Qinhuangdao Port : Announcements and Notices - Connected Transaction Establishment of A Joint Venture

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秦 皇 島 港 股 份 有 限 公 司

QINHUANGDAO PORT CO., LTD.*

(a joint stock limited liability company incorporated in the People's Republic of China)

(Stock Code: 3369)

CONNECTED TRANSACTION

ESTABLISHMENT OF A JOINT VENTURE

The Board is pleased to announce that, on 5 July 2019, the Company entered into the Capital Contributors' Agreement with QOS and Other Capital Contributors for establishment of the Joint Venture.

Pursuant to the Capital Contributors' Agreement, the total registered capital of the Joint Venture will be RMB600 million, among which, the Company and QOS have agreed to contribute RMB24.00 million and RMB18.00 million, representing 4% and 3% of the total registered capital of the Joint Venture, respectively, and the remaining 33 Capital Contributors shall subscribe the corresponding equity interests in the Joint Venture in proportion to their respective capital contributions. Upon the Establishment, the Joint Venture will not become a subsidiary of the Company.

As at the date of this announcement, QOS is a connected person of the Company as HPG is the holding company of QOS and HPG is the controlling shareholder of the Company. Accordingly, the Establishment constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more applicable percentage ratio(s) in respect of the Establishment, as calculated by the total amount of contribution by the Company under the Capital Contributors' Agreement are more than 0.1% but less than 5%, the Establishment is only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules, but is exempted from independent shareholders' approval requirements.

ESTABLISHMENT OF THE JOINT VENTURE

The Board is pleased to announce that, on 5 July 2019, the Company entered into the Capital Contributors' Agreement with QOS and Other Capital Contributors for establishment of the Joint Venture.

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PRINCIPAL TERMS OF THE CAPITAL CONTRIBUTORS' AGREEMENT

Date: 5 July 2019

Parties:

1. the Company;
2. QOS; and
3. Other Capital Contributors

(collectively referred to as the "Capital Contributors")

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Other Capital Contributors and their ultimate beneficial owners are independent third parties.

Registered capital and shareholding:

The registered capital of the Joint Venture is RMB600 million, the amount of contribution subscribed and the percentage of capital contribution in the Joint Venture by the Capital Contributors are as follows:

		Percentage	Amount
		of capital	of capital
		contribution	contribution
No.	Name of Capital Contributors	(%)	(RMB0' 000)
1	China Railway Construction Investment Corporation Limited	30	18000
2	Shenhua Sales Group Co., Ltd.	5	3000
3	China Coal Energy Company Limited	5	3000
4	Datong Coal Mine Group Company Limited	2	1200
5	Inner Mongolia Yitai Coal Co., Ltd.	2	1200
6	Shaanxi Coal and Chemical Industry Group Co., Ltd.	2	1200
7	Henan Energy and Chemical Engineering Group Co., Ltd.
	(河南能源化工集團有限公司)	2	1200
8	Yankuang Group Company Limited	2	1200
9	Shanxi Coking Coal Group Company Limited	2	1200
10	Huainan Mining Industry (Group) Co., Ltd.	2	1200
11	Yangquan Coal Industry (Group) Co. Ltd.	2	1200
12	Jizhong Energy Group Co., Ltd.	2	1200
13	Shanxi Lu'an Mining (Group) Company Limited	1	600
14	China Coal Transportation & Sale Society	1	600
15	China Huaneng Group Fuel Co., Ltd.	2	1200
16	China Huadian Fuel Co., Ltd. (中國華電集團燃料有限公司)	2	1200
17	Datang Power Fuel Company Ltd.	2	1200
18	State Power Investment Corporation Limited*
	(國家電力投資集團有限公司)	2	1200
19	SDIC Power Holdings Co., Ltd.	2	1200
20	China Resources Power Fuel (China) Company Limited	2	1200

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		Percentage	Amount
		of capital	of capital
		contribution	contribution
No.	Name of Capital Contributors	(%)	(RMB0' 000)
21	Guangdong Energy Group Co., Ltd.	1	600
22	Jiangsu Guoxin Investment Group Limited	1	600
23	Zhejiang Zheneng Coal Transportation Investment Co., Ltd.*
	(浙江浙能煤運投資有限責任公司)	1	600
24	China Baowu Steel Group Corporation Limited	1	600
25	Ansteel Group Corporation	1	600
26	HBIS Group Co., Ltd.	1	600
27	Hunan Valin Iron & Steel Group Co., Ltd.*
	(湖南華凌鋼鐵集團有限責任公司)	1	600
28	Qinhuangdao Port Co., Ltd.* (秦皇島港股份有限公司)	4	2400
29	SDIC Caofeidian Port Co., Ltd. (國投曹妃甸港口有限公司)	2	1200
30	Tangshan Port Group Co., Ltd.* (唐山港集團股份有限公司)	2	1200
31	China Railway Materials Group Corporation	5	3000
32	China Taiyuan Coal Transaction Center	3	1800
33	Qinhuangdao Ocean Shipping Coal Trading Market Co., Ltd.
	(秦皇島海運煤炭交易市場有限公司)	3	1800
34	Shaanxi Coal Transaction Center Co., Ltd.*
	(陝西煤炭交易中心有限公司)	1	600
35	Guoneng Hutong Inner Mongolia Network Technology Co.,
	Ltd.* (國能互通內蒙古網路科技有限公司)	1	600
	Total	100	60000

The total registered capital of the Joint Venture will be RMB600 million, which is determined by the Capital Contributors with reference to the funding requirements of the Joint Venture.

The capital contribution to be made by the Company, which is denominated in RMB and payable in cash, will be funded by the Company's internal resources.

Upon the establishment of the Joint Venture, the Capital Contributors shall pay their respective capital contributions subscribed in a lump sum and deposit it in the account opened by the Joint Venture in the bank within 15 working days after the Joint Venture obtaining the business license.

Upon the Establishment, the Joint Venture will not become a subsidiary of the Company.

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SCOPE OF BUSINESS OF THE JOINT VENTURE

The scope of business of the Joint Venture will include wholesale of coal and related products, trade broker and agent, operation of "Four Technologies" services and derivative products in the professional sector of commodity index, consulting and investigation, road freight transportation, waterborne cargo transportation, loading and unloading, general warehousing, multimodal transport, freight forwarding agency, internet information services, internet production service platforms, internet data services, information systems integration and internet-of-things technology services, information technology consulting services, other telecommunications services, other financial service activities, development of application software, conferences, exhibitions and related services, property management, internet advertising services, other advertising services, resources and property rights exchange services, credit services, market management services, supply chain management services, research on social sciences and humanities, standardisation services, retails of books and publications. (for items subject to approval in accordance with laws, business can only be conducted upon approval by relevant department, and the business scope of the Joint Venture shall be subject to the items approved by its registration authority.)

LIABILITY FOR DEFAULT

Failure to pay the contributions within the period and in the amount required by the Capital Contributors' Agreement by the Capital Contributors will be deemed as default. In addition to making up the capital contribution payable to the Joint Venture, the defaulting party shall also pay liquidated damages to the non-defaulting party at 0.2‰ over the outstanding capital contribution, and the liquidated damages shall be distributed at the actual percentage of capital contribution of each non-defaulting party. If the defaulting party still not pay its capital contribution in full within 30 days past due, the non-defaulting party shall be entitled to request the defaulting party to compensate for all losses incurred.

EFFECTIVENESS

The Capital Contributors' Agreement will become effective when it is duly signed by legal representatives or entrusted agents of the Capital Contributors with their respective seals affixed thereto.

REASONS FOR AND BENEFITS OF THE ESTABLISHMENT

Capital Contributors of the Joint Venture cover key enterprises in China in all aspects of coal production and transportation needs, with the advantages of integrating coal supply and demand, railway, port, road transportation, warehousing, quality inspection, financing, settlement and other resources. The investment in the China National Coal Exchange helps the Group to maintain good communication with other enterprises in the industry chain, provides customers with better and more efficient services and strengthens the Company's role in the coal industry chain.

Based on the above, the Board (including the independent non-executive Directors) believes that the Capital Contributors' Agreement has been entered into under normal commercial terms, which is fair and reasonable and in the interests of the Company and its shareholders as a whole.

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Mr. CAO Ziyu, Mr. LIU Guanghai, Mr. YANG Wensheng, Mr. MA Xiping and Ms. XIAO Xiang, all being connected Directors, have abstained from voting for the approval of the Establishment at the Board meeting. Save for the above, no other Directors had material interests in the Establishment or were otherwise required to abstain from voting in respect of the relevant Board resolution.

LISTING RULES IMPLICATIONS

As at the date of this announcement, QOS is a connected person of the Company as HPG is the holding company of QOS and HPG is the controlling shareholder of the Company. Accordingly, the Establishment constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more applicable percentage ratio(s) in respect of the Establishment, as calculated by the total amount of contribution by the Company under the Capital Contributors' Agreement are more than 0.1% but less than 5%, the Establishment is only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules, but is exempted from independent shareholders' approval requirements.

GENERALNote

The Group

The Group, one of the large public port operator for staple dry bulk cargoes in the world and one of the most important ore port operators in the Bohai Rim, is principally engaged in the provision of coal, metal ores, oil and liquefied chemicals, bulk and general cargo, containers and relevant logistics services, as well as relevant port value-added services.

China Railway Construction Investment Corporation Limited

The scope of business of China Railway Construction Investment Corporation Limited includes investment and investment management, asset management; enterprise management; construction project management; railway asset resource development and consultation; tendering and bidding business; development, sales and lease of mechanical equipment, railway transportation equipment and railway special device; comprehensive development of railway land; real estate development, sales of self-developed commercial housing.

Shenhua Sales Group Co., Ltd.

The scope of business of Shenhua Sales Group Co., Ltd. includes coal wholesale operations (excluding spot trading, storage and transportation of coal in Beijing); sales of chemical products (excluding category 1 precursor chemicals and hazardous chemicals); import and export of goods, import and export of technologies, import and export agency; transportation agency services; technology development, technical consulting, technical services.

Note: Except for the Group, each Capital Contributor's information relating to its scope of business is derived from public information.

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