SINOPEC KANTONS HOLDINGS LIMITED 
By 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.
SINOPEC KANTONS HOLDINGS LIMITED*
(incorporated in Bermuda with limited liability)
(Stock Code: 934) ANNOUNCEMENT PRE-CLOSING AND EXPECTED CLOSING OF ACQUISITION OF AN EQUITY INTEREST IN AND DISCLOSEABLE TRANSACTION IN RELATION TO EQUITY CONTRIBUTION TO FUJAIRAH OIL TERMINAL FZC IN THE UNITED ARAB EMIRATES
Reference is made to the First Announcement of the Company dated 9 January 2012 in which the Board announced that on 9 January 2012 Sinomart Development, a wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement and the Shareholders' Agreement with Concord HK in respect of the acquisition of the equity interest in FOT, and entered into the commercial storage agreement with FOT in respect of the services to be provided by FOT.
Details of the principal terms of the Sale and Purchase Agreement and the Shareholders' Agreement are disclosed in the sections headed "The Sale and Purchase Agreement" and "The Shareholders' Agreement" in the First Announcement.
The Board is pleased to announce that on 13 December 2012, Sinomart Development achieved Pre- Closing of the Acquisition and became a shareholder of FOT, subject to Closing under the Sale and Purchase Agreement. Sinomart Development is expected to complete the Sale and Purchase Agreement (that is, Closing) on around 3 January 2013, and the obligations of Sinomart Development and Concord HK under the Shareholders' Agreement will then become unconditional upon such Closing.
* for identification purpose only
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The Company did not request to purchase the Control Shares (representing 1% of the issued share capital of FOT) from Concord HK. Therefore, after Pre-Closing and it is expected that after Closing, the Company holds indirectly 50% of the issued share capital of FOT through Sinomart Development. The Directors consider FOT as an Associate of the Company under the HKFRS after Closing.
As mentioned in the First Announcement, under the terms of the Shareholders Agreement, the shareholders of FOT are expected to contribute to the Project proportional to their shareholding in FOT. It is also expected that the Project is to be financed in the ratio of around 70% debt from banks and around 30% equity from shareholders.
As required by the terms of the Credit Agreement and as a condition precedent to the drawdown of funds under the Credit Agreement from certain international banks and commercial banks, of an aggregate loan amount of approximately US$251.86 million (equivalent to approximately HK$1,959.47 million) to FOT, on 28 December 2012, the Company and Sinomart Development entered into the Equity Subscription Agreement pursuant to which Sinomart Development and Concord HK as shareholders of FOT shall make certain equity contributions to FOT of an aggregate amount of US$50,859,474.59 (equivalent to approximately HK$395.69 million) each in relation to the Project. Details of the principal terms of the Equity Subscription Agreement are disclosed in the section headed "The Equity Subscription Agreement" in this announcement. As at the date of this announcement, the Credit Agreement is subject to, among others, financial close and drawdown.
Sinomart Development and FOT also entered into the Commercial Storage Agreement amending and restating the commercial storage agreement dated 9 January 2012. The details of principal terms of the Commercial Storage Agreement are disclosed in the section headed "The Commercial Storage Agreement" in this announcement.
LISTING RULES IMPLICATION
As the applicable percentage ratios (as defined in the Listing Rules) in respect of the Sale and Purchase Agreement and the Equity Subscription Agreement in aggregate will exceed 5% but be less than 25%, the Equity Subscription Agreement constitutes a discloseable transaction for the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.
2
Reference is made to the First Announcement of the Company dated 9 January 2012 in which the Board announced that on 9 January 2012 Sinomart Development, a wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement and the Shareholders' Agreement with Concord HK in respect of the acquisition of the equity interest in FOT, and entered into the commercial storage agreement with FOT in respect of the services to be provided to Sinomart Development by FOT. FOT will principally engage in operating oil storage facilities in the Fujairah Free Zone, the United Arab Emirates and it will develop an oil storage project with a capacity of 1,155,000 cubic metres in the Emirate of Fujairah, and more specifically located adjacent to the Port of Fujairah, the United Arab Emirates. FOT will provide services in respect of oil products at, outside or through its oil depot, including but not limited to, making storage space available, procuring delivery of, and storing petroleum products including white and black petroleum products.
Details of the principal terms of the Sale and Purchase Agreement and the Shareholders' Agreement are disclosed in the sections headed "The Sale and Purchase Agreement" and "The Shareholders' Agreement" in the First Announcement. On 28 December 2012, Sinomart Development and FOT also entered into the Commercial Storage Agreement amending and restating the commercial storage agreement dated 9 January 2012. Details of the principal terms of the Commercial Storage Agreement are disclosed in the section headed "The Commercial Storage Agreement" in this announcement.
The Board is pleased to announce that on 13 December 2012, Sinomart Development achieved Pre- Closing of the Acquisition and became a shareholder of FOT, subject to Closing under the Sale and Purchase Agreement. Sinomart Development is expected to complete the Sale and Purchase Agreement (that is, Closing) on around 3 January 2013, and the obligations of Sinomart Development and Concord HK under the Shareholders' Agreement will then become unconditional upon such Closing.
The Company did not request to purchase the Control Shares (representing 1% of the issued share capital of FOT) from Concord HK. Therefore, after Pre-Closing, and it is expected that after Closing, the Company holds indirectly 50% of the issued share capital of FOT through Sinomart Development. The Directors consider FOT as an Associate of the Company under the HKFRS after Closing.
As mentioned in the First Announcement, under the terms of the Shareholders' Agreement the shareholders of FOT are expected to contribute to the Project proportional to their shareholdings in FOT. It was expected that the Project would be financed in the ratio of around 70% debt from banks and around 30% equity from the shareholders of FOT. Pursuant to the terms of the Shareholders' Agreement, Sinomart Development agreed to fund up to its respective shareholding proportion all equity capital contributions, including any shareholders' loans, required to be injected into FOT in order to enable FOT to complete and operate the Project.
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On 28 December 2012, FOT entered into the Credit Agreement with certain international and commercial banks, under which loan facilities in the aggregate amount of approximately US$251.86 million (equivalent to approximately HK$1,959.47 million) would be made available to FOT for the purposes of financing the Project.
As required by the terms of the Credit Agreement and as a condition precedent to the drawdown of funds under the Credit Agreement from the banks, on 28 December 2012 the Company and Sinomart Development entered into the Equity Subscription Agreement pursuant to which Sinomart Development and Concord HK as shareholders of FOT shall make certain equity contributions to FOT of an aggregate amount of US$50,859,474.59 (equivalent to approximately HK$395.69 million) each in relation to the Project. As at the date of this announcement, the Credit Agreement is subject to, among others, financial close and drawdown.
Principal terms of the Equity Subscription Agreement are summarised below.
28 December 2012
Parties
(1) Sinomart Development, as shareholder of FOT (2) Concord HK, as shareholder of FOT
(3) Concord Energy, as sponsor
(4) the Company, as sponsor
(5) FOT, as borrower, and
(6) certain international banks and commercial banks, as facility agent, as offshore security trustee, and as onshore security agent respectively
Concord HK is an investment holding company with limited liability incorporated in Hong Kong, and is wholly owned by Concord Energy as at the date of this announcement. Concord Energy is a company with limited liability incorporated in Singapore.
To the Directors' knowledge, information and belief having made all reasonable enquiries, each of Concord HK, Concord Energy, the international banks and commercial banks and their ultimate beneficial owners is an independent third party of the Company and its connected persons (as defined in the Listing Rules).
Pursuant to the Equity Subscription Agreement, the obligations of Sinomart Development and Concord
HK therein are each guaranteed by the Company and Concord Energy respectively.
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Equity Contributions
Pursuant to the Equity Subscription Agreement, Sinomart Development and Concord HK as shareholders of FOT shall, on a several basis, make equity contributions up to the Subordinated Loan Commitment, that is, up to a sum of US$43,609,474.59 (equivalent to approximately HK$339.28 million). Advances of any such equity contributions shall be made five (5) Business Days after FOT has requested an advance of all or part of such Subordinated Loan Commitment; or on the Business Day specified in any acceleration notice calling for the advance of all or part of such Subordinated Loan Commitment delivered by the facility agent in accordance with the terms of the Equity Subscription Agreement. Sinomart Development intends to satisfy payment for the above contributions by the internal resources of the Group and/or other equity/debt financing, as may be arranged by the Board.
EPC Equity Contributions
Pursuant to the Equity Subscription Agreement, Sinomart Development and Concord HK as shareholders of FOT shall, on a several basis, make additional equity contributions to FOT to reimburse FOT or to enable FOT to pay or otherwise satisfy amounts paid or payable by FOT in respect of losses, damages, costs (including legal costs), expenses and liabilities arising from or in connection with specified claims made by the contractors under the construction contracts in relation to the Project. Sinomart Development and Concord HK shall make such additional equity contributions on a pro rata basis proportional to their shareholdings in FOT, and Sinomart Development's obligation to make such additional equity contribution is limited to, and shall not in aggregate exceed Sinomart Development's EPC Equity Contribution, being an amount of US$7,250,000 (equivalent to approximately HK$56.41 million). Sinomart Development intends to satisfy payment for the above contributions by the internal resources of the Group and/or other equity/debt financing, as may be arranged by the Board.
The Company's Guarantee
As required by the terms of the Equity Subscription Agreement, on 28 December 2012, the Company entered into the Sinopec Equity Guarantee guaranteeing the obligations of Sinomart Development under the Equity Subscription Agreement. The aggregate liability of the Company under the Sinopec Equity Guarantee shall be limited to a sum of US$50,859,474.59 (equivalent to approximately HK$395.69 million), being the aggregate of the Subordinated Loan Commitment and Sinomart Development's EPC Equity Contribution.
COMMERCIAL STORAGE AGREEMENT Date
28 December 2012
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(1) FOT, as owner of the oil depot
(2) Sinomart Development, as customer
Services
Pursuant to the Commercial Storage Agreement, FOT agreed to provide the services to Sinomart Development commencing from the Commercial Operations Date. Such services shall comprise any or all operations carried out or to be carried out by FOT in respect of the oil products entrusted by customers at, outside or through its oil depot, including but not limited to making storage space available, procuring delivery of, storing, manipulating (which shall be deemed to include the through- pumping of the oil products between the common valve block at the Fujairah port and the oil tank of FOT), moving, treating, processing, delivering, and administrative handling of the oil products (including shipping documentation, mandatory government reporting, etc).
Volume commitment for storage
Each of Sinomart Development and Concord Energy agreed to renting a storage of 577,500 cubic metres from FOT, that is 50% of the total capacity of the oil depot.
Rental and handling charge
The minimum price for the rental and handling charge in respect of the storage is at a fixed rate of US$4.40 per cubic metre per month for the total of the volume commitment for storage by Sinomart Development to FOT, payable from the Commercial Operations Date to the expiry of the Commercial Storage Agreement, irrespective of capacity actually used by Sinomart Development or Concord Energy. The rental and handling charge shall be the higher of the minimum price or the applicable market price, which shall be decided by the board of directors of FOT on an annual basis.
Effective period of the Commercial Storage Agreement
The Commercial Storage Agreement shall become effective from the occurrence of the later of (a) agreed form and content of engineering, procurement and construction contract having been initialled by Sinomart Development and Concord Energy; and (b) the main terms and conditions of the external financing from lenders of the construction of the Project having been jointly negotiated and agreed by Sinomart Development and Concord Energy.
The storage rental obligation under the Commercial Storage Agreement shall commence from the Commercial Operations Date and shall continue for a period of 10 years plus force majeure extension periods as defined therein.
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Guarantee provided by the Company
The performance and payment obligations of Sinomart Development under the Commercial Storage
Agreement are guaranteed by the Company under a separate guarantee in favour of FOT dated 31
December 2012.
FOT is a private company incorporated in the Fujairah Free Zone, the United Arab Emirates, and as at the date of this announcement, FOT is owned as to 50% by Concord HK and 50% by Sinomart Development subject to Closing of the Sale and Purchase Agreement.
FOT will principally engage in operating oil storage facilities in the Fujairah Free Zone, the United Arab Emirates and it will develop an oil storage project with a capacity of 1,155,000 cubic metres in the Emirate of Fujairah, and more specifically located adjacent to the Port of Fujairah, United Arab Emirates. FOT will provide services in respect of oil products at, outside or through its oil depot, including but not limited to, making storage space available, procuring delivery of, and storing petroleum products including white and black petroleum products. The total investment by the Project is approximately US$359.8 million (equivalent to approximately HK$2,799.24 million). As at the date of this announcement, FOT has not commenced any commercial business.
The Group is principally engaged in trading of crude oil and oil products, operation of crude oil terminals and their ancillary facilities, provision of logistic services including the storage, logistic, terminal services and the distribution of oil and oil products and the international logistic agency services.
Fujairah is located at the eastern seaboard of the United Arab Emirates, and the Port of Fujairah is one of the most important ports in the United Arab Emirates and one of the largest bunkering ports in the world. FOT will develop and operate an oil storage terminal with a capacity of 1,155,000 cubic metres in the Port of Fujairah.
As mentioned in the First Announcement, the Directors consider that the Acquisition is in line with the Group's business development strategy of providing oil storage facilities and related logistics services and expanding into new markets. In addition, upon commencement of the operation of the Project, it will increase the overall profitability and stability of the earnings of the Group. The Equity Subscription Agreement: (1) provides further necessary capital for FOT for the development of its infrastructures, business and operations in relation to the Project; and (2) enables FOT to raise financing from the banks under the Credit Agreement.
The Directors consider that the terms and conditions of the Equity Subscription Agreement are fair and reasonable, on normal commercial terms and are in the interests of the Company and the Shareholders as a whole.
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The Company was incorporated in Bermuda with limited liability and its shares are listed on the Stock Exchange. The principal activities of the Group are the trade of crude oil and oil products, the operation of crude oil terminals and their ancillary facilities, provision of logistic services including the storage, logistic, terminal services and the distribution of oil and oil products and the international logistic agency services. The Group currently, among others, wholly owns one operating company in the PRC, namely Huade Petrochemical Co. Ltd. and six joint ventures in the PRC, namely Zhan Jiang Port Petrochemical Terminal Co., Ltd. and five joint ventures in the PRC referred to in the circular of the Company dated 14
December 2011 in relation to the acquisition of these five joint ventures, which were completed between
24 October 2012 and 31 October 2012. Reference is also made to the announcement dated 15 October
2012 regarding the acquisition of 50% of the equity interest in Vesta Terminals B.V.
As the applicable percentage ratios (as defined in the Listing Rules) in respect of the Sale and Purchase Agreement and the Equity Subscription Agreement in aggregate will exceed 5% but be less than 25%, the Equity Subscription Agreement constitutes a discloseable transaction for the Company under the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.
DEFINITIONS
In this announcement, unless the context requires otherwise, the following terms shall have the meanings set out below:
"Acquisition" : the acquisition by Sinomart Development from Concord HK of the
Base Shares pursuant to the Sale and Purchase Agreement; "Associate(s)" : the meaning ascribed to it in the Listing Rules;
"Base Shares" : 50% of the issued share capital in FOT; "Board" : the board of Directors;
"Business Day" : means a day (other than a Friday, Saturday or Sunday) on which banks and financial markets are open for general business in (as the case may be, in accordance with the terms of the Credit Agreement) London, New York City, Singapore, Hong Kong, Kuala Lumpur, the Federal Territory of Labuan and the Emirate of Fujairah;
"Closing" : the completion of the Acquisition as defined in the Sale and Purchase
Agreement;
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"Company" : Sinopec Kantons Holdings Limited, a limited liability company incorporated in Bermuda, the shares of which are listed on the Stock Exchange;
"Commercial Operations
Date"
: the date on which, among others, all necessary licences and permits
required for FOT in order to operate the Project will be obtained;
"Commercial Storage
Agreement"
: a commercial storage agreement dated 28 December 2012 (amending and restating the commercial storage agreement dated 9 January
2012) entered into between FOT as owner of the oil depot and
Sinomart Development as customer in relation to the services which
FOT shall provide to Sinomart Development;
"Concord Energy" : Concord Energy Pte Ltd, a limited liability company incorporated in
Singapore;
"Concord HK" : Concord Energy Oil Terminal (Hong Kong) Limited, a limited liability company incorporated in Hong Kong and a wholly-owned subsidiary of Concord Energy;
"Control Shares" : 1% of the issued share capital in FOT;
"Credit Agreement" : a credit agreement dated 28 December 2012 entered into between FOT as the borrower, and international banks and commercial banks which are independent third parties named therein, pursuant to which loan facilities in the aggregate amount of approximately US$251.86 million (equivalent to approximately HK$1,959.47 million) will be made available to FOT;
"Directors" : the directors of the Company from time to time;
"Equity Subscription
Agreement"
: an equity subscription agreement dated 28 December 2012 entered into between Sinomart Development, Concord HK, Concord Energy, the Company, FOT, and international banks and commercial banks which are independent third parties named therein, pursuant to which Sinomart Development and Concord HK shall make certain equity
contributions to FOT;
"FOT" : Fujairah Oil Terminal FZC, a limited liability company incorporated in the Fujairah Free Zone, the United Arab Emirates;
"First Announcement" : the announcement of the Company dated 9 January 2012 in relation to the Acquisition;
"Group" : the Company and its subsidiaries;
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"HKFRS" : Hong Kong Financial Reporting Standards;
"Listing Rules" : the Rules Governing the Listing of Securities on the Stock Exchange; "PRC" : t h e People's Republic of China, but for the purposes of this
announcement only, excluding Hong Kong, Macau and Taiwan;
"Pre-Closing" : 1 3 December 2012, the date on which Sinomart Development became the holder of the Base Shares;
"Project" : 1,155,000 cubic metre capacity petroleum crude and product storage terminal with ancillary facilities being developed by FOT in the Emirate of Fujairah, which will be used to store petroleum products including white and black petroleum products;
"Sale and Purchase
Agreement"
: a sale and purchase agreement dated 9 January 2012 entered into between Sinomart Development, Concord HK, Concord Energy and
the Company in relation to the Acquisition;
"Shareholders" : persons whose names appear on the register of members as registered holders of the shares of the Company;
"Shareholders' Agreement" : a shareholders' agreement dated 9 January 2012 entered into between Sinomart Development, Concord HK, Concord Energy, the Company and FOT in order to regulate the respective rights and obligations of Sinomart Development and Concord HK in FOT;
"Sinomart Development" : Sinomart KTS Development Limited (
