Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this announcement, make no
representation as to its accuracy or completeness and expressly disclaim any liability
whatsoever for any loss howsoever arising from or in reliance upon the whole or any
part of the contents of this announcement.
AIR CHINA LIMITED
(a joint stock limited company
incorporated in
the People’s Republic of China
with limited liability)
(Stock Code: 753)
CATHAY PACIFIC AIRWAYS
LIMITED
(Incorporated in Hong Kong
with limited liability)
(Stock Code: 293)
Joint Announcement
Connected Transaction
Establishment of Airport Ground Handling Joint Venture
in Shanghai
On 30th March 2012, Air China and Hong Kong Airport Services entered into the
Joint Venture Agreement with Shanghai Airport Authority and Shanghai International
Airport Co., Ltd. for the establishment of Shanghai International Airport Services Co.,
Ltd. as Joint Venture Company in Shanghai, the PRC for provision of airport ground
handling services at Shanghai Pudong International Airport and Shanghai Hongqiao
International Airport.
As Air China is a substantial shareholder of Cathay Pacific and Hong Kong Airport
Services is a wholly owned subsidiary of Cathay Pacific which is a substantial
shareholder of Air China, the Transaction constitutes a connected transaction for each
of Air China and Cathay Pacific under Chapter 14A of the Listing Rules. As the
highest of the relevant percentage ratios as defined under Rule 14.07 of the Listing
Rules (other than the profits ratio) in respect of the Transaction for each of Air China
and Cathay Pacific is more than 0.1% but less than 5%, the Transaction is subject to
announcement and reporting requirements under Chapter 14A of the Listing Rules.
THE JOINT VENTURE AGREEMENT
Date:
30th March 2012
Parties:
(1)
(2)
(3)
(4)
Shanghai Airport Authority
Shanghai International Airport Co., Ltd.
Air China
Hong Kong Airport Services
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Particulars of the Transaction
On 30th March 2012, Air China and Hong Kong Airport Services entered into the
Joint Venture Agreement with Shanghai Airport Authority and Shanghai
International Airport Co., Ltd. for the establishment of Shanghai International Airport
Services Co., Ltd. as Joint Venture Company in Shanghai, the PRC for provision of
airport ground handling services at Shanghai Pudong International Airport and
Shanghai Hongqiao International Airport.
Pursuant to the Joint Venture Agreement, the Joint Venture Company will have a
term of 20 years from its Establishment Date.
The scope of business of the Joint Venture Company will mainly be the provision of
airport ground handling services at Shanghai Pudong International Airport and
Shanghai Hongqiao International Airport.
The structure of the registered capital of the Joint Venture Company will be as
follows:Joint Venture Party
capital contribution
(RMB)
36,000,000
147,600,000
86,400,000
90,000,000
360,000,000
=========
Shanghai Airport Authority
Shanghai International Airport Co., Ltd.
Air China
Hong Kong Airport Services
Total registered capital:
shareholding
percentage
10%
41%
24%
25%
100%
====
Air China and Hong Kong Airport Service will pay their respective contributions of
RMB86,400,000 and RMB90,000,000 to the registered capital of the Joint Venture
Company in cash in RMB or USD equivalent in respect of their respective 24% and
25% shareholding in the Joint Venture Company within 3 months after the
Establishment Date.
Shanghai Airport Authority and Shanghai International Airport Co., Ltd. will inject
cash in RMB and their existing ground service equipment into the Joint Venture
Company as their contributions to the registered capital of the Joint Venture
Company in kind in respect of their respective 10% and 41% shareholding in the
Joint Venture Company within 3 months after the Establishment Date.
Under PRC laws, the transfer of state owned assets is subject to a mandatory
valuation process. The transfer by any Joint Venture Party of its interest in the
registered capital of the Joint Venture Company is subject to the pre-emptive rights
of the other Joint Venture Parties.
The board of directors of the Joint Venture Company will comprise 9 members
(including the chairman of the board): 2 directors appointed by Shanghai Airport
Authority, 3 directors appointed by Shanghai International Airport Co., Ltd., 2
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directors appointed by Air China and 2 directors appointed by Hong Kong Airport
Services. The chairman of the board of the Joint Venture Company will be
appointed by Shanghai International Airport Co., Ltd.
The performance of the obligations of the Joint Venture Parties under the Joint
Venture Agreement is conditional upon, among other things, all necessary approvals,
licences and registration from the relevant PRC government authorities for the Joint
Venture Agreement and the Transaction having been obtained.
Shanghai Airport Authority and Shanghai International Airport Co., Ltd. will
facilitate to novate their existing airport ground handling services contracts, including
those in respect of Cathay Pacific and Dragonair, to the Joint Venture Company.
The existing manpower of Shanghai Airport Authority and Shanghai International
Airport Co., Ltd. engaging in airport ground handling services will transfer to the
Joint Venture Company in order to ensure the continuity of operations at Shanghai
Pudong International Airport and Shanghai Hongqiao International Airport.
Reasons for, and benefits of, the Transaction
The establishment of the Joint Venture Company in Shanghai, the PRC for provision
of airport ground handling services at Shanghai Pudong International Airport and
Shanghai Hongqiao International Airport will enable Air China Group and Cathay
Pacific Group to deliver better services to satisfy the increasing demand for air
passenger and cargo services in mainland China.
Connection between the parties
Air China, by virtue of its 29.99% shareholding in Cathay Pacific, is a substantial
shareholder and therefore a connected person of Cathay Pacific under the Listing
Rules.
Cathay Pacific, by virtue of its 19.53% shareholding in Air China, is a substantial
shareholder of Air China. Hong Kong Airport Services, being a wholly owned
subsidiary of Cathay Pacific, is therefore a connected person of Air China under the
Listing Rules.
The Transaction therefore constitutes a connected transaction for each of Air China
and Cathay Pacific under the Listing Rules.
Compliance with the Listing Rules
As the highest of the relevant percentage ratios as defined under Rule 14.07 of the
Listing Rules (other than the profits ratio) in respect of the Transaction is more than
0.1% but less than 5%, the Transaction constitutes a connected transaction for each of
Air China and Cathay Pacific and is subject to announcement and reporting
requirements under Rule 14A.32 of the Listing Rules, but exempt from the
independent shareholders’ approval requirements.
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Opinion of the directors
The Air China Directors, including the independent non-executive Air China
Directors, consider that the Transaction is on normal commercial terms, in the
ordinary and usual course of business of Air China, fair and reasonable and in the
interests of Air China and its shareholders as a whole.
The Cathay Pacific Directors, including the independent non-executive Cathay
Pacific Directors, consider that the Transaction is on normal commercial terms, in the
ordinary and usual course of business of Cathay Pacific, fair and reasonable and in
the interests of Cathay Pacific and its shareholders as a whole.
Cai Jianjiang, Fan Cheng, Christopher Pratt and Ian Shiu, being directors of Cathay
Pacific at the time of voting, were materially interested in the Transaction and had
abstained from voting on the relevant board resolutions of Air China in respect of the
Transaction.
Christopher Pratt, Kong Dong, Cai Jianjiang, Fan Cheng, Ian Shiu and Zhao
Xiaohang, being directors and/or officers of Air China at the time of voting, were
materially interested in the Transaction and had abstained from voting on the relevant
board resolutions of Cathay Pacific in respect of the Transaction.
Directors of Air China
As at the date of this announcement, the Air China Directors are:
Non-Executive Directors: Wang Changshun (Chairman), Wang Yinxiang, Cao
Jianxiong, Sun Yude, Christopher Pratt, Ian Shiu;
Executive Directors: Cai Jianjiang, Fan Cheng; and
Independent Non-Executive Directors: Fu Yang, Li Shuang, Han Fangming and
Yang Yuzhong.
Directors of Cathay Pacific
As at the date of this announcement, the Cathay Pacific Directors are:
Executive Directors: Christopher Pratt (Chairman), James Barrington, Ivan Chu,
Martin Murray and John Slosar;
Non-Executive Directors: Cai Jianjiang, Fan Cheng, James W.J. Hughes-Hallett,
Peter Kilgour, Ian Shiu, Merlin Swire, Wang Changshun and Zhao Xiaohang; and
Independent Non-Executive Directors: Irene Lee, Jack So, Tung Chee Chen and
Peter Wong.
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Definitions
“Air China”
Air China Limited, a company incorporated in the PRC,
whose H shares are listed on the Stock Exchange as their
primary listing venue and on the Official List of the UK
Listing Authority as their secondary listing venue, and whose
A shares are listed on the Shanghai Stock Exchange. The
principal activity of Air China is air passenger, air cargo and
airline-related services.
“Air China
Directors”
The directors of Air China.
“Air China Group”
Air China and its subsidiaries.
“Cathay Pacific”
Cathay Pacific Airways Limited, a company incorporated in
Hong Kong and listed on the Stock Exchange, the principal
activity of which is the operation of scheduled airline
services.
“Cathay Pacific
Directors”
The directors of Cathay Pacific.
“Cathay Pacific
Group”
Cathay Pacific and its subsidiaries, including Dragonair.
“Dragonair”
Hong Kong Dragon Airlines Limited, a company
incorporated in Hong Kong and wholly owned by Cathay
Pacific and the principal activity of which is the operation of
scheduled airline services.
“Establishment
Date”
The date of issuance of the business licence of the Joint
Venture Company by the State Administration for Industry
and Commerce of the PRC.
“Hong Kong
Airport Services”
Hong Kong Airport Services Limited, a company
incorporated in Hong Kong and wholly owned by Cathay
Pacific and the principal activity of which is the operation of
airport ground handling services.
“Joint Venture
Company”
Shanghai International Airport Services Co., Ltd., the joint
venture company to be established in the PRC in accordance
with the Joint Venture Agreement.
“Joint Venture
Agreement”
The joint venture agreement dated 30th March 2012 between
Shanghai Airport Authority, Shanghai International Airport
Co., Ltd., Air China and Hong Kong Airport Services in
respect of the establishment of the Joint Venture Company.
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“Joint Venture
Party”
Any one of Shanghai Airport Authority, Shanghai
International Airport Co., Ltd., Air China and Hong Kong
Airport Services; collectively “Joint Venture Parties”.
“Listing Rules”
The Rules Governing the Listing of Securities on the Stock
Exchange.
“PRC”
The People’s Republic of China.
“RMB”
Renminbi, the lawful currency of the PRC.
“Shanghai Airport
Authority”
Shanghai Airport Authority, a state-owned enterprise under
the State-owned Assets Supervision and Administration
Commission of Shanghai Municipal Government and the
principal activity of which is operational management of
airport ground handling services related to domestic and
overseas transport.
“Shanghai
International
Airport Co., Ltd.”
Shanghai International Airport Co., Ltd., a company
incorporated in the PRC, whose shares are listed on the
Shanghai Stock Exchange.
The principal activity of
Shanghai International Airport Co., Ltd. is the provision of
ground support services to domestic and overseas transport
enterprises. Shanghai Airport Authority holds 53.25%
shareholding in Shanghai International Airport Co., Ltd.
“Stock Exchange”
The Stock Exchange of Hong Kong Limited.
“Transaction”
The transaction contemplated under the Joint Venture
Agreement.
“USD”
United States dollars, the lawful currency of the United
States of America.
By Order of the Board
Air China Limited
Rao Xinyu
Tam Shuit Mui
Joint Company Secretaries
By Order of the Board
Cathay Pacific Airways Limited
David Fu
Company Secretary
Beijing, 30th March 2012
Hong Kong, 30th March 2012
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