Company to Duolun Coal Chemical Company in the form of revolving loan facility through the Entrusted Loan Arrangement, in which Datang Finance Company acts as the lending agent. LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) of the Entrusted Loan under the Entrusted Loan Framework Agreement is more than 5% but less than 25%, the Entrusted Loan Framework Agreement constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. As at the date of this announcement, CDC together with its subsidiaries holds approximately 34.71% of the issued share capital of the Company. Duolun Coal Chemical Company is owned as to 60% and 40% by Energy and Chemical Company, a wholly-owned subsidiary of the Company, and CDC, respectively. Datang Finance Company is a subsidiary of CDC. Both Duolun Coal Chemical Company and Datang Finance Company are therefore connected persons of the Company and the transaction under the Entrusted Loan Framework Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) for the principal amount of the Entrusted Loan under the Entrusted Loan Framework Agreement is more than 5%, the Entrusted Loan Arrangement and the Entrusted Loan Framework Agreement are subject to the requirements of reporting, announcement and approval by the independent Shareholders of the Company under Chapter 14A of the Listing Rules. The Company will disclose the relevant details in the next annual report and accounts of the Company in accordance with the relevant requirements as set out in Chapter 14A of the Listing Rules. A circular containing details of the Entrusted Loan Arrangement and the Entrusted Loan Framework Agreement, a letter from the independent board committee and a letter from the independent financial advisor, both advising the Entrusted Loan Arrangement and the terms of the Entrusted Loan Framework Agreement will be despatched to the Shareholders on or before 5 November 2013. ENTRUSTED LOAN FRAMEWORK AGREEMENT Date and Subject Matter On 15 October 2013, the third meeting of the eighth session of the Board considered and approved the provision of the Entrusted Loan of not more than RMB6 billion to Duolun Coal Chemical Company. On 15 October 2013, the Company and Energy and Chemical Company entered into the Entrusted Loan Framework Agreement with Datang Finance Company and Duolun Coal Chemical Company in relation to the provision of the Entrusted Loan by the Company to Duolun Coal Chemical Company in the form of revolving loan facility through the Entrusted Loan Arrangement, in which Datang Finance Company acts as the lending agent. Parties 1. The Company and Energy and Chemical Company, as the lender; 2. Datang Finance Company, as the lending agent; and 3. Duolun Coal Chemical Company, as the borrower. MAJOR TERMS OF THE ENTRUSTED LOAN FRAMEWORK AGREEMENT 1. Entrusted Loan Arrangement Pursuant to the Entrusted Loan Framework Agreement, Datang Finance Company is entrusted by the Company and Energy and Chemical Company to act as a lending agent to provide the Entrusted Loan to Duolun Coal Chemical Company in the form of revolving loan facility, monitor the use as well as the repayment of the Entrusted Loan by Duolun Coal Chemical Company. Separate Entrusted Loan Contracts will be entered into between the parties when each tranche of the Entrusted Loan was released, the terms and conditions of such Entrusted Loan Contracts shall be consistent with the principles and terms of the Entrusted Loan Framework Agreement. 2. Principal amount of the Entrusted Loan Not exceeding RMB6 billion and in the form of revolving entrusted loan facility. 3. Term The term for the Entrusted Loan Framework Agreement is 36 months commencing from 15 October 2013 and ending on 14 October 2016. 4. Interest rate At a floating interest rate, being the benchmark interest rate to be charged for the same level of loans in RMB for the same period as announced by the People's Bank of China on the date when each tranche of borrowing is withdrawn and such interest rate is to be adjusted annually. The adjustment date is 21st December of each year. The adjusted borrowing interest rate will be the benchmark interest rate for the same level of loans in RMB for the same period announced by the People's Bank of China on the adjustment date. As at the date of this announcement, the prevailing benchmark interest rate for three-year loans in RMB as announced by the People's Bank of China is 6.15% per annum. Such interest rate is arrived at after arm's length negotiation between the Company and Duolun Coal Chemical Company in consideration of the overall reduction in capital costs to the Group after the accounts of Duolun Coal Chemical Company (being the controlled subsidiary of the Company) are consolidated into the accounts of the Company. 5. Repayment schedule of the principal of the Entrusted Loan One-off repayment of the principal for each tranche of the Entrusted Loan by Duolun Coal Chemical Company upon maturity of the relevant Entrusted Loan Contracts. 6. Payment schedule of interests of the Entrusted Loan Interests shall be settled by Duolun Coal Chemical Company on a quarterly basis. The settlement date falls on the twentieth (20th) day of the last month of each quarter. 7. Handling fees The handling fees shall be charged in tranches on the date of grant of each tranche of the Entrusted Loan. The rate of the handling fees shall be 0.025% of each tranche of the Entrusted Loan. 8. Effective date The Entrusted Loan Framework Agreement shall become effective when it is duly signed by the legal representatives or authorized agent of both parties and sealed with their respective chops and upon the approval of the internal authority of each of the parties (or the internal approval procedures of each of the parties have been implemented), including obtaining the approval of the Entrusted Loan Framework Agreement by the independent Shareholders of the Company at the EGM. REASONS FOR AND BENEFITS OF ENTERING INTO THE ENTRUSTED LOAN FRAMEWORK AGREEMENT In view of the cooperation history between Datang Finance Company and the Company and given that the provision of entrusted loan services by Datang Finance Company is covered under the Financial Services Agreement, Datang Finance Company has better understanding of the operations of the Company which will allow more expedient and efficient services than those rendered by other PRC commercial banks. Further, the handling fees charged by Datang Finance Company will not be higher than those charged by other PRC commercial banks. In view of the above considerations, the Company appointed Datang Finance Company, rather than other PRC commercial banks, as the lending agent. Further, considering the capital risks control measures under the Financial Services Agreement as set out in the circular of the Company dated 16 November 2010 and the financial services agreement for the service term commencing from 1 January 2014 and ending on 31 December 2016 as set out in the major transaction and continuing connected transactions announcement of the Company dated 15 October 2013 and the terms under the Entrusted Loan Framework Agreement are normal commercial terms which confer no additional obligations nor risks on the Company when comparing with other entrusted loan agreements in the market, the Company considers that no additional risks will be involved by appointing Datang Finance Company as the lending agent under the Entrusted Loan Framework Agreement. In order to ensure the day-to-day cash flow of Duolun Coal Chemical Company, the Company intends to provide the Entrusted Loan of not exceeding RMB6 billion to Duolun Coal Chemical Company. The Company is of the view that the Entrusted Loan will be primarily utilized by Duolun Coal Chemical Company to replace the due entrusted loan between the Company and the Energy and Chemical Company, due borrowings from external commercial banks and supplement its liquidity, and is thus beneficial for the smooth progress of the production and operation activities of Duolun Coal Chemical Company. Considering the possible higher financial costs for Duolun Coal Chemical Company to obtain the current loan from other commercial banks when comparing with the financial costs incurred by the Company to obtain the funding of the Entrusted Loan, the Company considers that the overall capital costs to the Group will be relatively reduced after the accounts of Duolun Coal Chemical Company (being the subsidiary of the Company) are consolidated into the accounts of the Company. The Directors (excluding the independent non-executive Directors whose views will be contained in the circular after considering the advice from the independent financial advisor) are of the view that the terms of the Entrusted Loan Framework Agreement are fair and reasonable, have been entered into after arm's length negotiation between all parties thereto and determined on normal commercial terms and is in the best interests of the Company and its Shareholders as a whole. INFORMATION RELATING TO THE PARTIES OF THE AGREEMENT 1. Information relating to the Company The Company 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 as well as the provision of power-related technical services. The main service areas of the Company are in the PRC. 2. Information relating to Energy and Chemical Company Energy and Chemical Company is a wholly-owned subsidiary of the Company which was duly incorporated on 12 February 2009 with a registered capital of RMB9,189.56 million. Its principal businesses include: energy and chemical technology development, technology transfer, technical consulting, technology services; investment management; engineering design; chemical and electrical equipment maintenance, installation, commissioning; import and export, import and export agent, technology import and export. 3. Information relating to Duolun Coal Chemical Company Duolun Coal Chemical Company was duly incorporated on 19 August 2009 with a registered capital of RMB4,050 million. Duolun Coal Chemical Company is principally responsible for the construction and operation of the coal-based olefin project with an annual output of 460,000 tonnes. The equity structure of Duolun Coal Chemical Company is as follows: Energy and Chemical Company, a wholly-owned subsidiary of the Company, holds 60% equity interests, and CDC holds 40% equity interests. From December 2012 onwards, part of the construction in progress were carried forward to fixed assets. 4. Information relating to Datang Finance Company Datang Finance Company is a non-banking financial institution duly incorporated in the PRC on 10 May 2005. Its registered capital is RMB3 billion. Its principal business includes, among others, the provision of deposit services, loan services, entrusted loan services and entrusted investment services. 5. Information relating to CDC CDC was established on 9 March 2003 with registered capital of RMB15.394 billion. It is principally engaged in the development, investment, construction, operation and management of power energy, organization of power (thermal) production and sales; manufacturing, repair and maintenance of power equipment; power technology development and consultation; power engineering, contracting and consultation of environmental power engineering; development of new energy as well as development and production of power related coal resources. LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) of the Entrusted Loan under the Entrusted Loan Framework Agreement is more than 5% but less than 25%, the Entrusted Loan Framework Agreement constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. As at the date of this announcement, CDC together with its subsidiaries holds approximately 34.71% of the issued share capital of the Company. Duolun Coal Chemical Company is owned as to 60% and 40% by Energy and Chemical Company, a wholly-owned subsidiary of the Company, and CDC, respectively. Datang Finance Company is a subsidiary of CDC which is a controlling Shareholder. Both Duolun Coal Chemical Company and Datang Finance Company are therefore connected persons of the Company and the transaction under the Entrusted Loan Framework Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) for the principal amount of the Entrusted Loan under the Entrusted Loan Framework Agreement is more than 5%, the Entrusted Loan Framework Agreement and the Entrusted Loan Arrangement are subject to the requirements of reporting, announcement and approval by the independent Shareholders of the Company under Chapter 14A of the Listing Rules. The Company will disclose the relevant details in the next annual report and accounts of the Company in accordance with the relevant requirements as set out in Chapter 14A of the Listing Rules. A circular containing details of the Entrusted Loan Arrangement and the Entrusted Loan Framework Agreement, a letter from the independent board committee and a letter from the independent financial advisor, both advising the Entrusted Loan Arrangement and the terms of the Entrusted Loan Framework Agreement will be despatched to the Shareholders on or before 5 November 2013. Any Shareholder with a material interest in the transaction and its associates will abstain from voting at the EGM to be held by the Company to (including but not limited to) consider and approve the Entrusted Loan Framework Agreement. Therefore, CDC and its associates shall abstain from voting at the EGMto approve the Entrusted Loan Framework Agreement. INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISOR An independent board committee comprising the independent non-executive Directors will be formed to advise the independent Shareholders on the terms of the Entrusted Loan Framework Agreement. The Company will appoint an independent financial advisor to advise the independent board committee of the Company and the independent Shareholders on the terms of the Entrusted Loan Framework Agreement. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions have the following meanings: "A Share(s)" the domestic ordinary share(s) of the Company with a nominal value of RMB1.00 each and are listed on the Shanghai Stock Exchange "Board" the board of Directors of the Company "CDC" China Datang Corporation, a State-owned enterprise established under the laws of the PRC and is the controlling Shareholder of the Company pursuant to the Listing Rules which, together with its subsidiaries, own approximately 34.71% of the issued share capital of the Company as at the date of this announcement "Company" Datang International Power Generation Co., Ltd., a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, whose H Shares are listed on the Hong Kong Stock Exchange and the London Stock Exchange and whose A Shares are listed on the Shanghai Stock Exchange "connected person" has the meaning ascribed to it under the Listing Rules "connected transaction" has the meaning ascribed to it under the Listing Rules "Datang Finance Company" Datang Corporation Finance Limited Company, a controlling subsidiary of CDC "Directors" the director(s) of the Company "Duolun Coal Chemical Datang Inner Mongolia Duolun Coal Chemical Company" Company Limited, which constructs and operates the Duolun Coal Chemical Project "Duolun Coal Chemical the project located in Duolun County in the Project" Inner Mongolia Autonomous Region which uses the brown coal from the East Unit 2 coal mine of Shengli Coal Mine as raw materials for the production of polypropylene chemical products by employing the pulverised coal gasification technology, the synthetic gas purification technology, large-scale methanol synthesis technology, the methanol-to-propylene technology and the propylene polymerisation technology "EGM" the extraordinary general meeting of the Company to be held for the consideration and approval of, amongst others, the Entrusted Loan Framework Agreement "Energy and Chemical Datang Energy and Chemical Company Limited, Company" a wholly-owned subsidiary of the Company "Entrusted Loan" the revolving entrusted loan of a total principal amount of not more than RMB6 billion "Entrusted Loan the arrangement where Datang Finance Arrangement" Company is entrusted by the Company to act as a lending agent to release the Entrusted Loan to Duolun Coal Chemical Company pursuant to the Entrusted Loan Agreement "Entrusted Loan the specific entrusted loan contracts Contracts" entered into by the relevant parties when each tranche of the Entrusted Loan was released, the major terms of which will be consistent with the terms and principles of the Entrusted Loan Framework Agreement "Entrusted Loan the entrusted loan framework agreement Framework Agreement" entered into on 15 October 2013 between the Company, Energy and Chemical Company, Datang Finance Company and Duolun Coal Chemical Company in respect of the Entrusted Loan Arrangement "Financial Services the financial services agreement entered Agreement" into between the Company and Datang Finance Company on 26 October 2010, particulars of which please refer to the Company's circular dated 16 November 2010 "Group" the Company and its subsidiaries "H Share(s)" the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange and the London Stock Exchange "Hong Kong" the Hong Kong Special Administrative Region of the PRC "Listing Rules" the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange "PRC" the People's Republic of China "RMB" Renminbi, the lawful currency of the PRC "Shares" the ordinary shares 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) of the Company "Stock Exchange" The Stock Exchange of Hong Kong Limited "%" percent By Order of the Board Zhou Gang Secretary to the Board Beijing, the PRC, 15 October 2013 As at the date of this announcement, the Directors of the Company are: Chen Jinhang, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Li Gengsheng, Cao Xin, Cai Shuwen, Liu Haixia, Guan Tiangang, Dong Heyi*, Ye Yansheng*, Li Hengyuan*, Zhao Jie*, Jiang Guohua* * Independent non-executive Directors