THIS CIRCULAR IS IMPORTANT AND REQUIRES

Transcription

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt about any of the contents of this circular or as to what action to take in relation to this
circular, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or
other professional adviser.
If you have sold or transferred all your shares in Huadian Power International Corporation Limited* (the
“Company”), you should at once hand this circular and the proxy form and reply slip to the purchaser(s) or
the transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was
effected for transmission to the purchaser(s) or the transferee(s).
This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase
or subscribe for securities of Huadian Power International Corporation Limited.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no
responsibility for the contents of this circular, 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 circular.
PRC
(1) PROPOSED NON-PUBLIC ISSUANCE OF NEW A SHARES
(2) CONNECTED TRANSACTION —
PLACING OF NEW A SHARES TO CHINA HUADIAN
AND
(3) REFRESHMENT OF GENERAL MANDATE
Independent Financial Adviser to the
Independent Board Committee and the Independent Shareholders
China Investment Securities International Capital Limited
A letter from the Board is set out on pages 1 to 22 of this circular. A letter from the IBC is set out on pages 23
to 24 of this circular. A letter from the Independent Financial Adviser, containing its advice to the IBC and the
Independent Shareholders, is set out on pages 25 to 42 of this circular.
The notice convening the EGM of the Company to be held at 2:00 p.m. on 13 February 2015 at Huabin
International Hotel, No.4 Xuanwumennei Street, Xicheng District, Beijing, the PRC was despatched to the
Shareholders on 30 December 2014, which is reproduced on pages 58 to 68 of this circular.
If you are eligible and intend to attend the EGM, please complete and return the reply slip despatched on 30
December 2014 in accordance with the instructions printed thereon on or before Friday, 23 January 2015.
Shareholders who intend to appoint a proxy to attend the EGM shall complete and return the proxy form
despatched on 30 December 2014 in accordance with the instructions printed thereon not less than 24 hours
before the time fixed for holding the EGM or any adjournment thereof (as the case may be). Completion and
return of the proxy form will not preclude you from attending the EGM and voting in person if you so wish.
20 January 2015
* For identification purpose only
CONTENTS
Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Appendix I — Feasibility Analysis Report on the Use of
Proceeds Raised from the Non-Public Issuance of A Shares . . . . . . . . . . . 43
Appendix II — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
—i—
DEFINITIONS
In this circular, unless the context otherwise requires, the following expressions shall have the
following meanings:
“A Shares”
means the listed domestic shares in the ordinary share capital of
the Company, with a par value of RMB1.00 each, which are listed
on the Shanghai Stock Exchange;
“associate”
has the meaning ascribed to it under the Hong Kong Listing Rules
that apply to the Company;
“Board”
means the board of directors of the Company;
“China Huadian”
means 中國華電集團公司 China Huadian Corporation*, a wholly
PRC State-owned enterprise, and the controlling shareholder of the
Company;
“China Huadian
means the proposed subscription of new A Shares by China
A Shares Subscription”
Huadian pursuant to the China Huadian A Share Subscription
Agreement;
“China Huadian A Shares
means the conditional subscription agreement entered into between
Subscription Agreement”
China Huadian and the Company on 29 December, 2014, under
which the Company agrees to issue and China Huadian agrees to
subscribe for not less than 20% of the new A Shares to be issued
under the Non-Public Issuance;
“China Huadian Hong Kong”
means 中國華電香港有限公司 China Huadian Hong Kong
Company Limited*, a wholly-owned subsidiary of China Huadian;
“Company”
means 華電國際電力股份有限公司 Huadian Power International
Corporation Limited*, a Sino-foreign investment joint stock
company limited by shares incorporated in the PRC, whose H
shares and A shares are listed on the Hong Kong Stock Exchange
and the Shanghai Stock Exchange, respectively;
“close associate”
— ii —
DEFINITIONS
“connected person(s)”
“controlling shareholder”
“CSRC”
means 中國證券監督管理委員會 (China Securities Regulatory
Commission);
‘Director”
means the directors of the Company;
“EGM”
means the extraordinary general meeting of the Company to be
convened on 13 February 2015 to consider and to approve, among
other things, the Non-Public Issuance, the China Huadian A Shares
Subscription, the China Huadian A Shares Subscription Agreement
and the refreshment of Existing General Mandate;
“Existing General Mandate”
has the meaning as defined in section IV headed “Refreshment of
General Mandate” of the Letter from the Board included in this
circular;
“Fengjie Project”
means the 2×600 MW power generating units project of Fengjie
Power Plant of Huadian Power International Corporation Limited*,
a branch of the Company;
“Group”
means the Company and its subsidiaries as at the Latest Practicable
Date;
“Hong Kong”
means the Hong Kong Special Administrative Region of the PRC;
“Hong Kong Listing Rules”
means the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited;
“Hong Kong Stock Exchange”
means The Stock Exchange of Hong Kong Limited;
“H Shares”
means the overseas listed foreign shares in the ordinary share
capital of the Company, with a par value of RMB1.00 each, which
are listed on the Hong Kong Stock Exchange;
— iii —
DEFINITIONS
“IBC”
means the independent board committee of the Company
comprising all independent non-executive Directors formed
in accordance with the Hong Kong Listing Rules to advise
the Independent Shareholders on the China Huadian A Shares
Subscription, the China Huadian A Shares Subscription Agreement
and the refreshment of the Existing General Mandate;
“Independent Financial Adviser”
means China Investment Securities International Capital Limited,
or “China Investment
( 中投證券國際融資有限公司 ), a corporation licensed to conduct
Securities”
Type 6 (advising on corporate finance) regulated activity under the
SFO;
“Independent Shareholders”
means Shareholders other than: (i) China Huadian and its associates
including China Huadian Hong Kong; and (ii) all other parties
(if any) who are interested or involved in the China Huadian A
Shares Subscription and the China Huadian A Shares Subscription
Agreement;
“Latest Practicable Date”
means 16 January 2015, being the latest practicable date prior to
the printing of this circular for ascertaining certain information
contained herein;
“Non-Public Issuance”
the proposed non-public issuance of not more than 1,418,000,000
A Shares of the Company to not more than 10 target investors,
including China Huadian;
“PRC”
means the People’s Republic of China;
“Price Determination Date”
means 30 December 2014, i.e., the date of the announcement in
the PRC of the Board’s resolutions in respect of the Non-Public
Issuance;
“Price Determination Period”
means the period of 20 trading days prior to the Price
Determination Date, i.e. from 25 November 2014 to 22 December
2014, and for this purpose, “trading day” means a day on which
the Shanghai Stock Exchange is open for dealing or trading in
securities;
“RMB”
Renminbi, the lawful currency of the PRC;
— iv —
DEFINITIONS
“Refreshed General Mandate”
has the meaning as defined in section IV headed “Refreshment of
General Mandate” of the Letter from the Board included in this
circular;
“SASAC”
means 中國國務院國有資產監督管理委員 * (State-owned Assets
Supervision and Administration Commission of the State Council
of the PRC);
“SFO”
means the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or otherwise
modified from time to time;
“Share(s)”
the share(s) in the ordinary share capital of the Company, with
a nominal value of RMB1.00 each, including A Share(s) and H
Share(s);
“Shareholder(s)”
means the shareholders of the Company;
“Shiliquan Project”
means the 1×600 MW power generating unit project of Shiliquan
Power Plant of Huadian Power International Corporation Limited*,
a branch of the Company; and
“%”
means per cent.
—v—
LETTER FROM THE BOARD
PRC
Directors:
Li Qingkui (Chairman, Non-executive Director)
Chen Jianhua (Vice Chairman, Executive Director)
Chen Dianlu (Vice Chairman, Non-executive Director)
Geng Yuanzhu (Executive Director)
Wang Yingli (Non-executive Director)
Chen Bin (Non-executive Director)
Gou Wei (Non-executive Director)
Chu Yu (Non-executive Director)
Wang Yuesheng (Independent Non-executive Director)
Ning Jiming (Independent Non-executive Director)
Yang Jinguan (Independent Non-executive Director)
Ding Huiping (Independent Non-executive Director)
Office address:
No.2 Xuanwumennei Street
Xicheng District
Beijing, the PRC
Place of business in Hong Kong:
36th Floor, Tower Two
Times Square
1 Matheson Street
Causeway Bay
Hong Kong
20 January 2015
To the Shareholders
Dear Sir or Madam,
AND
I.
INTRODUCTION
Reference is made to: (i) the announcement of the Company dated 29 December 2014 in
relation to, among others, the proposed Non-Public Issuance of A Shares, placing of new A
Shares to China Huadian and refreshment of the Existing General Mandate; and (ii) the notice
of EGM dated 30 December 2014 for the purpose of considering and approving the resolutions
in relation to among others, the Non-Public Issuance, China Huadian A Shares Subscription,
the China Huadian A Shares Subscription Agreement and refreshment of the Existing General
Mandate.
—1—
The purpose of this circular is to provide the Shareholders with further information in respect
of resolutions regarding the following matters to be proposed at the EGM to enable the
Shareholders to make their informed decisions as to how to vote at the EGM:
(i)
details of the proposed Non-Public Issuance;
(ii)
the terms of the China Huadian A Shares Subscription Agreement and details of the
China Huadian A Shares Subscription; and
(iii) refreshment of the Existing General Mandate.
II.
THE NON-PUBLIC ISSUANCE
The Board announced that on 29 December 2014, the Board resolved to propose a non-public
issuance of A Shares.
Proposal
(1)
Class and nominal value of the Shares to be issued
The Shares to be issued under the Non-Public Issuance are RMB denominated ordinary
Shares of the Company with a nominal value of RMB1.00 per Share, which will be listed
domestically (A Shares).
(2)
Target subscribers
The Non-Public Issuance of A Shares will contain two tranches: (1) Non-Public Issuance
to Independent Shareholders and (2) China Huadian A Shares Subscription. The NonPublic Issuance is proposed to target not more than ten specified investors, including
China Huadian. China Huadian has entered into the China Huadian A Shares Subscription
Agreement on 29 December 2014 with the Company, pursuant to which China Huadian
will subscribe for not less than 20% of the new A Shares to be issued under the NonPublic Issuance. Details of China Huadian A Shares Subscription are set out in section
III of the Letter from the Board below. Other than China Huadian, the specified investors
shall be investors which complied with the requirements of CSRC, including securities
investment funds, insurance institutional investors, trust investment companies, financial
companies, securities companies, qualified foreign institutional investors, natural persons
and other qualified investors.
—2—
After the Company has obtained the approval in respect of the Non-Public Issuance
from the CSRC, the ultimate target subscribers (other than China Huadian) will be
determined by the Board and its authorized person and the lead underwriter based on the
relevant requirements of CSRC and the price quoted by target subscribers, following the
price priority principle, a book-building process, in accordance with Article 27 of the
Implementation Rules for the Non-public Issue of Shares by Listed Companies issued by
the CSRC. CSRC requires the Company to solicit price quote from, among others, not
less than:
(i)
20 securities investment funds;
(ii)
10 securities companies; and
(iii) five insurance institutional investors.
Shares will be issued to all the successful target subscribers at the same time upon
completion of the Non-Public Issuance.
China Huadian will remain as the controlling shareholder of the Company after the
subscription of shares under the Non-Public Issuance by the target subscribers (including
China Huadian).
As at the Latest Practicable Date, the Company had not entered into any agreements with
any potential investor (other than China Huadian) in connection with the Non-Public
Issuance. The Company will make further announcement(s) to update its Shareholders
and the investing public if there are material developments in respect of the Non-Public
Issuance, including the entering into of any placing agreements by the Company in
connection with the Non-Public Issuance (if any) as and when considered appropriate. To
the best knowledge, information and belief of the Directors, the potential investors (other
than China Huadian) and their respective ultimate beneficial owners are not connected
persons of the Company. The Company will use its best efforts to ensure that the
investors (other than China Huadian) and their ultimate beneficial owners are third parties
independent of the Company and its connected persons.
—3—
(3)
Number of Shares to be issued and method of subscription
The Non-Public Issuance of A Shares will be conducted pursuant to the Refreshed General
Mandate. The number of Shares to be issued under the Non-Public Issuance will not
exceed 1,418,000,000 Shares, and therefore the aggregate nominal value of the Shares to
be issued will not exceed RMB1,418,000,000. Within the range of the issuance mentioned
above, the ultimate number of the issuance will be determined by the Board and person(s)
authorised by the Board according to the market conditions at the time of the Non-Public
Issuance after consultation with the lead underwriter of this issuance. As the amount of
the total proceeds raised from the Non-Public Issuance is capped at RMB7,147,000,000, if
the final issue price of the Non-Public Issuance, determined according to a book-building
process as described in paragraph headed “Price Determination Date, issue price and
method of pricing” in section II of the Letter from the Board below, shall be higher than
RMB5.04 per Share, the number of Shares issuable under the Non-Public Issuance will be
reduced accordingly such that the total proceeds will amount to RMB7,147,000,000.
All Shares to be issued under the Non-Public Issuance shall be subscribed in cash.
(4)
Method of issuance
All A Shares under the Non-Public Issuance will be offered to target investors by way of
non-public issuance at an appropriate time to be determined, which shall be within the
time limit as stated in the approval to be obtained from CSRC. Based on prior experience,
such time limit will normally be six months upon obtaining the approval from CSRC.
(5)
Price Determination Date, issue price and method of pricing
The pricing benchmark date of the Non-Public Issuance shall be the Price Determination
Date, i.e., 30 December 2014. According to the requirements of relevant laws and
regulations and regulatory documents including the Measures for Administration of the
Issue of Securities by Listed Companies (《上市公司證券發行管理辦法》) and the
Implementation Rules for the Non-public Issue of Shares by Listed Companies (《上
市公司非公開發行股票實施細則》), the issue price of the Non-Public Issuance shall
be not less than RMB5.04 per Share, i.e. not less than 90% of the average trading price
of the A Shares in the Price Determination Period (the average trading price of the A
Shares in the Price Determination Period = the total value of A Shares traded in the Price
Determination Period/the total volume of A Shares traded in the Price Determination
Period). The issue price will be adjusted correspondingly in case of any ex-rights or exdividend events during the period from the Pricing Determination Date to the date of
issuance.
—4—
Subject to the abovementioned indicative minimum issue price, the issue price of the
Non-Public Issuance will be determined by a book-building process. The Board and its
authorized person(s) shall after the approval from CSRC is obtained, determine the final
issue price in accordance with the authorization of general meeting of the Company,
the requirements of relevant laws and regulations and other regulatory documents and
the price quoted by investors based on the price priority principle after consultation
with the lead underwriter for the Non-Public Issuance, in accordance with Article 27
of the Implementation Rules for the Non-public Issue of Shares by Listed Companies
issued by the CSRC, which requires the Company and the lead underwriter to collect
the accumulative statistics of the valid subscription quotations and reasonably ascertain
the offering targets, subscription price and subscription amount based on price priority
principle.
The indicative minimum issue price of RMB5.04 per Share under the Non-Public
Issuance: (i) represents no less than 90% of the average trading price of the A Shares
during the Price Determination Period, and (ii) represents a discount of less than 20%
to the higher of the closing price of the H Shares on 22 December 2014 and the average
closing price of the H Shares in the 5 trading days immediately before that date, assuming
an exchange rate of HK$1 = RMB0.80.
On the basis of the above, the Directors believe that the indicative minimum issue price
of the Non-Public Issuance is fair and reasonable under the circumstances. As stated
above, the final issue price will be determined subject to compliance with requirements
of the relevant laws and rules applicable to the Company and the Non-Public Issuance.
Further, the Company’s PRC lawyers in respect of the Non-Public Issuance will issue a
report which will be published in Chinese in due course regarding the process of the NonPublic Issuance, and will provide their opinion as to whether such process and the results
of the Non-Public Issuance are fair, just and in compliance with the relevant regulations
as a matter of PRC law. The PRC lawyers will witness the relevant legal documents, and
confirm the effectiveness of such legal documents in their report.
The net price to the Company of each new A Share to be issued will be determined and
disclosed upon completion of the Non-Public Issuance and the determination of relevant
expenses incurred or to be incurred in relation to the Non-Public Issuance in accordance
with the requirements of the Hong Kong Listing Rules.
As at 22 December 2014 (i.e. the latest trading day preceding the trading suspension
of the Shares of the Company), the closing price of the A Shares and the H Shares
respectively was RMB7.38 and HK$6.81 per Share.
—5—
Under the PRC regime, so far as the Company understands, the book-building and
allocation process will be implemented mainly through several steps which are generally
summarised below:
Stage 1 - Communication with CSRC
At this stage, the lead underwriter of the Non-Public Issuance will communicate with the
CSRC on the steps of the book-building process. Based on previous experience, CSRC
may require the lead underwriter at this stage to obtain from China Huadian a legally
binding commitment in respect of the number of A Shares or percentage of A Shares
issuable under the Non-Public Issuance to be subscribed for by China Huadian (which
will represent/be not less than 20% of the total number of A Shares finally available
under the Non-Public Issuance according to the China Huadian A Shares Subscription
Agreement).
Stage 2 - Filing with CSRC
The Company will then submit to CSRC for confirmation the proposed issue plan and
other documents related to the Non-Public Issuance.
Stage 3 - Book-building process
Assuming that China Huadian has submitted its legally binding commitment in Stage 1,
the number of A Shares or percentage of A Shares issuable under the Non-Public Issuance
set out in the said commitment will be allocated to and made available for subscription
by China Huadian according to the China Huadian A Shares Subscription Agreement, and
the remaining A Shares issuable under the Non-Public Issuance will be made available
to other potential subscribers which will indicate to the lead underwriter the proposed
number(s) of A Shares to be subscribed for at the relevant pricing level(s). China
Huadian will be obliged to subscribe for the number of A Shares or percentage of A
Shares issuable under the Non-Public Issuance as stated in the legal binding commitment
in Stage 1 regardless of the indications made by other potential subscribers (other than
China Huadian) in Stage 3.
—6—
Assuming that China Huadian has not submitted the said commitment in Stage 1, 20% of
the A Shares finally determined to be issuable under the Non-Public Issuance will initially
be allocated to China Huadian, and the balance of such A Shares will be made available
to other potential subscribers which will likewise indicate to the lead underwriter the
proposed number(s) of A Shares to be subscribed for at the relevant pricing level(s).
After the subscription price is determined and after the A Shares are allocated to the
target subscribers (other than China Huadian), China Huadian will have the right to take
up the A Shares available for subscription but not subscribed for by the other potential
subscribers at the subscription price applicable to other target subscribers.
During the process, all the indications made by the potential subscribers (other than China
Huadian) will be ranked with reference to the proposed subscription pricing levels to
determine the final subscription price.
In either case, China Huadian will not participate in the book-building process for fixing
the subscription price of the A Shares to be issued, and will subscribe for the A Shares
allocated to it at the subscription price fixed in accordance with the book-building
procedures, which price shall be the same as the price applicable to all target subscribers.
(6)
Conditions precedent
The Non-Public Issuance is conditional upon, among other things, (i) the approvals of all
resolutions in respect of the Non-Public Issuance by the Shareholders at the extraordinary
general meeting as required by the relevant PRC laws and regulations; and (ii) obtaining
of the approvals and the authorization from SASAC and CSRC as required under relevant
laws, regulations and regulatory documents. The China Huadian A Shares Subscription
forms part of and will complete simultaneously when the Non-Public Issuance completes.
Upon satisfaction of all the conditions precedent, the Company will apply for the issuance
and listing of the Shares to the Shanghai Stock Exchange and China Securities Depository
and Clearing Corporation Limited and complete all approval procedures for the NonPublic Issuance. The Company is preparing to apply for the approval from SASAC and,
based on prior experience, currently expects that such approval may be obtained before
the EGM. The Company will apply for the approval from CSRC immediately after the
resolutions in respect of the Non-Public Issuance are passed at the EGM. For additional
conditions precedent in respect of the China Huadian A Shares Subscription Agreement,
please refer to the paragraph headed “Conditions Precedent” in section III of the Letter
from the Board included in this circular.
—7—
(7)
Lock-up period arrangement
The Shares subscribed for by the investors (other than China Huadian) under the NonPublic Issuance shall not be transferred within 12 months from the date of the completion
of the issuance. Please refer to the paragraph headed “Lock-up arrangement” in section
III of the Letter from the Board included in this circular for details of the lock-up period
arrangement for Shares issued under China Huadian A Shares Subscription.
(8)
Use of proceeds
The total proceeds of the Non-Public Issuance will be not more than RMB 7,147 million.
After deducting all applicable costs and expenses in association with the Non-Public
Issuance, the proceeds are proposed to be utilized in the following ways:
No.
Name of project
Proceeds to be utilized
(RMB million)
1
Fengjie Project
3,000
2
Shiliquan Project
2,100
3
Replenish working capital
Not more than 2,047
Total
Not more than 7,147
Should the total proceeds of the Non-Public Issuance be lower than RMB7,147 million (but
higher than RMB5,100 million), the amount proposed to be used as working capital of the
Company will be reduced by that shortfall.
Should the total proceeds of the Non-Public Issuance be lower than RMB5,100 million,
no proceeds will be used as working capital of the Company, and the Company currently
intends to allocate the proceeds between the Fengjie Project and the Shiliquan Project on
a pro-rata basis.
Please refer to The Feasibility Analysis Report on the Use of Proceeds Raised from the
Non-Public Issuance of A Shares set out in Appendix I to this circular for an analysis on
the use of proceeds of the Non-Public Issuance.
—8—
Fengjie Project
Fengjie Power Plant of Huadian Power International Corporation Limited* is a
branch of the Company. Fengjie Project is a main power supply project in Chongqing
Municipality, under which 2×600 MW supercritical coal-fired power generating units
will be constructed and a total of 381 MW small power generating units in Chongqing
Municipality will be closed down accordingly. Therefore, it is a project of “replacing
smaller units with larger units”. It is anticipated that these two new units will be put into
operation in 2016.
Upon putting into operation, Fengjie Project will become one of the main on-grid power
resources in Chongqing and will be responsible for the power supply in the city, which
will effectively narrow the on-grid power gap, satisfying the needs for development in
Chongqing and guaranteeing the provision of stable energy supply for the sustainable
development of the economy in Chongqing.
The total investment amount of this project will be RMB4,680 million, and the total
invested amount has been approximately RMB740 million so far. Subject to the
mechanism as described before, the proceeds of RMB3,000 million from the Non-Public
Issuance will be used for the Fengjie Project. If there is insufficient funding for this
project afterwards, the Company will finance the same by raising funds on its own. As
required by the government authority in the PRC, the financial internal return rate of the
project will have to be not less than 8%.
Shiliquan Project
Shiliquan Power Plant of Huadian Power International Corporation Limited* is a branch
of the Company. Shiliquan Project, locating at the industrial area at the south of Shizhong
District, Zaozhuang City, Shandong Province, is one of the key projects in Shandong
Province and is also an important part of the policy on energy conservation, emission
reduction and optimization of the structure of power resources. Under the Shiliquan
Project, one 600 MW ultra-supercritical coal-fired power generating unit with the function
to supply heat as well will be expanded, and a total of 240 MW small power generating
units in Shandong Province will be closed down accordingly. Therefore, it is a project of
“replacing smaller units with larger units”. It is anticipated that the unit will be put into
operation in 2016.
—9—
The construction of Shiliquan Project is able to ease the tension of the supply of on-grid
power, improve the on-grid structure and improve the stability as well as efficiency of the
on-grid operation. According to the analysis on the demand for heat load for the urban
development in Zaozhuang City, the construction of this project is able to effectively
enhance the utilization rate of coal resources, reduce environmental pollution and improve
the people’s livelihood. Accordingly, there are stable demands for power and heat for
Shiliquan Project in the market. In addition, Shiliquan Project adopts domestic heat
supplying units that are environment-friendly, highly efficient and ultra supercritical,
which fully makes use of the water in urban area, recycling water and waste water at old
plants and existing fundamental facilities at the old plants. By taking advantage of local
coal resources, the distance of delivery is shortened, which allows the integrated usage of
resources, and advancement in various technical and economic indicators.
The total investment amount of this project will be RMB3,130 million, and the total
invested amount has been approximately RMB420 million so far. Subject to the
mechanism as described before, the proceeds of RMB2,100 million from the Non-Public
Issuance will be used for the Shiliquan Project. If there is insufficient funding for this
project in the future, the Company will finance the project by raising funds on its own.
As required by the government authority in the PRC, the financial internal return rate of
the project will have to be not less than 8%.
(9)
Accumulated profit distribution of the Company prior to the Non-Public Issuance
The new and existing Shareholders after the Non-Public Issuance will share the
undistributed profits of the Company accumulated prior to the Non-Public Issuance.
(10) Valid period of the resolution regarding the Non-Public Issuance
The resolution regarding the Non-Public Issuance shall be valid for 12 months from the
date of consideration and approval at the EGM.
Benefits of and reasons for the Non-Public Issuance
The Directors believe that the Non-Public Issuance (including China Huadian A Shares
Subscription) will significantly enhance the capital structure and financial position of the
Company by improving its balance sheet and leverage ratios, and will also improve the
financing capability of the Company, which in the long term, will enhance the Company’s
competitiveness and help the Company improve its operational position. The Non-Public
Issuance (including China Huadian A Shares Subscription) can also raise funds for the Company
to finance the Fengjie Project and the Shiliquan Project and to supplement the working capital
of the Company.
— 10 —
Implications under the Hong Kong Listing Rules
One of the target subscribers, China Huadian, being a controlling shareholder and hence a
connected person of the Company, has a material interest in the Non-Public Issuance. China
Huadian and its close associates shall therefore abstain from voting on the resolutions approving
the Non-Public Issuance. According to relevant requirements of the Hong Kong Listing Rules,
the Company will proceed with the Non-Public Issuance after obtaining approvals from
Independent Shareholders by way of special resolutions at the EGM convened in compliance
with the articles of association of the Company.
Details of previous fund raising activities by way of issue of equity securities in the past 12
months
Date of completion Fund raising activity
18 July 2014
Net proceeds raised
Placing of new A Shares under general Approximately
Use of net proceeds
(i) Approximately RMB2,233 million
mandate granted to the Board at RMB3,311 million
has been used as the Company’s working
the annual general meeting of the
capital to repay bank borrowings; and (ii)
Company held on 25 June 2013
approximately RMB1,078 million has been
used to purchase coal
30 July 2014
Placing of new H Shares under general Approximately
(i) Approximately HK$625 million has been
mandate granted to the Board at HK$1,384 million
used as the Company’s working capital to
the annual general meeting of the
repay bank borrowings; (ii) approximately
Company held on 30 May 2014
HK$620.6 million has been used to replenish
the working capital; and (iii) the remaining
balance of approximately HK$138.4 million
is maintained at the Company’s bank account
Save for the fund raising activities disclosed above, the Company had not conducted any other
fund raising activities by way of issue of equity securities in the past 12 months immediately
preceding the Latest Practicable Date.
The Directors are of the opinion that the terms of the Non-Public Issuance (including the
proposed minimum issue price) are on normal commercial terms and are fair and reasonable
taking into consideration the prevailing market conditions and are in the interests of the
Company and Shareholders as a whole.
— 11 —
The Company will apply to the Shanghai Stock Exchange for the listing of, and permission
to deal in, the new A Shares to be issued pursuant to the Non-Public Issuance. Dealing in the
A Shares to be issued under the Non-Public Issuance on the Shanghai Stock Exchange will
commence upon expiration of the lock-up period. The new A Shares to be issued pursuant to the
Non-Public Issuance will rank, upon issue, pari passu in all respects with the A Shares in issue
at the time of allotment and issue of such new A Shares.
Shareholders and potential investors should be aware that, apart from the conditional
China Huadian A Shares Subscription Agreement, the Company has not entered into any
definitive agreement in connection with the Non-Public Issuance which is subject to the
conditions precedent set out above, and consequently the Non-Public Issuance may or may
not proceed. Accordingly, Shareholders are advised to exercise caution when dealing in the
Shares.
III. CHINA HUADIAN A SHARES SUBSCRIPTION
China Huadian A Shares Subscription Agreement
(1)
Parties
(i.)
The Company as issuer; and
(ii.) China Huadian as the subscriber.
(2)
Number of new A Shares subscribed for
Under the China Huadian A Shares Subscription Agreement, China Huadian will subscribe
for an aggregate of not less than 20% of the new A Shares to be issued under the NonPublic Issuance. Assuming that the number of A Shares issuable under the Non-Public
Issuance is 1,418,000,000 Shares, the minimum number of new A Shares to be subscribed
for under the China Huadian A Share Subscription Agreement represented approximately
3.22% of the existing issued share capital of the Company and approximately 4.00% of
the existing issued A Shares as at the Latest Practicable Date.
— 12 —
Immediately upon completion of the Non-Public Issuance, assuming (1) that the number
of A Shares issuable under the Non-Public Issuance is 1,418,000,000 Shares, (2) that
China Huadian will subscribe for the minimum number of A Shares issuable under the
China Huadian A Shares Subscription Agreement and (3) that there will be no other issue
or transfer of Shares from the Latest Practicable Date to completion of the Non-Public
Issuance, China Huadian and its associates, as ultimate beneficial owner, will hold in
aggregate 4,690,523,853 Shares, representing approximately 45.87% of the then enlarged
total issued share capital of the Company and will hold in aggregate 4,604,661,853 A
Shares, representing approximately 54.12% of the enlarged total issued A Shares.
Subject to the regulatory approvals as described in the paragraph headed “Conditions
Precedent” in section II of the Letter from the Board included in this circular which
may or may not be obtained, it is possible that China Huadian, under the Non Public
Issuance, may take up all the new A Shares to be issued pursuant to the Non-Public
Issuance. If that is the case, assuming (1) that the number of A Shares issuable under the
Non-Public Issuance is 1,418,000,000 Shares, and (2) that there will be no other issue
or transfer of Shares from the Latest Practicable Date to completion of the Non-Public
Issuance, immediately upon completion of the Non-Public Issuance, China Huadian and
its associates, as ultimate beneficial owner, will hold in aggregate 5,824,923,853 Shares,
representing approximately 56.97% of the then enlarged total issued share capital of the
Company and will hold in aggregate 5,739,061,853 A Shares, representing approximately
67.45% of the enlarged total issued A Shares.
(3)
Subscription price
The subscription price of the new A Shares to be issued under the China Huadian A
Shares Subscription shall be the same as the issue price of the Non-Public Issuance.
The subscription price will, pursuant to the terms of the China Huadian A Shares
Subscription Agreement, be paid in cash into the special savings account as designated
by the lead underwriter when the Company issues the new A Shares to China Huadian
after the Company obtains, among others, the approval of CSRC for the proposed China
Huadian A Shares Subscription.
— 13 —
(4)
Conditions precedent
The China Huadian A Shares Subscription is conditional upon (i) the execution of the
China Huadian A Shares Subscription Agreement by the Company and China Huadian;
(ii) the Independent Shareholders approving the China Huadian A Shares Subscription
Agreement and the China Huadian A Shares Subscription by poll at the EGM; and (iii)
the relevant governmental and regulatory authorities, including but not limited to SASAC
and CSRC, approving the China Huadian A Shares Subscription. The China Huadian A
Shares Subscription forms part of and will complete simultaneously when the Non-Public
Issuance completes.
No conditions are waivable under the China Huadian A Shares Subscription Agreement.
(5)
Lock-up arrangement
Pursuant to the relevant rules of CSRC, China Huadian shall not transfer any of the
new A Shares it will subscribe for pursuant to the China Huadian A Shares Subscription
Agreement within 36 months from the date of completion of the China Huadian A
Shares Subscription. Except for this lock-up arrangement, there is no restriction on the
subsequent sale of the new A Shares that China Huadian will subscribe for pursuant to
the China Huadian A Shares Subscription Agreement.
Since China Huadian is the controlling shareholder of the Company, and hence a connected
person of the Company, the placing and issue of new A Shares to China Huadian pursuant to
the China Huadian A Shares Subscription Agreement constitutes a connected transaction of the
Company and is subject to announcement, circular and shareholders’ approval requirements
under Chapter 14A of the Hong Kong Listing Rules. The proposal relating to the China
Huadian A Shares Subscription and the China Huadian A Shares Subscription Agreement will
be proposed by way of a special resolution at the EGM for the Independent Shareholders to
approve. As required by the Hong Kong Listing Rules, as at the Latest Practicable Date, China
Huadian, which hold 4,321,061,853 issued A Shares representing approximately 49.06% of
the Company’s total issued share capital, and its wholly-owned subsidiary, China Huadian
Hong Kong, which hold 85,862,000 issued H Shares representing approximately 0.97% of the
Company’s total issued share capital, will abstain from voting on the resolutions to be proposed
at the EGM for approving the China Huadian A Shares Subscription and the China Huadian A
Shares Subscription Agreement.
— 14 —
Four non-executive Directors, namely, Mr. Li Qingkui, Mr. Chen Bin, Mr. Gou Wei and Mr.
Chu Yu (who are currently employees of China Huadian), have abstained from voting on the
Board resolutions approving the transactions contemplated under the China Huadian A Shares
Subscription Agreement. Save as mentioned above, none of the other Directors has a material
interest in the China Huadian A Shares Subscription and hence no other Director has abstained
form voting on such Board resolutions.
An IBC (comprising all the independent non-executive Directors) has, in accordance with the
Hong Kong Listing Rules, been formed to advise the Independent Shareholders on the China
Huadian A Shares Subscription and the China Huadian A Shares Subscription Agreement. In
this connection, an independent financial adviser has also been appointed with the approval of
the IBC to advise such committee and the Independent Shareholders as to whether the China
Huadian A Shares Subscription and the China Huadian A Shares Subscription Agreement are
fair and reasonable and make recommendation on voting.
The Directors are of the opinion that the terms of the China Huadian A Shares Subscription and
the China Huadian A Shares Subscription Agreement (including the proposed issue price) are
on normal commercial terms and are fair and reasonable taking into consideration the prevailing
market conditions and are in the interests of the Company and Shareholders as a whole.
— 15 —
Effects on the shareholding structure of the Company
Set out below was the information on the Company’s shareholding structure as at the Latest
Practicable Date and immediately after the completion of the Non-Public Issuance:
As at the Latest Practicable Date
Approximate percentage
of the total issued shares
Shareholders
Number of Shares held
of the Company
China Huadian
4,321,061,853 A Shares
49.06%
85,862,000 H Shares
0.97%
4,406,923,853
50.04%
2,768,994,347 A Shares
31.44%
1,631,371,600 H Shares
18.52%
8,807,289,800
100%
China Huadian Hong Kong (a wholly-owned
subsidiary of China Huadian and an associate
of China Huadian)
Sub-total of shareholding interests held
by China Huadian and its associate
Public
Total
— 16 —
Assuming that (i) 1,418,000 A Shares are issued under the Non-Public Issuance; (ii) 20% of
new A Shares currently anticipated to be issued under the Non-Public Issuance, i.e. a total of
283,600,000 new A Shares, are fully subscribed for by China Huadian; and (iii) no other Shares
will be issued or transferred after the Latest Practicable Date until completion of the NonPublic Issuance:
Shareholders
of the Company
China Huadian
4,604,661,853 A Shares
45.03%
85,862,000 H Shares
0.84%
4,690,523,853
45.87%
3,903,394,347 A Shares
38.18%
1,631,371,600 H Shares
15.95%
10,225,289,800
100%
of China Huadian)
Public
Total
— 17 —
Assuming that (i) 1,418,000 A Shares are issued under the Non-Public Issuance, (ii) all the
new A Shares currently anticipated to be issued under the Non-Public Issuance, i.e. a total
of 1,418,000,000 are fully subscribed for by China Huadian; and (iii) no other Shares will
be issued or transferred after the Latest Practicable Date until completion of the Non-Public
Issuance:
Shareholders
of the Company
China Huadian
5,739,061,853 A Shares
56.13%
85,862,000 H Shares
0.84%
5,824,923,853
56.97%
2,768,994,347 A Shares
27.08%
1,631,371,600 H Shares
15.95%
10,225,289,800
100%
of China Huadian)
Public
Total
The percentage figures above have been rounded off to the nearest second decimal place,
leading to minor discrepancy between 100% and the sum of all shares.
Shareholders and potential investors should be aware that the China Huadian A Shares
Subscription is subject to the conditions precedent set out above, and consequently the
China Huadian A Shares Subscription may or may not proceed. Accordingly, Shareholders
are advised to exercise caution when dealing in the Shares.
— 18 —
IV. REFRESHMENT OF GENERAL MANDATE
Existing General Mandate
At the annual general meeting of the Company held on 30 May 2014, the Shareholders
approved, among other things, the grant of the general mandate to the Directors to allot, issue
and deal with no more than 286,205,600 H Shares and 1,188,011,240 A Shares in the share
capital of the Company, representing 20% of each of the then existing total number of H
Shares and A Shares as at the date of passing of the relevant resolution (the “Existing General
Mandate”).
Upon the completion of the placing of H Shares on 30 July 2014, the Existing General Mandate
in respect of the H Shares has been fully used. As at the Latest Practicable Date, the Company
had not made any refreshment of the Existing General Mandate since the annual general meeting
of the Company on 30 May 2014.
Refreshed General Mandate
As at the Latest Practicable Date, there were 7,090,056,200 A Shares and 1,717,233,600 H
Shares in issue. In this regard, the Board has proposed that the Existing General Mandate
be refreshed to authorise the Directors to issue and allot up to 1,418,011,240 A Shares and
343,446,720 H Shares, representing 20% of each of the existing total number of A Shares and H
Shares as at the date of passing of the proposed resolution at the EGM of the Company (assuming
no Shares will be issued or repurchased by the Company prior to the date of the EGM) (the
“Refreshed General Mandate”). The Refreshed General Mandate will, if granted at the EGM,
remain effective until the earliest of: (a) the conclusion of the first annual general meeting of
the Company immediately after the passing of the resolutions at the EGM; or (b) the end of the
period within which such annual general meeting of the Company is required by the articles of
the Company or any applicable laws to be held; or (c) when revoked or varied by an ordinary
resolution of the Shareholders in a general meeting prior to the next annual general meeting of
the Company.
The refreshment of the Existing General Mandate before the next annual general meeting of the
Company is subject to the approval of the Independent Shareholders at the EGM, pursuant to
rule 13.36(4) of the Hong Kong Listing Rules. China Huadian (being the Company’s controlling
shareholder) and China Huadian Hong Kong (being an associate of the Company’s controlling
shareholder) are required to and shall abstain from voting in favour of the proposed resolution
approving the refreshment of the Existing General Mandate. The Company will also comply
with the requirements specified under Rule 13.39(4).
— 19 —
If the Refreshed General Mandate is granted by the Independent Shareholders at the EGM, it
will refresh and replace the Existing General Mandate which will thereby, and starting from the
conclusion of the EGM, cease to be in force.
If however the Refreshed General Mandate is not granted by the Independent Shareholders
at the EGM, the Existing General Mandate, to the extent unused, will continue to be valid,
effective and in force according to the terms of the Existing General Mandate as approved
by the Shareholders at the Company’s annual general meeting on 30 May 2014. In that case,
the resolutions in respect of the Non-Public Issuance (including the China Huadian A Shares
Subscription) will not be proposed for approval at the EGM and the Non-Public Issuance will
not proceed as a result. The Company will comply with the relevant laws and regulations to
which it is subject if it has reached any decision to raise funds in the future.
Reasons for the refreshment of the Existing General Mandate
The Directors believe that the Refreshed General Mandate will allow financial flexibility for the
Company to raise further funds for its future business development and expansion.
In respect of the A Shares issuable under the Refreshed General Mandate, if granted, as set
out in section II of the Letter from the Board included in this circular, the Company proposes
to raise not more than RMB 7,147 million by issuing not more than 1,418,000,000 A Shares
by way of Non-Public Issuance. The resolutions in respect of the Non-Public Issuance will be
subject to the approval of the Independent Shareholders at the EGM.
In respect of the H Shares issuable under the Refreshed General Mandate, if granted, as at the
Latest Practicable Date, the Directors had no specific plan to utilize such Refreshed General
Mandate to allot and issue H Shares but may do so in the future if there arise new business
opportunities which require additional funding. Save as disclosed in the announcement of the
Company dated 29 December 2014, currently, the Company has not made any decision or
reached any agreement in respect of such business opportunities. The Company will comply
with the relevant regulatory requirements under laws and rules, including the Hong Kong
Listing Rules, that are applicable to it if and when such opportunities materialize.
Accordingly, the Directors and the independent non-executive Directors consider that the
approval of the grant of the Refreshed General Mandate is in the interests of the Company and
the Shareholders as a whole.
— 20 —
V.
INFORMATION ON THE PARTIES
Information relating to the Group
The Group is one of the largest comprehensive energy companies in the PRC, and primarily
engages in the construction and operation of power plants, including large-scale efficient coal
or gas-fired generating units and various renewable energy projects, and the development,
construction and operation of coal mines.
Information relating to China Huadian
China Huadian, a wholly PRC state-owned enterprise and the controlling shareholder of the
Company, directly and indirectly through China Huadian Hong Kong, holds approximately
50.04% equity interests in the Company. China Huadian is primarily engaged in power
generation, heat production and supply, energy development of coal and other resources related
to the power generation and relevant professional technical services.
VI. EGM
The notice of the EGM of the Company is set out on pages 58 to 68 of this circular. If you are
eligible and intend to attend the EGM, please complete and return the reply slip despatched on
30 December 2014 in accordance with the instructions printed thereon on or before Friday, 23
January 2015. Shareholders who intend to appoint a proxy to attend the EGM shall complete
and return the proxy form despatched on 30 December 2014 in accordance with the instructions
printed thereon not less than 24 hours before the time fixed for holding the EGM or any
adjournment thereof (as the case may be). Completion and return of the proxy form will not
preclude you from attending the EGM and voting in person if you so wish.
China Huadian, which holds 4,321,061,853 issued A Shares representing approximately
49.06% of the Company’s total issued share capital, and China Huadian Hong Kong (being
a close associate of China Huadian), which holds 85,862,000 issued H Shares representing
approximately 0.97% of the Company’s total issued share capital, will abstain from voting on
the resolutions approving the Non-Public Issuance. China Huadian and China Huadian Hong
Kong (being an associate of China Huadian) will abstain from voting on the resolutions to be
proposed at the EGM for approving the China Huadian A Shares Subscription and the China
Huadian A Shares Subscription Agreement. China Huadian (being the Company’s controlling
shareholder) and China Huadian Hong Kong (being an associate of the Company’s controlling
shareholder) will abstain from voting in favour of the proposed resolution approving the
refreshment of the Existing General Mandate.
— 21 —
VII. VOTING BY POLL
All the resolutions set out in the notice of the EGM would be decided by poll in accordance
with the Hong Kong Listing Rules and the articles of association of the Company.
On a poll, every Shareholder present in person (or, in the case of a Shareholder being a
corporation, by its duly authorised representative) or by proxy shall have one vote for every
fully paid Share held. A Shareholder present in person (or, in the case of a Shareholder being a
corporation, by its duly authorised representative) or by proxy who is entitled to more than one
vote need not use all his/its votes or cast all his/its votes in the same way.
After the conclusion of the EGM, the poll results will be published on the website of Hong
Kong Exchanges and Clearing Limited at www.hkexnews.hk and the website of the Company at
www.hdpi.com.cn.
VIII. FURTHER INFORMATION
Your attention is also drawn to the letter from the IBC, the letter from the Independent Financial
Adviser, and the Feasibility Analysis Report on the Use of Proceeds Raised from the NonPublic Issuance of A Shares as set out in Appendix I to this circular as well as the other general
information as set out in Appendix II to this circular.
Yours faithfully,
For and on behalf of the Board
Huadian Power International Corporation Limited*
Chairman
Li Qingkui
— 22 —
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
PRC
20 January 2015
To the Independent Shareholders
Dear Sir or Madam,
AND
We have been appointed to form the IBC to consider and advise the Independent Shareholders
in accordance with the Hong Kong Listing Rules as to our opinion on, (i) the terms of the China
Huadian A Shares Subscription and the China Huadian A Shares Subscription Agreement and (ii) the
refreshment of the Existing General Mandate, the details of which are set out in the circular issued by
the Company to the Shareholders dated 20 January 2015 (the “Circular”), of which this letter forms
part. Terms used herein shall have the same meanings as defined in the Circular unless the context
otherwise requires.
We wish to draw the attention of the Independent Shareholders to this letter from the Board, the letter
from the IBC and the letter of advice from China Investment Securities, the Independent Financial
Adviser, set out on pages 1 to 22, page 23 to 24 and pages 25 to 42 of the Circular, respectively.
— 23 —
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
Having taken into account the principal factors and reasons considered by the Independent Financial
Adviser, its conclusion and advice, we concur with the view of the Independent Financial Adviser
and consider that (i) the terms of the China Huadian A Shares Subscription and the China Huadian
A Shares Subscription Agreement are fair and reasonable, are on normal commercial terms or better
and are in the interests of the Company and the Shareholders as a whole; and that (ii) the refreshment
of the Existing General Mandate is fair and reasonable and is in the interests of the Company and the
Shareholders as a whole.
Accordingly, we recommend the Independent Shareholders to vote in favor of the resolutions to be
proposed at the EGM to approve the China Huadian A Shares Subscription, the China Huadian A
Shares Subscription Agreement and the refreshment of the Existing General Mandate.
Yours faithfully,
Independent Board Committee of
Independent Non-executive Directors
Wang Yuesheng, Ning Jiming, Yang Jinguan, Ding
Huiping
— 24 —
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
The following is the text of the letter of advice from the Independent Financial Adviser to the IBC and
the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.
63th Floor,
Bank of China Tower,
1 Garden Road,
Central,
Hong Kong
20 January 2015
Huadian Power International Corporation Limited
No. 2 Xuanwumennei Street,
Xicheng District
Beijing, PRC
To the IBC and the Independent Shareholders
Dear Sirs,
AND
INTRODUCTION
We refer to our appointment as the independent financial adviser to the Company to advise the
IBC and the Independent Shareholders in respect of the entering into the China Huadian A Shares
Subscription Agreement and the proposed refreshment of the Existing General Mandate and grant of
the Refreshed General Mandate (the “Refreshment of General Mandate”) to allot and issue Shares,
details of which are set out in the letter from the Board (the “Letter from the Board”) contained in
the circular dated 20 January 2015 (the “Circular”) issued by the Company to the Shareholders, of
which this letter forms part. The terms used in this letter shall have the same meanings as defined in
the Circular unless the context otherwise requires.
— 25 —
This letter contains our advice to the IBC and the Independent Shareholders as to whether or not
(i) the terms under the China Huadian A Shares Subscription Agreement are on normal commercial
terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests
of the Company and the Shareholders as a whole; (ii) the Refreshment of General Mandate is fair and
reasonable so far as the Independent Shareholders are concerned and in the interests of the Company
and the Shareholders as a whole; and (iii) the Independent Shareholders should vote in favour of the
resolutions to approve the China Huadian A Shares Subscription and the Refreshment of General
Mandate at the EGM.
As at the Latest Practicable Date, we did not have any relationships or interests with the Company or
any other parties that could reasonably be regarded as relevant to the independence of us. In the last
two years, we have acted as an independent financial adviser to the then independent board committee
and independent shareholders of the Company in relation to two occasions as detailed in the circulars
of the Company dated 15 November 2013 and 27 November 2014 respectively. Given (i) our
independent role in these two engagements; and (ii) our fees for these two engagements represented
an insignificant percentage of the revenue of our parent group, we consider these two engagements
would not affect our independence to form our opinion in respect of the China Huadian A Shares
Subscription Agreement and the Refreshment of General Mandate.
BASIS OF OUR OPINION
In formulating our advice and recommendations, we have relied on the accuracy of the information
and facts supplied, and the opinions expressed by the Company, its Directors and its management
to us. We have assumed that all statements of belief and intention made by the Directors and the
management of the Company in the Circular were made after due enquiry. We have also assumed that
all information, representations and opinion made or referred to in the Circular were true, accurate and
complete at the time they were made and continued to be so at the Latest Practicable Date. Should
there be any material changes to our opinion after the dispatch of the Circular, the Shareholders would
be notified as soon as possible. We have no reason to doubt the truth, accuracy and completeness of
the information and representations provided to us by the Company, its Directors and its management,
and have been advised by the Directors and the management of the Company that no material facts
have been omitted from the information provided and referred to in the Circular.
We consider that we have reviewed sufficient information to reach an informed view, to justify our
reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis
for our recommendation. We have not, however, conducted any form of in-depth investigation into
the business affairs, financial position or future prospects of the Group or the counterparties of the
China Huadian A Shares Subscription Agreement, nor carried out any independent verification of the
information supplied, representations made or opinions expressed by the Company, its Directors and
its management.
— 26 —
PRINCIPAL FACTORS AND REASONS CONSIDERED
In arriving at our opinions and recommendations, we have taken into consideration the following
principal factors and reasons:
I.
BACKGROUND
1.
The Non-Public Issuance (including the China Huadian A Shares Subscription)
On 29 December 2014, the Board resolved to propose a Non-Public Issuance and it will
contain two tranches, including (i) Non-Public Issuance to Independent Shareholders;
and (ii) the China Huadian A Shares Subscription, which is proposed to target not more
than ten specified investors, including China Huadian. The number of Shares to be issued
under the Non-Public Issuance will not exceed 1,418,000,000 Shares. As set out in the
Letter from the Board, (i) the issue price of the Non-Public Issuance shall be not less
than RMB5.04 per Share; and (ii) the amount of the total proceeds to be raised from the
Non-Public Issuance (including the China Huadian A Shares Subscription) is capped
at RMB7,147 million by the mechanism that, if the final issue price of the Non-Public
Issuance (including the China Huadian A Shares Subscription), determined according
to a book-building process, shall be higher than RMB5.04 per Share, the number of A
Shares issuable under the Non-Public Issuance (including the China Huadian A Shares
Subscription) will be reduced. Also, China Huadian had entered into the China Huadian
A Shares Subscription Agreement on 29 December 2014 with the Company. Under the
China Huadian A Shares Subscription Agreement, China Huadian will subscribe for an
aggregate of not less than 20% of the new A Shares to be issued under the Non-Public
Issuance and the subscription price of the new A Shares to be issued under the China
Huadian A Share Subscription shall be the same as the issue price of the Non-Public
Issuance. The minimum number of new A Shares to be subscribed under the China
Huadian A Share Subscription Agreement represents (i) approximately 3.22% of the
existing issued share capital of the Company; and (ii) approximately 4.00% of the existing
issued A Share capital of the Company respectively as at the Latest Practicable Date.
— 27 —
2.
The Refreshment of General Mandate
At the annual general meeting of the Company held on 30 May 2014, the Shareholders
approved, among other things, the grant of the general mandate to the Directors to allot,
issue and deal with no more than 286,205,600 H Shares and 1,188,011,240 A Shares in
the share capital of the Company, representing 20% of each of the then existing total
number of H Shares and A Shares as at the date of passing of the relevant resolution.
Upon the completion of the placing of H Shares on 30 July 2014, the Existing General
Mandate in respect of the H Shares has been fully used. As at the Latest Practicable
Date, there were 7,090,056,200 A Shares and 1,717,233,600 H Shares in issue. In this
regard, the Board proposes that the Existing General Mandate be refreshed to authorise
the Directors to issue and allot up to 1,418,011,240 A Shares and 343,446,720 H Shares,
representing 20% of each of the existing total number of A Shares and H Shares as at
the date of passing of the proposed resolution at the EGM of the Company (assuming no
Shares will be issued or repurchased by the Company prior to the date of the EGM).
3.
Hong Kong Listing Rules’ implication
The China Huadian A Shares Subscription
Since China Huadian is the controlling shareholder of the Company, and hence a
connected person of the Company, the placing of new A Shares to China Huadian
pursuant to the China Huadian A Shares Subscription Agreement constitutes a connected
transaction of the Company and is subject to announcement, circular and independent
shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.
As required by the Hong Kong Listing Rules, as at the Latest Practicable Date, China
Huadian, which held 4,321,061,853 issued A Shares representing approximately 49.06%
of the Company’s total issued share capital, and its wholly-owned subsidiary, China
Huadian Hong Kong, which held 85,862,000 issued H Shares representing approximately
0.97% of the Company’s total issued share capital, will abstain from voting on the
resolution to be proposed at the EGM for approving the China Huadian A Shares
Subscription.
The IBC has, in accordance with the Hong Kong Listing Rules, been formed to advise the
Independent Shareholders on the China Huadian A Shares Subscription Agreement and
the transaction contemplated thereunder at the EGM.
— 28 —
The Refreshment of General Mandate
Pursuant to Rule 13.36(4) of the Hong Kong Listing Rules, the Refreshment of the
General Mandate before the next annual general meeting of the Company is subject to
the approval of the Independent Shareholders at the EGM, at which any of the controlling
Shareholders and their associates, or where there are no controlling Shareholders,
Directors (excluding independent non-executive Directors) and the chief executives
and all their respective associates shall abstain from voting in favour of the resolution
approving the Refreshment of General Mandate. China Huadian, China Huadian Hong
Kong and their associates are required to and shall abstain from voting on the resolution
to be proposed at the EGM for approving the Refreshment of the General Mandate. The
Company will comply with the requirements specified under Rule 13.39(4) of the Hong
Kong Listing Rules.
The IBC has, in accordance with the Hong Kong Listing Rules, been formed to advise the
Independent Shareholders on the Refreshment of the General Mandate at the EGM.
4.
Background on the Group
As set out in the Letter from the Board, the Group is one of the largest comprehensive
energy companies in the PRC, and primarily engages in the construction and operation of
power plants, including large-scale efficient coal or gas-fired generating units and various
renewable energy projects, and the development, construction and operation of coal
mines.
5.
Background on China Huadian
As set out in the Letter from the Board, China Huadian, a wholly PRC State-owned
enterprise and the controlling shareholder of the Company, directly and indirectly through
China Huadian Hong Kong, holds approximately 50.04% equity interests in the Company.
China Huadian is primarily engaged in power generation, heat production and supply,
energy development of coal and other resources related to the power generation and
relevant professional technical services.
— 29 —
II.
THE CHINA HUADIAN A SHARES SUBSCRIPTION
1.
Reasons for and benefits of the China Huadian A Shares Subscription
(a)
The China Huadian A Shares Subscription
As set out in the Letter from the Board, the Directors believe that the Non-Public
Issuance (including China Huadian A Shares Subscription) will significantly
enhance the capital structure and financial position of the Company by improving
its balance sheet and leverage ratios, and will also improve the financing
capability of the Company, which in the long term, will enhance the Company’s
competitiveness and help the Company improve its operational position. Also, the
amount of the total proceeds to be raised from the Non-Public Issuance (including
the China Huadian A Shares Subscription) is capped at RMB7,147 million, which
is intended to be used (i) as to approximately RMB3,000 million and RMB2,100
million to finance the Fengjie Project and the Shiliquan Project respectively; and
(ii) as to not more than approximately RMB2,047 million to replenish the working
capital of the Company. In addition, (i) should the total proceeds of the Non-Public
Issuance be lower than RMB7,147 million (but higher than RMB5,100 million),
the amount proposed to be used as working capital of the Company will be reduced
by that shortfall; and (ii) should the total proceeds of the Non-Public Issuance
be lower than RMB5,100 million, no proceeds will be used as working capital of
the Company, and the Company currently intends to allocate the total proceeds
between the Fengjie Project and the Shiliquan Project on a pro-rata basis.
Having considered the above, we are of the view that the allocation mechanism of
the total proceeds mentioned above is fair and reasonable.
(b)
Other means of financing
As advised by the Directors, apart from the Non-Public Issuance (including the
China Huadian A Shares Subscription), they have considered various other means
of fund raising, including debt financing and other equity financing alternatives to
the Group.
— 30 —
a.
Debt financing
As referred to the interim report of the Company for the six months ended
30 June 2014 (the “2014 Interim Report”), the Group’s total asset amounted
to approximately RMB181,856 million as at 30 June 2014, whilst its total
liabilities was approximately RMB147,241 million as at 30 June 2014,
resulting in a debt to assets ratio of approximately 80.97%.
The Directors considered that the current gearing level of the Group is
relatively high and do not prefer to further increase the gearing level and
create additional debt liabilities to the Group. Raising funds by equity
financing with interest-free nature could reduce the debt to assets ratio. The
Directors thus concluded that equity financing can improve leverage of the
Group as compared to debt financing.
b.
Other equity financing alternatives to the Group
In H Shares market
The Directors considered other equity financing alternatives such as rights
issue of H Shares, open offer of H Shares and placement of new H Shares
to independent investors and concluded that they will not be in the interests
of the Independent Shareholders. Given that the issued H Share capital of
the Company is significantly lower than the issued A Share capital of the
Company, the expected size of the fund to be raised by rights issue, open
offer or placement of H Shares will be significantly less than approximately
RMB7,147 million.
As advised by the Directors, it will be in the interest of the Company to issue
new A Shares to obtain the funding directly in Renminbi. If the Company
conducts a fund raising exercise by issuance of new H Shares in Hong
Kong, the Company is required to convert the foreign currencies raised from
such issue to Renminbi, as well as to go through relevant procedures and
approvals as required by the relevant PRC rules and regulations to transfer
the proceeds back to the PRC for the Group’s uses.
— 31 —
In A Shares market
As advised by the Directors, under the relevant PRC laws and regulations,
the Non-Public Issuance (including China Huadian A Shares Subscription) of
new A shares to investors is generally subject to a lock-up period of not less
than 12 months. Based on the current structure of the proposed issue of new
A Shares, China Huadian shall not transfer their new A Shares within 36
months from the completion date of the Non-Public Issuance. However, there
is no similar compulsory regulatory requirement in relation to lock-up for H
shares listed in Hong Kong. With such a relatively longer lock-up period, the
Directors are of the view that the proposed issue of new A Shares will have
a limited negative impact on the A Share market price of the Company.
In addition, as advised by the management of the Company, the Company
considered various other means of fund raising that are based on a pro-rata
manner, such as rights issue and open offer of A Share. However, according
to the 《上市公司證券發行管理辦法》 (Measures for Administration of the
Issue of Securities by Listed Company*) issued by CSRC (the “Measures”),
public issuance of A shares is subject to the continuing of Company’s
profitability for 3 years preceding the rights issue or the open offer. The
Directors advised that the Company recorded a consolidation net loss after
deduction of non-recurring gain and losses for the financial year ended 31
December 2011 and thus the Directors concluded that both the rights issue of
A Shares or open offer of A Shares is not attainable.
After due and careful consideration by the management of the Company, it
is of the view that the Non-Public Issuance (including the China Huadian A
Shares Subscription) is the most preferable method. In addition, the Directors
considered that the China Huadian A Shares Subscription also demonstrates
the confidence that China Huadian places in the Company, which is
conducive to enhancing the profile of the Company and stabilize the trading
price of the Company’s Shares.
Having considered the above, we concurred with the Directors’ view that the China
Huadian A Shares Subscription is the most appropriate fund raising method currently
available for the Group. In light of the above, we are of the view that it is in the interests
of the Company and the Shareholders as a whole to raise fund by the China Huadian A
Shares Subscription.
— 32 —
2.
The terms of the China Huadian A Shares Subscription Agreement
Subscription price of the new A Shares
As set out in the Letter from the Board, the indicative minimum issue price of RMB5.04
per Share under the Non-Public Issuance: (i) represents no less than 90% of the average
trading price of the A Shares during the Price Determination Period; and (ii) represents
a discount of less than 20% to the higher of the closing price of the H Shares on 22
December 2014 and the average closing price of the H Shares in the 5 trading days
immediately before that date.
The subscription price for the China Huadian A Shares Subscription shall be not less
than RMB5.04 per A Share, which is equivalent to approximately HK$6.30, assuming an
exchange rate of HK$1 = RMB0.80, represents:
(i)
a discount of approximately 21.86% to the closing price of RMB6.45 per A Share
at the Latest Practicable Date;
(ii)
a discount of approximately 31.71% to the closing price of RMB7.38 per A Share
as quoted on Bloomberg on 22 December 2014, being the last trading day of the H
Shares on the Hong Kong Stock Exchange prior to the release of the announcement
dated 29 December 2014 in relation to the China Huadian A Shares Subscription (the
“Last Trading Day”);
(iii) a discount of approximately 21.62% to the average closing price of RMB6.43 per
A Share as quoted on Bloomberg for the last 5 trading days up to and including the
Last Trading Day;
(iv) a discount of approximately 7.49% to the closing price of HK$6.81 per H Share as
quoted on the Hong Kong Stock Exchange on the Latest Practicable Date;
(v)
a discount of approximately 7.49% to the closing price of HK$6.81 per H Share as
quoted on the Hong Kong Stock Exchange on Last Trading Day;
(vi) a discount of approximately 0.32% to the average closing price of HK$6.32 per H
Share as quoted on the Hong Kong Stock Exchange for the last 5 trading days up
to and including the Last Trading Day;
— 33 —
The chart below depicts (i) the daily closing prices of the H Shares traded on the Hong
Kong Stock Exchange from 23 June 2014 (being approximately six months immediately
prior to the Last Trading Day) up to and including the Last Trading Day (the “Review
Period”); and (ii) the daily closing prices of the A Shares (presented in HK$ equivalent
based on the daily closing RMB and HK$ exchange rates quoted on Bloomberg) as
quoted on Bloomberg during the Review Period, respectively:
10
Daily closing price (HK$)
9
8
7
HK$6.30
6
5
4
3
2
1
0
23/6/2014
23/7/2014
23/8/2014
23/9/2014
23/10/2014
23/11/2014
23/12/2014
A Share
H Share
Source: the Hong Kong Stock Exchange’s website (www.hkex.com.hk); Bloomberg
During the Review Period, the H Shares were traded with closing prices in the range of
HK$4.24 per H Share to HK$6.81 per H Share (the “Review Period H Shares Range”),
with an average of closing price of approximately HK$5.58 per H Share for the Review
Period. In addition, the A Shares were traded with closing prices in the range of RMB2.94
per A Share to RMB7.38 per A Share (the “Review Period A Shares Range”), with an
average of closing price of approximately RMB4.09 per A Share for the Review Period.
— 34 —
Although the subscription price for the China Huadian A Shares Subscription of not less
than RMB5.04 per A Share, which is equivalent to approximately HK$6.30 per A Share,
assuming an exchange rate of HK$1 = RMB0.80, is (i) at a discount of approximately
31.71% to the closing price of RMB7.38 per A Share on the Last Trading Day and at a
discount of approximately 21.62% to the average closing price of RMB6.43 per A Share
as quoted on Bloomberg for the last 5 trading days up to and including the Last Trading
Day respectively; and (ii) at a discount of approximately 7.49% to the closing price of
HK$6.81 per H Share on the Last Trading Day and at a discount of approximately 0.32%
to the average closing price of HK$6.32 per H Share for the last 5 trading days up to
and including the Last Trading Day respectively, we are of the view that comparisons
with longer term average more fairly reflect the attractions of the subscription price for
the China Huadian A Shares Subscription and minimize the effect of short term price
fluctuations.
Also, having considered the following that:
(a)
the subscription price for the China Huadian A Shares Subscription (i) is higher
than the average of the closing price of the A Shares of approximately of RMB4.09
and is within the Review Period A Shares Range; (ii) had been above or equal to
the closing price of the A Shares on 115 trading days (representing approximately
89.84% of the total number of trading days), out of the total 128 trading days in
the entire Review Period; and (iii) represents not less than 90% of the average
trading price of the A Shares in the Price Determination Period (the average trading
price of the A Shares in the Price Determination Period equals to the total value
of A Shares traded in the Price Determination Period divided by the total volume
of A Shares traded in the Price Determination Period) in accordance with the
requirements of relevant laws and regulations and regulatory documents such as
the Measures and the Implementation Rules for the Non-public Issue of Shares by
Listed Companies (《上市公司非公開發行股票實施細則》) as set out in the Letter
from the Board, which is in conformity with the issuing procedure and pricing
mechanism made by relevant authorities department in the PRC; and
(b)
the subscription price for the China Huadian A Shares Subscription (i) is higher
than the average of the closing price of the H Shares of approximately of HK$5.58
and is within the Review Period H Shares Range; and (ii) had been above or
equal to the closing price of the H Shares on 106 trading days (representing
approximately 82.81% respectively of the total number of trading days), out of the
total 128 trading days in the entire Review Period;
— 35 —
we are of the view that the method of pricing stated above in determining the minimum
subscription price of the China Huadian A Shares Subscription is fair and reasonable.
Also, we note that the ultimate target subscribers (other than China Huadian) will be
determined by the Board and its authorized person and the lead underwriter based on the
relevant requirements of CSRC and the price quoted by target subscribers, following the
price priority principle and a book-building process, in accordance with Article 27 of the
Implementation Rules for the Non-public Issue of Shares by Listed Companies (《上市
公司非公開發行股票實施細則》) issued by CSRC, which requires the Company and the
lead underwriter to collect the accumulative statistics of the valid subscription quotations
and reasonably ascertain the offering targets, subscription price and subscription amount
based on price priority principle.
We understood from the Directors that (i) the indicative minimum issue price of the
Non-Public Issuance will be set in accordance with Article 27 of the Implementation
Rules for the Non-public Issuance of Shares by Listed Companies issued by the CSRC;
(ii) the Company’s PRC lawyers in respect of the Non-Public Issuance will issue a
report regarding the process of the Non-Public Issuance, and will provide their opinion
as to whether such process and the results of the Non-Public Issuance are fair, just and
in compliance with the relevant regulations as a matter of PRC law; and (iii) the PRC
lawyers will witness the relevant legal documents, and confirm the effectiveness of such
legal documents in their report, and thus we are of the view that the mechanism of price
priority principle stated above is fair and reasonable.
3.
Conditions precedent to the China Huadian A Shares Subscription Agreement
As set out in the Letter from the Board, the China Huadian A Shares Subscription
Agreement will take effect upon fulfilment of the following conditions:
(i)
the execution of the China Huadian A Shares Subscription Agreement by the
Company and China Huadian;
(ii)
the Independent Shareholders approving the China Huadian A Shares Subscription
Agreement and the China Huadian A Shares Subscription by poll at the EGM; and
(iii) the relevant governmental and regulatory authorities, including but not limited to
SASAC and CSRC, approving the China Huadian A Shares Subscription.
No conditions can be waived under the China Huadian A Shares Subscription Agreement.
— 36 —
The Directors advised that condition (i) has been fulfilled as at the Latest Practicable
Date.
The China Huadian A Shares Subscription forms part of and will complete simultaneously
when the Non-Public Issuance completes.
The Company is preparing to apply for the approval from SASAC and based on prior
experience, currently expects that such approval may be obtained before the EGM. The
Company will apply for the approval from CSRC immediately after the resolutions in
respect of the Non-Public Issuance are passed at the EGM.
4.
Lock-up arrangement of the new A Shares
Pursuant to the relevant rules of CSRC, China Huadian shall not transfer any of the
new A Shares it will subscribe for pursuant to the China Huadian A Shares Subscription
Agreement within 36 months from the date of completion of the China Huadian A
Shares Subscription. Except for this lock-up arrangement, there is no restriction on the
subsequent sale of the new A Shares that China Huadian will subscribe for pursuant to
the China Huadian A Shares Subscription Agreement.
Furthermore, according to the Measures, the non-public issuance of new A shares is
generally subject to a lock-up period of not less than (i) 36 months period for (a) the
controlling shareholders, their beneficial owners, or their associates; (b) investors who
obtain the controlling power upon the completion of the issuance; and (c) strategic
investors as introduced by the board of the company; or (ii) 12 months period for the
other investors from the date of the completion of the issuance.
Based on the aforesaid, as the lock-up arrangement of the new A Shares pursuant to the
China Huadian A Shares Subscription Agreement fulfills the requirements stated in the
Measures, we consider that the lock-up arrangement under the China Huadian A Shares
Subscription Agreement is fair and reasonable so far as the interest of the Independent
Shareholders is concerned.
— 37 —
5.
Possible financial effects of the Non-Public Issuance (including the China Huadian A
Shares Subscription)
As advised by the Directors, the Non-Public Issuance (including the China Huadian A
Shares Subscription) would have the following financial effects to the Group:
(a)
Net assets value
As referred to in the 2014 Interim Report, the unaudited consolidated net asset
value of the Group attributable to the Shareholders as at 30 June 2014 were
approximately RMB34,615 million. The Directors expected that the Group’s
net assets value would increase immediately after completion of the Non-Public
Issuance (including the China Huadian A Shares Subscription) as the net proceeds
from the Non-Public Issuance (including the China Huadian A Shares Subscription)
will bring in additional funds to the Group.
(b)
Gearing
The Directors expect that the Group’s debt to assets ratio will be reduced after
the completion of the China Huadian A Shares Subscription, in view of the fact
that the China Huadian A Shares Subscription will bring in additional funds to the
Group.
(c)
Working capital
As the net proceeds from the Non-Public Issuance (including China Huadian A
Shares Subscription) will increase the Group’s cash position, the Directors expect
that the Group’s working capital position would be improved immediately after
completion of the Non-Public Issuance (including the China Huadian A Shares
Subscription).
We concur with the Directors’ view that the Non-Public Issuance (including the China
Huadian A Shares Subscription) would not have any material adverse impact on the
Group’s financial position.
It should be noted that the aforementioned analysis is for illustrative purposes only and do
not purport to represent how the financial position of the Group will be upon completion
of the Non-Public Issuance (including the China Huadian A Shares Subscription).
— 38 —
III. THE REFRESHMENT OF GENERAL MANDATE
1.
Reasons for and benefits of the Refreshment of General Mandate
As set out in the Letter from the Board, the Directors believe that the Refreshment of
General Mandate will provide financial flexibility for the Company to raise further funds
for its future business development and expansion initiatives.
As discussed with the management of the Company, the Non-Public Issuance (including
the China Huadian A Shares Subscription) is conditional on the Refreshment of General
Mandate. Also, as advised by the Directors, the Refreshment of General Mandate will
provide the Company with (i) an additional financing alternative in a less costly and a
relatively flexible way as it (a) does not create any payment of interest obligations on
the Company as compared with bank financing; and (b) is less costly than raising funds
by way of rights issue or open offer; and (ii) the financial flexibility as allowed under
the Hong Kong Listing Rules to allot and issue new Shares as consideration for funding
business development opportunities in the future as and when such opportunities arise.
As set out in the Letter from the Board, the Directors had no specific plan to utilize such
Refreshed General Mandate to allot and issue H Shares but may do so in the future if
there arise new business opportunities which require additional funding. Save as disclosed
in the previous announcements or publications of the Company, currently, the Company
has not made any decision or reached any agreement in respect of such business
opportunities.
Also, the Refreshment of General Mandate is solely intended to facilitate the NonPublic Issuance and provide financial flexibility to the Company. The Directors have not
considered other financing alternatives as at the Latest Practicable Date.
Taken the above-mentioned into consideration, we concurred with the Directors that
the Refreshment of General Mandate is crucial for the Non-Public Issuance (including
the China Huadian A Shares Subscription) and thus of the view that the Refreshment of
General Mandate is in the interests of the Company and the Shareholders as a whole.
— 39 —
2.
Details of previous fund raising activities by way of issue of equity securities in the
past 12 months
Net proceeds
Date of completion Fund raising activity
raised
Use of net proceeds
18 July 2014
Approximately
(i) Approximately
Placing of new A Shares
under general mandate
RMB3,311
RMB2,233 million
granted to the Board
million
has been used as the
at the annual general
Company’s working
meeting of the Company
capital to repay bank
held on 25 June 2013
borrowings; and
(ii) approximately
RMB1,078 million has
been used to purchase
coal
30 July 2014
Placing of new H Shares
Approximately
(i) Approximately HK$625
under general mandate
HK$1,384
million has been used
granted to the Board
million
as the Company’s
at the annual general
working capital to
meeting of the Company
repay bank borrowings;
held on 30 May 2014
(ii) approximately
HK$620.6 million
has been used to
replenish the working
capital; and (iii) the
remaining balance
of approximately
HK$138.4 million
is maintained at the
Company’s bank
account
Save for the fund raising activities disclosed above, the Company had not conducted
any fund raising activities by way of issue of equity securities in the past 12 months
immediately preceding the Latest Practicable Date.
— 40 —
IV.
POTENTIAL DILUTION TO THE SHAREHOLDING OF THE INDEPENDENT
SHAREHOLDERS
The Non-Public Issuance (including the China Huadian A Shares Subscription) and the
Refreshment of General Mandate would dilute the interest of the Independent Shareholders
in the issued share capital of the Company. Set out below is the shareholding structure of the
Company as at the Latest Practicable Date and immediately after completion of the Non-Public
Issuance (including the China Huadian A Shares Subscription) and the Refreshment of General
Mandate (assuming that there is no other change in the issued share capital of the Company save
for the issue of new A Shares between the Latest Practicable Date and the date of completion of
the Non-Public Issuance (including the China Huadian A Shares Subscription)):
Immediately after completion of the Non-Public Issuance (including the China Huadian
As at the Latest Practicable Date
A Shares Subscription) and the Refreshment of General Mandate
Assuming that (i) 20% of new A Shares
Assuming that (i) all the new A Shares
currently anticipated to be issued under the currently anticipated to be issued under
Non-Public Issuance, i.e. a total of 283,600,000 the Non-Public Issuance, i.e. a total of
new A Shares, are fully subscribed for by 1,418,000,000 are fully subscribed for by
China Huadian; and (ii) the full utilization of China Huadian and (ii) the full utilization of
the Refreshed General Mandate
Percentage of
Percentage of
Percentage of
total issued
total issued
total issued
Name of Shareholder
Class of Shares
China Huadian
A Shares
4,321,061,853
49.07%
4,604,661,853
43.57%
5,739,061,853
54.30%
China Huadian Hong Kong
H Shares
85,862,000
0.97%
85,862,000
0.81%
85,862,000
0.81%
4,406,923,853
50.04%
4,690,523,853
44.38%
5,824,923,853
55.11%
A Shares
2,768,994,347
31.45%
3,903,394,347
36.93%
2,768,994,347
26.20%
H Shares
1,631,371,600
18.51%
1,631,371,600
15.44%
1,631,371,600
15.44%
Holders of new Shares to be issued under A Shares
—
0.00%
11,240
0.00%
11,240
0.00%
—
0.00%
343,446,720
3.25%
343,446,720
3.25%
8,807,289,800
100%
10,568,747,760
100%
10,568,747,760
100%
Sub-total of shareholding interests held by
Number of Shares
share capital Number of Shares
share capital Number of Shares
share capital
China Huadian and its concert party
Public
H Shares
— 41 —
Based on the above, the shareholding interest of the existing Independent Shareholders will
be increased from approximately 49.96% to approximately 52.37% (assuming that (i) 20% of
new A Shares currently anticipated to be issued under the Non-Public Issuance, i.e. a total of
283,600,000 new A Shares, are fully subscribed for by China Huadian and (ii) the full utilization
of the Refreshed General Mandate) or diluted from approximately 49.96% to approximately
41.64% (assuming that (i) all the new A Shares currently anticipated to be issued under the
Non-Public Issuance, i.e. a total of 1,418,000,000 are fully subscribed for by China Huadian
and (ii) the full utilization of the Refreshed General Mandate) respectively, as a result of the
Non-Public Issuance (including China Huadian A Shares Subscription) and the Refreshment of
General Mandate.
Taking into account the benefits of the Non-Public Issuance (including China Huadian A Shares
Subscription) and the Refreshment of General Mandate as discussed above and the fact that
the shareholding of all the Shareholders will be diluted after the completion of the Non-Public
Issuance (including China Huadian A Shares Subscription) and the Refreshment of General
Mandate, with all other things being equal, we consider such dilution or potential dilution of
shareholding of the Independent Shareholders to be acceptable.
RECOMMENDATION AND CONCLUSION
Having considered the above principal factors and reasons, we are of the opinion that (i) the terms
under the China Huadian A Shares Subscription Agreement are on normal commercial terms, fair
and reasonable so far as the Independent Shareholders are concerned and is in the interests of the
Company and the Shareholders as a whole; (ii) the Refreshment of General Mandate is fair and
reasonable so far as the Independent Shareholders are concerned and in the interests of the Company
and the Shareholders as a whole. We therefore advise the IBC to recommend the Independent
Shareholders to vote in favour of the resolutions to approve the China Huadian A Shares Subscription,
the China Huadian A Shares Subscription Agreement and the Refreshment of General Mandate. We
also advise the Independent Shareholders to vote in favour of the proposed resolution to approve the
China Huadian A Shares Subscription, the China Huadian A Shares Subscription Agreement and the
Refreshment of General Mandate at the EGM.
Yours faithfully,
For and on behalf of
China Investment Securities International Capital Limited
Tony Wu
Managing Director and
Head of Investment Banking Department
*
In this letter, the English names of the PRC laws and entities are translations of their Chinese names and
included herein for identification purpose only. In the event of any inconsistency, the Chinese names shall
prevail.
— 42 —
APPENDIX I
FEASIBILITY ANALYSIS REPORT ON THE USE OF PROCEEDS
RAISED FROM THE NON-PUBLIC ISSUANCE OF A SHARES
Stock code of A share: 600027
Stock name of A share: Huadian Power International
Stock code of H share: 1071
Stock name of H Share: HDPI
(Registered Address: No.14800, Jingshi Road, Jinan City, Shandong Province)
Report on the Feasibility Analysis on the Use of Proceeds
from Non-Public Issuance of A Shares
December 2014
— 43 —
APPENDIX I
CONTENTS
I
Plan on the use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
II
Feasibility Analysis on the Investment Projects Financed by the Proceeds . . . . . . . . . 46
(I)
2×600 MW power generating units project of Fengjie Power Plant of
(II)
1×600 MW power generating unit project of Shiliquan Power Plant of
Huadian Power International Corporation Limited* . . . . . . . . . . . . . . . . . . . . . . . . 46
Huadian Power International Corporation Limited* . . . . . . . . . . . . . . . . . . . . . . . . 48
(III) Replenish Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
III
Effects of the Non-Public Issuance on Operational Management and
Financial Position of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (I)
Effects of the Non-Public Issuance on
(II)
Effects of the Non-Public Issuance on
Operational Management of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Position of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 44 —
52
52
52
APPENDIX I
The feasibility analysis on the use of proceeds from the non-public issuance of shares of Huadian
Power International Corporation Limited* (the “Company” or “Huadian Power International”) is as
follows:
I.
PLAN ON THE USE OF PROCEEDS
The non-public issuance of shares is intended to raise a total proceeds of not more than
RMB7,147 million. After deducting relevant issuance expenses, the proceeds are proposed to be
utilized in the following ways:
No.
Name of project
Proceeds to be utilized
(RMB million)
1
the 2×600 MW power generating units project at
3,000
Fengjie Power Plant of Huadian Power
International Corporation Limited*
2
the 1×600 MW power generating unit project at Shiliquan
2,100
Power Plant of Huadian Power
3
Replenish working capital
Not more than 20.47
Total
Not more than 71.47
If the net amount of actual proceeds from the non-public issuance is less than the total proposed
amount to be invested in the above projects, the Company will adjust and finally decide the
use of proceeds for financing specific investment projects, prioritize the use and determine the
actual investment amount of each project depending on the actual net amount of proceeds and
the urgency of the projects. The problem of insufficiency of proceeds will be solved by the
Company’s own funds or other financing methods. Before the receipt of the proceeds from the
non-public issuance, the Company will raise funds by other means for investment depending on
the actual progress of the project, and replace it with the proceeds after the receipt of the same
pursuant to the procedures of relevant regulations.
— 45 —
APPENDIX I
II.
FEASIBILITY ANALYSIS ON THE INVESTMENT PROJECTS FINANCED BY
THE PROCEEDS
(i)
2×600 MW power generating unit project of Fengjie Power Plant of Huadian Power
1.
Basic information on the project
Fengjie Power Plant of Huadian Power International is a branch of Huadian Power
International. 2×600 MW power generating unit project of Fengjie Power Plant of
Huadian Power International (hereafter “Fengjie Project”) is a main power supply
project in Chongqing Municipality, under which two domestic 600 MW supercritical coal-fired power generating units will be constructed and a total of 381
MW small power generating units in Chongqing Municipality will be closed down
accordingly. Therefore, it is a project of “replacing small units with larger units”.
Fengjie Project adopts the secondary circulating water cooling method, with the
annual water consumption of 13,900,000 m 3 which is drained from Three Gorges
Reservoir area. After Fengjie Project is put into operation, the annual consumption
of coal is 2,550,000 tonnes, 500 KV AC grids are connected into the system, and
the transmission project will be invested and constructed by power grid enterprises.
It is anticipated that these two units will be put into operation in 2016.
Fengjie Project is located in Fengjie County of Chongqing Municipality. Fengjie
County is located in the east of Chongqing, in the center of Three Gorges Reservoir
area, and in the west of Three Gorges of Yangtze River and in the center of Hunan,
Hubei, Chongqing and Shaanxi. It is close to Wushan County in the east, leading
to Enshi City of Hubei Province in the south, neighbouring Yunyang County in the
west and Wuxi County in the north. The whole county covers an area of 4,098.37
sq.km, ranking the second in Chongqing Municipality.
— 46 —
APPENDIX I
2.
Development prospects of the project
In recent years, as the economic development of Chongqing Municipality
accelerates, the demand for power has also increased rapidly, and the mismatch of
supply and demand of power grid has become more and more severe. According
to the feasibility study of the project, since the hydroelectric power capacity of the
plan in Chongqing was limited, and the municipality only depended on the existing
power transmission plan to transmit power from external areas, the power grid has
been exposed to much power shortage since the late stage of the “Eleventh FiveYear Plan”. During the “Twelfth Five-Year Plan”, the maximum power shortage
has been approximately 7,000 MW. It is expected that, during the “Thirteenth FiveYear Plan”, the maximum power shortage will be approximately 12,000 MW. Upon
putting into operation, Fengjie Project will become one of the main on-grid power
resources in Chongqing and will be responsible for the power supply in Chongqing
City, which will effectively narrow the on-grid power gap, satisfying the needs for
development in Chongqing City and guaranteeing the provision of stable energy
supply for the sustainable development of the economy in Chongqing City.
In addition, Fengjie County, where Fengjie Project is located, is one of the 100
major counties in China which produce coal. It is the No.1 coal producing county
in Chongqing City and has rich coal resources. Its steady annual output is above
5 million tonnes, with external annual sales of around 3.98 million tonnes. The
Company can fully utilize the advantage of coal resources to lower the coal costs
in Fengjie Project.
3.
The status of Obtaining Qualification Documents
The obtaining of approval of Fengjie Project from relevant regulatory authorities is
as follows:
(1)
In March 2013, the Approval on the “Replacing Small Units with
Larger Units” New Engineering Project of Fengjie Power Plant of
Chongqing Huadian by NDRC (Fa Gai Neng Yuan [2013] No. 591)
(《國家發展改革委關於重慶華電奉節電廠「上大壓小」新建工程項目核准
的批覆》（發改能源 [2013]591號）) issued by the National Development and
Reform Commission in respect of the project was obtained;
— 47 —
APPENDIX I
(2)
In July 2013, the Reply to the Preliminary Examination Opinions on the
Construction Land of the “Replacing Small Units with Larger Units” New
Engineering Project of Fengjie Power Plant of Chongqing Huadian (Guo Tu
Zi Yuan Shen Zi [2012] No. 168) (《關於重慶華電奉節電廠「上大壓小」新
建項目建設用地預審意見的覆函》
（國土資預審字 [2012]168號）) issued by
the Ministry of Land and Resources in respect of the project was obtained;
(3)
In October 2012, the Approval on the Report of the Environmental Impact
caused by the “Replacing Small Units with Larger Units” New Project of
Fengjie Power Plant of Chongqing Huadian (Huan Shen [2012] No. 285)
(《關於重慶華電奉節電廠「上大壓小」新建項目環境影響報告書的批覆》
（環審 [2012]285 號）) issued by the Ministry of Environmental Protection
in respect of the project was obtained.
4.
Project estimation and economic evaluation
The total investment amount of the project will be RMB4,680 million, and the total
invested amount has been approximately RMB740 million so far. The proceeds of
RMB3,000 million will be used for the project. If there is insufficient funding for
the project afterwards, the Company will finance the project by fund raising on its
own. The financial internal return rate of the project is expected to be 8%.
(ii)
1×600 MW power generating unit project at Shiliquan Power Plant of Huadian
Power International Corporation Limited
1.
Basic information on the project
Shiliquan Power Plant of Huadian Power International Corporation Limited* is
a branch of Huadian Power International Corporation Limited*. The 1×600 MW
power generating unit project at Shiliquan Power Plant (the “Shiliquan Power
Plant”), locating at the industrial area at the south of Shizhong District, Zaozhuang
City, Shandong Province, is one of the key projects in Shandong Province and is
also an important part of energy conservation, emission reduction and optimization
of the structure of power resources. Under Shiliquan Project, one 600 MW ultrasupercritical coal-fired power generating unit will be expanded with the function
to supply heat as well, and a total of 240 MW small power generating units
in Chongqing City will be closed down accordingly. Therefore, it is a project
of “replacing small units with larger units”. The power generating unit adopts
circulating water cooling method with an annual water usage of 7.23 million m 3.
The source of such water is recycled water from Zaozhuang Wastewater Treatment
— 48 —
APPENDIX I
Plant and Zaozhuang Huiquan Wastewater Treatment Plant and surface water from
Huibaoling Reservoir. After being put into operation, the annual demand for coal
will amount to 1.56 million tonnes, which will be supplied by Zaozhuang Mining
(Group) Co., Ltd., delivered to the power plant through highways and railways.
The power generating unit will be connected to the system of at the level of 220kV
and the construction work for the output system will be invested and established
by power grid companies. It is anticipated that the unit will be put into operation in
2016.
Zaozhuang City is located in the southern part of Shangdong Province with Linyi
to the east, Jilin to the north, Jiangsu Province to the south with a total area of 4,550
sq.m. and a population of approximately 3.7 million. Zaozhuang City is situated
within Lunan Economic Belt under the “Twelfth Five-Year Plan” and is one of the
areas in Shandong which contains rich coal resources. According to the summary
of the “Twelfth Five-Year Plan” of Shandong Province, Shandong Province will
speed up the process of the construction of Lunan Economic Belt, which will serve
as an important growth point for the economic development of Shandong Province.
2.
Development prospect of the project
Under the “Twelfth Five-Year Plan”, coal-fired power generation has been
further developed in Shandong Province. The Shandong Province promotes the
construction of power project of “replacing small units with larger units” and
speeds up the process of shutting down under-performing power generating units.
Besides, the government selects to set up large-scale mine-mouth power plants
and comprehensive utilization power plants at Jining, Zaozhuang, Heze, etc. where
there are rich coal resources. Pursuant to the power grid plan of Shandong, after
analysis and estimation on electricity distribution of the Zaozhuang area, the power
grid there constantly stays in the status of receiving electricity from the main power
grid. The situation is more obvious under the “Twelfth Five-Year Plan” when highconsumption, polluting and under-performing power generating units have been
further shut down within the power grid in Shandong, which led to pressure on
power supply in the area. According to overall urban planning of Zaozhuang City,
the supply of power is becoming an urgent matter for the reformation of old towns
and urbanization of surrounding rural areas.
— 49 —
APPENDIX I
The construction of Shiliquan Project is able to ease the tension of the supply of
on-grid power, improve the on-grid structure and improve the stability as well
as efficiency of the on-grid operation. According to the analysis on the demand
for heat load for the urban development in Zaozhuang City, the construction of
the project is able to effectively enhance the utilization rate of coal resources,
reduce environmental pollution and improve the people’s livelihood. Accordingly,
there are stable demands for power and heat for Shiliquan Project in the market.
In addition, Shiliquan Project adopts domestic heat supplying units that are
environment-friendly, highly efficient and ultra supercritical, which fully makes
use of the water in urban area, recycling water and waste water at old plants and
existing fundamental facilities at the old plants. By taking advantage of local coal
resources, the distance of delivery is shortened, which allows the integrated usage
of resources, and the advancement in various technical and economic indicators.
3.
The status of obtaining Qualification Documents
The obtaining of approval of Shiliquan Project from relevant regulatory authorities
is as follows:
(1)
In March 2013, the Approval on the “Replacing Small Units with Larger
Units” New Engineering Project of Shiliquan Power Plant of Shandong
Huadian International by NDRC (Fa Gai Neng Yuan [2013] No. 580) (《國
家發展改革委關於山東華電國際十里泉電廠「上大壓小」擴建工程項目核
准的批覆》（發改能源 [2013]580 號）) issued by the National Development
and Reform Commission in respect of the project was obtained;
(2)
In December 2009 and May 2012, the Reply to the Preliminary Consideration
Comments on the Engineering Construction Land of the “Replacing Small
Units with Larger Units” 1×600 MW Supercritical Power Generating Unit
New Engineering Project of Shiliquan Power Plant of Shandong Huadian
International (Guo Tu Zi Yu Shen Zi [2009] No. 434) (《關於山東華電十
里泉發電廠「上大壓小」1 台 60 萬千瓦級超臨界機組工程建設用地預審意見
的覆函》（國土資預審字 [2009]434 號）) and the Letter of the Approval on
Extension of the Effective Period of Preliminary Consideration Comments
of the Engineering Construction Land of the “Replacing Small Units with
Larger Units” 1×600 MW Ultra Supercritical Power Generating Unit of
Shiliquan Power Plant of Shandong Huadian International (Guo Tu Zi Yu
Shen Zi [2012] No. 119) (《關於同意延長山東華電十里泉發電廠「上大壓
小」1 台 60 萬千瓦級超超臨界機組工程建設用地預審意見有效期的函》（國
土資預審字 [2012]119 號）) issued by the Ministry of Land and Resources,
respectively in respect of the project was obtained;
— 50 —
APPENDIX I
(3)
In April 2011, the Approval on the Report of the Environmental Impact
caused by the “Replacing Small Units with Larger Units” Expansion Project
of Shiliquan Power Plant of Shandong Huadian International (Huan Shen
[2011] No. 100) (《關於華電國際十里泉發電廠「上大壓小」擴建項目環
境影響報告書的批覆》（環審 [2011]100 號）) issued by the Ministry of
Environmental Protection in respect of the project was obtained.
4.
Project estimation and economic valuation
The total investment amount of the project will be RMB3,130 million, and the total
invested amount has been approximately RMB420 million so far. The proceeds of
RMB2,100 million will be used for the project. If there is insufficient funding for
the project afterwards, the Company will finance the project by fund raising on its
own. The financial internal return rate of the project is expected to be 8%.
(iii) Replenish working capital
As the business and scale of the company expands rapidly, there are more significant
liabilities. Besides, the gearing ratio has been maintained at a high level and there are
additional burden on finance costs. As stated in the combined financial statement as of 30
September 2014, the gearing ratio of the Company was 77.85%, which was significantly
higher than the average level of comparable listed companies. The gearing ratios of
comparable listed companies as at 30 September 2014 are set out as below:
Company name (in short)
Gearing ratio
Huadian Power International
77.85%
Huaneng International
69.24%
GDPD
74.28%
Datang Power
77.94%
Average
74.83%
Huadian Power International intends to use approximately $2.047billion from the nonpublic issuance of shares to replenish its liquidity, which helps optimize financial
structure, minimize finance costs and enhance operational efficiency.
— 51 —
APPENDIX I
III. EFFECTS OF THE NON-PUBLIC ISSUANCE ON OPERATIONAL MANAGEMENT
AND FINANCIAL POSITION OF THE COMPANY
(i)
Effects of the Non-Public Issuance on Operational Management of the Company
After deducting the relevant issuance expenses, the proceeds from the non-public issuance
will be mainly used for the construction of power projects. The investment project
financed by the proceeds from the non-public issuance complies with the industrial
policies of the PRC, and is in line with the economic and social orientation of “energy
conservation and emission reduction”.
The investment project financed by the proceeds will further improve the business
scale, production efficiency and market shares of the Company, and enhance the
relative competitiveness and anti-risk capability of the Company to achieve the longterm sustainable development of Huadian Power International. Upon the completion
and commencement of production, the investment project financed by the proceeds
will increase the controlling installment capability by 1,800 MW. On the basis of the
controlling installment capability of 37,321 MW of the Company as at the interim period
of 2014, the increase rate is approximately 4.82%.
(ii)
Effects of the Non-Public Issuance on Financial Position of the Company
1.
Optimize the Structure of Assets and Liabilities, Improve the Anti-risk Capability
During the recent years, the gearing ratios of the Company presented the gradual
increase tendency: calculated based on the consolidated criteria, the gearing ratios
of the Company as at 31 December 2011, 31 December 2012, 31 December 2013
and 30 September 2014 were 84.06%, 83.20%, 80.59% and 77.85% respectively.
High gearing ratio increased the financial risks of the Company.
If assets and liabilities of the Company as at 30 September 2014 were calculated
based on the consolidated criteria, assuming it was calculated according to the
cap of the issuance amounts, upon the completion of the non-public issuance, the
gearing ratio of the Company will decrease by approximately three percentage
points. Therefore, the non-public issuance can optimize the structure of assets and
liabilities of the Company and is helpful in improving the anti-risk capability of the
Company.
— 52 —
APPENDIX I
2.
Increase Profitability and Reduce Finance Costs
The proceeds from the non-public issuance, after deducting issuance expenses, will
be used for the construction of the power projects, which will increase the core
business revenue of the Company and profitability after putting into operation.
Meanwhile, as the Company has been gradually expanding operation scale in recent
years, the size of liabilities also increased accordingly. In 2011, 2012 and 2013,
finance costs of the Company amounted to RMB4,925 million, RMB6,223 million
and RMB6,019 million, respectively, which presented a growth trend. Upon receipt
of proceeds from non-public issuance, it will facilitate to optimize capital structure
of the Company, appropriately reduce finance cost and improve profitability of the
Company.
In conclusion, the proceeds from non-public issuance of the Company will be
used in compliance with industrial policies of the PRC and development needs of
the Company. The projects to be invested have strong profitability and promising
development prospects. The use of proceeds will bring favorable investment income
for the Company and deliver profitable return for shareholders.
The implementation of investment projects financed by the proceeds will further
expand the scale and strengths, enhance competitiveness and facilitate sustained
development of the Company, and in the interests of the Company and its
shareholders as a whole.
29 December 2014
— 53 —
APPENDIX II
1.
GENERAL INFORMATION
RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept full responsibility,
includes particulars given in compliance with the Hong Kong Listing Rules for the purpose
of giving information with regard to the Company. The Directors, having made all reasonable
enquiries, confirm that to the best of their knowledge and belief the information contained in
this circular is accurate and complete in all material respects and not misleading or deceptive,
and there are no other matters the omission of which would make any statement herein or this
circular misleading.
2.
INTERESTS OF DIRECTORS, SUPERVISORS, CHIEF EXECUTIVE AND SENIOR
MANAGEMENT
Number of A shares
of the Company held
Name
Position In the Company
Gou Wei
Non-executive Director
as personal interest
10,000 (Note)
Capacity
Beneficial owner
Note: Representing approximately 0.0001% of the total issued A shares of the Company as at the Latest
Practicable Date.
Save as disclosed above, as at the Latest Practicable Date, so far as the Company is aware,
none of the Directors, supervisors, chief executive or members of the senior management of
the Company and their respective associates had any interests or short positions in the shares,
underlying shares and/or debentures (as the case may be) of the Company and/or any of its
associated corporations (within the meaning of Part XV of the SFO) which was required to
be notified to the Company and the Hong Kong Stock Exchange pursuant to the provisions of
Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such
Director, supervisor, chief executive or member of senior management was taken or deemed
to have under such provisions of the SFO), or which are required, pursuant to section 352 of
the SFO, to be entered in the register referred to therein, or which are required pursuant to the
Model Code for Securities Transactions by Directors of Listed Companies as set out in appendix
10 to the Hong Kong Listing Rules to be notified to the Company and the Hong Kong Stock
Exchange (which for this purpose shall be deemed to apply to the supervisors of the Company
to the same extent as it applies to the Directors).
— 54 —
APPENDIX II
GENERAL INFORMATION
Four Directors, namely, Mr. Li Qingkui, Mr. Chen Bin, Mr. Gou Wei and Mr. Chu Yu, who
are employees of China Huadian Corporation, have abstained from voting on the relevant board
resolutions approving the transactions relating to the China Huadian A Share Subscription
and the refreshment of Existing General Mandate. Save as disclosed above, as at the Latest
Practicable Date, none of the Directors or supervisors was also a director or employee of a
company which had an interest or short position in the shares or underlying shares of the
Company which would fall to be disclosed to the Company under the provisions of Division 2
and 3 of Part XV of the SFO.
3.
CONSENT AND QUALIFICATION OF EXPERT
China Investment Securities has given and has not withdrawn its written consent to the issue of
this circular with its letter of advice included in the form and context in which it appears.
The following sets out the qualifications of the China Investment Securities:
Name
Qualifications
China Investment Securities
Type 6 (advising on corporate finance) regulated activity as
defined under the SFO
As at the Latest Practicable Date, China Investment Securities did not have any shareholding in
any member of the Group or any right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for securities in any member of the Group.
As at the Latest Practicable Date, China Investment Securities did not have any direct or
indirect interest in any assets which had been, since 31 December 2013, being the date to which
the latest published audited accounts of the Company were made up, acquired or disposed of by
or leased to, or were proposed to be acquired or disposed of by or leased to, any member of the
Group.
4.
NO MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, save as disclosed in the interim report of the Company for
the six months ended 30 June 2014 and in the previous announcements of the Company, the
Directors were not aware of any material adverse change in the financial or trading position
of the Group since 31 December 2013, being the date to which the latest published audited
accounts of the Company were made up.
— 55 —
APPENDIX II
5.
GENERAL INFORMATION
SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Director or supervisor of the Company had
entered into any service contract with any member of the Group (excluding contracts expiring
or determinable by the relevant member of the Group within one year without payment of
compensation (other than statutory compensation)).
6.
COMPETING INTERESTS
Four Directors, namely, Mr. Li Qingkui, Mr. Chen Bin, Mr. Gou Wei and Mr. Chu Yu, hold
positions in China Huadian Corporation. One supervisor, namely, Mr. Peng Xingyu is an
employee of China Huadian Corporation.
As at the Latest Practicable Date, none of the Directors or the supervisors of the Company
or their respective close associates (as defined under the Hong Kong Listing Rules) had any
interest in other business which competes or is likely to compete with the business of the Group
as if each of them were treated as a controlling shareholder of the Company under Rule 8.10 of
the Hong Kong Listing Rules.
7.
INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS
SIGNIFICANT TO THE GROUP
As at the Latest Practicable Date, none of the Directors or supervisors of the Company had
any direct or indirect interest in any assets which had been since 31 December 2013 (being the
date to which the latest published audited accounts of the Company were made up) acquired or
disposed of by or leased to, or were proposed to be acquired or disposed of by or leased to, any
member of the Group.
As at the Latest Practicable Date, none of the Directors or supervisors of the Company was
materially interested in any contract or arrangement entered into by any member of the Group
which was subsisting as at the Latest Practicable Date and which was significant in relation to
the business of the Group.
— 56 —
APPENDIX II
8.
GENERAL INFORMATION
MATERIAL LITIGATION
As at the Latest Practicable Date, certain members of the Group were a party to certain
litigations arising from the ordinary course of business or assets acquisition. The likely outcome
of these contingent liabilities, litigations or other legal proceedings cannot be ascertained at
present, but the management of the Group believes that any possible legal liability which may
result from the aforesaid cases will not have material adverse effect on the financial position
and operating results of the Group. Save as disclosed, as at the Latest Practicable Date, no
material litigation or claims were pending or threatened or made against the Group so far as the
Directors are aware.
9.
MISCELLANEOUS
(a)
The registered office of the Company is situated at No.14800, Jingshi Road, Jinan City,
Shandong Province the PRC.
(b)
The business office of the Company is situated at No. 2 Xuanwumennei Street, Xicheng
District, Beijing. the PRC.
(c)
The Hong Kong H share registrar and H share transfer office of the Company is Hong
Kong Registrars Limited situated at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Hong Kong.
(d)
The English text of this circular (except for Appendix I to this circular) shall prevail over
its Chinese text in the case of inconsistency. In respect of Appendix I, the Chinese text
shall preveil over its English text in the case of inconsistency.
10.
DOCUMENTS AVAILABLE FOR INSPECTION
A copy of each of the (i) China Huadian A Shares Subscription Agreement; (ii) the letter from
the Board, the text of which is set out on pages 1 to 22 of this circular; (iii) the letter from the
IBC, the text of which is set out on pages 23 to 24 of this circular; and (iv) the letter from the
Independent Financial Adviser, the text of which is set out on pages 25 to 42 of this circular
will be available for inspection at the offices of Wonderful Sky Financial Group Holdings
Limited, 6th Floor, Nexxus Building, 41 Connaught Road, Central, Hong Kong during normal
business hours on any weekday (except public holidays) from the date of this circular up to and
including 3 February 2015.
— 57 —
NOTICE OF EGM
The Securities and Futures Commission of Hong Kong, Hong Kong Exchanges and Clearing Limited
and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this notice,
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 notice.
PRC
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “EGM”) of Huadian
Power International Corporation Limited* (the “Company”) will be held at 2:00 p.m. on Friday, 13
February 2015 at Huabin International Hotel, No.4 Xuanwumennei Street, Xicheng District, Beijing,
the PRC for the purpose of considering and, if appropriate, by way of polls, approving the following
resolutions. Unless the context otherwise requires, capitalized terms used in this notice shall have
the meanings as those defined in the announcements of the Company dated 29 December 2014 (the
“Announcement”). A circular containing, among other things, details of the transactions referred
to in the Announcement, a letter from the independent financial adviser containing its advice to
the independent Board committees and the independent Shareholders on relevant matters and the
recommendation of the independent Board committees regarding relevant matters to the independent
Shareholders, is expected to be despatched to the Shareholders in accordance with the Hong Kong
Listing Rules on or before 20 January 2015.
— 58 —
NOTICE OF EGM
AS SPECIAL RESOLUTIONS
1.
To consider and approve, by way of special resolution, the exercise of general mandate by the
board of directors (the “Board”) of the Company to allot, issue and deal with shares of the
Company:
“THAT
(1)
The Board be and is hereby granted, during the Relevant Period (as hereafter defined),
an unconditional general mandate to separately or concurrently allot, issue and deal with
additional domestic shares (the “A Shares”) and/or overseas listed foreign invested shares
(the “H Shares”) of the Company, and to make or grant offers, agreements or options in
respect thereof, subject to the following conditions:
(i)
such mandate shall not extend beyond the Relevant Period save that the Board may,
during the Relevant Period, make or grant offers, agreements or options which
might require the implementation or exercise of such powers beyond the end of the
Relevant Period;
(ii)
the number of the A Shares and/or H Shares to be allotted and issued or agreed
conditionally or unconditionally to be issued and allotted separately or concurrently
approved by the Board pursuant to the general mandate shall not exceed 20% of
each of its existing issued A Shares and/or H Shares respectively; and
(iii) the Board will only exercise its power under such mandate in accordance with the
Company Law of the PRC and the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”)
(as amended from time to time) or applicable laws, rules and regulations of other
government or regulatory bodies and only if all necessary approvals from the
China Securities Regulations Commission and/or other relevant PRC government
authorities have been obtained.
— 59 —
NOTICE OF EGM
(2)
For the purposes of this special resolution:
“Relevant Period” means the period from the date of passing this special resolution until
the earliest of the following three dates:
(i)
the conclusion of the next annual general meeting of the Company immediately
after the passing of this resolution;
(ii)
the expiration of the period within which the next annual general meeting of the
Company immediately after the passing of this resolution is required by the articles
of association of the Company (“Articles of Association”) or other applicable laws
of the PRC to be held; and
(iii) the date on which the authority granted to the Board of the Company set out in this
resolution is revoked or varied by a special resolution of the Shareholders of the
Company (means the registered holder(s) of A Shares or H Shares of the Company)
in a general meeting.
(3)
Contingent on the Board resolving to separately or concurrently issue Shares pursuant to
paragraph (1) of this special resolution, the Board be authorized to increase the registered
capital of the Company to reflect the number of Shares authorized to be issued by the
Company pursuant to paragraph (1) of this resolution and to make such appropriate and
necessary amendments to the Articles of Association as they think fit to reflect such
increases in the registered capital of the Company and to take any other actions and
complete any formalities required to effect the separate or concurrent issuance of Shares
pursuant to paragraph (1) of this resolution and the increase in the registered capital of
the Company.”
— 60 —
NOTICE OF EGM
2.
Conditional on the passing of resolution No. 1, to consider and approve each of the following,
by way of separate special resolutions, in relation to the proposed Non-public Issuance (the
“Issuance”) (Note 2):
(1) Class of shares to be issued:
RMB denominated ordinary shares (A Shares);
(2) Nominal value per share:
RMB1.00;
(3) Target subscriber and
Not more than ten target subscribers under the Issuance,
lock-up period:
including China Huadian and other target investors
complied with the requirements of CSRC, including
securities investment funds, insurance institutional
investors, trust investment companies, financial
companies, securities companies, qualified foreign
institutional investors, natural persons and other qualified
investors. After obtaining the necessary approvals, the
Board shall (based on the subscription application bidding
prices indicated by the target subscribers) determine the
final target subscribers (other than China Huadian) in
compliance with the principle to give priority to those
target subscribers who submitted higher bidding prices.
China Huadian shall not transfer its Shares within 36
months from the date of completion of the Issuance; other
target investors shall not transfer their new Shares within
12 months from the date of completion of the Issuance;
(4) Method of issue:
Non-public issuance to target subscriber within the
validity period stipulated in the approvals document of
CSRC;
(5) Method of subscription:
All target subscribers shall make their subscription for the
Shares issued this time at the same price in cash;
— 61 —
NOTICE OF EGM
(6) Determination date of the
The determination date of the issuance price shall be
issuance price and the
the date of the announcement of the Board resolutions
issuance price:
in respect of the Issuance passed at the sixth meeting of
the seventh session of the Board, i.e. 30 December 2014.
The issuance price shall not be lower than RMB5.04 per
share, i.e. 90% of the average trading price of A Shares
of the Company during the 20 trading days immediately
preceding the determination date of the issuance price
(the average trading price of A Shares of the Company
during the 20 trading days immediately preceding the
determination date of the issuance price is the total
turnover of A Shares of the Company during the 20
trading days immediately preceding the determination date
of the issuance price divided by the total trading volume
of A Shares during the 20 trading days immediately
preceding the determination date of the issuance price).
The final issuance price shall be determined by the Board
of the Company after obtaining the approval documents
of the Non-public Issuance, pursuant to the authorization
granted by the general meeting and taking into account
all applicable laws and rules, regulations, other regulatory
documentations and market conditions, and compliance
of the principle to give priority to higher bidding prices
based on the subscription application bidding prices
indicated by the target subscribers and consultations with
the lead underwriter of the issuance. The issuance price
shall be adjusted accordingly if there is any ex-rights
or ex-dividend between the determination date of the
issuance price and the issuance date of the Issuance;
— 62 —
NOTICE OF EGM
(7) Number of shares to be issued:
Not more than 1,418,000,000 A Shares. The final number
of new A Shares to be issued shall be determined by
the Board pursuant to the authorization granted by the
general meeting under this resolution after taking into
account the actual situations and consultations with the
lead underwriter of the Non-public Issuance. In particular,
the proposed subscription of Shares by China Huadian
will be not less than 20% of the number of shares
actually issued under this Issuance (the final number of
shares to be issued shall be determined on the basis of
negotiation among the Company, China Huadian and the
lead underwriter with reference to the actual subscription
application);
(8) Listing arrangement:
After the expiration of the lock-up period, the Shares
issued under this Issuance shall be listed and traded on
the Shanghai Stock Exchange;
(9) Total proceeds raised and
The total proceeds of the Issuance will be not more than
use of proceeds:
RMB7,147 million, which (after deducting issuance
expenses and fees) is proposed to be used in Fengjie
Project and Shiliquan Project and to supplement the
working capital of the Company, respectively (Note 8);
(10) Arrangement of
The retained profits before the Issuance shall be shared
retained profits:
among the existing and new Shareholders after the
completion of the Issuance; and
(11) Validity period of
12 months from the date of passing these resolutions.
these resolutions:
— 63 —
NOTICE OF EGM
3.
Conditional on the passing of resolution No. 1, to approve, confirm and/or ratify the China
Huadian A Shares Subscription and China Huadian A Shares Subscription Agreement.
4.
Conditional on the passing of resolution No. 2, to consider and approve, by way of special
resolution, the following authorizations to the Board, the Chairman and/or the person authorized
by him in connection with the Issuance:
“THAT:
(1)
subject to all applicable laws and rules, and regulations and requirements of regulatory
authorities and departments, to authorize the Board to handle all things in connection with
the Issuance, including but not limited to, determining the method of the Issuance, number
of shares to be issued, issuance price, price determination method, target subscribers and
timing;
(2)
authorities and departments, to authorize the Board, the Chairman or the authorized
person of the Chairman to handle all matters relating to the Issuance, to formulate,
prepare, revise, finalize and execute all information disclosure documents relating to the
Issuance; and to sign all contracts, agreements and documents relating to the Issuance;
(3)
to authorize the Board to make relevant adjustments to the issuance method of the
Issuance in the event there is any change to the policies of the regulatory authorities
relating to the non-public issuance of shares or there is any change to the market
conditions relating to the Issuance, save and except for those matters required to be
re-voted at the general meeting pursuant to any laws, regulations and the Articles of
Association;
(4)
to authorize the Board, the Chairman and the authorized person of the Chairman to handle
the capital verification procedures relating to the Issuance;
(5)
authorities and departments, to authorize the Board (subject to the scope of this
resolution) to make appropriate adjustments to the arrangements of the use of proceeds
raised from the Issuance;
— 64 —
NOTICE OF EGM
(6)
to authorize the Board, the Chairman and the authorized person of the Chairman to
handle the share registration, lock-up and application for listing of the new A Shares
of the Company on the Shanghai Stock Exchange and submit relevant documents upon
completion of the Issuance;
(7)
to authorize the Board, the Chairman and the authorized person of the Chairman to make
consequential amendments to the relevant provisions in the Articles of Association upon
completion of the Issuance and handle relevant approval procedures, and to deal with
relevant registration and filing procedures relating to the change of the registered capital
of the Company;
(8)
authorities and departments, to authorize the Board to handle all other matters incidental
to the Issuance; and
(9)
the authorizations described in paragraphs (5) to (7) in this resolution shall be valid in the
duration of the relevant events commencing from the date of passing of this resolution
in the general meeting, and other authorizations shall be valid for a period of 12 months
from the date of passing of this resolution in a general meeting.”
AS ORDINARY RESOLUTIONS
5.
Conditional on the passing of resolution No. 2, to consider and approve that the Company
satisfies the conditions for non-public issuance of A Shares under the Administrative Measures
for the Issuance of Securities by Listed Companies《上市公司證券發行管理辦法》and Detailed
Implementation Rules for the Non-public Issuance of Stocks by Listed Companies《上市公司非
公開發行股票實施細則》of the PRC.
6.
Conditional on the passing of resolution No. 2, to consider and approve the “Feasibility Analysis
Report on the Use of Proceeds Raised from the Non-public Issuance of A Shares”. Details of
the aforesaid report were contained in the Overseas Regulatory Announcement of the Company
published on the website of the Hong Kong Stock Exchange on 29 December 2014.
7.
Conditional on the passing of resolution No. 2, to consider and approve the “Report on the
Previous Use of Proceeds”. Details of the aforesaid report were contained in the Overseas
Regulatory Announcement of the Company published on the website of the Hong Kong Stock
Exchange on 29 December 2014.
— 65 —
NOTICE OF EGM
By order of the Board
Zhou Lianqing
Secretary to the Board
As at the date of this notice, the Board comprises:
Li Qingkui (Chairman, Non-executive Director), Chen Jianhua (Vice Chairman, Executive Director),
Chen Dianlu (Vice Chairman, Non-executive Director), Geng Yuanzhu (Executive Director), Wang
Yingli (Non-executive Director), Chen Bin (Non-executive Director), Gou Wei (Non-executive
Director), Chu Yu (Non-executive Director), Wang Yuesheng (Independent Non-executive Director),
Ning Jiming (Independent Non-executive Director), Yang Jinguan (Independent Non-executive
Director), and Ding Huiping (Independent Non-executive Director).
Beijing, the PRC
30 December 2014
Notes:
1.
Proposal to refresh general mandate to issue shares
In order to ensure flexibility and to give discretion to the Directors in the event that it becomes desirable to
issue any Shares, the Board has resolved to seek the Shareholders’ approval on 13 February 2015 for refreshing
the general mandate, which is an unconditional general mandate to allot, issue and/or deal with Shares.
2.
The Issuance is conditional upon, among others, obtaining necessary approvals from SASAC and CSRC.
3.
Eligibility of attending the EGM and closure of the H share register of members
Shareholders of the Company’s H shares whose names appear on the Company’s register of members at the
close of business on Wednesday, 14 January 2015 (the “Registered Shareholder(s)”) are entitled to attend
the EGM conditional upon completion of the necessary registration procedures. The register of members of H
shares will be closed from Thursday, 15 January 2015 to Friday, 13 February 2015, both days inclusive, for the
purpose of determining H Shareholders’ entitlement to attend the EGM, during which period no transfer of the
H Shares will be registered.
In order to be entitled to attend the EGM, Shareholders of H shares are required to deposit their respective
instrument(s) of transfer and the relevant share certificate(s) with the H share registrar, Hong Kong Registrars
Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, no later than
4:30 p.m. on Wednesday, 14 January 2015.
— 66 —
NOTICE OF EGM
4.
5.
Registration procedures for attending the EGM
(1)
Registered Shareholders who intend to attend the EGM are required to deliver the completed and signed
written reply slip to the Secretarial Office of the Board of the Company on or before Friday, 23 January
2015. Please use the “Reply Slip for Attendance”, or a duplicate copy thereof to reply. In addition to
the requirements mentioned above, Registered Shareholders who intend to attend the EGM shall, if
applicable, also deliver copies of their instrument(s) of transfer and the relevant share certificates to the
Secretarial Office of the Board of the Company on or before Friday, 23 January 2015.
(2)
Registered Shareholders may deliver the necessary registration documents to the Company in person, by
post or by facsimile. Upon receipt of the above documents, the Company shall complete the registration
procedures in respect of attending the EGM, and shall issue copies or facsimile copies of admission
cards for attending the EGM by post or by facsimile. Shareholders or their proxies may produce such
copies of the admission cards at the time of attending the EGM in exchange for the original of the
admission cards.
Proxies
Any Registered Shareholder is entitled to appoint one or more proxies to attend and vote at the EGM on his
behalf by completing the “Proxy Form for Use at the Extraordinary General Meeting” (the “Proxy Form”) or
by completing a duplicate copy thereof. A proxy need not be a Shareholder of the Company. Should more than
one proxy be appointed, such proxies shall only exercise his/her voting rights on a poll. The Proxy Form shall
be signed by a Registered Shareholder or his attorney duly authorized in writing. If the Proxy Form is signed by
the attorney of a Registered Shareholder, the power of attorney or other documents of authorization authorizing
the attorney to appoint the proxy shall be notarised. If the Registered Shareholder is a corporation, the Proxy
Form shall be executed under seal or shall be executed by its director or a duly authorised person. The notarized
power of attorney or other authorization documents and the completed Proxy Form shall be delivered to Hong
Kong Registrars Limited not less than 24 hours before the time designated for convening the EGM or any
adjournment thereof (as the case may be).
6.
Miscellaneous
(1)
Each of the Shareholders (or his proxy) shall exercise his voting rights according to the number of shares
with voting rights represented by him and shall be entitled to one vote for each share held.
(2)
The EGM is expected to take about half a day. Shareholders who attend the EGM shall be responsible
for their own travel and accommodation expenses.
(3)
The office address of the Company and the contact details of the Secretarial Office of the Board are as
follows:
No. 2 Xuanwumennei Street Xicheng District
Beijing, the PRC
Tel No.: (86) 10 8356 7903
Fax No.: (86) 10 8356 7963
— 67 —
NOTICE OF EGM
(4)
The address and contact details of Hong Kong Registrars Limited are as follows:
Rooms 1712-1716, 17th floor
Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
Tel No.: (852) 2862 8628
Fax No.: (852) 2865 0990/2529 6087
7.
Abstention from voting
China Huadian and China Huadian Hong Kong and all other parties (if any) who are interested or involved in
the China Huadian A Shares Subscription or China Huadian A Shares Subscription Agreement, shall abstain
from voting in respect of Resolutions Nos. 1, 2 and 3 in the EGM.
8.
Use of proceeds
For details, please refer to the relevant announcement of the Company dated 29 December 2014.
— 68 —

THIS CIRCULAR IS IMPORTANT AND REQUIRES

Transcription

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