UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________
FORM
6-K
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16
under
the Securities Exchange Act of 1934
For
the
month of November 2007.
Commission
File Number: 001-14550
China
Eastern Airlines Corporation Limited
(Translation
of Registrant’s name into English)
2550
Hongqiao Road
Hongqiao
Airport
Shanghai,
China 200335
(Address of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F:
x Form
20-F o Form
40-F
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): o
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: o Yes x No
If
"Yes"
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): n/a
SIGNATURES
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 undersigned, thereunto
duly authorized.
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China
Eastern Airlines Corporation Limited
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(Registrant)
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Date
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November
9, 2007
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By
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/s/
Li
Fenghua
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Name:
Li Fenghua
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Title:
Chairman of the Board of
Directors
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Certain
statements contained in this announcement may be regarded as "forward-looking
statements" within the meaning of the U.S. Securities Exchange Act of 1934,
as
amended. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual performance,
financial condition or results of operations of the Company to be materially
different from any future performance, financial condition or results of
operations implied by such forward-looking statements. Further information
regarding these risks, uncertainties and other factors is included in the
Company's filings with the U.S. Securities and Exchange Commission. The
forward-looking statements included in this announcement represent the Company's
views as of the date of this announcement. While the Company anticipates
that
subsequent events and developments may cause the Company's views to change,
the
Company specifically disclaims any obligation to update these forward-looking
statements, unless required by applicable laws. These forward-looking statements
should not be relied upon as representing the Company's views as of any date
subsequent to the date of this announcement.
The
Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of
this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.
This
announcement appears for information purposes only and does not constitute
an
invitation or offer to acquire, purchase or subscribe for securities of China
Eastern Airlines Corporation Limited.
(A
joint stock limited company incorporated in the People’s Republic of China with
limited liability)
(Stock
code: 670)
(1)
SUBSCRIPTION OF NEW H SHARES BYSINGAPORE
AIRLINES
LIMITED
AND TEMASEK
(2)
SUBSCRIPTION OF NEW H SHARES BY CHINA EASTERN AIR
HOLDING
COMPANY AND CONNECTED TRANSACTION
(3)
RESUMPTION OF TRADING IN H SHARES
Reference
is made to the announcement published by the Company dated 2 September 2007
in
respect of a proposed strategic investment by SIA and Temasek in the
Company.
On
9
November 2007, SIA and Temasek entered into the Investor Subscription Agreement
with the Company. Pursuant to the Investor Subscription Agreement, SIA and
Temasek will, at the subscription price of HK$3.80 per share, subscribe in
cash
for 1,235,005,263 new H Shares and 649,426,737 new H Shares in the Company
respectively. Immediately after completion of the Share Subscriptions, SIA
and
Temasek will hold new H Shares in the Company representing approximately
15.73%
and 8.27% of the total enlarged share capital of the Company
respectively.
Simultaneously
with the entering into of the Investor Subscription Agreement, CEA Holding
entered into the CEA Holding Subscription Agreement with the Company. Pursuant
to the CEA Holding Subscription Agreement, CEA Holding will, at the subscription
price of HK$3.80 per share, subscribe in cash for 1,100,418,000 new H Shares
in
the Company. Immediately after completion of the Share Subscriptions, CEA
Holding will hold new H Shares which together with the A Shares it already
holds
will represent in aggregate 51.00% of the total enlarged share capital of
the
Company.
Completion
of the Investor Subscriptions and the CEA Holding Subscription will be
inter-conditional and will take place simultaneously. The total proceeds
of the
Share Subscriptions will be approximately HK$11,342,430,000 before deduction
of
expenses, and will strengthen the financial position of the
Company.
1
On
the
date of the subscription agreements, CEA Holding entered into the Shareholders
Agreement with SIA and Temasek. Under the Shareholders Agreement, CEA Holding,
SIA and Temasek have agreed on certain matters relating to the Company and
their
respective shareholding interests in the Company. On the same date, the Company
entered into the Cooperation Agreement and the Personnel Secondment Agreement
with SIA.
In
accordance with the Company’s articles of association and applicable Listing
Rules, the issue of new H Shares pursuant to the Share Subscriptions is required
to be subject to approval of shareholders of the Company by way of special
resolutions at a general meeting and separate class meetings. CEA Holding
and
its associates will abstain from voting at the general meeting and the class
meeting of holders of A Shares convened for approving such issue.
Independently
of the above approval requirements, since CEA Holding is the controlling
shareholder, and hence a connected person of the Company, the issue of new
H
Shares to CEA Holding pursuant to the CEA Holding Subscription Agreement
constitutes a connected transaction of the Company under Chapter 14A of the
Listing Rules and is subject to reporting, announcement and independent
shareholders’ approval requirements under that chapter. An Independent Board
Committee comprising the independent non-executive directors of the Company
will
be formed to advise Independent Shareholders of the Company on the terms
of the
CEA Holding Subscription. An independent financial adviser will be appointed
to
advise the Independent Board Committee and the Independent Shareholders on
the
same. In respect of the CEA Holding Subscription, the Company will convene
a
general meeting for the Independent Shareholders to consider and, if thought
fit, to approve the issue of new H Shares to CEA Holding pursuant
thereto.
A
circular containing further details of the Investor Subscriptions and the
CEA
Holding Subscription as well as other related matters, together with notices
of
the various shareholders meetings, will be issued by the Company and despatched
to its shareholders in due course.
At
the
request of the Company, trading in the H Shares of the Company on the Stock
Exchange was suspended with effect from 9:30 a.m. on 5 November 2007 pending
the
release of this announcement. The Company has made an application to the
Stock
Exchange for the resumption of trading in its shares on the Stock Exchange
with
effect from 9:30 a.m. on 12 November 2007.
INTRODUCTION
The
Company announced on 2 September 2007 that the Company and CEA Holding had
reached commercial consensus with SIA and Temasek regarding the basis on
which
SIA and Temasek will proceed with a proposed strategic investment in the
Company
by way of subscription of new H Shares. The commercial consensus was reflected
in a heads of agreement entered into by the Company, CEA Holding, SIA and
Temasek on 2 September 2007.
The
Directors are pleased to announce that, following further discussions, SIA
and
Temasek entered into the Investor Subscription Agreement with the Company
on 9
November 2007. Simultaneously with the entering into of the Investor
Subscription Agreement, CEA Holding entered into the CEA Holding Subscription
Agreement with the Company. On the same date, CEA Holding, SIA and Temasek
entered into the Shareholders Agreement, and the Company and SIA entered
into
the Cooperation Agreement and the Personnel Secondment Agreement.
2
SUBSCRIPTION
OF NEW H SHARES BY SIA AND TEMASEK
Investor
Subscription Agreement dated 9 November 2007
Parties
| (1) |
The
Company as the issuer.
|
| (2) |
SIA
as a subscriber.
|
| (3) |
Temasek
as a subscriber.
|
Number
of new H Shares subscribed for
SIA
and
Temasek will subscribe for 1,235,005,263 new H Shares and 649,426,737 new
H
Shares respectively. Such new H Shares represent approximately 25.38% and
13.34%
respectively of the existing issued share capital of the Company. Immediately
after completion of the Share Subscriptions (which include the CEA Holding
Subscription described below), SIA and Temasek will hold new H Shares
representing approximately 15.73% and 8.27% of the issued share capital of
the
Company as enlarged by the issue of the Investor Subscription Shares and
the CEA
Holding Subscription Shares.
Application
will be made by the Company to the Stock Exchange for the granting of the
listing of, and permission to deal in, all the Investor Subscription
Shares.
Subscription
price
HK$3.80
per H Share. The aggregate subscription price of HK$7,160,841,600 will be
payable in cash upon completion of the Investor Subscriptions. The subscription
price was agreed after arm’s length negotiations between the
parties.
The
subscription price, determined by reference to the trading prices of H Shares
in
May 2007, represents a premium of 1.9% as compared to the closing price of
HK$3.73 per H Share on 21 May 2007, the last trading day prior to the suspension
of trading in the Company’s shares on 22 May 2007. Trading in the Company’s
shares was resumed on 3 September 2007 after the entering into of the heads
of
agreement by the Company, CEA Holding, SIA and Temasek on 2 September
2007.
Compared
to the closing price of HK$7.69 per H Share on 2 November 2007 (the last
trading
day prior to this announcement), the subscription price represents a discount
of
50.59%. Compared to the average of the H Share closing prices on the five
consecutive trading days immediately prior to this announcement, the
subscription price represents a discount of 53.20%. Compared to the net asset
value per share of the Company as at 30 June 2007 (unaudited), the subscription
price represents a premium of 464.95%.
Conditions
precedent
Completion
of the Investor Subscriptions is conditional upon certain conditions which
include:
| (1) |
the
receipt of all the licenses, authorisations, permits, consents
and
approvals from the relevant approval authorities and other relevant
approvals for the Investor Subscriptions and the CEA Holding Subscription
and the transactions contemplated under the Investor Subscription
Agreement and the CEA Holding Subscription
Agreement;
|
3
| (2) |
the
approvals by the shareholders of the Company at a general meeting
and
class meetings for the issue of new H Shares pursuant to the Investor
Subscriptions and the CEA Holding Subscription and for the adoption
of the
revised articles of association of the
Company;
|
| (3) |
simultaneous
completion of the CEA Holding Subscription (in other words, completion
of
the Investor Subscriptions and completion of the CEA Holding Subscription
are inter-conditional and are required to take place
simultaneously);
|
| (4) |
the
Shareholders Agreement not having been
terminated;
|
| (5) |
the
Listing Committee of the Stock Exchange granting approval for the
listing
of, and permission to deal in, the Investor Subscription Shares
and the
CEA Holding Subscription Shares;
and
|
| (6) |
the
subscribers receiving a legal opinion from the Company’s PRC legal
advisors in an agreed form.
|
Completion
will take place on the second business day after the satisfaction of the
conditions precedent or on such other date as the parties may agree. If the
conditions precedent have not been satisfied or waived on or before 9 August
2008, the Investor Subscription Agreement will automatically
terminate.
Other
key terms of the Investor Subscription Agreement
| – |
Board
representation
|
For
so
long as SIA will be entitled to nominate at least one Director to the Board
under the Shareholders Agreement (such right is described in more details
below), SIA will have the right to nominate one person as a director of each
of
the key subsidiaries of the Company.
The
Company will take reasonable actions to facilitate the appointments and the
continued memberships of the persons whom SIA and Temasek are entitled to
nominate to the Board under the Shareholders Agreement (such rights are
described in more details below) and the persons whom SIA is entitled to
nominate as directors of the key subsidiaries of the Company.
| – |
Board
committee representation
|
The
Company will take reasonable actions to facilitate the appointments and the
continued memberships of the persons whom SIA and Temasek are entitled under
the
Shareholders Agreement to nominate as members of the Board committees (such
right is described in more details below).
| – |
Finance
committee
|
The
Company will establish a finance committee as a board committee to study
and
review and make proposals to the Board on certain financial matters of the
Group.
4
| – |
Management
representation
|
SIA
has
the right to nominate its personnel to certain executive positions of the
Company pursuant to the Personnel Secondment Agreement. The Company will
consult
and discuss with SIA in relation to the nomination of the president of the
Company. The President of the Company will also discuss with the Chief Executive
Officer of SIA in relation to the nomination of four positions in the Company,
namely, the head of sales and marketing, head of planning, head of finance
and
head of operations (if such position is created in the future).
| – |
Transfer
restrictions
|
Subject
to certain exceptions, SIA and Temasek will not dispose of any of the Investor
Subscription Shares or Additional Shares arising therefrom within the Lock-up
Period. The transfer restrictions will cease if the Company is in material
breach of certain provisions of the Investor Subscription Agreement or if
CEA
Holding is in material breach of certain provisions of the Shareholders
Agreement.
| – |
Anti-dilution
rights
|
Subject
to applicable laws, SIA is entitled to subscribe for additional shares in
the
Company in order to maintain its percentage shareholding of 15.73% of the
total
issued share capital of the Company as a result of an issue of any share
capital
of the Company or an issue of any securities convertible into or exchangeable
into any shares of the Company or any warrants or other rights to subscribe
for
any shares of the Company.
The
exercise of the anti-dilution rights will be subject to the satisfaction
of all
necessary legal and regulatory requirements (including those under the Listing
Rules). Thus, if the current provisions under Chapter 14A of the Listing
Rules
remain unchanged at the time of the exercise of the anti-dilution rights,
the
exercise of such rights will be subject to approval by Independent
Shareholders.
| – |
Future
increase in shareholding
percentage
|
Subject
to applicable laws, SIA has the right to increase its percentage shareholding
in
the Company when PRC foreign ownership restriction laws are
relaxed.
| – |
Non-competition
|
Subject
to certain exceptions, the Company has undertaken to SIA not to issue any
of the
Company’s securities to any competitor of SIA or any affiliate of such
competitor other than a PRC airline company. The Company has also undertaken
to
SIA that it will not, and will procure that its subsidiaries will not, make
any
investments in, or provide certain types of financing to, any competitor
of SIA
or any affiliate of such competitor (other than a PRC airline company or
an
affiliate of a PRC airline company).
SIA
has
undertaken not to transfer any of the Company’s securities to any competitor of
the Company or any affiliate of such competitor. SIA has also undertaken
that,
for so long as it holds any interest in securities in the Company, it will
not
make any new investments in, or provide certain types of financing to, a
PRC
airline company or an affiliate of a PRC airline company where SIA does not
already have any interest, provided that this restriction does not prohibit
SIA
from making any further investment in, or provide any financing to, the Company
and Great Wall Airlines.
The
Company and SIA will jointly discuss and decide whether the Company will
join a
global alliance that competes with the global alliance that SIA is
in.
5
| – |
Exclusivity
|
The
Company has undertaken that it and its subsidiaries shall not enter into
any
discussion or transaction prior to completion in relation to the sale of
any
shares or securities of the Company or its subsidiaries or any other transaction
that will have the effect of frustrating the purpose or interest of the
transactions contemplated under the Investor Subscription
Agreement.
| – |
Representations
and warranties
|
The
Company has provided customary representations and warranties to SIA and
Temasek.
| – |
Termination
of Investor Subscription
Agreement
|
Each
of
SIA, Temasek and the Company may terminate the Investor Subscription Agreement
prior to completion if there is any change in law that materially restricts
or
prohibits the consummation of any of the transactions contemplated under
the
Investor Subscription Agreement.
SIA
and
Temasek may terminate the Investor Subscription Agreement prior to completion
if
(subject to certain exceptions) there is any material change to the financial
condition or business or prospects of the Company or any of its subsidiaries
that materially and adversely affects the Group as a whole or if the Company
is
in breach of certain provisions on exclusivity and non-competition. In addition,
SIA and Temasek may also terminate the Investor Subscription Agreement prior
to
completion if the Company is in breach of any warranties given and such breach
has a material adverse effect on the Group as a whole.
The
Company may terminate the Investor Subscription Agreement prior to completion
if
(subject to certain exceptions) there is any material change to the financial
condition or business or prospects of SIA that materially and adversely affects
SIA and its subsidiaries as a whole.
| – |
Termination
of strategic investor rights
|
The
rights of SIA with respect to management representation, anti-dilution,
non-competition and future increase in shareholding percentage will terminate
if
SIA ceases to hold (subject to certain cure periods) at least 10% of the
issued
share capital of the Company.
SUBSCRIPTION
OF NEW H SHARES BY CEA HOLDING
CEA
Holding Subscription Agreement dated 9 November 2007
Parties
| (1) |
The
Company as the issuer.
|
| (2) |
CEA
Holding as the subscriber.
|
6
Number
of new H Shares subscribed for
CEA
Holding will subscribe for 1,100,418,000 new H Shares. Such new H Shares
represent approximately 22.61% of the existing issued share capital of the
Company. Immediately after completion of the Share Subscriptions (which include
the Investor Subscriptions described above), CEA Holding will hold new H
shares
representing approximately 14.01% of the issued share capital of the Company
as
enlarged by the issue of the Investor Subscription Shares and the CEA Holding
Subscription Shares. Taking into account the 2,904,000,000 A Shares it already
holds (which A Shares represent approximately 59.67% of the existing issued
share capital of the Company), CEA Holding will hold an aggregate of
4,004,418,000 shares in the Company, representing 51.00% of the Company’s
enlarged issued share capital.
Application
will be made by the Company to the Stock Exchange for the granting of the
listing of, and permission to deal in, all the CEA Holding Subscription
Shares.
Subscription
price
HK$3.80
per H Share. The aggregate subscription price of HK$4,181,588,400 will be
payable in cash upon completion of the CEA Holding Subscription. The
subscription price was agreed after arm’s length negotiations between the
parties.
The
subscription price per H Share under the CEA Holding Subscription is the
same as
that under the Investor Subscriptions. As mentioned in the section headed
“SUBSCRIPTION OF NEW H SHARES BY SIA AND TEMASEK - Investor Subscription
Agreement dated 9 November 2007 -Subscription price” above, the subscription
price of HK$3.80 per H Share under the Investor Subscriptions was agreed
after
arm’s length negotiations between the parties, and it represents a premium of
1.9% as compared to the closing price per H Share on the last trading day
prior
to the suspension of trading in the Company’s shares on 22 May 2007. The
subscription of new H Shares by CEA Holding under the CEA Holding Subscription
is intended primarily to serve a policy purpose, that is, to enable CEA Holding
(a PRC entity) to maintain absolute majority control of 51.00% in the issued
share capital of the Company despite the dilution effect resulting from the
Investor Subscriptions. It is considered appropriate therefore for the
subscription price per H Share under the CEA Holding Subscription to be the
same
as that under the Investor Subscriptions. Taking into account the benefits
that
the Share Subscriptions as a whole will bring to the Company (described in
more
details in the section headed “REASONS FOR AND BENEFITS OF THE SHARE
SUBSCRIPTIONS” below), the Directors are of the view that the subscription price
of HK$3.80 per H Share under the CEA Holding Subscription is fair and reasonable
and in the interests of the shareholders of the Company as a whole.
Conditions
precedent
Completion
of the CEA Holding Subscription is conditional upon certain conditions which
include:
| (1) |
the
receipt of all the licenses, authorisations, permits, consents
and
approvals from the relevant approval authorities and other relevant
approvals for the CEA Holding Subscription and the transactions
contemplated under the CEA Holding Subscription
Agreement;
|
| (2) |
the
approvals by the shareholders of the Company at a general meeting
and
class meetings for the issue of new H Shares pursuant to the CEA
Holding
Subscription and for the adoption of the revised articles of association
of the Company;
|
7
| (3) |
simultaneous
completion of the Investor Subscriptions;
and
|
| (4) |
the
Listing Committee of the Stock Exchange granting approval for the
listing
of, and permission to deal in, the CEA Holding Subscription
Shares.
|
Completion
will take place on the second business day after the satisfaction of the
conditions precedent or on such other date as the parties may
agree.
SHAREHOLDERS
AGREEMENT AMONG CEA HOLDING, SIA AND TEMASEK
Simultaneously
with the entering into of the subscription agreements, CEA Holding entered
into
a Shareholders Agreement with SIA and Temasek. Under the Shareholders Agreement,
CEA Holding, SIA and Temasek have agreed on certain matters relating to the
Company and their respective shareholding interests in the Company.
Shareholders
Agreement dated 9 November 2007
Parties
| (1) |
CEA
Holding.
|
| (2) |
SIA.
|
| (3) |
Temasek.
|
Key
terms of the Shareholders Agreement
| – |
Board
representation
|
Subject
to the size of the Board having 14 seats pursuant to the articles of association
of the Company, SIA has the right to nominate two persons as Directors and
the
number of SIA-nominated Directors shall change proportionally if the
shareholding of SIA in the Company changes. Notwithstanding the foregoing,
SIA
has the right to nominate at least one person to the Board for so long as
the
number of the Company’s shares held beneficially by SIA and/or its nominees does
not fall below 5% of the total registered capital of the Company.
Temasek
has the right to nominate one person as a Director for so long as the number
of
the Company’s shares held beneficially by Temasek and/or its nominees does not
fall below 5% of the total registered capital of the Company.
| – |
Board
committee representation
|
For
so
long as SIA will be entitled to nominate at least one Director to the Board,
SIA
will have the right to nominate one person to each of the Board
committees.
Temasek
has the right to nominate one person to the finance committee and the planning
and development committee of the Board for so long as the number of the
Company’s shares held beneficially by Temasek and/or its nominees does not fall
below 5% of the total registered capital of the Company.
8
| – |
Consultation
rights
|
CEA
Holding will not, without prior consultation with SIA and Temasek, exercise
its
voting rights, or cause any Director nominated by it to exercise his vote,
in
favour of any resolution in respect of the winding up of the Company or its
subsidiaries or in relation to the merger or consolidation of the Company
with
or into any other person, or the disposal of all or substantially all of
the
shares, assets or business of the Company.
| – |
Transfer
restrictions
|
SIA
and
Temasek have undertaken to CEA Holding to be subject to the same transfer
restrictions as those undertaken by them under the Investor Subscription
Agreement. The transfer restrictions in the Shareholders Agreement will cease
if
the equivalent restrictions in the Investor Subscription Agreement are
terminated.
CEA
Holding has undertaken not to dispose of any of CEA Holding Subscription
Shares
and any Additional Shares arising therefrom within the Lock-up Period. The
transfer restrictions on CEA Holding will cease to apply to CEA Holding if
the
transfer restrictions on SIA and Temasek in the Shareholders Agreement cease
to
apply to SIA and Temasek.
| – |
Right
of first refusal
|
SIA
has
the right of first refusal over the CEA Holding Subscription Shares and any
Additional Shares therefrom to be sold by CEA Holding (other than transfers
by
CEA Holding to its wholly-owned subsidiaries).
CEA
Holding has the right of first refusal over SIA’s Investor Subscription Shares,
Additional Shares and the securities acquired by SIA pursuant to the
anti-dilution right described above to be sold by SIA (other than transfers
by
SIA to its wholly-owned subsidiaries).
| – |
Non-competition
|
CEA
Holding has undertaken not to sell any securities of the Company to any
competitor of SIA or any affiliate of such competitor. CEA Holding has also
undertaken that it will not make any investments in, or provide certain types
of
financing to, any competitor of SIA or any affiliate of such competitor (other
than a PRC airline company or an affiliate of a PRC airline
company).
SIA
has
given similar non-competition undertakings in Shareholders Agreement as those
given by it in the Investor Subscription Agreement.
| – |
Undertaking
to vote
|
To
the
extent applicable to it and subject to applicable laws, each of SIA, Temasek
and
CEA Holding has undertaken to exercise their respective voting rights, and
procure that any director of the Company nominated by them to exercise their
voting rights and other powers and authorities, to give effect to the
arrangements as stipulated in the Shareholders Agreement and the Investor
Subscription Agreement.
9
| – |
Termination
of strategic investor rights
|
The
consultation right of SIA, the right of first refusal of SIA and the rights
of
SIA with respect to non-competition will terminate if SIA ceases to hold
(subject to certain cure periods) at least 10% of the issued share capital
of
the Company. The consultation right of Temasek will terminate if Temasek
ceases
to be entitled to nominate a Director to the Board under the Shareholders
Agreement.
Subject
to certain exceptions, the Shareholders Agreement will come into force and
effect on completion of the Investor Subscriptions.
STRATEGIC
COOPERATION BETWEEN THE COMPANY AND SIA
Simultaneously
with the entering into of the subscription agreements, the Company and SIA
entered into a Cooperation Agreement and a Personnel Secondment Agreement
setting out the long term broad-based cooperation between the Company and
SIA
for the purpose of their mutual strategic development in a number of
areas.
The
Cooperation Agreement sets out the key areas of strategic alliance and
cooperation between the Company and SIA including flight operations,
procurement, marketing, secondment of personnel, code sharing, human resources,
training and technical engineering.
The
Personnel Secondment Agreement provides for detailed terms which would apply
to
the secondment by SIA of executive personnel to certain positions in the
Company, including the determination of the duration of such secondment and
the
rights and responsibilities of the parties relating to such
secondment.
Unless
otherwise agreed between the parties, the Cooperation Agreement and Personnel
Secondment Agreement are expected to take effect on the date of completion
of
the Investor Subscriptions.
RANKING
OF THE NEW H SHARES TO BE ISSUED
The
new H
Shares to be issued pursuant to the Share Subscriptions will rank, upon issue,
pari passu in all respects with the H Shares in issue at the time of issue
and
allotment of such new H Shares. The shareholding structures of the Company
immediately prior to, and immediately after, completion of the Share
Subscriptions are as follows:
Shareholding
structure of the Company immediately prior to
completion
of the Share Subscriptions
10
Shareholding
structure of the Company immediately
after
completion of the Share Subscriptions
Shareholding
structure of the Company
in
terms of numbers of shares
|
CEA
Holding
(A
Shares)
|
CEA
Holding
(H
Shares)
|
SIA
(H
Shares)
|
Temasek
(H
Shares)
|
Public
(A
Shares)
|
Public
(H
Shares)
|
Total
|
||||||||||||||||
|
|
||||||||||||||||||||||
|
Current
shareholding
|
2,904,000,000
|
0
|
0
|
0
|
396,000,000
|
1,566,950,000
|
4,866,950,000
|
|||||||||||||||
|
%
of total shares
Outstanding
|
59.67
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
8.14
|
%
|
32.19
|
%
|
100
|
%
|
||||||||
|
Number
of new
H
shares issued
|
0
|
1,100,418,000
|
1,235,005,263
|
649,426,737
|
0
|
0
|
2,984,850,000
|
|||||||||||||||
|
Post-subscription
shareholding
|
2,904,000,000
|
1,100,418,000
|
1,235,005,263
|
649,426,737
|
396,000,000
|
1,566,950,000
|
7,851,800,000
|
|||||||||||||||
|
%
of total shares
outstanding
|
36.99
|
%
|
14.01
|
%
|
15.73
|
%
|
8.27
|
%
|
5.04
|
%
|
19.96
|
%
|
100
|
%
|
||||||||
INFORMATION
ABOUT THE PARTIES
SIA
is an
international airline company incorporated and based in the Republic of
Singapore whose shares are listed and traded on the Singapore Exchange
Securities Trading Limited.
Temasek
is a company incorporated in the Republic of Singapore and is an indirect,
wholly-owned subsidiary of Temasek Holdings (Private) Limited. As at 31 October
2007, Temasek Holdings (Private) Limited holds approximately 54.60% of the
total
issued share capital of SIA. The principal activities of Temasek and Temasek
Holdings (Private) Limited are investment holding.
SIA
and
Temasek are third parties independent of the Company and its connected
persons.
CEA
Holding is a state-owned enterprise established in the PRC. The principal
activities of CEA Holding are investment holding.
The
Company is an international airline company incorporated in the PRC whose
H
Shares, A Shares and American depository shares are listed on the Stock
Exchange, the Shanghai Stock Exchange and the New York Stock Exchange, Inc.,
respectively.
11
REASONS
FOR AND BENEFITS OF THE SHARE SUBSCRIPTIONS
In
recent
years, the Chinese aviation industry has experienced rapid growth and
development. At the same time, the competition in the airline industry has
become intense.
The
Company feels the necessity and importance to improve its management and
operation, and to strengthen its products’ competitiveness in the international
aviation market. The Company believes that through the Investor Subscriptions,
it will significantly benefit from the strategic cooperation with SIA and
Temasek and from the capital injection.
Through
the strategic partnership, the Company and SIA will engage in long term
cooperation in a number of areas, including flight, maintenance and repair,
procurement, marketing, secondment of personnel, code sharing, human resources,
training and technical engineering. It is expected that the strategic
cooperation will enable the Company to achieve greater passenger traffic
flow
and revenue generation, attain higher levels of customer service, and realize
increased efficiency and cost savings through the coordinated activities
and
operations between the Company and SIA.
Through
the strategic partnership, the Company will have access to SIA’s extensive
international network which enables the Company to expand its international
business rapidly and effectively. Leveraging SIA’s world renowned brand name and
successful experience in airline operations and management, the Company will
be
able to further enhance the effectiveness of its operations, improve its
products and services, strengthen its financial performance and brand value.
More directly, the capital injection through the Investor Subscriptions will
help improve the Company’s capital structure and financial and operational
position. Besides, the Company will benefit from Temasek’s superior expertise in
financial and investment management.
This
strategic partnership will introduce world-class management and operation
experience to China’s domestic airline industry, significantly raise Chinese
airlines’ profile and brand image in the international markets, and promote
healthy competition in China’s domestic airline industry. For domestic and
international passengers, the partnership will in time create tremendous
value
through, among other things, the offering of a greater variety of air routes
and
flight options, more convenient reservation and ticketing systems and improved
flight operation and service quality.
The
Directors believe that the terms of the Share Subscriptions are fair and
reasonable and in the interests of the shareholders of the Company as a
whole.
RECENT
FUND RAISING ACTIVITIES AND USE OF PROCEEDS
The
Company has not conducted any fund raising activities within the 12 months
immediately prior to the date of this announcement. The total proceeds of
the
Share Subscriptions will be approximately HK$11,342,430,000 before deduction
of
expenses. The proceeds are currently intended by the Company for use in
improving products of the Company, enhancing service quality, and increasing
efforts on staff training, including among other things introducing new
aircraft, improving on-flight atmosphere, streamlining flight connection
services, improving facilities and related services at VIP lounges.
12
IMPLICATIONS
UNDER THE LISTING RULES
The
issue
of new H Shares pursuant to the Share Subscriptions (which comprises the
Investor Subscriptions and the CEA Holding Subscriptions) will constitute
a
variation of class rights of the holders of A Shares and the holders of H
Shares
under the articles of association of the Company. Pursuant to the articles
of
association of the Company and Rule 19A.38 of the Listing Rules, the issue
of
such new H Shares is required to be subject to approvals of shareholders
of the
Company by way of special resolutions at a general meeting and separate class
meetings. At the general meeting convened for the purpose of approving the
issue
of new H Shares pursuant to the Share Subscriptions, since the Investor
Subscriptions and the CEA Holding Subscription are inter-conditional, CEA
Holding and its associates will abstain from voting. Likewise, at the class
meeting of holders of A Shares convened for the purpose of approving the
issue
of new H Shares pursuant to the Share Subscriptions, since the Investor
Subscriptions and the CEA Holding Subscription are inter-conditional, CEA
Holding and its associates will also abstain from voting.
Independently
of the approval requirements mentioned above, since CEA Holding is the
controlling shareholder, and hence a connected person of the Company, the
issue
of new H Shares to CEA Holding pursuant to the CEA Holding Subscription
Agreement constitutes a connected transaction of the Company under Chapter
14A
of the Listing Rules and is subject to reporting, announcement and independent
shareholders’ approval requirements under that Chapter. Thus, an Independent
Board Committee comprising the independent non-executive directors of the
Company will be formed to advise Independent Shareholders of the Company
on the
terms of the CEA Holding Subscription. An independent financial adviser will,
in
accordance with the Listing Rules, be appointed to advise the Independent
Board
Committee and the Independent Shareholders on the same. For the purpose of
Chapter 14A of the Listing Rules and in respect of the CEA Holding Subscription,
the Company will convene a general meeting for the Independent Shareholders
to
consider and, if thought fit, to approve the issue of new H Shares to CEA
Holding pursuant thereto.
A
circular containing further details of the Investor Subscriptions and the
CEA
Holding Subscription as well as other related matters (including proposed
consequential changes to the articles of association of the Company and the
proposed appointment of new directors, in both cases effective upon the
completion of the Share Subscriptions), together with notices of the various
shareholders meetings, will be issued by the Company and despatched to its
shareholders in due course.
At
the
request of the Company, trading in the H Shares of the Company on the Stock
Exchange was suspended with effect from 9:30 a.m. on 5 November 2007 pending
the
release of this announcement. The Company has made an application to the
Stock
Exchange for the resumption of trading in its shares on the Stock Exchange
with
effect from 9:30 a.m. on 12 November 2007.
DEFINITIONS
In
this
announcement, unless the context otherwise requires, the following expressions
have the following meanings:
|
“A
Shares”
|
means
the ordinary shares issued by the Company, with a Renminbi-denominated
par
value of RMB1.00 each, which are subscribed for and paid up in
Renminbi
and are listed on the Shanghai Stock
Exchange;
|
|
“Additional
Shares”
|
means
additional shares arising from the Investor Subscription Shares
or, as the
case may be, the CEA Holding Subscription Shares, as a result of
an equity
reorganization of the Company;
|
13
|
“associates”
|
has
the meaning ascribed thereto under the Listing
Rules;
|
|
“Board”
|
means
the board of directors of the
Company;
|
|
“CEA
Holding”
|
means
中國東方航空集團公司
(China
Eastern Air Holding Company), a wholly PRC state-owned enterprise
and the
controlling shareholder of the Company holding approximately 59.67%
of its
issued share capital as at the date of this
announcement;
|
|
“CEA
Holding Subscription”
|
means
the subscription for new H Shares in the Company by CEA Holding
pursuant
to the CEA Holding Subscription
Agreement;
|
|
“CEA
Holding Subscription
Agreement”
|
means
the subscription agreement dated 9 November 2007 between
CEA Holding and the Company under which the CEA Holding agrees
to
subscribe for, and the Company agrees to issue, 1,100,418,000 new
H Shares
at the subscription price of HK$3.80 per
share;
|
|
“CEA
Holding Subscription
Shares”
|
means
the 1,100,418,000 new H Shares subscribed for by CEA Holding
pursuant to the CEA Holding Subscription
Agreement;
|
|
“Company”
|
means
中國東方航空股份有限公司
(China
Eastern Airlines Corporation Limited), a joint stock limited company
incorporated in the PRC with limited liability, whose H Shares,
A Shares
and American depositary shares are listed on the Stock Exchange,
the
Shanghai Stock Exchange and the New York Stock Exchange, Inc.,
respectively;
|
|
“connected
person”
|
has
the meaning ascribed thereto under the Listing
Rules;
|
|
“Cooperation
Agreement”
|
means
the cooperation agreement dated 9 November 2007 between the Company
and
SIA;
|
|
“Directors”
|
means
the directors of the Company;
|
|
“Group”
|
means
the Company and its subsidiaries;
|
|
“H
Shares”
|
means
the ordinary shares issued by the Company, with a Renminbi-denominated
par
value of RMB1.00 each, which are subscribed for and paid up in
a currency
other than Renminbi and are listed on the Stock
Exchange;
|
|
“Independent
Board
Committee”
|
means
the independent board committee of the Company to be formed
to advise the Independent Shareholders in relation to the CEA Holding
Subscription;
|
|
“Independent
Shareholders”
|
means
the shareholders of the Company, other than CEA Holdings and its
associates;
|
|
“Investor
Subscriptions”
|
means
the subscriptions for new H Shares in the Company by SIA and Temasek
pursuant to the Investor Subscription
Agreement;
|
14
|
“Investor
Subscription
Agreement”
|
means
the subscription agreement dated 9 November 2007 among the
Company, SIA and Temasek under which (1) SIA agrees to subscribe
for, and
the Company agrees to issue, 1,235,005,263 new H Shares, and (2)
Temasek
agrees to subscribe for, and the Company agrees to issue, 649,426,737
new
H Shares, in each case at the subscription price of HK$3.80 per
share;
|
|
“Investor
Subscription Shares”
|
means
the 1,235,005,263 new H Shares in the Company subscribed for by
SIA and
the 649,426,737 new H Shares in the Company subscribed for by Temasek,
in
each case pursuant to the Investor Subscription
Agreement;
|
|
“Listing
Rules”
|
means
the Rules Governing the Listing of Securities on The Stock Exchange
of
Hong Kong Limited;
|
|
“Lock-up
Period”
|
means
a period of three years from the date of completion of the Investor
Subscriptions;
|
|
“Personnel
Secondment
Agreement”
|
means
the personnel secondment agreement dated 9 November 2007
between the Company and SIA;
|
|
“PRC”
|
means
the People’s Republic of China;
|
|
“Share
Subscriptions”
|
means
(1) the subscriptions for new H Shares in the Company by SIA and
Temasek
pursuant to the Investor Subscription Agreement and (2) the subscription
for new H Shares in the Company by CEA Holding pursuant to the
CEA Holding
Subscription Agreement;
|
|
“Shareholders
Agreement”
|
means
the shareholders agreement dated 9 November 2007 between CEA Holding,
SIA
and Temasek;
|
|
“SIA”
|
means
Singapore Airlines Limited, a company incorporated in the Republic
of
Singapore, whose shares are listed on the Singapore Stock
Exchange;
|
|
“Stock
Exchange”
|
means
The Stock Exchange of Hong Kong Limited;
and
|
|
“Temasek”
|
means
Lentor Investments Pte. Ltd., an indirect, wholly owned subsidiary
of
Temasek Holdings (Private) Limited.
By
order of the Board
CHINA
EASTERN AIRLINES CORPORATION LIMITED
Li
Fenghua
Chairman
|
15
The
Directors, as at the date of this announcement, are:
Li
Fenghua (Chairman,
Non-executive Director)
Li
Jun (Vice
Chairman, Non-executive Director)
Luo
Chaogeng (Non-executive
Director)
Cao
Jianxiong (President,
Executive Director)
Luo
Zhuping (Executive
Director)
Hu
Honggao (Independent
non-executive Director)
Peter
Lok (Independent
non-executive Director)
Wu
Baiwang (Independent
non-executive Director)
Zhou
Ruijin (Independent
non-executive Director)
Xie
Rong (Independent
non-executive Director)
Shanghai,
the People’s Republic of China
9
November 2007
“Please
also refer to the published version of this announcement in China
Daily”
16