FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
For
the month of May, 2009,
(Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.)
Form
20-F X
Form 40-F _____
(Indicate
by check mark whether the registrant by furnishing the information contained in
this form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934. )
Yes
____No X
(If
"Yes" is marked, indicate below the file number assigned to registrant in
connection with Rule 12g3-2(b): 82-__________. )
N/A
Huaneng
Power International, Inc.
West
Wing, Building C, Tianyin Mansion
No.
2C Fuxingmennan Street
Xicheng
District
Beijing,
100031 PRC
This
Form 6-K consists of:
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|
1.
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a
notice for 2008 annual general meeting of Huaneng Power International,
Inc. (the “Registrant”) and proxy form and reply slip attached thereto,;
and
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|
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2.
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a
circular on discloseable and connected transactions regarding acquisition
of interests in YLQ Co-generation and Beijing
Co-generation;
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Each
made by the Registrant on May 4, 2009.
(a
Sino-foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock
Code: 902)
Notice
of 2008 Annual General Meeting
NOTICE IS HEREBY GIVEN that
the 2008 annual general meeting (the “Annual General Meeting”) of Huaneng Power
International, Inc. (the “Company”) will be held at 9:00 a.m. on 18 June 2009 at
Holiday Inn Central Plaza Beijing, 1 Caiyuanjie, Xuanwu District, Beijing, the
People’s Republic of China for considering and approving the following
resolutions:
Ordinary
Resolutions:
1. To
consider and approve the working report from the Board of Directors of the
Company for year 2008.
2. To
consider and approve the working report from the Supervisory Committee of the
Company for year 2008.
3. To
consider and approve the audited financial statements of the Company for year
2008.
4. To
consider and approve the profit distribution plan of the Company for year 2008.
(Note 1)
5. To
consider and approve the proposal regarding the appointment of the Company’s
auditors for year 2009. (Note
2)
6. To
consider and approve the proposal regarding the transfer of interest in Tianjin
Yangliuqing Co-generation Limited Liability Company. (Note 3)
7. To
consider and approve the proposal regarding the transfer of interest in Huaneng
Beijing Co-generation Limited Liability Company. (Note 4)
Special
Resolutions:
8. To
consider and approve the proposal regarding amendments to the articles of
association of the Company. (Note 5)
9. To
consider and approve the proposal regarding the issue of short-term debentures
by the Company.
“THAT
(i) an approval to be given to the Company to issue within the PRC short-term
debentures of a principal amount up to RMB10 billion (in either one or multiple
tranches) within 12 months from the date on which shareholders’ approval is
obtained; (ii) an unconditional general mandate to be given to the Company’s
board of directors or any two or more directors to determine the terms and
conditions and other relevant matters in relation to the respective tranches of
the issue of short-term debentures in accordance with the need of the Company
and the market conditions, including but not limited to the final principal
amount of the short-term debentures to be issued and the term thereof within the
prescribed scope as set out in (i) above, the execution of all necessary legal
documents, and the conduct of appropriate information disclosures.”
|
By
Order of the Board
Gu Biquan
Company
Secretary
|
Beijing,
the PRC
4
May 2009
Notes:
1. After
auditing by PricewaterhouseCoopers Zhong Tian CPAs Limited Company and
PricewaterhouseCoopers, for
1
the
accounting year ended 31 December 2008, the Company’s loss after taxation
attributable to the shareholders of the Company was RMB3,701,229,826 and
RMB3,937,687,568 respectively according to PRC Accounting Standards and
International Financial Reporting Standards. During 2008, the Company did not
allocate any statutory surplus common reserve fund and discretionary surplus
common reserve fund. Taking into consideration the accumulated balance of
distributable profit of the Company, and in order to reward the shareholders,
the dividend distribution plan of the Company for 2008 is: Using the total share
capital of the Company as the base number and from the Company’s accumulative
undistributed profits, the Company will distribute cash dividend of RMB1
(inclusive of tax) to all the shareholders for every 10 shares and it is
anticipated that the cash dividend paid will amount to
RMB1,205,538,344.
2. Proposal
regarding the appointment of the Company’s auditors for 2009
To
appoint PricewaterhouseCoopers Zhong Tian CPAs Co. Ltd. as the PRC auditors of
the Company and PricewaterhouseCoopers as the Company’s international auditors
for 2009 with a total remuneration of appproximately RMB20 million.
3. Please
refer to the Company´s circular dated 4 May 2009 for details.
4. Please
refer to the Company´s circular dated 4 May 2009 for details.
5. Please
refer to the Company´s circular dated 27 April 2009 for details.
6. Eligibility
for attending the Annual General Meeting
Holders
of the Company’s H Shares whose names appear on the HK$ Dividend H Shares
Register and the US$ Dividend H Shares Register maintained by Hong Kong
Registrars Limited at 4:30 p.m. on 15 May 2009 are eligible to attend the Annual
General Meeting and are entitled to receive cash dividends.
7. Proxy
(i) A
member eligible to attend and vote at the Annual General Meeting is entitled to
appoint, in written form, one or more proxies to attend and vote on his behalf.
A proxy needs not be a shareholder.
(ii) A
proxy should be appointed by a written instrument signed by the appointor or its
attorney duly authorised in writing. If the form of proxy is signed by the
attorney of the appointor, the power of attorney authorising that attorney to
sign or other authorisation document(s) shall be notarised.
(iii) To
be valid, the power of attorney or other authorisation document(s) which have
been notarised together with the completed form of proxy must be delivered, in
the case of holders of Domestic Shares, to the Company and, in the case of
holders of H Shares, to Hong Kong Registrar Limited, not less than 24 hours
before the time designated for holding of the Annual General
Meeting.
(iv) A
proxy may exercise the right to vote by a show of hands or by poll. However, if
more than one proxy is appointed by a shareholder, such proxies shall only
exercise the right to vote by poll.
8. Registration
procedures for attending the Annual General Meeting
(i) A
shareholder or his proxy shall produce proof of identity when attending the
meeting. If a shareholder is a legal person, its legal representative or other
persons authorised by the board of directors or other governing body of such
shareholder may attend the Annual General Meeting by producing a copy of the
resolution of the board of directors or other governing body of such shareholder
appointing such persons to attend the meeting.
(ii) Holders
of H Shares intending to attend the Annual General Meeting should return the
reply slip for attending the Annual General Meeting to the Company on or before
28 May 2009.
(iii) Shareholders
may send the reply slip to the Company in person, by post or by
fax.
9. Closure
of H Share Register of Members
The
H share register of members of the Company will be closed from 18 May 2009 to 17
June 2009 (both days inclusive).
2
10. Other
Businesses
(i) The
Annual General Meeting will last for half day. Shareholders who attend shall
bear their own travelling and accommodation expenses.
(ii) The
address of the Share Registrar for H Shares of the Company, Hong Kong Registrar
Limited, is at:
1712-1716,
17/F, Hopewell Centre
183
Queen’s Road East
Hong
Kong
(iii) The
registered address of the Company is at:
West
Wing,
Building
C,
Tianyin
Mansion,
2C
Fuxingmennan Street,
Xicheng
District,
Beijing
100031,
The
People’s Republic of China
Telephone
No.: (+86)-10-66491999
Facsimile
No.: (+86)-10-66491888
As
at the date of this notice, the directors of the Company are:
|
Cao
Peixi
(Executive
Director)
Huang
Long
(Non-executive
Director)
Wu
Dawei
(Non-executive
Director)
Huang
Jian
(Non-executive
Director)
Liu
Guoyue
(Executive
Director)
Fan
Xiaxia
(Executive
Director)
Shan
Qunying
(Non-executive
Director)
Xu
Zujian
(Non-executive
Director)
Huang
Mingyuan
(Non-executive
Director)
Liu
Shuyuan
(Non-executive
Director)
|
Liu
Jipeng
(Independent
Non-executive Director)
Yu
Ning
(Independent
Non-executive Director)
Shao
Shiwei
(Independent
Non-executive Director)
Zheng
Jianchao
(Independent
Non-executive Director)
Wu
Liansheng
(Independent
Non-executive Director)
|
3
(a
Sino-foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock Code: 902)
Proxy
Form for 2008 Annual General Meeting
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Number
of Shares related to this proxy form (Note
1)
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H
Shares/Domestic Shares*
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I(We)(Note
2)
___________________________________________________________________________________________________________________________________________________
of ___________________________________________________________________________________________________________________
, Shareholders’ Account:
________________________________________________________ and I.D.
No.:
_______________________________________________________________ , being
the holder(s) of
________________________________________________________________________________________________________________________________________
H Share(s)/Domestic Share(s)* (Note
1) of Huaneng Power International, Inc. (the “Company”) now appoint(Note
3), ____________________________________________________________ I.D.
No.:
__________________________________________________________________
(of ), or
failing him the Chairman of the meeting as my(our) proxy to attend and vote for
me(us) on the following resolutions in accordance with the instruction(s) below
and on my(our) behalf at the 2008 Annual General Meeting to be held at 9:00 a.m.
on 18 June 2009 at Holiday Inn Central Plaza Beijing, 1 Caiyuanjie, Xuanwu
District, Beijing, the People’s Republic of China for the purpose of considering
and, if thought fit, passing the resolutions as set out in the notice convening
the said meeting. In the absence of any indication, the proxy may vote for or
against the resolutions at his own discretion.(Note
6)
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Ordinary
Resolutions:—
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For
(Note
4)
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Against
(Note
4)
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||
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1.
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To
consider and approve the working report from the Board of Directors of the
Company for year 2008.
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|||
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2.
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To
consider and approve the working report from the Supervisory Committee of
the Company for year 2008.
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|||
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3.
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To
consider and approve the audited financial statements of the Company for
year 2008.
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|||
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4.
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To
consider and approve the profit distribution plan of the Company for year
2008.
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|||
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5.
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To
consider and approve the proposal regarding the appointment of the
Company’s auditors for year 2009.
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|||
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6.
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To
consider and approve the proposal regarding the transfer of the interest
in Tianjin Yangliuqing Co-generation Limited Liability
Company.
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|||
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7.
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To
consider and approve the proposal regarding the transfer of the interest
in Huaneng Beijing Co-generation Limited Liability
Company.
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|||
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8.
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To
consider and approve the proposal regarding amendments to the articles of
association of the Company.
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|||
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9.
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To
consider and approve the proposal regarding the issue of short-term
debentures by the Company.
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|||
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Date:
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2009
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Signature:
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(Note
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Notes:
1. Please
insert the number of
Share(s) registered in your name(s) relating to this form of proxy. If no number
is inserted, this form of proxy will be deemed to relate to all of the shares in
the capital of the Company registered in your name(s).
2. Please
insert full name(s) and address(es) in BLOCK LETTERS.
3. Please
insert the name and address of your proxy. If this is left blank, the chairman
of the Annual General Meeting will act as your proxy. One or more proxies, who
may not be member(s) of the Company, may be appointed to attend and vote in the
meeting provided that such proxies must attend the meeting in person on your
behalf. Any alteration made to this proxy form must be signed by the
signatory.
4. Attention:
If you wish to vote FOR any resolution, please indicate with a “√” in the
appropriate space under “For”. If you wish
to vote AGAINST any resolution, please indicate with a “√” in the
appropriate space under “Against”. In the
absence of any such indication, the proxy will vote or abstain at his
discretion.
5. This
form of proxy must be signed underhand by you or your attorney duly authorised
in that behalf. If the appointer is a corporation, this form must be signed
under its common seal or under hand by any directors or agents duly appointed by
such corporation.
6. This
form of proxy together with the power of attorney or other authorisation
document(s) which have been notarised, must be delivered, in the case of a
holder of Domestic Share(s), to the Company and in the case of a holder of H
Share(s), to Hong Kong Registrar Limited, at least 24 hours before the time
designated for the holding of the Annual General Meeting.
* Please delete
as appropriate.
(a
Sino-foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock
Code: 902)
Reply
Slip for 2008 Annual General Meeting
I/(We)
_________________________________________________________________________________________________________________________
of
_____________________________________________________________________________________________________________________________
Telephone
number: ______________________________________________ and Fax number:
______________________________________________ ,
being
the holder(s) of
____________________________________________________________________ H
Share(s)/Domestic Share(s)* of Huaneng Power International, Inc. (the “Company”)
hereby reply that I/We wish to attend or appoint a proxy to attend (on my/our
behalf) the 2008 annual general meeting (the “AGM”) to be held at 9:00 a.m. on
18 June 2009 at Holiday Inn Central Plaza Beijing, 1 Caiyuanjie, Xuanwu
District, Beijing, the People’s Republic of China.
Signature:________________________________
Date:
_________________________________
Note: Eligible
shareholders who wish to attend the AGM are advised to complete and return this
reply slip to the Company at West Wing, Building C, Tianyin Mansion, 2C,
Fuxingmennan Street, Xicheng District, Beijing 100031, the PRC by post or by
facsimile (Fax no.: (+86)-10-66491888). Failure to sign and return this reply
slip, however, will not preclude an eligible shareholder from attending the
AGM.
* Please delete as
appropriate.
THIS
CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to
any aspect of this circular or as to the action to be taken, you should obtain
independent professional advice.
If you have sold or
transferred all your shares in Huaneng Power International, Inc., you
should at once hand this circular and where applicable, the form of proxy and
reply slip to the purchaser or transferee or to the bank, or a licensed
securities dealer or other agent through whom the sale or transfer was effected
for transmission to the purchaser or transferee.
Hong
Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited
take no responsibility for the contents of this document, 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 document.
(a
sino foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock
Code: 902)
DISCLOSEABLE
AND CONNECTED TRANSACTIONS
ACQUISITION
OF INTERESTS IN YLQ CO-GENERATION
AND
BEIJING CO-GENERATION
Independent
Financial Adviser
to
the Independent Board Committee and the Independent Shareholders
A
letter from the board of Directors of Huaneng Power International, Inc. is set
out on pages 4 to 18 of this circular. A letter from the Independent Board
Committee of Huaneng Power International, Inc. is set out on page 19 of this
circular. A letter from China Merchants containing its advice to the Independent
Board Committee and the independent shareholders of Huaneng Power International,
Inc. is set out on pages 20 to 39 of this circular.
A
notice convening the AGM to be held at 9:00 a.m. on 18 June 2009 at Holiday Inn
Central Plaza Beijing, 1 Caiyuanjie, Xuanwuqu District, Beijing, the People’s
Republic of China will be sent to you separately.
If
you intend to attend the AGM, you should complete and return the reply slip in
accordance with the instructions printed thereon as soon as
possible.
Whether
or not you are able to attend, you should complete and return the form of proxy
in accordance with the instructions printed thereon and return it to Hong Kong
Registrars Limited at Rooms 1806-07, 18th Floor, Hopewell Centre, 183 Queen’s
Road East, Wanchai, Hong Kong, as soon as possible and in any event by not later
than 24 hours before the time appointed for holding such meeting or any
adjournment thereof.
Completion
and return of the form of proxy will not preclude you from attending and voting
at the AGM should you so wish.
4
May 2009
CONTENTS
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Page
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Definitions
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1
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Letter
from the Board
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4
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1.
Introduction
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4
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2.
Background
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5
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3.
YLQ Co-generation Interest Transfer Agreement
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7
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4.
Beijing Co-generation Interest Transfer Agreement
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8
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5.
Information regarding the Power Plants
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9
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6.
Reasons for the Acquisitions, Pricing Factors and Impact
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14
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7.
Post-closing Related Transactions under the Shanghai Listing
Rules
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16
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8.
Appointment of Independent Financial Adviser
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17
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9.
General Meeting
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17
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10.
Recommendation from the Independent Board Committee
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18
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11.
Recommendation from the Board
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18
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12.
Other Information
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18
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Letter
from the Independent Board Committee
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19
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Letter
from China Merchants
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20
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Appendix
I — Property Valuation Report
|
40
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Appendix
II — General Information
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51
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DEFINITIONS
In
this circular, the following expressions have the following meanings unless the
context requires otherwise:
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“A
Shares”
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domestic
tradable shares in the ordinary share capital of the Company with a
nominal value of RMB1.00 each, which are listed on the Shanghai Stock
Exchange;
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“Acquisition(s)”
|
the
purchase by the Company of the YLQ Co-generation Interest and Beijing
Co-generation Interest, individually or collectively;
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“ADSs”
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American
Depositary Shares, each representing the ownership of 40 H Shares, which
are listed on the New York Stock Exchange Inc.;
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“AGM”
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the
2008 annual general meeting of the Company to be held for shareholders of
the Company on 18 June 2009 to consider and approve, among other things,
the Acquisitions;
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“associates”
|
has
the meaning ascribed to it in the Listing Rules;
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“Beijing
Co-generation”
|
Huaneng
Beijing Co-generation Limited Liability Company;
|
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“Beijing
Co-generation Interest”
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41%
interest in the registered capital of Beijing Co-generation held by
HIPDC;
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“Beijing
Co-generation Interest
Transfer
Agreement”
|
the
agreement entered into between the Company and HIPDC on 21 April 2009 for
transfer of Beijing Co-generation Interest;
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“Board”
|
the
board of Directors of the Company;
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“CCAFM”
|
China
Consultants of Accounting and Financial Management Co.,
Ltd.;
|
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“China
Merchants” or “Independent
Financial
Adviser”
|
China
Merchants Securities (HK) Co., Limited, a corporation licensed to carry
out type 1 (dealing in securities), type 2 (dealing in futures contracts),
type 4 (advising on securities), type 6 (advising on corporate finance)
and type 9 (asset management) regulated activities as defined under the
SFO, the independent financial adviser to the Independent Board Committee
and the Independent Shareholders;
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“Closing”
|
the
closing of the Acquisition;
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“Company”,
“HPI”
|
Huaneng
Power International, Inc., a sino foreign joint stock limited company
incorporated in the PRC and the H Shares, ADSs and A Shares of which are
listed on the Hong Kong Stock Exchange, the New York Stock Exchange Inc.
and the Shanghai Stock Exchange, respectively, and its subsidiaries (as
the case may be);
|
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“connected
persons”
|
has
the meaning ascribed to it in the Listing Rules;
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“Director(s)”
|
the
director(s) (including independent non-executive directors) of the
Company;
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“H
Shares”
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overseas
listed foreign shares in the ordinary share capital of the Company with a
nominal value of RMB1.00 each, which are listed on the Hong Kong Stock
Exchange;
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“HIPDC”
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Huaneng
International Power Development Corporation;
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“Hong
Kong”
|
the
Hong Kong Special Administrative Region of the PRC;
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|
“Hong
Kong Listing Rules”
|
the
Rules Governing the Listing of Securities on the Hong Kong Stock
Exchange;
|
1
|
“Huaneng
Group”
|
China
Huaneng Group;
|
|
“Independent
Board Committee”
|
a
committee of the Board established for the purpose of considering the
Acquisitions, comprising Mr. Liu Jipeng, Mr. Yu Ning, Mr. Shao Shiwei,
Mr. Zheng Jianchao and Mr. Wu Liansheng the independent
non-executive Directors of the Company;
|
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“Independent
Shareholders”
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Shareholders
other than Huaneng Group, HIPDC and their respective associates, and who
are not involved in, or interested in the Acquisitions;
|
|
“Latest
Practicable Date”
|
28
April 2009, being the latest practicable date prior to the printing of
this circular for ascertaining certain information contained
herein;
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“PRC”
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the
People’s Republic of China;
|
|
“RMB”
|
Renminbi,
the lawful currency of the PRC;
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“SFO”
|
the
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
Kong);
|
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“Shanghai
Listing Rules”
|
The
Rules Governing the Listing of securities on the Shanghai Stock
Exchange;
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“Shareholders”
|
the
shareholders of the Company;
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“Stock
Exchange”
|
The
Stock Exchange of Hong Kong Limited;
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“subsidiaries”
|
has
the meaning ascribed to it in the Listing Rules;
|
|
“Transfer
Agreement(s)”
|
YLQ
Co-generation Interest Transfer Agreement and Beijing Co-generation
Interest Transfer Agreement, individually or
collectively;
|
|
“YLQ
Co-generation”
|
Tianjin
Huaneng Yangliuqing Co-generation Limited Liability
Company;
|
|
“YLQ
Co-generation Interest”
|
55%
interest in the registered capital of YLQ Co-generation held Huaneng
Group; and
|
|
“YLQ
Co-generation Interest
Transfer
Agreement”
|
the
agreement entered into between the Company and Huaneng Group on 21 April
2009 for transfer of YLQ Co-generation
Interest.
|
2
LETTER
FROM THE BOARD
(a
sino foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock Code: 902)
|
Directors:
Cao
Peixi
Huang
Long
Wu
Dawei
Huang
Jian
Liu
Guoyue
Fan
Xiaxia
Shan
Qunying
Xu
Zujian
Huang
Mingyuan
Liu
Shuyuan
|
Legal
Address:
West
Wing, Building C
Tianyin
Mansion
No.
2C
Fuxingmennan
Street
Xicheng
District
Beijing
100031
PRC
o
rIndependent
Non-executive Directors:
Liu
Jipeng
Yu
Ning
Shao
Shiwei
Zheng
Jianchao
Wu
Liansheng
o
o
|
|
4
May 2009
|
To
the Shareholders
Dear
Sir or Madam,
DISCLOSEABLE
AND CONNECTED TRANSACTIONS
ACQUISITION
OF INTERESTS IN YLQ CO-GENERATION
AND
BEIJING CO-GENERATION
1. INTRODUCTION
On
21 April 2009, the Board made an announcement (“Announcement”) regarding the
acquisition of YLQ Co-generation Interest and Beijing Co-generation Interest
from Huaneng Group and HIPDC, respectively. As stated in the Announcement, the
Company shall issue a circular to the Shareholders containing further
information of the Acquisitions as contemplated by the Transfer Agreements and
will convene a general meeting for obtaining the Independent Shareholders’
approvals for the conduct of the Acquisitions.
The
letter from the Independent Board Committee to the Independent Shareholders is
included in this circular. China Merchants has been appointed as the independent
financial adviser to advise the Independent Board Committee and the Independent
Shareholders on the fairness and reasonableness of the terms of the Transfer
Agreements and whether the Acquisitions (together with the Transfer Agreements)
are in the interests of the Company and its shareholders as a whole. The letter
of advice from China Merchants to the Independent Board Committee and the
Independent Shareholders is included in this circular.
The
purposes of this circular are:
(i) to
provide you with further information in relation to the Acquisitions and the
Transfer Agreements;
(ii) to
set out the letter of advice from China Merchants to the Independent Board
Committee and the Independent
3
Shareholders
and the recommendation of the Independent Board Committee as advised by China
Merchants; and
(iii) to
seek your approval of the ordinary resolutions in relation to the transactions
as contemplated by the Transfer Agreements, which is set out in the notice of
the AGM.
2. Background
The
Company and its subsidiaries mainly develop, construct, operate and manage
large-scale power plants in China nationwide. It is one of the largest listed
power producers in China, owning within the PRC a generation capacity of 39,203
MW on an equity basis.
Huaneng
Group is principally engaged in the operation and management of industrial
investments; the development, investment, construction, operation and management
of power plants; organising the generation and sale of power (and heat); and the
development, investment, construction, production and sale of products in
relation to information, transportation, new energy and environmental protection
industries.
HIPDC
was established as a sino-foreign joint venture company with the approval of the
State Council. Its principal scope of business includes developing, constructing
and operating power plants in China.
Huaneng
Group is the controlling shareholder of HIPDC, holding a 51.98% direct interest
in HIPDC. In addition, Huaneng Group also holds a 5% indirect interest in HIPDC
and directly holds an aggregate of 8.92% effective interest in the total issued
share capital of the Company. As at the Latest Practicable Date, HIPDC, as the
controlling shareholders of the Company, holds approximately 42.03% of the total
issued share capital of the Company.
The
relationships among the Company, Huaneng Group and HIPDC are as
follows:
* Huaneng
Group, through China Hua Neng Group Hong Kong Limited, its wholly-owned
subsidiary, indirectly holds a 100% interest in Pro-Power Investment Limited
while Pro-Power Investment Limited holds a 5% interest in HIPDC.
# Of
the 8.92% interest, 0.17% represents the interest in the H Shares of the Company
held by China Hua Neng Group Hong Kong Limited.
According
to the Hong Kong Listing Rules, Huaneng Group and HIPDC are connected persons of
the Company, and accordingly, the acquisitions of YLQ Co-generation Interest and
Beijing Co-generation Interest by the Company from Huaneng Group and HIPDC,
respectively constitute connected transactions of the Company.
Taking
the acquisitions of YLQ Co-generation Interest and Beijing Co-generation
Interest as a whole in accordance with Rule 14A.25 of the Hong Kong Listing
Rules, the aggregate of the transaction amount involved is RMB2.348 billion. The
transaction scale of such transactions in aggregate exceeds 2.5% of the
applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong
Kong Listing Rules. The acquisitions of YLQ Co-generation Interest and Beijing
Co-generation Interest constitute connected transactions of the Company, which
shall be subject to the Independent Shareholders’ approvals according to Rule
14A.18 of the Hong Kong Listing Rules. Huaneng Group, HIPDC and their respective
associates shall abstain from voting in the AGM in respect of the ordinary
resolutions to approve the acquisition of YLQ Co-generation Interest (including
YLQ Co-generation Interest Transfer Agreement) and the acquisition of Beijing
Co-generation Interest (including Beijing Co-generation Interest Transfer
Agreement).
The
Acquisitions in aggregate also constitute discloseable transactions to the
Company.
3. YLQ
co-generation Interest Transfer Agreement
4
The
YLQ Co-generation Interest Transfer Agreement was approved by the Directors at
the board meeting on 21 April 2009 and signed by Huaneng Group and the Company
on the same day.
|
Date:
|
21
April 2009
|
|
Parties:
|
Seller:Huaneng
Group
|
|
Purchaser:the
Company
|
|
|
Interest
to be acquired:
|
Equity
interest representing 55% of the registered capital of YLQ
Co-generation.
|
|
Consideration:
|
The
consideration for the purchase of the YLQ Co-generation Interest is
RMB1.076 billion, payable in cash on the Closing date and to be funded by
the Company’s internal cash surplus. The purchase price was determined on
the basis of normal commercial terms and arm’s length negotiations between
the parties thereto.
|
|
Conditions
precedent:
(1)Conditions
which need to be satisfied:
|
Closing
is subject to the satisfaction or waiver of the following
conditions:
|
|
• the
Independent Board Committee agreed and supported the acquisition of YLQ
Co-generation Interest; •the YLQ Co-generation Interest
Transfer Agreement and the acquisition of YLQ Co-generation Interest have
been approved and adopted by the Independent
Shareholders; •the obtaining of all necessary approvals
for the YLQ Co-generation Interest Transfer Agreement and the acquisition
of YLQ Co-generation Interest; and •Tianjin Municipal
Jinneng Investment Corporation has waived its pre-emptive rights in the
transfer of YLQ Co-generation Interest.
|
|
|
(2)Conditions
which the Company may waive:
|
|
|
• representations
and warranties of Huaneng Group in the YLQ Co-generation Interest Transfer
Agreement are true and complete in all material respects;
and •Huaneng Group has fulfilled in all material respects
its obligations under the YLQ Co-generation Interest Transfer
Agreement.
|
|
|
(3)Conditions
which Huaneng Group may waive: • representations
and warranties of the Company in the YLQ Co-generation Interest Transfer
Agreement are true and complete in all material respects;
and •the Company has fulfilled in all material respects
its obligations under the YLQ Co-generation Interest Transfer
Agreement.
|
|
|
In
case if any conditions for closing are waived, further announcement will
be made by the Company accordingly.
|
|
|
Closing:
|
The
Closing shall be on the 5th working day after the satisfaction or waiver
of the aforesaid conditions, or on a day as agreed between the Company and
Huaneng Group.
|
4. Beijing
Co-generation Interest Transfer Agreement
The
Beijing Co-generation Interest Transfer Agreement was approved by the Directors
at the board meeting on 21 April 2009 and signed by HIPDC and the Company on the
same day.
5
|
Date:
|
21
April 2009
|
|
Parties:
|
Seller:HIPDC
|
|
Purchaser:the
Company
|
|
|
Interest
to be acquired:
|
Equity
interest representing 41% of the registered capital of Beijing
Co-generation.
|
|
Consideration:
|
The
consideration for the purchase of the Beijing Co-generation Interest is
RMB1.272 billion, payable in cash on the Closing date and to be funded by
the Company’s internal cash surplus. The purchase price was determined on
the basis of normal commercial terms and arm’s length negotiations between
the parties thereto.
|
|
Conditions
precedent:
(1)Conditions
which need to be satisfied:
|
Closing
is subject to the satisfaction or waiver of the following
conditions:
|
|
• the
Independent Board Committee agreed and supported the acquisition of
Beijing Co-generation Interest;
|
|
|
• the
Beijing Co-generation Interest Transfer Agreement and the acquisition of
Beijing Co-generation Interest have been approved and adopted by the
Independent Shareholders;
|
|
|
• the
obtaining of all necessary approvals for the Beijing Co-generation
Interest Transfer Agreement and the acquisition of Beijing Co-generation
Interest; and
|
|
|
• each
of Beijing Jingneng International Energy Limited and China Hua Neng Group
Hong Kong Limited has waived its pre-emptive right in the transfer of
Beijing Co-generation Interest.
|
|
|
(2)Conditions
which the Company may waive:
|
|
|
• representations
and warranties of HIPDC in the Beijing Co-generation Interest Transfer
Agreement are true and complete in all material respects;
and •HIPDC has fulfilled in all material respects its
obligations under the Beijing Co-generation Interest Transfer
Agreement.
|
|
|
(3)Conditions
which HIPDC may waive: • representations and
warranties of the Company in the Beijing Co-generation Interest Transfer
Agreement are true and complete in all material respects;
and •the Company has fulfilled in all material respects
its obligations under the Beijing Co-generation Interest Transfer
Agreement.
|
|
|
In
case if any conditions for closing are waived, further announcement will
be made by the Company accordingly.
|
|
|
Closing:
|
The
closing shall be on the 5th working day after the satisfaction or waiver
of the aforesaid conditions, or on a day as agreed between the Company and
HIPDC.
|
5. Information
regarding the Power Plants
(i) YLQ
Co-generation
6
YLQ
Co-generation is situated in Tianjin. It was incorporated on 17 May 1996 and the
principal business of which includes power generation, provision of
co-generation power, installation, repair and related services relating to
co-generation power. Currently, YLQ Co-generation has four coal-fired
co-generation units with a generation capacity of 300,000 KW each. These units
commenced operation in December 1998, September 1999, December 2006 and May
2007, respectively.
Huaneng
Group is the controlling shareholder of YLQ Co-generation, holding a 55%
interest in the registered capital of YLQ Co-generation. The investment made by
Huaneng Group in the YLQ Co-generation Interest amounted to RMB858.5 million.
The other shareholder of YLQ Co-generation is Tianjin Municipal Jinneng
Investment Corporation, holding 45% interest in the registered capital of YLQ
Co-generation. Upon Closing, the Company will hold a 55% interest in the
registered capital of YLQ Co-generation while the remaining 45% interest will
still be held by Tianjin Municipal Jingneng Investment Corporation. Tianjin
Municipal Jinneng Investment Corporation does not hold any shares in the Company
and is also a third party independent of the Company and connected persons of
the Company.
Upon
Closing, YLQ Co-generation will become a subsidiary of the Company and its
financial results will be consolidated into the Company’s financial
statements.
Huaneng
Group has warranted that the YLQ Co-generation Interest is not subject to any
mortgage, charge, lien or third party rights and such interest is not subject to
any disputes, litigation, arbitration and other legal proceedings.
Operating
Data of YLQ Co-generation
The
following table sets out certain operating data of YLQ Co-generation for
2008:
|
Installed
capacity (MW)
|
1,200
|
|
Power
generation (billion kWh)
|
6.793
|
|
Utilization
hours (hours)
|
5,660
|
|
House
consumption rate (%)
|
7.10
|
|
Average
on-grid power tariff (RMB/MWh, inclusive of tax)
|
389.03
|
|
Coal
consumption rate for power sold (grams/kWh)
|
331.97
|
|
Unit
fuel cost for power sold (RMB/MWh)
|
203.74
|
Selected
Financial Information of the YLQ Co-generation
The
following is a summary of audited financial information of YLQ Co-generation as
at 31 December 2007 and 31 December 2008 and for the years ended 31 December
2007 and 31 December 2008, prepared in accordance with the PRC Accounting
Standands.
|
As
at 31
December
2007
|
As
at 31
December
2008
|
|
|
(RMB
in thousands, except percentage)
|
||
7
|
Total
asset
|
4,773,208
|
4,633,984
|
|
Total
liabilities
|
3,205,590
|
3,048,528
|
|
Receivables
|
302,379
|
329,013
|
|
Contingent
liabilities
|
—
|
—
|
|
Net
asset
|
1,567,619
|
1,585,455
|
|
Interest
attributable to Huaneng Group
|
55%
|
55%
|
|
Net
asset attributable to Huaneng Group according to the above
ratio
|
862,190
|
872,000
|
|
For
the year
ended
31
December
2007
|
For
the
year
ended
31
December
2008
|
|
|
(RMB
in thousands, except percentage)
|
||
|
Operating
revenue
|
2,061,190
|
2,179,850
|
|
Operating
profit
|
311,563
|
6,325
|
|
Profit
before tax
|
318,138
|
19,908
|
|
Effective
tax rate
|
33%
|
16%
|
|
Net
profit
|
214,249
|
16,627
|
Valuation
of YLQ Co-generation
CCAFM,
an independent asset appraisal institution which is qualified to participate in
securities related matters, has conducted a valuation on YLQ Co-generation by
using replacement cost method. The appraisal date is fixed on 31 December 2008
and the results are set out below:
|
(RMB´000)
|
|
|
Book
value of shareholders´ equity
|
1,585,455
|
|
Appraised
value of shareholders´ equity
|
1,918,142
|
|
Increase/Decrease
(amount)
|
332,687
|
8
|
Increase/Decrease
(%)
|
21%
|
Reasons
for appreciation in value under the valuation report: The appreciation in value
for YLQ Co-generation was RMB332.687 million, representing an appreciation in
the appraised value for the fixed assets and land use rights and an impairment
in the assessment of its liabilities. Of which, the appraised value for land use
rights as compared to its net book value appreciated by an amount of RMB241.77
million. The appreciation in the appraised value for land use rights was mainly
due to the fact that YLQ Co-generation obtained the relevant lands relatively
earlier in time, the area of the lands it occupied was relatively larger as well
as the appreciation in value of the land use rights in recent years. The
appraised value of the fixed assets was RMB82.17 million. The reasons
attributable to the appreciation were due to the fact that the construction of
Phase III of YLQ Co-generation was completed as early as in 1999 and have been
in use for nearly 10 years as at the date of assessment. The key generating
facilities, although their net book value is low as a result of depreciation,
are still under normal operation. It thus causes an appreciation in valuation.
The impairment in assessment of the non-current liabilities in an amount of
RMB9.69 million was caused by the government subsidy obtained but not yet
verified in the liabilities item of YLQ Co-generation.
(ii) Beijing
Co-generation
Beijing
Co-generation is situated in Beijing. It was formerly Beijing Branch of HIPDC,
which was incorporated on 21 January 1991. In November 2003, Beijing Branch of
HIPDC was re-structured into a sino-foreign joint stock limited company as
Beijing Co-generation, the principal businesses of which include construction
and operation of power plants and the ancillary projects including fund raising
both within and/or outside China; import of complete or ancillary sets of
equipments, machinery tools; and provision of three materials (steel, cement and
wood), fuel and other material for construction and operation of power
plants.
Currently,
Beijing Co-generation has five coal-fired co-generation units with an aggregate
generation capacity of 845,000 KW. Of these, two generation units having the
generation capacity of 165,000 KW commenced operation in January 1998, and two
generation units having the generation capacity of 220,000 KW commenced
operation in December 1998 and June 1999, respectively. The other generation
unit having a generation capacity of 75,000 KW commenced operation in April
2004.
HIPDC
is the major shareholder of Beijing Co-generation, holding a 41% interest in the
registered capital of Beijing Co-generation. The investment made by HIPDC in the
Beijing Co-generation Interest amounted to RMB 656 million. Other shareholders
of Beijing Co-generation are Beijing Jingneng Internatioinal Energy Limited
Company and China Hua Neng Group Hong Kong Limited, holding 34% and 25% interest
in the registered capital of Beijing Co-generation, respectively.
Upon
Closing, the Company will hold a 41% interest in the registered capital of
Beijing Co-generation while each of Beijing Jingneng International Energy
Limited Company and China Hua Neng Group Hong Kong Limited will continue to hold
34% and 25% interest in Beijing Co-generation, respectively. China Hua Neng
Group Hong Kong Limited is wholly owned by Huaneng Group (i.e. controlling
shareholder of HIPDC). Pursuant to the arrangement made between the Company and
China Hua Neng Hong Kong Limited on 21 April 2009, China Hua Neng Group Hong
Kong Limited agreed to entrust the Company to, free of payment, exercise the
voting right of its 25% interest in Beijing Co-generation upon Closing for so
long as the Company remains the largest shareholder of Beijing Co-generation.
Therefore, upon completion, Beijing Co-generation will be regarded as a
subsidiary of the Company and its financial results will be consolidated into
the Company’s financial statements.
Beijing
Jingneng International Energy Limited Company does not hold shares in the
Company and is also a third party independent of the Company and connected
persons of the Company.
HIPDC
has warranted that the Beijing Co-generation Interest is not subject to any
mortgage, charge, lien or third party rights and such interest is not subject to
any disputes, litigation, arbitration and other legal proceedings.
Operating
Data of Beijing Co-generation
The
following table sets out certain operating data of Beijing Co-generation for
2008:
9
|
Installed
capacity (MW)
|
845
|
|
Power
generation (billion kWh)
|
4.998
|
|
Utilization
hours (hours)
|
5,914
|
|
House
consumption rate (%)
|
11.74
|
|
Average
on-grid power tariff (RMB/MWh, inclusive of tax)
|
467.29
|
|
Coal
consumption rate for power sold (grams/kWh)
|
298.05
|
|
Unit
fuel cost for power sold (RMB/MWh)
|
147.15
|
Selected
Financial Information of the Beijing Co-generation
The
following is a summary of audited financial information of Beijing Co-generation
as at 31 December 2007 and 31 December 2008 and for the years ended 31 December
2007 and 31 December 2008, prepared in accordance with the PRC Accounting
Standards.
|
As
at 31
December
2007
|
As
at 31
December
2008
|
|
|
(RMB
in thousands, except percentage)
|
||
|
Total
asset
|
4,147,878
|
3,853,949
|
|
Total
liabilities
|
2,094,852
|
1,826,748
|
|
Receivables
|
330,192
|
393,541
|
|
Contingent
liabilities
|
—
|
—
|
|
Net
asset
|
2,053,026
|
2,027,201
|
|
Interest
attributable to HIPDC
|
41%
|
41%
|
|
Net
asset attributable to HIPDC according to the above ratio
|
841,741
|
831,153
|
|
For
the year
ended 31
December
2007
|
For
the
year
ended
31
December
2008
|
|
|
(RMB
in thousands, except
percentage)
|
||
10
|
Operating
revenue
|
2,116,612
|
2,193,032
|
|
Operating
profit
|
459,595
|
331,818
|
|
Profit
before tax
|
476,562
|
345,637
|
|
Effective
tax rate
|
6%
|
9%
|
|
Net
profit
|
449,856
|
315,032
|
Valuation
of Beijing Co-generation
CCAFM
has conducted a valuation on Beijing Co-generation by using replacement cost
method. The appraisal date is fixed on 31 December 2008 and the results are set
out below:
|
(RMB’000)
|
|
|
Book
value of shareholders’ equity
|
2,027,201
|
|
Appraised
value of shareholders’ equity
|
3,042,276
|
|
Increase/Decrease
(amount)
|
1,015,075
|
|
Increase/Decrease
(%)
|
50%
|
Reasons
for appreciation in value under valuation report: the appreciation in value for
Beijing Co-generation was RMB1,015.075 million, representing an appreciation
mainly in the appraised value for the fixed assets and land use rights. Of
which, the appreciation in the appraised value for land use rights amounted to
RMB821.170 million. The appreciation in the appraised value for land use rights
was mainly due to the fact that Beijing Co-generation obtained the relevant
lands relatively earlier in time, the area of the lands it occupied was
relatively larger as well as the appreciation in value of the land use rights in
recent years. The appraised value of the fixed assets was RMB213.85 million. As
Phase I of Beijing Co-generation commenced operation during the period from 1998
and 1999, its key generating facilities which are still under normal operation,
are now only of low net value as a result of depreciation, thus causing an
appreciation in the appraised value.
6. Reasons
for the Acquisitions, Pricing Factors and Impact
The
Acquisitions reflect the Company´s continued implementation of its development
strategy which focuses on both greenfield development and acquisition. Upon
completion, the Acquisitions will enlarge the Company’s operating scale and
geographical scope, thus enhancing the profitability of the Company as well as
consolidating the Company’s position as one of the largest independent power
companies. In order to cope with the challenges of global financial crisis
currently encountered nationwide by maintaining steady and relatively rapid
economic growth, increasing market share by way of acquisition of power assets
will be instrumental in enhancing the Company´s competitive strengths and
increasing shareholders´ value. The Acquisitions will lead the Company to enter
into the power markets of Beijing and Tianjin and help to strengthen the
Company´s leading position in the economic region around Baohai, an area with
rapid economic growth and strong power demand. Beijing Co-generation is located
in Beijing and has an aggregate generation capacity of 845 MW. As it has the
most advanced and equipped environmental protection system, it then has stronger
competitive strength and better social image. YLQ Co-generation is located in
Tianjin and has an aggregate generation capacity of 1,200 MW. It has
geographical competitive strength and is providing thermal power to a large area
in Tianjin.
Upon
completion of the Acquisitions, the Company´s total generation capacity on an
equity basis will increase by 1,006.45 MW, from 39,203 MW as at 31 March 2009 to
40,209.45 MW. For 2008, the profit after tax of YLQ
11
Co-generation
amounted to RMB16.6268 million, of which the YLQ Co-generation Interest
attributable to Huaneng Group accounted for RMB9.1448 million. For 2008, the
profit after tax of Beijing Co-generation amounted to RMB315.032 million, of
which the Beijing Co-generation Interest attributable to HIPDC accounted for
RMB129.1631 million.
The
Acquisitions have no material impact on the assets, liabilities and revenue of
the Company.
The
consideration of the Acquisitions was arrived at after various negotiations
among the parties, and has already taken into account the market environment,
operating conditions, and profitability of YLQ Co-generation and Beijing
Co-generation, particularly, the asset valuation report prepared by
CCAFM.
According
to the audited financial statements of YLQ Co-generation and Beijing
Co-generation, the book value of the net asset of YLQ Co-generation Interest
held by Huaneng Group as at 31 December 2008 amounted to RMB872 million while
the book value of the net asset of Beijing Co-generation Interest held by HIPDC
as at 31 December 2008 amounted to RMB831.15 million. Therefore, the aggregate
corresponding book value of the net asset of such two interests amounted to RMB
1,703.15 million. According to the asset valuation report prepared by CCAFM, the
value of the YLQ Co-generation Interest held by Huaneng Group amounted to
RMB1,054.98 million and the value of the Beijing Co-generation Interest held by
HIPDC amounted to RMB1,247.33 million. As such, the aggregate of the
corresponding appraised value of such two interests amounted to RMB2,302.31
million, that forms the principal basis in determining the total consideration
of the Acquisitions.
The
total consideration of the Acquisitions represents a premium of 37.86% over the
aggregate corresponding book value of the net asset of YLQ Co-generation
Interest and Beijing Co-generation Interest, and a premium of 2% over the
aggregate corresponding appraised value of such two interests. The book value of
the net asset reflects the historical cost and the accumulated depreciation of
YLQ Co-generation and Beijing Co-generation while the appraised value
demonstrates the replacement cost of YLQ Co-generation and Beijing Co-generation
as at the appraisal date (i.e. 31 December 2008). The pricing level of the
Acquisitions has reflected the value that YLQ Co-generation and Beijing
Co-generation may create in operation, which differ from the book value of the
net asset and the appraised value of such two interests.
The
Directors believe that the acquisition prices and terms are fair and reasonable
to the Company and its shareholders as a whole. The acquisitions of YLQ
Co-generation Interest and Beijing Co-generation Interest are beneficial to the
Company and its shareholders.
7. Post-closing
related transactions under the shanghai listing rules
Pursuant
to the Shanghai Listing Rules, upon completion of the Acquisitions, the
following transactions by YLQ Co-generation and Beijing Co-generation will
become related transactions between the Company and connected persons of the
Company, which require independent shareholders’ approvals. However, pursuant to
the Hong Kong Listing Rules, such transactions are connected transactions exempt
from the reporting, announcement and independent shareholders’ approval
requirements.
(i)
Related transaction of YLQ Co-generation
Pursuant
to an on-lending agreement entered into between the former China Foreign Trade
and Trust Investment Corporation (“Lender”) and Huaneng Power Corporation
(“Borrower”, the predecessor of Huaneng Group) on 25 February 1994 (“On-lending
Agreement”), the Lender agreed to on-lend to the Borrower a loan totalling not
more than DM262,000,000 pursuant to the German Government Hybrid Loan Agreement
entered into between the then PRC Ministry of Foreign Trade and Economic
Cooperation and KFW Bankengruppe on 16 November 1993 (“Loan Agreement”). Such
loan was used for the construction of YLQ Co-generation. Pursuant to the
On-lending Agreement, such loan was divided into two tranches with the first
tranche of the loan amounting to DM132,000,000 and the second tranche of the
loan amounting to DM130,000,000. The term of the first tranche of the loan was
30 years from 16 November 1993 to 30 May 2023. The repayment period was 16 years
and the Borrower shall repay the principal of the loan in 32 instalments on a
half-yearly basis from 30 November 2007 to 30 May 2023 and the first repayment
date was 30 November 2007 while the second tranche of the loan shall be repaid
in 20 equal instalments on a half-yearly basis and the first repayment date
shall be no later than 30 December 1998.
Pursuant
to a foreign government loans and liabilities novation agreement entered into
between The Export-Import Bank of China (took over the foreign government
lending and on-lending business originally undertaken by the Lender upon
approval by the State Council in 1995) and Huaneng Group on 22 December 2004,
Huaneng Group agreed to
12
assume
all the liabilities under the On-lending Agreement transferred by the Borrower
to Huaneng Group.
Huaneng
Group issued a letter of confirmation on repayment of principal in June 2005 to
confirm the total amount of the EUR130,810,105.86 loan from the German
Government for the use in the expansion project of YLQ Co-generation and
principal repayment schedules and details of the monthly repayment of on-lending
business charges, principals and interest.
Pursuant
to a foreign currency loan settlement agreement entered into between Huaneng
Group and YLQ Co-generation on 21 April 2009, the principal balance of the
outstanding foreign currency loan under the On-lending Agreement as at 21 April
2009 amounted to EUR58,310,000 and the interest rate of the loan balance was 2%
and the on-lending business charges rate was 0.15%. YLQ Co-generation will pay
such outstanding principal, interest and on-lending business charges to Huaneng
Group and Huaneng Group will in turn repay the same to The Export-Import Bank of
China.
(ii)
Related Transaction of Beijing Co-generation
Pursuant
to an arrangement between the Company and China Hua Neng Group Hong Kong Limited
(a wholly owned subsidiary of Huaneng Group, which in turn is the controlling
shareholder of HIPDC ) on 21 April 2009, upon the completion of the purchase of
Beijing Co-generation Interest by the Company from HIPDC, China Hua Neng Group
Hong Kong Limited will entrust the Company to, free of payment, exercise the
voting right of its 25% interest in Beijing Co-generation for so long as the
Company remains the largest shareholder of Beijing Co-generation.
8. Appointment
of independent financial adviser
According
to the requirements of the Hong Kong Listing Rules, the Independent Board
Committee will advise the Independent Shareholders in connection with the
Acquisitions (including the Transfer Agreements). Pursuant to Rule 14A.22 of the
Hong Kong Listing Rules, China Merchants has been appointed by the Company as
independent financial adviser to make recommendations to the Independent Board
Committee and Independent Shareholders as to whether the Acquisitions are on
normal commercial terms, and the terms of the Acquisitions are fair and
reasonable, and whether the Acquisitions are in the interests of the Company and
the shareholders as a whole and to advise the Independent Shareholders on how to
vote.
9. General
Meeting
The
transactions as contemplated by the Transfer Agreements constitute a
discloseable and a connected transactions to the Company. As the aggregate of
the transaction scale of the Acquisitions exceeds 2.5% of the applicable
percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing
Rules, the Acquisitions are connected transactions of the Company, which shall
be subject to Independent Shareholders’ approvals as required under Rule 14A.18
of the Hong Kong Listing Rules. The Company will convene the AGM on 18 June 2009
to consider the approval of the Acquisitions (including the Transfer
Agreements). The voting at such meeting will be taken on a poll and the Company
will make an announcement of the poll results. Huaneng Group, HIPDC and their
respective Associates and shareholders who are involved in, or interested in the
Acquisition (holding an aggregate of 6,121,786,667 shares in the Company,
representing approximately 50.94% of the total issued shares of the Company as
at the date hereof) will abstain from voting at the AGM in respect of the
ordinary resolutions to approve the Acquisitions (including the Transfer
Agreements). The voting at the AGM, at which the proposed resolutions will be
passed by way of ordinary resolution and voting will be taken by way of a poll
in accordance with the requirements of the Hong Kong Listing Rules. The notice
of AGM will be sent to the Shareholders separately.
Whether
or not you intend to attend the meeting in person, you are requested to complete
and return the reply slip in accordance with the instructions printed thereon to
the registered office of the Company at West Wing, Building C, Tianyin Mansion,
2C, Fuxingmennan Street, Xicheng District, Beijing, PRC as soon as possible but
in any event not later than 28 May 2009. The form of proxy should be completed
and returned to the Company’s H Share Registrar, Hong Kong Registrars Limited,
at Room 1806-1807, 18/F, Hopewell Centre, 183 Queen’s Road East, Hong Kong or
the registered office of the Company in accordance with the instructions printed
thereon as soon as practicable and in any event by not later than 24 hours
before the time appointed for the holding of the AGM. Completion and return of
the form of proxy will not preclude you from attending and voting in person at
the meeting should you so wish.
10.
RECOMMENDATION FROM THE INDEPENDENT BOARD COMMITTEE
Your
attention is drawn to the letter from the Independent Board Committee to the
Independent Shareholders of the
13
Company,
which is set out on page 19 of this circular, and which contains their
recommendation in respect of the Acquisitions (and the Transfer
Agreements).
The
letter of advice from China Merchants to the Independent Board Committee and the
Independent Shareholders on the fairness and reasonableness of the terms of the
Transfer Agreements and whether the Acquisitions (together with the Transfer
Agreements) are on normal commercial terms and in the interests of the Company
and its shareholders as a whole is set out on pages 20 to 39 of this
circular.
The
Independent Board Committee, having taken into account the advice of China
Merchants, considers that the terms of the Transfer Agreements are fair and
reasonable so far as the Independent Shareholders are concerned and that the
Acquisitions are on normal commercial terms and in the interests of the Company
and its shareholders as a whole. Accordingly, it recommends that the Independent
Shareholders vote in favour of the relevant resolutions to approve the Transfer
Agreements and the transactions as contemplated thereby.
11. RECOMMENDATION
FROM THE BOARD @#
#@The
Directors (including independent non-executive Directors) are of the view that
the Transfer Agreements were entered into: (i) in the ordinary and usual course
of business of the Company; (ii) on normal commercial terms; and (iii) on terms
that are fair and reasonable and the Acquisitions are in the interests of the
Company and its shareholders as a whole. The Board accordingly recommends the
Shareholders to vote in favour of the relevant resolutions to approve the
Transfer Agreements and the transactions as contemplated thereby.
12. OTHER
INFORMATION
Your
attention is drawn to the general information set out in the appendices to this
circular.
|
Yours
faithfully
By
order of the Board
Huaneng
Power International, Inc.
Cao
Peixi
Chairman
|
14
LETTER
FROM THE INDEPENDENT BOARD COMMITTEE
(a
sino foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock
Code: 902)
|
Registered
office:
West
Wing, Building C
Tianyin
Mansion
2C
Fuxingmennan Street
Xicheng
District
Beijing
100031
The
People’s Republic of China
o
o
|
|
|
4
May 2009
|
To
the Independent Shareholders
Dear
Sir or Madam,
DISCLOSEABLE
AND CONNECTED TRANSACTIONS
We,
the Independent Board Committee of Huaneng Power International, Inc., are
advising the Independent Shareholders in connection with the Acquisitions (and
the Transfer Agreements), details of which are set out in the letter from the
Board contained in the circular (“Circular”) of the Company to the Shareholders
dated 4 May 2009, of which this letter forms a part. Terms defined in the
Circular shall have the same meanings when used herein unless the context
otherwise requires.
Under
the Hong Kong Listing Rules, the transactions as contemplated by the Transfer
Agreements constitute connected transactions to the Company. Accordingly, the
conduct of transactions as contemplated by the Transfer Agreements will require
the approvals of the Independent Shareholders at the AGM.
We
wish to draw your attention to the letter of advice from China Merchants set out
on pages 20 to 39 of the Circular. We have discussed the letter and the opinion
contained therein with China Merchants.
Having
considered, inter alia, the factors and reasons considered by, and the opinion
of, China Merchants, as stated in its aforementioned letter, we consider the
terms of the Transfer Agreements to be fair and reasonable so far as the
Independent Shareholders are concerned. We are of the view that the Acquisitions
are in the interests of the Company and its shareholders as a whole.
Accordingly, we recommend that the Independent Shareholders vote in favour of
the relevant ordinary resolutions as set out in the Notice of AGM to be proposed
at the AGM to be held on 18 June 2009 and thereby approve the Transfer
Agreements and the transactions contemplated thereby.
|
Yours
faithfully,
Liu
JipengYu NingShao ShiweiZheng JianchaoWu Liansheng
Independent
Directors
|
15
LETTER
FROM CHINA MERCHANTS
The
following is the text of a letter of advice from China Merchants in connection
with the Acquisitions to the Independent Board Committee and the Independent
Shareholders, which has been prepared for the purpose for inclusion in this
circular.
48th
Floor, One Exchange Square
Central,
Hong Kong
4
May 2009
Huaneng
Power International, Inc.
West
Wing, Building C
Tianyin
Mansion
No.
2C
Fuxingmennan
Street
Xicheng
District
Beijing
100031
PRC
To: the
Independent Board Committee and the Independent Shareholders of
Huaneng
Power International, Inc.
Dear
Sirs,
DISCLOSEABLE
AND CONNECTED TRANSACTIONS|
ACQUISITION
OF INTERESTS IN YLQ CO-GENERATION
AND
BEIJING CO-GENERATION
INTRODUCTION
We
refer to our appointment as the independent financial adviser to advise the
Independent Board Committee and the Independent Shareholders in relation to the
Acquisitions, details of which are set out in the letter from the Board (the
“Letter from the Board”)
contained in the circular dated 4 May 2009 (the “Circular”) issued by the
Company to the Shareholders, of which this letter forms a part. Capitalized
terms used in this letter shall have the same meanings as those defined in the
Circular unless the context requires otherwise.
This
letter contains our advice to the Independent Board Committee and the
Independent Shareholders as to (i) whether the YLQ Co-generation Interest
Transfer Agreement and the Beijing Co-generation Interest Transfer Agreement are
on normal commercial terms, in the ordinary and usual course of business, fair
and reasonable so far as the Independent Shareholders are concerned and are in
the interests of the Company and the Shareholders as a whole; and (ii) whether
the Independent Shareholders should vote in favor of the YLQ Co-generation
Interest Transfer Agreement and the Beijing Co-generation Interest Transfer
Agreement at the AGM.
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 the management of the Company and its subsidiaries (the “Group”) to us. We have assumed
that all statements of belief and intention made by the Directors 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 true at the
date of the AGM. 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 the management of the Group and have been advised by the Directors
that no material facts have been omitted from the information provided and
referred to in the Circular.
16
In
rendering our opinions, we have researched, analysed and relied on information
from independent third party sources. We have assumed such information to be
accurate and reliable and have not carried out any independent verification on
the accuracy of such information. Such relevant information provides us with a
basis on which we have been able to formulate our independent
opinion.
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 and future prospects of the Group and the counterparties of
the YLQ Co-generation Interest Transfer Agreement and the Beijing Co-generation
Interest Transfer Agreement, nor carried out any independent verification of the
information supplied, representations made or opinions expressed by the Company,
its Directors and the management of the Group.
PRINCIPAL
FACTORS AND REASONS
In
arriving at our opinions and recommendations, we have taken into consideration
the following principal factors and reasons:
I. BACKGROUND
(1) The
Acquisitions
On
21 April 2009, the Company entered into the YLQ Co-generation Interest Transfer
Agreement with Huaneng Group, pursuant to which the Company agreed to acquire
from Huaneng Group its YLQ Co-generation Interest, representing 55% interest in
the registered capital of YLQ Co-generation, at a consideration of RMB1.076
billion. The purchase price will be funded by the Company’s internal cash
surplus. Upon Closing, YLQ Co-generation will become a subsidiary of the
Company.
On
the same day, the Company entered into the Beijing Co-generation Interest
Transfer Agreement with HIPDC, pursuant to which the Company agreed to acquire
from HIPDC its Beijing Co-generation Interest, representing 41% interest in the
registered capital of Beijing Co-generation, at a consideration of RMB1.272
billion. The purchase price will be funded by the Company’s internal cash
surplus. Upon Closing, the Company will hold a 41% interest in the registered
capital of Beijing Co-generation.
Details
of the principal terms of the YLQ Co-generation Interest Transfer Agreement and
the Beijing Co-generation Interest Transfer Agreement are set out in paragraph
headed “Major terms of the Acquisitions” below.
(2) Background
of the Group
As
stated in the Letter from the Board, the Group mainly develops, constructs,
operates and manages large-scale power plants in China nationwide. It is one of
the largest listed power producers in China, owning within the PRC a generation
capacity of 39,203 MW on an equity basis.
(3) Background
of the Vendors
As
stated in the Letter from the Board, Huaneng Group is principally engaged in the
operation and management of industrial investments; the development, investment,
construction, operation and management of power plants; organising the
generation and sale of power (and heat); and the development, investment,
construction, production and sale of products in relation to information,
transportation, new energy and environmental protection industries.
As
stated in the Letter from the Board, HIPDC was established as a sino-foreign
joint venture company with the approval of the State Council. Its principal
scope of business includes developing, constructing and operating power plants
in China.
As
stated in the Letter from the Board, Huaneng Group is the controlling
shareholder of HIPDC, holding a 51.98% direct interest in HIPDC. In addition,
Huaneng Group also holds a 5% indirect interest in HIPDC and directly holds an
aggregate of 8.92% effective interest in the total issued share capital of the
Company. As at the Latest Practicable Date, HIPDC held approximately 42.03% of
the total issued share capital of the Company.
According
to the Hong Kong Listing Rules, Huaneng Group and HIPDC are connected persons of
the Company, and
17
accordingly,
the acquisitions of YLQ Co-generation Interest and Beijing Co-generation
Interest by the Company from Huaneng Group and HIPDC, respectively constitute
connected transactions of the Company.
Taking
the acquisitions of YLQ Co-generation Interest and Beijing Co-generation
Interest as a whole in accordance with Rule 14A.25 of the Hong Kong Listing
Rules, the aggregate of the transaction amount involved is RMB2.348 billion. The
transaction scale of such transactions in aggregate exceeds 2.5% of the
applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong
Kong Listing Rules. The acquisitions of YLQ Co-generation Interest and Beijing
Co-generation Interest constitute connected transactions of the Company, which
shall be subject to the Independent Shareholders’ approvals according to Rule
14A.18 of the Hong Kong Listing Rules. Huaneng Group, HIPDC and their respective
associates shall abstain from voting in the AGM in respect of the ordinary
resolutions to approve the acquisition of YLQ Co-generation Interest (including
YLQ Co-generation Interest Transfer Agreement) and the acquisition of Beijing
Co-generation Interest (including Beijing Co-generation Interest Transfer
Agreement).
The
Acquisitions also constitute discloseable transactions to the
Company.
(4) Information
on YLQ Co-generation
Background
As
stated in the Letter from the Board, YLQ Co-generation is situated in Tianjin.
It was incorporated on 17 May 1996 and the principal business of which includes
power generation, provision of co-generation power, installation, repair and
related services relating to co-generation power. Currently, YLQ Co-generation
has four coal-fired co-generation units with a generation capacity of 300,000 KW
each. These units commenced operation in December 1998, September 1999, December
2006 and May 2007, respectively.
Huaneng
Group is the controlling shareholder of YLQ Co-generation, holding a 55%
interest in the registered capital of YLQ Co-generation. The investment made by
Huaneng Group in the YLQ Co-generation Interest amounted to RMB858.5 million.
The other shareholder of YLQ Co-generation is Tianjin Municipal Jinneng
Investment Corporation, holding 45% interest in the registered capital of YLQ
Co-generation. Upon Closing, the Company will hold a 55% interest in the
registered capital of YLQ Co-generation while the remaining 45% interest will
still be held by Tianjin Municipal Jingneng Investment Corporation. Tianjin
Municipal Jinneng Investment Corporation does not hold any shares in the Company
and is also a third party independent of the Company and connected persons of
the Company.
Upon
Closing, YLQ Co-generation will become a subsidiary of the Company and its
financial results will be consolidated into the Company’s financial
statements.
Huaneng
Group has warranted that the YLQ Co-generation Interest is not subject to any
mortgage, charge, lien or third party rights and such interest is not subject to
any disputes, litigation, arbitration and other legal proceedings.
Operating
Data of YLQ Co-generation
The
following table sets out certain operating data of YLQ Co-generation for
2008:
|
Installed
capacity (MW)
|
1,200
|
|
Power
generation (billion kWh)
|
6.793
|
|
Utilization
hours (hours)
|
5,660
|
|
House
consumption rate (%)
|
7.10
|
|
Average
on-grid power tariff (RMB/MWh, inclusive of tax)
|
389.03
|
|
Coal
consumption rate for power sold (grams/kWh)
|
331.97
|
|
Unit
fuel cost for power sold (RMB/ MWh)
|
203.74
|
18
Selected
financial information of the YLQ Co-generation
The
following is an extract of selected audited financial information of YLQ
Co-generation as at 31 December 2007 and 31 December 2008 and for the years
ended 31 December 2007 and 31 December 2008, prepared in accordance with the PRC
Accounting Standards.
|
As
at 31
December
2007
|
As
at 31
December
2008
|
|
|
(RMB in
thousands, except percentage)
|
||
|
Total
asset
|
4,773,208
|
4,633,984
|
|
Total
liabilities
|
3,205,590
|
3,048,528
|
|
Receivables
|
302,379
|
329,013
|
|
Net
asset
|
1,567,619
|
1,585,455
|
|
Interest
attributable to Huaneng Group
|
55%
|
55%
|
|
Net
asset attributable to Huaneng Group according to the above
ratio
|
862,190
|
872,000
|
|
For
the year
ended 31
December
2007
|
For
the
year
ended
31
December
2008
|
|
|
(RMB
in thousands, except percentage)
|
||
|
|
2,061,190
|
2,179,850
|
|
Operating
profit
|
311,563
|
6,325
|
|
Profit
before tax
|
318,138
|
19,908
|
|
Effective
tax rate
|
33%
|
16%
|
|
Net
profit
|
214,249
|
16,627
|
The
operating profit of YLQ Co-generation for the year ended 31 December 2008
decreased substantially by
19
approximately
RMB305.24 million, representing a decrease of approximately 97.97%, as compared
with that for the year ended 31 December 2007. Such decrease is mainly due to
(i) the increase in the cost of sales in 2008 of approximately RMB486.50 million
as compared with that of 2007 arising from the increase in the unit fuel cost
for power sold in 2008 which is higher than the increase in the unit selling
price of power sold; and (ii) an impairment loss of assets of approximately
RMB43,000 for the year ended 31 December 2008 as compared with a revaluation
gain in assets of approximately RMB4.73 million for the year ended 31 December
2007.
(5) Information
on Beijing Co-generation
Background
As
stated in the Letter from the Board, Beijing Co-generation is situated in
Beijing. It was formerly Beijing Branch of HIPDC, which was incorporated on 21
January 1991. In November 2003, Beijing Branch of HIPDC was re-structured into a
sino-foreign joint stock limited company as Beijing Co-generation, the principal
businesses of which include construction and operation of power plants and the
ancillary projects including fund raising both within and/or outside China;
import of complete or ancillary sets of equipments, machinery tools; and
provision of three materials (steel, cement and wood), fuel and other material
for construction and operation of power plants.
Currently,
Beijing Co-generation has five coal-fired co-generation units with an aggregate
generation capacity of 845,000 KW. Of these, two generation units having the
generation capacity of 165,000 KW commenced operation in January 1998, and two
generation units having the generation capacity of 220,000 KW commenced
operation in December 1998 and June 1999, respectively. The other generation
unit having a generation capacity of 75,000 KW commenced operation in April
2004.
HIPDC
is the major shareholder of Beijing Co-generation, holding a 41% interest in the
registered capital of Beijing Co-generation. The investment made by HIPDC in the
Beijing Co-generation Interest amounted to RMB656 million. Other shareholders of
Beijing Co-generation are Beijing Jingneng International Energy Limited Company
and China Hua Neng Group Hong Kong Limited, holding 34% and 25% interest in the
registered capital of Beijing Co-generation, respectively.
Upon
Closing, the Company will hold a 41% interest in the registered capital of
Beijing Co-generation while each of Beijing Jingneng International Energy
Limited Company and China Hua Neng Group Hong Kong Limited will continue to hold
34% and 25% interest in Beijing Co-generation, respectively. China Hua Neng
Group Hong Kong Limited is wholly owned by Huaneng Group (i.e. controlling
shareholder of HIPDC). Pursuant to the arrangement made between the Company and
China Hua Neng Hong Kong Limited on 21 April 2009, China Hua Neng Group Hong
Kong Limited agreed to entrust the Company to, free of payment, exercise the
voting right of its 25% interest in Beijing Co-generation upon Closing for so
long as the Company remains the largest shareholder of Beijing Co-generation.
Therefore, upon Closing, Beijing Co-generation will be regarded as a subsidiary
of the Company and its financial results will be consolidated into the Company’s
financial statements.
Beijing
Jingneng International Energy Limited Company does not hold shares in the
Company and is also a third party independent of the Company and connected
persons of the Company.
HIPDC
has warranted that the Beijing Co-generation Interest is not subject to any
mortgage, charge, lien or third party rights and such interest is not subject to
any disputes, litigation, arbitration and other legal proceedings.
Operating
Data of Beijing Co-generation
The
following table sets out certain operating data of Beijing Co-generation for
2008:
|
Installed
capacity (MW)
|
845
|
|
Power
generation (billion kWh)
|
4.998
|
|
Utilization
hours (hours)
|
5,914
|
20
|
House
consumption rate (%)
|
11.74
|
|
Average
on-grid power tariff (RMB/MWh, inclusive of tax)
|
467.29
|
|
Coal
consumption rate for power sold (grams/kWh)
|
298.05
|
|
Unit
fuel cost for power sold (RMB/ MWh)
|
147.15
|
Selected
financial information of the Beijing Co-generation
The
following is an extract of selected audited financial information of Beijing
Co-generation as at 31 December 2007 and 31 December 2008 and for the years
ended 31 December 2007 and 31 December 2008, prepared in accordance with the PRC
Accounting Standards.
|
As
at 31
December
2007
|
As
at 31
December
2008
|
|
|
(RMB
in thousands, except percentage)
|
||
|
Total
asset
|
4,147,878
|
3,853,949
|
|
Total
liabilities
|
2,094,852
|
1,826,748
|
|
Receivables
|
330,192
|
393,541
|
|
Net
asset
|
2,053,026
|
2,027,201
|
|
Interest
attributable to HIPDC
|
41%
|
41%
|
|
Net
asset attributable to HIPDC according to the above
ratio
|
841,741
|
831,153
|
|
For
the year
ended 31
D
ecember
2007
|
For
the
year
ended
31
December
2008
|
|
|
(RMB
in thousands, except percentage)
|
||
|
Operating
revenue
|
2,116,612
|
2,193,032
|
|
Operating
profit
|
459,595
|
331,818
|
21
|
Profit
before tax
|
476,562
|
345,637
|
|
Effective
tax rate
|
6%
|
9%
|
|
Net
profit
|
449,856
|
315,032
|
The
operating profit of Beijing Co-generation for the year ended 31 December 2008
decreased by approximately RMB127.78 million, representing a decrease of
approximately 27.80%, as compared with that for the year ended 31 December 2007.
Such decrease is mainly due to (i) the increase in the cost of sales in 2008 of
approximately RMB209.65 million as compared with that of 2007 arising from the
increase in the unit fuel cost for power sold in 2008 is higher than the
increase in the unit selling price of power sold; and (ii) an impairment loss in
assets of approximately RMB2.28 million in 2008 as compared to nil revaluation
gain or impairment loss in assets in 2007. The operating profit of Beijing
Co-generation decreases at a lesser extent than that of YLQ Co-generation
because the increase in unit selling price as compared with the unit fuel cost
of Beijing Co-generation is at a larger extent than that of YLQ
Co-generation.
(6) Electricity
consumption in the PRC
Based
on China Statistical Yearbook 2008, China Statistical Yearbook 2007, China
Statistical Yearbook 2006, published by the National Bureau of Statistics of
China, the electricity consumption in the PRC increased from approximately
1,903,160 million kilowatt hour (“kWh”) in 2003 to approximately
3,271,180 million kWh in 2007, representing a compound annual growth rate
(“CAGR”) of
approximately 14.50% per annum.
Set
out below is the consumption of electricity in the PRC from 2003 to
2007:
Consumption
of electricity in the PRC from 2003 to 2007
Source: China
Statistical Yearbook 2008, China Statistical Yearbook 2007, China Statistical
Yearbook 2006, published by the National Bureau of Statistics of
China
According
to an article namely “2009年電力需求呈前低後高態勢”
(Demand for electricity will be lower in the first half of 2009 and higher in
the second half of 2009) dated 5 January 2009 published on the website of
People’s
Daily Online (www.people.com.cn), increase rate in demand for electricity in the
PRC for the year of 2009 is estimated to be between 4.2% and 5.4%. Increase rate
in demand for electricity in the PRC for the first half of 2009 will be lower
while that for the second half of 2009 will be higher. The increase rate in
demand for electricity is correlated with the gross domestic product (“GDP”).
II. MAJOR
TERMS OF THE ACQUISITIONS
(1) The
YLQ Co-generation Interest Transfer Agreement
Set
out below are the principal terms of the YLQ Co-generation Interest Transfer
Agreement:
22
|
Date:
|
21
April 2009
|
|
Parties:
|
Seller:
Huaneng Group
|
|
Purchaser:
the Company
|
|
|
Interest
to be acquired:
|
Equity
interest representing 55% of the registered capital of YLQ
Co-generation.
|
|
Consideration:
|
The
consideration for the purchase of the YLQ Co-generation Interest is
RMB1.076 billion, payable in cash on the Closing date and to be funded by
the Company’s internal cash surplus. The purchase price was determined on
the basis of normal commercial terms and arm’s length negotiations between
the parties thereto.
|
|
Conditions
precedent:
|
Closing
is subject to the satisfaction or waiver of the following
conditions:
|
|
(1)Conditions
which need to be satisfied:
|
|
|
˙the
Independent Board Committee agreed and supported the acquisition of YLQ
Co-generation Interest;
|
|
|
˙the
YLQ Co-generation Interest Transfer Agreement and the acquisition of YLQ
Co-generation Interest have been approved and adopted by the Independent
Shareholders;
|
|
|
˙the
obtaining of all necessary approvals for the YLQ Co-generation Interest
Transfer Agreement and the acquisition of YLQ Co-generation Interest;
and
|
|
|
˙Tianjin
Municipal Jinneng Investment Corporation has waived its pre-emptive rights
in the
transfer of YLQ Co-generation Interest.
|
|
|
(2)Conditions
which the Company may waive:
|
|
|
˙representations
and warranties of Huaneng Group in the YLQ Co-generation Interest Transfer
Agreement are true and complete in all material respects;
and
|
|
|
˙Huaneng
Group has fulfilled in all material respects its obligations under
the YLQ Co-generation Interest Transfer Agreement.
|
|
|
(3)Conditions
which Huaneng Group may waive:
|
|
|
˙representations
and warranties of the Company in the YLQ Co-generation Interest Transfer
Agreement are
true and complete in all material respects; and
|
|
|
˙the
Company has fulfilled in all material respects its obligations under the
YLQ Co-generation Interest Transfer Agreement.
|
|
|
Closing:
|
The
Closing shall be on the 5th working day after the satisfaction or waiver
of the aforesaid conditions, or on a day as agreed between the Company and
Huaneng
Group.
|
(2) The
Beijing Co-generation Interest Transfer Agreement
Set
out below are the principal terms of the Beijing Co-generation Interest Transfer
Agreement:
23
|
Date:
|
21
April 2009
|
|
Parties:
|
Seller:
HIPDC
|
|
Purchaser:
the Company
|
|
|
Interest
to be acquired:
|
Equity
interest representing 41% of the registered capital of Beijing
Co-generation.
|
|
Consideration:
|
The
consideration for the purchase of the Beijing Co-generation Interest is
RMB1.272 billion, payable in cash on the Closing date and to be funded by
the Company’s internal cash surplus. The purchase price was determined on
the basis of normal commercial terms and arm’s length negotiations between
the parties thereto.
|
|
Conditions
precedent:
|
Closing
is subject to the satisfaction or waiver of the following
conditions:
|
|
(1)Conditions
which need to be satisfied:
|
|
|
˙the
Independent Board Committee agreed and supported the acquisition of
Beijing Co-generation Interest;
|
|
|
˙the
Beijing Co-generation Interest Transfer Agreement and the acquisition of
Beijing Co-generation Interest have been approved and adopted by the
Independent
Shareholders;
|
|
|
˙the
obtaining of all necessary approvals for the Beijing Co-generation
Interest Transfer Agreement and the acquisition of Beijing Co-generation
Interest; and
|
|
|
˙each of
Beijing Jingneng International Energy Limited and China Hua Neng
Group Hong Kong Limited has waived its pre-emptive right in the transfer
of Beijing Co-generation Interest.
|
|
|
(2)Conditions
which the Company may waive:
|
|
|
˙representations
and warranties of HIPDC in the Beijing Co-generation Interest Transfer
Agreement are true
and complete in all material respects; and
|
|
|
˙HIPDC
has fulfilled in all material respects its obligations under the Beijing
Co-generation Interest Transfer Agreement.
|
|
|
(3)Conditions
which HIPDC may waive:
|
|
|
˙representations
and warranties of the Company in the Beijing Co-generation Interest
Transfer Agreement are true and complete in all material respects;
and
|
|
|
˙the
Company has fulfilled in all material respects its obligations under the
Beijing Co-generation Interest Transfer Agreement.
|
|
|
Closing:
|
The
closing shall be on the 5th working day after the satisfaction or waiver
of the aforesaid conditions, or on a day as agreed between the Company and
HIPDC.
|
III. THE
ACQUISITION
(1) Basis
of the consideration
Acquisition
of the YLQ Co-generation Interest
24
As
stated in the Letter from the Board, the consideration for the purchase of the
YLQ Co-generation Interest (the “YLQ Co-generation Interest
Consideration”) is RMB1.076 billion. The consideration of the
Acquisitions was arrived at after various negotiations among the parties, and
has already taken into account the market environment, operating conditions, and
profitability of YLQ Co-generation and Beijing Co-generation, particularly, the
asset valuation report prepared by CCAFM.
As
stated in the Letter from the Board, CCAFM, an independent asset appraisal
institution which is qualified to participate in securities related matters, has
conducted a valuation on YLQ Co-generation by using replacement cost method (the
“YLQ Co-generation Valuation
Report”). The appraisal date is fixed on 31 December 2008 and the results
are set out below:
|
(RMB´000)
|
|
|
Book
value of shareholders´ equity
|
1,585,455
|
|
Appraised
value of shareholders´ equity
|
1,918,142
|
|
Increase
(amount)
|
332,687
|
|
Increase
(%)
|
21%
|
The
appreciation in value for YLQ Co-generation was RMB332.69 million, representing
an appreciation in the appraised value for the fixed assets and land use rights
and an impairment in the assessment of its liabilities. Of which, the appraised
value for land use rights as compared to its net book value appreciated by an
amount of RMB241.77 million. The appreciation in the appraised value for land
use rights was mainly due to the fact that YLQ Co-generation obtained the
relevant lands relatively earlier in time, the area of the lands it occupied was
relatively larger as well as the appreciation in value of the land use rights in
recent years. The appraised value of the fixed assets was RMB82.17 million. The
reasons attributable to the appreciation were due to the fact that the
construction of Phase III of YLQ Co-generation was completed as early as in 1999
and have been in use for nearly 10 years as at the date of assessment. The key
generating facilities, although their net book value is low as a result of
depreciation, are still under normal operation. It thus causes an appreciation
in valuation. The impairment in assessment of the non-current liabilities in an
amount of RMB9.69 million was caused by the government subsidy obtained but not
yet verified in the liabilities item of YLQ Co-generation.
According
to the YLQ Co-generation Valuation Report, the value of the YLQ Co-generation
Interest held by Huaneng Group amounted to RMB1,054.98 million. Thus, The YLQ
Co-generation Interest Consideration represents a premium of approximately 2%
over the appraised value of the YLQ Co-generation Interest.
In
assessing the fairness and reasonableness of the valuation of YLQ Co-generation,
we have discussed and reviewed the YLQ Co-generation Valuation Report prepared
by CCAFM. As stated in the YLQ Co-generation Valuation Report, CCAFM has adopted
the replacement cost method and the income method for the valuation of YLQ
Co-generation. Under the replacement cost approach, the value of a business
enterprise was determined by assuming the value of such business enterprise is
equal to the current cost of reproduction or replacement of such business
enterprise less deductions for physical deterioration and all relevant forms of
obsolescence and optimization in valuation. Income approach determines the value
of a business enterprise by discounting its future cash flow.
There
are three internationally recognized valuation methodologies namely, (i) the
market approach; (ii) the cost approach; and (iii) the income approach. As
stated in the YLQ Co-generation Valuation Report, CCAFM has adopted the
replacement cost approach for the valuation of YLQ Co-generation.
CCAFM
is of the view that the market approach is not appropriate for the valuation of
YLQ Co-generation since YLQ Co-generation and the comparable companies in the
PRC are in different operating environment and geographical location. Moreover,
the income approach is not appropriate because of the future uncertainties of
coal price and electricity price. The replacement cost method was considered by
CCAFM as the best method in the determination of
25
the
appraised value of YLQ Co-generation. Thus, the appraised net assets value of
YLQ Co-generation of approximately RMB1,918.14 million as stated in the YLQ
Co-generation Valuation Report is equal to the fair value of the assets and
liabilities of YLQ Co-generation.
We
concur with CCAFM that the replacement cost method is the most appropriate
approach in evaluating the fair value of YLQ Co-generation as at the date of
valuation of YLQ Co-generation.
As
stated in the YLQ Co-generation Valuation Report, the valuation of YLQ
Co-generation was conducted in accordance with the relevant rules and
regulations regarding asset valuation in the PRC.
We
have discussed with CCAFM on the methodology adopted and assumptions used in
arriving at its valuation of YLQ Co-generation in the YLQ Co-generation
Valuation Report. In the course of our discussions with CCAFM, no material issue
has come to our attention that would lead us to believe that the valuation of
YLQ Co-generation was not prepared on a reasonable basis nor reflect the
methodology and assumptions which have been adopted and arrived at after due and
careful consideration. We have no reason to doubt the fairness and
appropriateness of the methodology adopted and assumptions used by CCAFM in
arriving at the valuation of YLQ Co-generation.
Acquisition
of the Beijing Co-generation Interest
As
stated in the Letter from the Board, the consideration for the purchase of the
Beijing Co-generation Interest (the “Beijing Co-generation Interest
Consideration”) is RMB1.272 billion. The consideration of the
Acquisitions was arrived at after various negotiations among the parties, and
has already taken into account the market environment, operating conditions, and
profitability of YLQ Co-generation and Beijing Co-generation, particularly, the
asset valuation report prepared by CCAFM.
As
stated in the Letter from the Board, CCAFM has conducted a valuation on Beijing
Co-generation by using replacement cost method (the “Beijing Co-generation Valuation
Report”). The appraisal date is fixed on 31 December 2008 and the results
are set out below:
|
(RMB’000)
|
|
|
Book
value of shareholders’ equity
|
2,027,201
|
|
Appraised
value of shareholders’ equity
|
3,042,276
|
|
Increase
(amount)
|
1,015,075
|
|
Increase
(%)
|
50%
|
The
appreciation in value for Beijing Co-generation was RMB1,015.08 million,
representing an appreciation in the appraised value for the fixed assets and
land use rights. Of which, the appreciation in the appraised value for land use
rights amounted to RMB821.17 million. The appreciation in the appraised value
for land use rights was mainly due to the fact that Beijing Co-generation
obtained the relevant lands relatively earlier in time, the area of the lands it
occupied was relatively larger as well as the appreciation in value of the land
use rights in recent years. The appraised value of the fixed assets was
RMB213.85 million. As Phase I of Beijing Co-generation commenced operation
during the period from 1998 and 1999, its key generating facilities which are
still under normal operation, are now only of low net value as a result of
depreciation, thus, causing an appreciation in the appraised value.
According
to the Beijing Co-generation Valuation Report, the value of the Beijing
Co-generation Interest held by HIPDC amounted to RMB1,247.33 million. The
Beijing Co-generation Interest Consideration represents a premium of
approximately 2% over the appraised value of Beijing Co-generation
Interest.
In
assessing the fairness and reasonableness of the valuation of Beijing
Co-generation, we have discussed and reviewed
26
the
Beijing Co-generation Valuation Report prepared by CCAFM. As stated in the
Beijing Co-generation Valuation Report, CCAFM has adopted the replacement cost
method and the income method for the valuation of Beijing Co-generation. Under
the replacement cost approach, the value of a business enterprise was determined
by assuming the value of such business enterprise is equal to the current cost
of reproduction or replacement of such business enterprise less deductions for
physical deterioration and all relevant forms of obsolescence and optimization
in valuation. Income approach determines the value of a business enterprise by
discounting its future cash flow.
There
are three internationally recognized valuation methodologies namely, (i) the
market approach; (ii) the cost approach; and (iii) the income approach. As
stated in the Beijing Co-generation Valuation Report, CCAFM has adopted the
replacement cost approach for the valuation of Beijing
Co-generation.
CCAFM
is of the view that the market approach is not appropriate for the valuation of
Beijing Co-generation since Beijing Co-generation and the comparable companies
in the PRC are in different operating environment and geographical location.
Moreover, the income approach is not appropriate because of the future
uncertainties of coal price and electricity price as well as the fixed cost to
be incurred by Beijing Co-generation. The replacement cost method was considered
by CCAFM the best method in the determination of the appraised value of Beijing
Co-generation. Thus, the appraised net assets value of Beijing Co-generation of
approximately RMB3,042 million as stated in the Beijing Co-generation Valuation
Report is equal to the fair value of the assets and liabilities of Beijing
Co-generation.
We
concur with CCAFM that the replacement cost method is the most appropriate
approach in evaluating the fair value of Beijing Co-generation as at the date of
valuation of Beijing Co-generation.
As
stated in the Beijing Co-generation Valuation Report, the valuation of Beijing
Co-generation was conducted in accordance with the relevant rules and
regulations regarding asset valuation in the PRC.
We
have discussed with CCAFM on the methodology adopted and assumptions used in
arriving at its valuation of Beijing Co-generation in the Beijing Co-generation
Valuation Report. In the course of our discussions with CCAFM, no material issue
has come to our attention that would lead us to believe that the valuation of
Beijing Co-generation was not prepared on a reasonable basis nor reflect the
methodology and assumptions which have been adopted and arrived at after due and
careful consideration. We have no reason to doubt the fairness and
appropriateness of the methodology adopted and assumptions used by CCAFM in
arriving at the valuation of Beijing Co-generation.
We
have reviewed the property valuation report issued by Vigers Appraisals and
Consulting Limited (“Vigers”) which is included in
the Circular as Appendix I and noted that the market value of the land and
buildings of YLQ Co-generation and Beijing Co-generation as at 28 February 2009
appraised by Vigers were at a premium of approximately 1.23% as compared with
the appraised values of the land and buildings of YLQ Co-generation and Beijing
Co-generation as at 31 December 2008 as appraised by CCAFM. The premium is
mainly due to the fact that Vigers and CCAFM have applied different deprecation
rates in depreciating the buildings.
As
advised by the management of the Group, pursuant to 企業國有產權轉讓管理暫行辦法
(the Provisional Measures on the Management of Acquisition of the State-owned
Property Rights of Enterprises) effective from 1 February 2004, the
consideration for the acquisition of State-owned assets shall be based on the
value appraised by a qualified valuer endorsed by or filed with the relevant PRC
government regulatory bodies. In view of the above and as confirmed by the
management of the Group that CCAFM is a qualified valuer endorsed by or filed
with the relevant PRC government regulatory bodies, we consider that the YLQ
Co-generation Interest Consideration and the Beijing Co-generation Interest
Consideration, which are based on the appraised value, are in line with our
understanding of the above PRC regulation.
(2) Comparable
connected transactions
As
mentioned above, the consideration of the Acquisitions was arrived at after
various negotiations among the parties, and has already taken into account of
the market environment, operating conditions, and profitability of YLQ
Co-generation and Beijing Co-generation, particularly, the asset valuation
report prepared by CCAFM. We have discussed and reviewed the YLQ Co-generation
Valuation Report and the Beijing Co-generation Valuation Report with CCAFM and
consider that the YLQ Co-generation Valuation Report and the Beijing
Co-generation Valuation Report are fair and appropriate. Given that CCAFM has
taken into account of the three internationally recognized valuation
methodologies namely, (i) the market approach; (ii) the cost approach; and (iii)
the income approach in arriving at the appraised values of YLQ Co-generation and
Beijing Co-generation, we use the appraised values of YLQ
Co-generation
27
and
Beijing Co-generation as a benchmark to assess the fairness and reasonableness
of the consideration of the Acquisitions.
We
have, to the best of our knowledge, information and belief, performed searches
on the official website of the Stock Exchange and identified 14 connected
transactions (the “Comparable
Connected Transactions”) since 22 October 2008, being 6 months preceding
the date of the YLQ Co-generation Interest Transfer Agreement and the Beijing
Co-generation Interest Transfer Agreement, up to the date of the YLQ
Co-generation Interest Transfer Agreement and the Beijing Co-generation Interest
Transfer Agreement, involving all acquisitions of assets or businesses from
connected parties by companies incorporated in the PRC and listed on the main
board of the Stock Exchange and adopted the appraised values as the basis to
determine the relevant considerations. We compared the premium / discount of the
considerations over / to appraised values of the Comparable Connected
Transactions. However, we have to point out that although the analysis of
Comparable Connected Transactions can reflect transaction benchmark and provides
a guideline for valuation, it does not include differences in industries,
accounting policies and standards as well as differences in local regulations,
operating environment, business model, taxation and other unique characteristics
of different target companies. However, we believe the following Comparable
Connected Transactions analysis still provides a meaningful benchmark to assess
the consideration.
The
following table sets out the approximate considerations, appraised values and
the premium/discount of the considerations over/to appraised values of the
Comparable Connected Transactions:
|
Stock
Code
|
Listed
companies
|
Date
of
agreement
|
Consideration
|
Appraised
value
of
the
target
|
(Discount)/
premium
to/
over
the
appraised
value
|
|
(RMB
million)
|
(RMB
million)
|
||||
|
1171
|
Yanzhou
Coal Mining Company Limited
|
2008.10.24
|
593.24
|
599.13
|
(0.98%)
|
|
350
|
Jingwei
Textile Machinery Company Limited
|
2008.10.24
|
26.00
|
26.00
|
0.00%
|
|
553
|
Nanjing
Panda Electronics Company Limited
|
2008.11.05
|
121.00
|
121.99
|
(0.81%)
|
|
390
|
China
Railway Group Limited
|
2008.11.16
|
468.99
|
468.99
|
0.00%
|
|
1893
|
China
National Materials Company Limited
|
2008.12.2
|
141.50
|
141.50
|
0.00%
|
|
2866
|
China
Shipping Container Lines Company Limited
|
2008.12.9
|
11.11
|
11.11
|
0.00%
|
|
3983
|
中海石油化學股份有限公司
（China
BlueChemical Ltd.）
|
2008.12.12
|
1,262.85
|
1,262.85
|
0.00%
|
|
3399
|
廣東南粵物流股份有限公司（Guangdong
Nan Yue Logistics Company Limited）
|
2008.12.18
|
92.96
|
103.26
|
(9.97%)
|
|
2777
|
廣州富力地產股份有限公司（Guangzhou
R&F Properties Co., Ltd.）
|
2008.12.22
|
101.50
|
100.00
|
1.50%
|
28
|
347
|
鞍鋼股份有限公司（Angang
Steel Company Limited）
|
2009.01.05
|
85.42
|
85.42
|
0.00%
|
|
1893
|
China
National Materials Company Limited
|
2009.01.29
|
151.56
|
151.56
|
0.00%
|
|
386
|
China
Petroleum & Chemical Corporation
|
2009.03.27
|
1,839.38
|
1,839.38
|
0.00%
|
|
902
|
Huaneng
Power International, Inc.
|
2009.03.31
|
103.00
|
102.92
|
(0.08%)
|
|
3833
|
新疆新鑫礦業股份有限公司（Xinjiang
Xinxin Mining Industry Co., Ltd.）
|
2009.04.8
|
55.10
|
55.87
|
(1.38%)
|
|
Maximum:
|
1.50%
|
||||
|
Minimum:
|
(9.97%)
|
||||
|
YLQ
Co-generation Interest Transfer Agreement
|
2.00%
|
||||
|
Beijing
Co-generation Interest Transfer Agreement
|
2.00%
|
Source:
Announcements published on the Stock Exchange’s website
Note: The
premium/discount of the considerations over/to the appraised values are
calculated by dividing the considerations by the PRC appraised values of the
Comparable Connected Transactions.
As
shown above, the premiums of the considerations to the appraised values of each
of the YLQ Co-generation Interest Consideration and the Beijing Co-generation
Interest Consideration of approximately 2% is slightly greater than the maximum
premium of the considerations to the appraised values of the Comparable
Connected Transactions. After considering (i) the historical performance of YLQ
Co-generation and the Beijing Co-generation as mentioned in the paragraphs
headed “Information on YLQ Co-generation” and “Information on Beijing
Co-generation” above; (ii) the positive outlook of the electricity industry in
the PRC as mentioned in the paragraph headed “Electricity consumption in the
PRC” above; (iii) the increase in domestic consumption in the PRC as mentioned
in the paragraph headed “Reasons for and benefits of the Acquisitions” below;
and (iv) the appraised value of Beijing Co-generation and YLQ Co-generation
prepared by CCAFM, we consider that the YLQ Co-generation Interest Consideration
and the Beijing Co-generation Interest Consideration are fair and reasonable and
on normal commercial terms.
IV. REASONS
FOR AND BENEFITS OF THE ACQUISITIONS
We
consider that the Acquisitions would bring the following benefits to the Group
after Closing:
Benefits
from rising electricity industry and increasing domestic
consumption
As
stated in the paragraph headed “Electricity consumption in the PRC” above, the
electricity consumption in the PRC achieved a CAGR of approximately 14.50% per
annum for the period from 2003 to 2007.
As
stated in the paragraph headed “Electricity consumption in the PRC” above,
according to an article namely “2009
29
年電力需求呈前低後高態勢”
(Demand for electricity will be lower in the first half of 2009 and higher in
the second half of 2009) dated 5 January 2009 published on the website of
People’s Daily Online (www.people.com.cn), increase rate in demand for
electricity in the PRC for the year of 2009 is estimated to be between 4.2% and
5.4%. Increase rate in demand for electricity in the PRC for the first half of
2009 will be lower while that for the second half of 2009 will be higher. The
increase rate in demand for electricity is correlated with GDP.
Based
on China Statistical Yearbook 2007, GDP of PRC has recorded a CAGR of
approximately 16.7% per annum from 2005 to 2007. According to an article dated 5
March 2009 namely “09年GDP保八有可能實現
CPI控制在4%” (Achieving
8% GDP growth target and controlling CPI within 4% range in year 2009) from the
website of Hexun (http://news.hexun.com), the PRC government targets the GDP in
PRC will increase 8% for 2009 and the government is very confident of achieving
such target. On the National People’s Congress, it is mentioned that the PRC
government will allocate RMB908 billion in public spending in 2009, mostly for
investment in infrastructure, education, health care and etc. The PRC government
emphasized to continue reforming the economy and stressed the need to increase
domestic consumption. The premier also emphasized strongly that the PRC will
maintain steady and rapid economic development.
The
Directors believe that after the Acquisitions, the Group will further benefit
from the positive outlook of the electricity industry and the increase in
domestic consumption in the PRC.
In
line with the Company’s long-term development strategy
The
Acquisitions reflect the Company´s continued implementation of its development
strategy which focuses on both greenfield development and acquisition. Upon
Closing, the Acquisitions will enlarge the Company’s operating scale and
geographical scope, thus enhancing the profitability of the Company as well as
consolidating the Company’s position as one of the largest independent power
companies. In order to cope with the challenges of global financial crisis
currently encountered nationwide by maintaining steady and relatively rapid
economic growth, increasing market share by way of acquisition of power assets
will be instrumental in enhancing the Company´s competitive strengths and
increasing shareholders´ value. The Acquisitions will lead the Company to enter
into the power markets of Beijing and Tianjin and help to strengthen the
Company´s leading position in the economic region around Baohai, an area with
rapid economic growth and strong power demand. Beijing Co-generation is located
in Beijing and has an aggregate generation capacity of 845 MW. As it has the
most advanced and equipped environmental protection system, it then has stronger
competitive strength and better social image. YLQ Co-generation is located in
Tianjin and has an aggregate generation capacity of 1,200 MW. It has
geographical competitive strength and is providing thermal power to a large area
in Tianjin.
Increase
of the Company’s total generation capacity
Upon
Closing, the Company´s total generation capacity on an equity basis will
increase by 1,000.45 MW, from 39,203 MW as at 31 March 2009 to 40,209.45 MW. For
2008, the profit after tax of YLQ Co-generation amounted to RMB16.6268 million,
of which the YLQ Co-generation Interest attributable to Huaneng Group accounted
for RMB9.1448 million. For 2008, the profit after tax of Beijing Co-generation
amounted to RMB315.032 million, of which the Beijing Co-generation Interest
attributable to HIPDC accounted for RMB129.1631 million.
Taken
into account of the above, we are of the view that the entering into the YLQ
Co-generation Interest Transfer Agreement and the Beijing Co-generation Interest
Transfer Agreement are in the ordinary and usual course of business of the
Group, and is in the interests of the Group and the Shareholders as a
whole.
V. FINANCIAL
EFFECTS OF THE ACQUISITIONS
As
advised by the management of the Group, the Acquisitions would bring the
following financial effects on the Group:
(1) Earnings
As
stated in the Letter from the Board, for 2008, the net profit of YLQ
Co-generation amounted to RMB16.627 million, of which the YLQ Co-generation
Interest attributable to Huaneng Group accounted for approximately RMB9.145
million. For 2008, the profit after tax of Beijing Co-generation amounted to
RMB315.032 million, of which the Beijing Co-generation Interest attributable to
HIPDC accounted for approximately RMB129.163 million. With the positive outlook
of the electricity market in the PRC and the historical performance of YLQ
Co-generation and Beijing Co-generation, the Directors expect that the
Acquisitions will have a positive impact to the profitability of the
Group
30
upon
Closing.
(2) Net
asset value
As
the YLQ Co-generation Interest Consideration and the Beijing Co-generation
Consideration will be satisfied by the internal resources of the Group, we
concur with the Directors’ view that the YLQ Co-generation Interest Transfer
Agreement and the Beijing Co-generation Interest Transfer Agreement will have no
material effect on the consolidated net asset value of the Group upon
Closing.
(3) Gearing
As
mentioned in the above paragraph, since the payment for the YLQ Co-generation
Interest Consideration and the Beijing Co-generation Consideration will be
satisfied by internal resources of the Group, there will be no material effect
on the gearing ratio (calculated as total liabilities divided by total assets)
of the Group as a result of the YLQ Co-generation Interest Transfer Agreement
and the Beijing Co-generation Interest Transfer Agreement.
RECOMMENDATION
AND CONCLUSION
Having
considered the above principal factors and reasons, we are of the opinion that
the YLQ Co-generation Interest Transfer Agreement and the Beijing Co-generation
Interest Transfer Agreement are on normal commercial terms, in the ordinary and
usual course of business, 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. We would therefore advise the Independent Board
Committee to recommend the Independent Shareholders to vote in favour of the YLQ
Co-generation Interest Transfer Agreement and the Beijing Co-generation Interest
Transfer Agreement at the AGM. We also recommend the Independent Shareholders to
vote in favour of the YLQ Co-generation Interest Transfer Agreement and the
Beijing Co-generation Interest Transfer Agreement at the AGM.
|
Yours
faithfully,
For
and on behalf of
China
Merchants Securities (HK) Co., Limited
Tony
Wu
Managing
Director and
Head
of Investment Banking
Department
|
31
APPENDIX
I PROPERTY VALUATION
REPORT
The
following is the texts of letter, summary of valuation and valuation
certificates, prepared for the purpose of incorporation in this circular,
received from Vigers Appraisal & Consulting Limited, an independent property
valuer, in connection with their valuation as at 28th February 2009 for the
property interests to be acquired by the Group in the People’s Republic of
China.
4th
May 2009
The
Directors
Huaneng
Power International Incorporation
West
Area, Zone C, Tianyin Building,
No.
Bing 2 Fuxingmen Boulevard
Xicheng
District,
Beijing
the
PRC
Dear
Sirs,
In
accordance with your instructions for us to value the property interests to be
acquired by Huaneng Power International Incorporation (the “Company”) and its
subsidiaries (the “Group”) in the People’s Republic of China (“the PRC”), we
confirm that we have carried out an inspection, made relevant enquiries and
obtained such further information as we consider necessary for the purpose of
providing you with our opinion of the market value of such property interests as
at the 28th February, 2009 (“date of valuation”) for the purpose of
incorporation into this circular.
Our
valuation is our opinion of the market value of the property interest which we
would define market value as intended to mean “the estimated amount for which a
property should exchange on the date of valuation between a willing buyer and a
willing seller in an arm’s-length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without
compulsion”.
In
valuing the property interests Nos. 1 and 4, which are to be acquired by the
Group in the PRC, we have adopted a combination of the market and depreciated
replacement cost approach in assessing the land portion of the properties and
the buildings and structures standing on the land respectively. Hence, the sum
of the two results represents the market value of the properties as a whole. In
the valuation of the land portion, reference has been made to the standard land
prices in Tianjin and Beijing and the sales evidence as available to us in the
localities. As the nature of the buildings and structures cannot be valued on
the basis of market value, they have therefore been valued on the basis of their
depreciated replacement costs. The depreciated replacement cost approach
considers the current cost of replacement (reproduction) of the buildings and
improvements less deductions for physical deterioration and all relevant forms
of obsolescence and optimisation. The depreciated replacement cost approach
generally furnishes the most reliable indication of value for property in the
absence of a known market based on comparables sales. The approach is subject to
adequate potential profitability of the business.
In
valuing the property interests Nos. 2, 3 and 5, direct comparison approach is
adopted with reference to comparable transactions in the open market and on the
basis of vacant possession.
Our
valuation has been made on the assumption that the owner sells the property
interests on the open market in its existing state without the benefit of a
deferred terms contract, leaseback, joint venture, management agreement or any
similar arrangement which would serve to increase the value of the property
interests. In addition, no forced sale situation in any manner is assumed in our
valuation.
We
have not caused title searches to be made for the property interests at the
relevant government bureaus in the PRC.
32
We
have been provided with certain extracts of title documents relating to the
property interests in the PRC. However, we have not inspected the original
documents to verify the ownership, encumbrances or the existence of any
subsequent amendments which may not appear on the copies handed to us. In
undertaking our valuation for the property interests, we have relied on the
legal opinion (“the PRC legal opinion”) provided by the Company’s PRC legal
adviser, Haiwen & Partners.
We
have relied to a considerable extent on information provided by the Group and
have accepted advice given to us by the Group on such matters as planning
approvals or statutory notices, easements, tenure, occupancy, lettings, site and
floor areas and in the identification of the properties and other relevant
matter. We have also been advised by the Group that no material facts had been
concealed or omitted in the information provided to us. All documents have been
used for reference only.
All
dimensions, measurements and areas included in the valuation certificates are
based on information contained in the documents provided to us by the Group and
are approximations only. No on-site measurement has been taken.
We
have inspected the exterior and, where possible, the interior of the properties.
However, we have not carried out a structural survey nor have we inspected
woodwork or other parts of the structures which are covered, unexposed or
inaccessible and we are therefore unable to report that any such parts of the
properties are free from defect. No tests were carried out on any of the
services.
No
allowance has been made in our valuation for any charges, mortgages or amounts
owing on the property interests nor for any expenses or taxation which may be
incurred in effecting a sale. Unless otherwise stated, it is assumed that the
property interests are free from encumbrances, restrictions and outgoings of an
onerous nature which could affect their values.
Our
valuation is prepared in accordance with the HKIS Valuation Standards on
Properties (First Edition 2005) published by The Hong Kong Institute of
Surveyors (HKIS) and the requirements set out in Chapter 5 and Practice Note 12
to the Rule Governing the Listing of Securities issued by The Stock Exchange of
Hong Kong Limited.
Unless
otherwise stated, all money amounts stated are in Hong Kong Dollars (HK$). The
exchange rates adopted in valuing the property interests in the PRC is HK$ 1 :
RMB 0.88. There has been no significant fluctuation in the exchange rates for
the currency against Hong Kong Dollars between that date and the date of this
letter.
We
enclose herewith the summary of valuation together with the valuation
certificates.
|
Yours
faithfully,
For
and on behalf of
Vigers
Appraisal & Consulting Limited
Raymond
Ho Kai Kwong
Registered
Professional Surveyor (GP)
MRICS
MHKIS MSc(e-com)
Managing
Director
|
Note: Mr.
Raymond Ho Kai Kwong, Chartered Surveyor, MRICS MHKIS MSc(e-com), has over
twenty three years’ experiences in undertaking valuations of properties in Hong
Kong and has over sixteen years’ experiences in valuations of properties in the
PRC. Raymond has joined Vigers since 1989.
33
SUMMARY
OF VALUATION
|
Property
|
Market
Value in
existing
state as at 28th
February
2009
|
Interest
attributable
to
the Group after
Closing
|
Market
Value in
existing
state
attributable
to the
Group
after Closing
|
|
|
1.
|
A
power plant located at No. 900 Guanyintang Village, Wangsiying
Village, Chaoyang District, Beijing, the
PRC
|
RMB
1,618,800,000
(equivalent
to
approximately
HK$ 1,839,500,000)
|
41%
|
RMB
663,708,000
(equivalent
to
approximately
HK$
754,200,000)
|
|
2.
|
Unit
5, Phase 4, Block 7, Central Zone, North
Lane, Donghuashi, Chongwen District, Beijing, the
PRC
|
No
commercial value
|
41%
|
Nil
|
|
3.
|
Unit
602, Phase 8, Block 10, Nanxinyuan, Huaweiqiao
East, Chaoyang District, Beijing, the
PRC
|
No
commercial value
|
41%
|
Nil
|
|
4.
|
A
power plant located at Yangliuqing Town, Xiqing
District, Tianjin, the PRC
|
No
commercial value
|
55%
|
Nil
|
|
5.
|
Units
3-402, 501 and 502, Luolanxinyuan, Phase II, Luoma
Garden, on the junction between Youyi Road North and Yongan
Road, Hesi District, Tianjin, the
PRC
|
No commercial value
|
55%
|
Nil
|
|
Total
|
RMB 1,618,800,000
(equivalent to
approximately
HK$ 1,839,500,000)
|
RMB 663,708,000
(equivalent to
approximately
HK$ 754,200,000)
|
34
VALUATION
CERTIFICATE
|
Property
|
Description
and Tenure
|
Particulars
of Occupancy
|
Market
Value in existing state as at 28th February 2009
|
||||
|
1.
|
A
power plant located at No. 900 Guanyintang Village, Wangsiying Village,
Chaoyang District, Beijing, the PRC
|
The
property comprises a parcel of land together with various one to six
storey buildings and structures completed in between 1995 and 2000 erected
thereon.
The
property has a site area and total gross floor area of approximately
992,277.15 sq.m. and 206,875.62 sq.m. respectively.
The
land use rights of the property were granted for a term of 50 years
expiring on 19th December 2054 for industrial use.
|
The
property at present is occupied by Beijing Co-generation for power plant
and ancilliary uses.
|
RMB
1,618,800,000 (equivalent to approximately HK$
1,839,500,000)
Interest
attributable to the Group after Closing
41%
Market
Value in existing state attributable to the Group after
Closing
RMB
663,708,000 (equivalent to
approximately HK$754,200,000)
|
Notes:
1. Pursuant
to a State-owned Land Use Rights Grant Contract entered into between Beijing
Municipal Bureau of Land and Resources (“Party A”) and Beijing Co-generation
Limited Liability Company (hereinafter referred to as “Beijing Co-generation”)
(“Party B”) dated 20th December 2004 (Document No.: Jing Di Chu (He) Zi (2004)
No. 1481), the land use rights of the property with a site area of approximately
992,277.15 sq.m. were granted from Party A to Party B for a term of 50 years
commencing from 20th December 2004 for industrial use at a consideration of RMB
109,150,487.
According
to its Supplementary Agreement, the consideration was reduced to RMB
43,660,195.
2. Pursuant
to a State-owned Land Use Rights Certificate (Document No.: Jing Chao Guo Yong
(2005 Chu) No. 0094), the land use rights of the property with a site area of
approximately 992,277.15 sq.m. has been granted to Beijing Co-generation for a
term expiring on 19th December 2054 for industrial use.
3. According
to a Building Ownership Certificate (Document No.: Jing Fang Quan Zheng Chao She
Wai 03 Zi No. 00065), the ownership of various buildings of the property with a
total gross floor area of approximately 200,205.9 sq.m. are vested in Huaneng
International Power Development Corporation (Beijing Branch).
4. According
to the information provided by the Group, various buildings with a total gross
floor area of approximately 6,669.72 sq.m. without Building Ownership
Certificates erected thereon.
In
arriving of our valuation, we have ascribed no commercial value to the building
portion of the property due to the absence of the relevant Building Ownership
Certificates under Beijing Co-generation, hence it is not freely transferable in
the market. However, for indicative purpose, the depreciated replacement cost of
the building portion of the property as at the date of valuation is RMB
496,400,000 (equivalent to approximately HK$ 564,100,000) assuming this portion
of the property has obtained the relevant title documents and are entitled to
transfer, lease and mortgage in the market. The market value in existing state
attributable to the Group after Closing is RMB203,524,000 (equivalent to
approximately HK$231,300,000).
5. We
have been provided with a legal opinion on the property prepared by the Group’s
PRC legal adviser, Haiwen & Partners, which contains, inter alia, the
following information:
(a) According
to the State-owned Land Use Rights Certificate (Document No.: Jing Chao Guo Yong
(2005 Chu) No. 0094), the land use rights of the property has been granted to
Beijing Co-generation, Beijing Co-generation is entitled to transfer, lease and
mortgage the land use rights of the property;
(b) According
to the Building Ownership Certificate (Document No.: Jing Fang Quan Zheng Chao
She Wai 03 Zi No. 00065), the ownership of the building portion of the property
is vested in Huaneng International Power Development Corporation (Beijing
Branch). Thus, Beijing Co-generation is not entitled to transfer, lease and
mortgage the building portion of the property. However, there is no foreseeable
legal impediments for Beijing Co-generation to obtain the Building Ownership
Certificate. Beijing Co-generation is entitled to transfer, lease and mortgage
the building portion of the property once the aforesaid Building Ownership
Certificate is duly obtained;
(c) Another
building portion with a total gross floor area of approximately 6,669.72 sq.m.
has not obtained the Building Ownership Certificate, thus, Beijing Co-generation
is not entitled to transfer, lease and mortgage the building portion of the
property. However, there is no foreseeable legal impediments for Beijing
Co-generation to obtain the Building Ownership Certificate. Beijing
Co-generation is entitled to transfer, lease and mortgage the building portion
of the property once the aforesaid Building Ownership Certificate is duly
obtained; and
(d) The
property is free from any mortgages, charges and other legal encumbrances which
may cause adverse effects on the ownership of the property.
35
VALUATION
CERTIFICATE
|
Property
|
Description
and Tenure
|
Particulars
of Occupancy
|
Market
Value in existing state
as
at 28th February 2009
|
||||
|
2.
|
Unit
5, Phase 4, Block 7, Central Zone, North Lane, Donghuashi, Chongwen
District, Beijing, the PRC
|
The
property comprises a unit of a 7-storey (exclusive of a single-storey
basement) residential building completed in about 1997.
The
property has a gross floor area of approximately 89 sq.m.
|
The
property at present is occupied by Beijing Co-generation as
dormitory.
|
No
commercial value
Interest
attributable to the Group after Closing
41%
Market
Value in existing state attributable to the Group after
Closing
Nil
|
Notes:
1. According
to a Building Ownership Certificate (Document No.: Chong Qi Zi No. 12263), the
ownership of the residential development where the property located with a total
gross floor area of approximately 7,270.7 sq.m. is vested in Huaneng
International Power Development Corporation (Beijing Branch).
According
to the information provided by the Group, only the ownership of the property
with a gross floor area of approximately 89 sq.m. is held under Huaneng
International Power Development Corporation (Beijing Branch) as at the date of
valuation.
2. We
have ascribed no commercial value to the property due to the absence of the
relevant Building Ownership Certificate vested in Beijing Co-generation, hence
it is not freely transferable in the market. However, for indicative purpose,
the market value of the property is RMB 1,200,000 (equivalent to approximately
HK$1,360,000) assuming the property is entitled to transfer, lease and mortgage
in the market. The market value in existing state attributable to the Group
after Closing is RMB492,000 (equivalent to approximately
HK$560,000).
3. We
have been provided with a legal opinion on the property prepared by the Group’s
PRC legal adviser, Haiwen & Partners, which contains, inter alia, the
following information:
(a) Beijing
Co-generation is not entitled to transfer, lease and mortgage the property.
However, there is no foreseeable legal impediments for Beijing Co-generation to
obtain the Building Ownership Certificate. Beijing Co-generation is entitled to
transfer, lease and mortgage the property once the aforesaid Building Ownership
Certificate is duly obtained; and
(b) The
property is free from any mortgages, charges and other legal encumbrances which
may cause adverse effects on the ownership of the property.
36
VALUATION
CERTIFICATE
|
Property
|
Description
and Tenure
|
Particulars
of Occupancy
|
Market
Value in existing state
as
at 28th February 2009
|
||||
|
3.
|
Unit
602, Phase 8, Block 10, Nanxinyuan, Huaweiqiao East, Chaoyang District,
Beijing, the PRC
|
The
property comprises a unit of a 6-storey residential building completed in
about 1998.
The
property has a total gross floor area of approximately 112
sq.m.
|
The
property at present is occupied by Beijing Co-generation as
dormitory.
|
No
commercial value
Interest
attributable to the Group after Closing
41%
Market
Value in existing state attributable to the Group after
Closing
Nil
|
Notes:
1. Pursuant
to a Commodity House Sale and Purchase Agreement entered into between Beijing
Xinxing Real Estate Development Company (Party A) and Huaneng International
Power Development Corporation (Beijing Branch) (Party B) dated 5th June 1995,
the ownership of the residential development where the property located with a
total gross floor area of approximately 5,046.94 sq.m. has been transferred from
Party A to Party B at a consideration of RMB 30,219,905.
According
to the information provided by the Group, only the ownership of the property
with a gross floor area of approximately 112 sq.m. is held under Huaneng
International Power Development Corporation (Beijing Branch) as at the date of
valuation.
2. In
arriving of our valuation, we have ascribed no commercial value to the property
due to the absence of the Building Ownership Certificates, hence it is not
freely transferable in the market. However, for indicative purpose, the market
value of the property as at the date of valuation is RMB 1,200,000 (equivalent
to approximately HK$ 1,360,000) assuming the property has obtained the relevant
title document and is entitled to transfer, lease and mortgage in the market.
The market value in existing state attributable to the Group after Closing is
RMB492,000 (equivalent to approximately HK$560,000).
3. We
have been provided with a legal opinion on the property prepared by the Group’s
PRC legal adviser, Haiwen & Partners, which contains, inter alia, the
following information:
(a) Beijing
Co-generation is not entitled to transfer, lease and mortgage the property.
However, there is no foreseeable legal impediments for Beijing Co-generation to
obtain the Building Ownership Certificate. Beijing Co-generation is entitled to
transfer, lease and mortgage the property once the aforesaid Building Ownership
Certificate is duly obtained; and
(b) The
property is free from any mortgages, charges and other legal encumbrances which
may cause adverse effects on the ownership of the property.
VALUATION
CERTIFICATE
|
Property
|
Description
and Tenure
|
Particulars
of Occupancy
|
Market
Value in existing state
as
at 28th February 2009
|
||||
|
4.
|
A
power plant located at Yangliuqing Town, Xiqing District, Tianjin, the
PRC
|
The
property comprises 7 parcels of lands together with various buildings and
structures completed in between 1975 and 2008 erected
thereon.
The
property has a total site area and total gross floor area of approximately
1,039,190.35 sq.m. and 215,915.674 sq.m. respectively.
The
land use rights of the property were allocated in nature.
|
The
property at present is occupied by YLQ Co-generation as power plant and
ancilliary uses.
|
No
commercial value
Interest
attributable to the Group after Closing
55%
Market
Value in existing state attributable to the Group after
Closing
Nil
|
Notes:
1. According
to a State-owned Land Use Rights Certificate (Document No.: Chen Dan Guo Yong
(2008) No. 067), portion of the land use rights of the property with a site area
of approximately 48,655.3 sq.m. were allocated to YLQ Co-generation Limited
Liability Company (hereinafter referred to as “YLQ Co-generation”) for public
facilities use.
37
2. Pursuant
to a State-owned Land Use Rights Certificate (Document No.: Xi Qing Dan Guo Yong
(2006) No. 093), portion of the land use rights of the property with a site area
of approximately 22,335.55 sq.m. were allocated to YLQ Co-generation for the
construction of pressurizer use.
3. According
to a State-owned Land Use Rights Certificate (Document No.: Xi Qing Dan Guo Yong
(2006) No. 094), portion of the land use rights of the property with a site area
of approximately 792,452.37 sq.m. were allocated to YLQ Co-generation for power
plant use.
4. According
to a State-owned Land Use Rights Certificate (Document No.: Xi Qing Dan Guo Yong
(2006) No. 100), portion of the land use rights of the property with a site area
of approximately 8,193.43 sq.m. were allocated to YLQ Co-generation for power
plant use.
5. According
to a State-owned Land Use Rights Certificate (Document No.: Xi Qing Dan Guo Yong
(2006) No. 103), portion of the land use rights of the property with a site area
of approximately 4,914.4 sq.m. were allocated to YLQ Co-generation for culvert
construction use.
6. According
to a State-owned Land Use Rights Certificate (Document No.: Xi Qing Dan Guo Yong
(2006) No. 127), portion of the land use rights of the property with a site area
of approximately 74,163.72 sq.m. were allocated to YLQ Co-generation for ash
ground use.
7. According
to a State-owned Land Use Rights Certificate (Document No.: Bei Chen Dan Guo
Yong (2006) No. 115), portion of the land use rights of the property with a site
area of approximately 88,475.58 sq.m. were allocated to YLQ Co-generation for
industrial use. However, the practical use permitted is Ash Field.
8. Pursuant
to a Construction Work Planning Permit (Document No.: Jian Zheng 2006-02#), the
development of the property with a total gross floor area of approximately
38,366.4 sq.m. is permitted to construct.
9. According
to 7 Building Ownership Certificates (Document Nos.: Fang Quan Zheng Xi Qing Zi
No. 110037282 and 110000894, Fang Quan Zheng Nan Kai Zi No. 0408250 to 0408254),
the ownership of various buildings of the property with a total gross floor area
of approximately 109,905.21 sq.m. is vested in YLQ Co-generation.
10. According
to 5 Building Ownership Certificates (Document Nos.: Xi Jiao Fang Zi No. 04725,
Xi Fang Qi Zi No. 247, Jin Nan Zi No. 008893, 008910 and 008911), the ownership
of various buildings of the property with a total gross floor area of
approximately 67,619.814 sq.m. is vested in YLQ Power Plant of
Tianjin.
11. According
to the information provided by the Group, various buildings with a total gross
floor area of approximately 38,390.65 sq.m. erected thereon without Building
Ownership Certificates.
12. In
arriving of our valuation, we have ascribed no commercial value to the property
due to the land portion of the property is allocated in nature, hence it is not
freely transferable in the market. However, for indicative purpose, the market
value of the property as at the date of valuation is RMB 1,104,700,000
(equivalent to approximately HK$ 1,255,340,000) assuming the property is
entitled to transfer, lease and mortgage in the market. The market value in
existing state attributable to the Group after Closing is RMB607,585,000
(equivalent to approximately HK$690,440,000).
13. We
have been provided with a legal opinion on the property prepared by the Group’s
PRC legal adviser, Haiwen & Partners, which contains, inter alia, the
following information:
(a) The
land use rights of the property were allocated in nature. YLQ Co-generation is
not entitled to transfer, lease and mortgage the land use rights of the property
unless the relevant land premium has been duly settled and the approval from the
relevant government organizations were obtained, and hence the State-owned Land
Use Rights Certificate is issued by the relevant government organizations;
and
(b) YLQ
Co-generation is entitled to transfer, lease and mortgage the building portion
of the property once the State-owned Land Use Rights Certificate is obtained and
the building portion of the property has obtained the relevant Building
Ownership Certificates vested in YLQ Co-generation.
VALUATION
CERTIFICATE
|
Property
|
Description
and Tenure
|
Particulars
of Occupancy
|
Market
Value in existing state
as
at 28th February 2009
|
||||
|
5.
|
Units
3-402, 501 and 502, Luolanxinyuan, Phase II, Luoma
Garden, on the junction between Youyi Road North and Yongan
Road, Hesi District, Tianjin, the PRC
|
The
property comprises three residential units on Levels 4 and 5 of a 6-storey
residential building completed in about 1999.
The
property has a total gross floor area of approximately 488.48
sq.m.
The
land use rights of the property were allocated for a term of 100 years
commencing from 22nd February 2002 and expiring on 22nd February 2102 for
residential use.
|
The
property at present is occupied by YLQ Co-generation as dormitory
use.
|
No
commercial value
Interest
attributable to the Group after Closing
55%
Market
Value in existing state attributable to the Group after
Closing
Nil
|
38
Notes:
1. According
to three Tianjin Commodity House Sale and Purchase Agreements (Document Nos.:
2003-01080, 2003-01081 and 2003-01082) all entered into between Tianjin
Development Zone Xiangda Real Estate Development Company Limited (“Vendor”) and
YLQ Co-generation Limited Liability Company (hereinafter referred to as “YLQ
Co-generation”) (“Purchaser”), the property with a total gross floor area of
approximately 489.42 sq.m. has been transferred from Vendor to Purchaser at a
total consideration of RMB 2,646,946.
2. Pursuant
to three Real Estate Ownership Certificates (Document Nos.: Fang Di Zheng He Si
Zi No. Jin 0217279, 0217280 and 0217267), the ownership of the property with a
total gross floor area of approximately 488.48 sq.m. is vested in YLQ
Co-generation.
Furthermore, as stipulated in the aforesaid Real Estate Ownership Certificates,
the land use rights of the property were allocated to YLQ Co-generation for
residential use.
3. We
have ascribed no commercial value to the property due to the land use rights of
the property is allocated in nature, hence it is not freely transferable in the
market. However, for indicative purpose, the market value of the property is RMB
4,600,000 (equivalent to approximately HK$5,230,000) assuming the property is
entitled to transfer, lease and mortgage in the market. The market value in
existing state attributable to the Group after Closing is RMB2,530,000
(equivalent to approximately HK$2,875,000).
5. We
have been provided with a legal opinion on the property prepared by the Group’s
PRC legal adviser, Haiwen & Partners, which contains, inter alia, the
following information:
The
land use rights of the property is allocated in nature, YLQ Co-generation is not
entitled to transfer, lease and mortgage the property unless the relevant land
premium has been duly settled and the approval from the relevant government
organizations were obtained.
39
APPENDIX
II GENERAL
INFORMATION
1. RESPONSIBILITY
STATEMENT
This
circular includes particulars given in compliance with the Hong Kong Listing
Rules for the purpose of giving information with regard to the Company. The
Directors collectively and individually accept full responsibility for the
accuracy of the information contained in this circular and confirm, having made
all reasonable enquiries, that to the best of their knowledge and belief there
are no other facts the omission of which would make any statement herein
misleading.
2. DISCLOSURE
OF INTEREST
(a)
Directors and Supervisors of the Company
As
at the Latest Practicable Date, none of the Directors, chief executive or
Supervisors of the Company has interests or short positions in the shares and
underlying shares of the Company or any of its associated corporations (within
the meaning of Part XV of the SFO) which are required to be notified to the
Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the
SFO (including interests and short positions which they are 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 to be notified to the Company and the Stock
Exchange.
(b)
Substantial
Shareholders
As
at the Latest Practicable Date, save as disclosed below, so far as is known to
the Board, no persons (not being a Director, chief executive or Supervisor of
the Company) 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 Divisions 2 and 3 of Part XV of the SFO, or, who is directly or
indirectly, interested in 10% or more of the nominal value of any class of share
capital carrying rights to vote in all circumstances at the general meeting of
any other member of the Company:
|
Name
of shareholder
|
Class
of shares
|
Number
of shares held
|
Capacity
|
Approximate
percentage
of
shareholding
in
the Company’s
total
issued
share
capital
|
Approximate
percentage
of shareholding
in
the Company’s
total
issued
domestic
shares
|
Approximate
percentage
of shareholding
in
the
Company’s
total
issued
H shares
|
|
Huaneng
International Power Development Corporation#
|
Domestic
shares
|
5,066,662,118(L)
|
Beneficial
owner
|
42.03%(L)
|
56.30%(L)
|
—
|
|
China
Huaneng Group#
|
Domestic
shares
|
1,055,124,549(L)
|
Beneficial
owner
|
8.75%(L)
|
11.72%(L)
|
—
|
|
China
Huaneng Group #
|
H
shares
|
20,000,000(L)
|
Beneficial
owner
|
0.17%(L)
|
—
|
0.65%(L)
|
|
Hebei
Provincial Construction Investment Company
|
Domestic
shares
|
603,000,000(L)
|
Beneficial
owner
|
5.00%(L)
|
6.7%(L)
|
—
|
|
Barclays
Global Investors UK Holdings Limited
|
H
Shares
|
258,588,568(L)
|
Interest
of controlled corporations
|
2.14%(L)
|
—
|
8.46%(L)
|
|
1,820,000(S)
|
Interest
of controlled corporations
|
0.01%(S)
|
—
|
0.05%(S)
|
40
|
Barclays
PLC
|
H
Shares
|
258,588,568(L)
|
Interest
of controlled corporations
|
2.14%(L)
|
—
|
8.46%(L)
|
|
1,820,000(S)
|
Interest
of controlled corporations
|
0.01%(S)
|
—
|
0.05%(S)
|
Notes:
(1) The
letter “L” denotes a long position. The letter “S” denotes a short position. The
letter “P” denotes interest in a lending pool.
# As of
date of this circular, Huaneng Group holds 51.98% direct interests and an
additional 5% indirect interests in HIPDC.
# China
Huaneng Group held 20,000,000 H shares through its wholly owned subsidiary,
China Hua Neng Group Hong Kong Limited.
Save
as disclosed above, the Company is not aware of any other person (other than the
directors, supervisors and senior executives of the Company) having any
interests or short positions in the shares and underlying shares of the Company
as at the Latest Practicable Date as recorded in the register required to be
kept by the Company pursuant to Section 336 of the SFO.
As
at the Latest Practicable Date, save as disclosed below, so far as is known to
the Board, no director is a director or employee of a company which has an
interest or short position in the shares and underlying shares of the Company
which would fall to be disclosed to the Company under provisions of Divisions 2
and 3 of Part XV of the SFO:
(i) Mr.
Cao Peixi is the chairman and president of China Huaneng Group;
(ii) Mr.
Huang Long is the vice president of China Huaneng Group and a director of
Huaneng International Power Development Corporation;
(iii) Mr.
Wu Dawei is the president of China Huaneng Group; and
(iv) Mr.
Huang Jin is the deputy chief economist and chief of Financial Planning of China
Huaneng Group
3. MATERIAL
ADVERSE CHANGE
The
Directors are not aware of any material adverse change in the financial or
trading position of the Company and its subsidiaries since 31 December 2008,
being the date to which the latest published audited accounts of the Company and
its subsidiaries were made up to.
4. LITIGATION
None
of the Company and its subsidiaries was at present engaged in any litigation or
arbitration of material importance and there was no litigation or claim of
material importance known to the Directors to be pending or threatened by or
against the Company and its subsidiaries as at the Latest Practicable
Date.
5. CONSENT
OF EXPERTs
Each
of the following expert has given and has not withdrawn its written consent to
the issue of this circular with the inclusion of its letter or statements and
references to its name in the form and context in which they
appear:
|
Name
|
Qualification
|
|
China
Merchants
|
A
corporation licensed to carry out type 1 (dealing in securities), type 2
(dealing in futures contracts), type 4 (advising
on
|
41
|
securities),
type 6 (advising on corporate finance) and type 9 (asset management)
regulated activities as defined under the SFO
|
|
|
Vigers
Appraisal & Consulting Limited (“Vigers”)
|
Chartered
surveyor
|
As
at the Latest Practicable Date, none of the above experts was not beneficially
interested in the share capital of the Company and its subsidiaries nor did it
have any right, whether legally enforceable or not, to subscribe for or to
nominate persons to subscribe for securities in the Company and its
subsidiaries.
As
at the Latest Practicable Date, none of the above experts has any direct or
indirect interest in any assets which had been since 31 December 2008 (being the
date to which the latest published audited accounts of the Company were made up)
acquired or disposed of by or leased to the Company and its subsidiaries, or
were proposed to be acquired or disposed of by or leased to the Company and its
subsidiaries.
6. SERVICE
CONTRACTS
As
at the Latest Practicable Date, none of the Directors had entered into, or
proposed to enter into, a service contract with the Company or its subsidiaries
which does not expire or is not terminable by the Company and its subsidiaries
within one year without payment of compensation, other than statutory
compensation.
7. DIRECTORS’
INTERESTS IN THE COMPANY AND ITS SUBSIDIARIES’ ASSETS OR CONTRACTS
As
at the Latest Practicable Date, none of the Directors or Supervisors of the
Company had any interest in any assets which have been since 31 December 2008
(being the date to which the latest published audited accounts of the Company
were made up) acquired or disposed of by or leased to the Company and its
subsidiaries, or were proposed to be acquired or disposed of by or leased to the
Company and its subsidiaries.
As
at the Latest Practicable Date, none of the Directors or Supervisors was
materially interested in any contract or arrangement subsisting at the Latest
Practicable Date which was significant in relation to the business of the
Company.
8. DIRECTORS’
INTERESTS IN COMPETING BUSINESS
As
at the Latest Practicable Date, none of the Directors or their respective
associates has interests in the businesses, other than being a Director, which
compete or are likely to compete, either directly or indirectly, with the
businesses of the Company (as would be required to be disclosed under Rule 8.10
of the Hong Kong Listing Rules if each of them were a controlling
shareholder).
9. MATERIAL
CONTRACTS
The
following contracts (including contracts not entered into in the ordinary course
of business) have been entered into by the Company and its subsidiaries within
the two years immediately preceding the date of this circular, and are or may be
material:
(a) YLQ
Co-generation Transfer Agreement;
(b) Beijing
Co-generation Transfer Agreement;
(c) Huaneng
Group Framework Agreement as defined in the circular dated 7 November
2008;
(d) Huaneng
Finance Framework Agreement as defined in the circular dated 7 November
2008;
(e) Transfer
Agreement as defined in the circular dated 10 May 2008 of the
Company;
42
(f) An
agreement regarding the acquisition of interests in Huaneng Nanjing Jinling
Power Limited Company entered into between the Company and HIPDC on 3 December
2007, details of which were set out in the Company’s announcement dated 3
December 2007; and
(g) An
agreement regarding the subscription of new equity interests in China Huaneng
Finance Corporation entered into between the Company and China Huaneng Finance
Corporation on 23 October 2007, details of which were set out in the Company’s
announcement dated 23 October 2007.
10. MISCELLANEOUS
(a) Mr.
Gu Biquan is the Company Secretary and Board Secretary of the Company. Pursuant
to a waiver granted by the Stock Exchange to the Company from strict compliance
with Rules 8.17 and 19A.16 of the Listing Rules in relation to the appointment
of Mr. Gu Biquan as the Company secretary of the Company dated 20 December 2007,
the Company has arranged Mr. Zhang Xinmin, a fellow member of the Association of
Chartered Certified Accountants, to provide assistance to Mr. Gu Biquan in the
discharge of his duties as the Company Secretary under the Listing
Rules.
(b) Ms.
Zhou Hui is the Qualified Accountant of the Company. Ms. Zhou Hui is a PRC
qualified accountant. Pursuant to a waiver granted by the Stock Exchange to the
Company from strict compliance with Rule 3.24 of the Listing Rules in relation
to the appointment of a qualified accountant to of the Company dated 17 July
2006, the Company has arranged Mr. Zhang Xinmin, a fellow member of the
Association of Chartered Certified Accountants, to provide assistance to Ms.
Zhou Hui in the discharge of her duties as a qualified accountant under the
Listing Rules.
(c) The
head office and legal address of the Company is West Wing, Building C, Tianyin
Mansion, No. 2C, Fuxingmennan Street, Xicheng District, Beijing, PRC. The H
Share registrar of the Company in Hong Kong is Hong Kong Registrars Limited at
46/F Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong
Kong.
(d) In
the case of any discrepancy, the English text of this circular and form of proxy
shall prevail over the Chinese text.
11. DOCUMENTS
FOR INSPECTION
Copies
of the following documents will be available for inspection at the office of
Herbert Smith at 23/F., Gloucester Tower, 15 Queen’s Road Central, Hong Kong
during normal business hours on any weekday (except public holidays) from the
date of this circular up to and including 18 June 2009:
(a) the
Articles of Association of the Company;
(b) the
letter from the Independent Directors Committee, as set out in this
circular;
(c) the
letter from China Merchants, the independent financial adviser, as set out in
this circular;
(d) the
written consent of China Merchants referred to in this appendix;
(e) the
material contracts referred to in paragraph 9 of this appendix;
(f) the
annual report of the Company for the year ended 31 December 2008;
(g) the
YLQ Co-generation Interest Transfer Agreement; and
(h) the
Beijing Co-generation Interest Transfer Agreement.
43
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the under-signed, thereunto duly
authorized.
HUANENG
POWER INTERNATIONAL, INC.
By /s/ Gu Biquan
Name:
Gu Biquan
Title: Company
Secretary
Date: May
4, 2009