this prospectus is important and requires your …
TRANSCRIPT
If you are in any doubt as to any aspect of this Prospectus or as to the action to be taken, you should consult your licenced securities dealer,bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your Ordinary Shares in the Company, you should at once hand this Prospectus and the accompanyingApplication Forms to the purchaser or transferee or to the bank, licenced securities dealer or other agent through whom the sale or transferwas effected for transmission to the purchaser or transferee.
A copy of each of the Open Offer Documents, having attached thereto the documents specified in the paragraph headed “Documents deliveredto the Registrar of Companies in Hong Kong” in Appendix IV to this Prospectus, have been registered with the Registrar of Companies inHong Kong pursuant to Section 38D of the Companies (Winding Up and Miscellaneous Provisions) Ordinance. The Registrar of Companiesin Hong Kong and the SFC take no responsibility for the contents of any of those documents.
Shareholders with registered addresses in any of the Specified Territories and the Beneficial Shareholders who are residents of the SpecifiedTerritories are referred to the important information set out in the sections headed “Letter from the Board — Proposed Open Offer — ExcludedShareholders” and “Letter from the Board — Proposed Open Offer - Limited category of persons in the United States who may be able toparticipate in the Open Offer”.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of thisProspectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoeverarising from or in reliance upon the whole or any part of the contents of this Prospectus.
The Assured Entitlements, the Assured Allotment Application Forms, the Offered Mandatory Convertible Securities and the ConversionShares have not been and will not be registered under the U.S. Securities Act or the laws of any State in the United States, and may not beoffered or sold within the United States, absent registration or an exemption from the registration requirements of the U.S. Securities Act andapplicable State securities laws. There is no intention to register any portion of any securities described herein in the United States or toconduct a public offering of securities in the United States.
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 00144)
OPEN OFFER OF UNLISTED MANDATORY CONVERTIBLE SECURITIESON THE BASIS OF ONE UNIT OF UNLISTED
MANDATORY CONVERTIBLE SECURITIES FOR EVERY FIVE (5)ORDINARY SHARES HELD ON THE RECORD DATE
Joint Lead Financial Advisers
Co-Financial Advisers
Terms used in this cover shall have the same meanings as defined in this Prospectus.
The latest time for acceptance of and payment for the Offered Mandatory Convertible Securities is 4:00 p.m. on Thursday, 5 June 2014.The procedures for application and payment, transfer or conversion of the Offered Mandatory Convertible Securities are set out on pages 25to 30 of this Prospectus.
The existing Ordinary Shares of the Company have been dealt with on an ex-entitlement basis since 9:00 a.m. on Wednesday, 14 May 2014.Such dealings in the Ordinary Shares will take place whilst the conditions to which the Open Offer is subject remain unfulfilled. A persondealing in Ordinary Shares on an ex-entitlement basis will accordingly bear the risk that the Open Offer may not become unconditional ormay not proceed.
The Underwriting Agreement contains provisions entitling the Underwriter by notice in writing to the Company served prior to 5:00p.m. on Friday, 6 June 2014 or such other time or date as the Company and the Underwriter may agree in writing to terminate theUnderwriting Agreement on the occurrence of certain events including force majeure as set out in the section headed “Terminationof the Underwriting Agreement” on page 8 of this Prospectus.
If the Underwriter terminates the Underwriting Agreement, or if the conditions of the Underwriting Agreement are not fulfilled (orwaived by the Underwriter) in accordance with the terms thereof, the Open Offer will not proceed. Shareholders should thereforeexercise caution when dealing in the Ordinary Shares, and if they are in any doubt about their position, they are recommended toconsult their professional advisers.
THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMPORTANT ATTENTION
11.20
A1B113.51A
21 May 2014
The Open Offer is conditional upon the Underwriting Agreement becoming unconditional
and not being terminated. Furthermore, if the conditions of the Open Offer are not fulfilled, the
Open Offer may not proceed, in which case, a further announcement will be made by the
Company at the relevant time. It should also be noted that the Ordinary Shares have been dealt
with on an ex-entitlement basis from Wednesday, 14 May 2014. Such dealings will take place
when the conditions of the Open Offer remain unfulfilled and the Underwriting Agreement is
subject to termination in accordance with the terms thereof. Any person dealing in the securities
of the Company up to the date on which such condition is fulfilled or waived and up to the Latest
Time for Termination (as defined herein) will accordingly bear the risk that the Open Offer may
not become unconditional and may not proceed. Any person dealing or contemplating any
dealing in the securities of the Company during this period who is in any doubt about his or her
position is recommended to consult his or her own professional adviser.
EXCEPT AS OTHERWISE SET OUT HEREIN, THE OPEN OFFER DESCRIBED IN THIS
PROSPECTUS IS NOT BEING MADE TO SHAREHOLDERS OR BENEFICIAL
SHAREHOLDERS IN THE SPECIFIED TERRITORIES. This Prospectus does not constitute or
form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, the
Offered Mandatory Convertible Securities or to take up any entitlements to the Offered Mandatory
Convertible Securities in any jurisdiction in which such an offer or solicitation is unlawful. None of
the Offered Mandatory Convertible Securities, the Conversion Shares, this Prospectus, the Assured
Allotment Application Form or the Excess Application Form will be registered under the securities
laws of any of the Specified Territories and none of the Offered Mandatory Convertible Securities, the
Conversion Shares, this Prospectus, the Assured Allotment Application Form or the Excess
Application Form will qualify for distribution under any of the relevant securities laws of any of the
Specified Territories (other than pursuant to any applicable exceptions as agreed by the Company).
Accordingly, the Assured Entitlements, the Assured Allotment Application Forms, the Offered
Mandatory Convertible Securities and the Conversion Shares may not be offered, sold, pledged, taken
up, resold, renounced, transferred or delivered, directly or indirectly, into or within any of the
Specified Territories absent registration or qualification under the respective securities laws of such
Specified Territories, or exemption from the registration or qualification requirement under applicable
rules of such Specified Territories.
Shareholders with registered addresses in any of the Specified Territories and Beneficial
Shareholders who are residents of the Specified Territories are referred to the sections of this
prospectus headed “Letter from the Board — Proposed Open Offer — Excluded Shareholders” and
“Letter from the Board — Proposed Open Offer — Limited category of persons in the United States
who may be able to participate in the Open Offer”.
NOTICE TO CANADIAN INVESTORS
The Offered Mandatory Convertible Securities will not be distributed in Canada. Any resale of
the Offered Mandatory Convertible Securities in Canada must be made under applicable securities
laws which will vary depending on the relevant jurisdiction, and which may require resales to be made
NOTICE
— i —
under available statutory registration and prospectus exemptions, under a discretionary exemption
granted by the applicable Canadian securities regulatory authority or in a transaction not subject to
securities legislation in Canada. Purchasers are advised to seek legal advice prior to any resale of the
Offered Mandatory Convertible Securities.
NOTICE TO INVESTORS IN MACAU
The Open Offer can only be promoted, distributed, sold or delivered in the Macau Special
Administrative Region of the People’s Republic of China (“Macau”), or any document relating to the
Open Offer be distributed or circulated in Macau, by the institutions licensed in Macau according to
the Macau Financial System Act, as authorised by the Macau regulatory authority in observation of
the guidelines and recommendations issued by such authority from time to time. An overseas offer to
existing Macau Shareholders of the Offered Mandatory Convertible Securities will not require special
licensing or authorisation, provided that it does not involve a public offer in Macau or the circulation
of marketing materials in Macau.
NOTICE TO PRC INVESTORS
This Prospectus does not constitute a public offer of the Offered Mandatory Convertible
Securities, whether by way of sale or subscription, in the PRC. According to relevant PRC laws and
regulations, subject to any applicable exemptions, the Offered Mandatory Convertible Securities are
not being offered and may not be offered or sold directly or indirectly in the PRC to, or for the benefit
of, legal or natural persons of the PRC.
In each case, we reserve the absolute discretion in determining whether to allow such
participation as well as the identities of the persons who may be allowed to do so.
NOTICE TO INVESTORS IN THE UNITED KINGDOM
This Prospectus has not been delivered for approval to the Financial Services Authority (“FSA”)
in the United Kingdom nor has it been approved by an authorised person within the meaning of
Financial Services and Markets Act 2000, as amended (“FSMA”). No approved prospectus within the
meaning of section 85 of FSMA or of the Prospectus Directive has been published or is intended to
be published in relation to the Open Offer. Accordingly, the securities referred to in this Prospectus
may not be, and are not being, offered to persons in the United Kingdom except in circumstances
which will not result in an offer to the public in the United Kingdom in contravention of the FSMA
or the Prospectus Directive.
Within the United Kingdom, this Prospectus is only being addressed and distributed to persons
to whom interests may lawfully be promoted pursuant to section 21 of FSMA. In particular, this
Prospectus is being communicated to, and is directed only at: (a) persons (i) having professional
experience in matters relating to investments so as to qualify them as “investment professionals” under
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
“Order”); (ii) falling within Article 49(2)(a) to (d) of the Order; or (iii) falling within Article 50 of
the Order, or (b) persons who are “qualified investors” within the meaning of Article 2(1)(e) of the
Prospectus Directive, or (c) persons to whom it may otherwise be lawfully communicated (together
NOTICE
— ii —
being referred to as “Relevant Persons”). This communication must not be acted on or relied on by
persons who are not Relevant Persons. Any investment or investment activity to which this
communication relates is available only to Relevant Persons and will be engaged in only with Relevant
Persons.
NOTICE TO INVESTORS IN THE UNITED STATES
The Assured Entitlements, the Assured Allotment Application Forms, the Offered Mandatory
Convertible Securities and the Conversion Shares have not been and will not be registered under the
U.S. Securities Act or securities laws of any State or other jurisdiction of the United States and may
not be offered, sold, allotted, taken up, exercised, resold, renounced, pledged, transferred or delivered,
directly or indirectly, in or into the United States, except pursuant to an applicable exemption from,
or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in
compliance with any applicable securities laws of any State or other jurisdiction of the United States.
There will be no public offer of any securities in the United States.
The Open Offer Documents, the Offered Mandatory Convertible Securities and theConversion Shares have not been approved or disapproved by the U.S. Securities and ExchangeCommission, any State securities commission in the United States or any U.S. regulatoryauthority, nor have any the foregoing authorities passed upon or endorsed the merits of the OpenOffer, the Open Offer Documents, the Offered Mandatory Convertible Securities or theConversion Shares or the accuracy or adequacy of this document. Any representation to thecontrary is a criminal offence in the United States.
Subject to certain limited exceptions, none of this Prospectus, the Assured Allotment Application
Form or the Excess Application Form constitutes, will constitute, or forms or will form, part of any
offer or invitation or issue, purchase or acquire the Offered Mandatory Convertible Securities to any
person with a registered address, or who is located, in the United States. The Offered Mandatory
Convertible Securities are being offered outside the United States in reliance on Regulation S.
In addition, until 40 days after the commencement of the Open Offer, any offer, sale or transfer
of the Offered Mandatory Convertible Securities or Conversion Shares in or into the United States by
a dealer (whether or not participating in the Open Offer) may violate the registration requirements of
the U.S. Securities Act.
Each subscriber of Offered Mandatory Convertible Securities being offered and sold outside the
United States will be deemed to have represented and agreed, among other things, that the subscriber
is acquiring the Offered Mandatory Convertible Securities in an offshore transaction meeting the
requirements of Regulation S.
Any person (other than the institutional Accredited Investors who are also QIBs referred to in the
immediately following paragraph) subscribing for or accepting Offered Mandatory Convertible
Securities will be required to represent, among others, that such person:
(i) is not resident or located in, or a citizen of, the United States;
NOTICE
— iii —
(ii) it is not accepting an offer to acquire or take up the Offered Mandatory Convertible
Securities on a non-discretionary basis for a person who is resident or located in, or a
citizen of the United States at the time the instruction to accept was given;
(iii) it is not taking up for the account of any person who is located in the United States, unless:
(a) the instruction to take up was received from a person outside the United States; and
(b) the person giving such instruction has confirmed that (x) it has the authority to give
such instruction, and (y) either (A) has investment discretion over such account or (B)
is an investment manager or investment company that it is acquiring the Offered
Mandatory Convertible Securities in an “offshore transaction” within the meaning of
Regulation S;
(iv) it is acquiring the Offered Mandatory Convertible Securities in an “offshore transaction” as
defined in Regulation S;
(v) it has not been offered the Offered Mandatory Convertible Securities by means of any
“directed selling efforts” as defined in Regulation S;
(vi) it is not acquiring Offered Mandatory Convertible Securities with a view to the offer, sale,
transfer, delivery or distribution, directly or indirectly, of such Offered Mandatory
Convertible Securities or Conversion Shares into the United States; and
(vii) it understands that neither the Offered Mandatory Convertible Securities nor the
Conversion Shares have been or will be registered under the U.S. Securities Act or with any
securities regulatory authority of any State, territory, or possession of the U.S. and the
Offered Mandatory Convertible Securities are being distributed and offered outside the U.S.
in reliance on Regulation S. Consequently it understands the Offered Mandatory
Convertible Securities and the Conversion Shares may not be offered, sold, pledged or
otherwise transferred in or into the U.S., except in reliance on an exemption from, or in
transactions not subject to, the registration requirements of the U.S. Securities Act.
Notwithstanding the representations above, the Company may offer the Offered Mandatory
Convertible Securities in the United States to a limited number of persons whom the Company
reasonably believes to be institutional Accredited Investors who are also QIBs in transactions exempt
from the registration requirements under the U.S. Securities Act, provided that such persons fulfil the
relevant requirements to the satisfaction of the Company.
For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to the
representations and warranties above.
FORWARD-LOOKING STATEMENTS
All statements in this Prospectus other than statements of historical fact are forward-looking
statements. In some cases, forward-looking statements may be identified by the use of words such as
NOTICE
— iv —
“might”, “may”, “could”, “would”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”,
“plan”, “seek”, “continue”, “illustration”, “projection” or similar expressions and the negative
thereof. Forward-looking statements in this prospectus include, without limitation, statements in
respect of the Company’s business strategies, product offerings, market position, competition,
financial prospects, performance, liquidity and capital resources, as well as statements regarding
trends in the relevant industries and markets in which the Company operates, technological advances,
financial and economic developments, legal and regulatory changes and their interpretation and
enforcement.
The forward-looking statements in this Prospectus are based on management’s present
expectations about future events. Management’s present expectations reflect numerous assumptions
regarding the Company’s strategy and operations and industry developments. By their nature, they are
subject to known and unknown risks and uncertainties, which could cause actual results and future
events to differ materially from those implied or expressed by forward-looking statements. Should one
or more of these risks or uncertainties materialise, or should any assumptions underlying
forward-looking statements prove to be incorrect, the Company’s actual results could differ materially
from those expressed or implied by forward-looking statements. Additional risks not known to the
Company or that the Company does not currently consider material could also cause the events and
trends discussed in this Prospectus not to occur, and the estimates, illustrations and projections of
financial performance not to be realised.
Prospective investors are cautioned that forward-looking statements speak only as at the date of
publication of this Prospectus. Except as required by applicable laws, the Company does not
undertake, and expressly disclaims, any duty to revise any forward-looking statement in this
Prospectus, be it as a result of new information, future events or otherwise.
NOTICE
— v —
PAGE
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Termination of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Appendix I — Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Appendix II — Unaudited Pro Forma Financial Information of the Group . . . . . . . . 36
Appendix III — Adjustments to the Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . 42
Appendix IV — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
CONTENTS
— vi —
In this Prospectus, unless the context otherwise requires, the following expressions have the
following meanings:
“Announcement” the announcement dated 31 March 2014 issued by the
Company in relation to the Open Offer
“Application Form(s)” the Assured Allotment Application Form(s) and the Excess
Application Form(s)
“Articles” the articles of association of the Company
“associate(s)” has the meaning ascribed to it in the Listing Rules
“Assured Allotment Application
Form(s)”
the form(s) of application for use by the Qualifying
Shareholders to apply for their Assured Entitlement of the
Offered Mandatory Convertible Securities
“Assured Entitlement” assured entitlements to Offered Mandatory Convertible
Securities
“Beneficial Shareholder(s)” any beneficial owner(s) of Ordinary Shares whose Ordinary
Shares are registered as shown in the register of members of
the Company in the name of a registered Shareholder
“Board” the board of Directors of the Company
“Business Day(s)” a day (other than a Saturday, a Sunday or a day on which a
tropical cyclone warning signal number 8 or above or a
“black” rainstorm warning signal is hoisted in Hong Kong) on
which banks are generally open for business in Hong Kong
“CCASS” the Central Clearing and Settlement System established and
operated by HKSCC
“CCASS Investor Participant” a person admitted to participate in CCASS as an investor
participant who may be an individual or joint individuals or a
corporation
“CCASS Participant” a CCASS Clearing Participant, CCASS Custodian Participant
or a CCASS Investor Participant
“CMG” China Merchants Group Limited, a company incorporated in
the PRC and the ultimate holding company of the Company
“CMHK” China Merchants Holdings (Hong Kong) Company Limited, a
company incorporated in Hong Kong with limited liability
and the intermediate holding company of the Company
DEFINITIONS
— 1 —
“CMU” China Merchants Union (BVI) Limited, a company
incorporated under the law of British Virgin Islands and a
substantial shareholder of the Company
“Co-Financial Advisers” Standard Chartered Securities (Hong Kong) Limited, China
Development Bank Corporation and China Merchants
Securities (HK) Co., Limited
“Company” China Merchants Holdings (International) Company Limited,
a company incorporated in Hong Kong with limited liability
and whose Ordinary Shares are listed on the Main Board of
the Stock Exchange
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Chapter 32 of the Laws of Hong Kong)
“Conversion Date” the date on which a Conversion Notice is served
“Conversion Shares” the new Ordinary Shares to be allotted and issued to the
holders of Mandatory Convertible Securities upon the
conversion of the Mandatory Convertible Securities
“Converting Securities Holder(s)” holder(s) of Mandatory Convertible Securities who
propose(s) to exercise all or any part of the conversion rights
attached to his/her/its Mandatory Convertible Securities
“Director(s)” the director(s) of the Company
“Excess Application Form” the form of application for use by Qualifying Shareholders to
apply for excess Offered Mandatory Convertible Securities
“Excluded Shareholders” the Shareholders whose registered addresses in the
Company’s register of members as at the Record Date are in
any of the Specified Territories, except for those Shareholders
with addresses in the United States who fulfil the relevant
requirements to the satisfaction of the Company and any
Shareholders or Beneficial Shareholders at that time who are
otherwise known by the Company to be resident in any of the
Specified Territories, except for those Shareholders or
Beneficial Shareholders resident in the United States who
fulfil the relevant requirements to the satisfaction of the
Company
“Group” the Company and its subsidiaries from time to time
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
DEFINITIONS
— 2 —
“HKSCC” Hong Kong Securities Clearing Company Limited
“institutional Accredited
Investor”
institutional “accredited investor” as defined in Rule
501(a)(1), (2), (3) and (7) under the U.S. Securities Act
“Intermediary” in relation to a Beneficial Shareholder whose Ordinary Shares
are deposited in CCASS and registered in the name of HKSCC
Nominees Limited, means the Beneficial Shareholder’s
broker, custodian, nominee or other relevant person who is a
CCASS Participant or who has deposited the Beneficial
Shareholder’s Ordinary Shares with a CCASS Participant
“Issue Date” 13 June 2014, being the date of issuance of the Mandatory
Convertible Securities
“Joint Lead Financial Advisers” Merrill Lynch Far East Limited and UBS AG, Hong Kong
Branch
“Last Trading Day” 28 March 2014, being the last trading day before the date of
the Announcement
“Latest Practicable Date” 15 May 2014, being the latest practicable date prior to the
printing of this Prospectus for the purpose of ascertaining
certain information for inclusion therein
“Latest Time for Acceptance” 4:00 pm on 5 June 2014, or such later time or date as may be
agreed between CMU and the Company, being the latest time
for acceptance of, and payment for, the Offered Mandatory
Convertible Securities
“Latest Time for Termination” 5:00 pm on the Business Day after the Latest Time for
Acceptance or such later time or date as may be agreed
between CMU and the Company, being the latest time to
terminate the Underwriting Agreement or such other time as
may be agreed between the Company and CMU
“Listing Rules” The Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
“Mandatory Convertible
Securities”
the mandatory convertible securities to be issued by the
Company under the Open Offer with the rights and
restrictions summarised in the sub-section headed “Summary
of the Terms of the Mandatory Convertible Securities”
“Memorandum” the memorandum of association of the Company
DEFINITIONS
— 3 —
“Offered Mandatory Convertible
Securities”
the 505,400,882 units of Mandatory Convertible Securities
proposed to be offered to the Qualifying Shareholders for
subscription under the Open Offer
“Open Offer” the proposed issue by the Company of the Offered Mandatory
Convertible Securities by way of open offer to Qualifying
Shareholders on the basis of one unit of Offered Mandatory
Convertible Securities for every five existing Ordinary Shares
held by the Qualifying Shareholders as determined on the
Record Date
“Open Offer Documents” the Prospectus and the Application Forms
“Ordinary Share(s)” ordinary share(s) in the share capital of the Company
“Overseas Shareholder(s)” the Shareholder(s) whose name(s) appear(s) on the register of
members of the Company on the Record Date and whose
address(es) as shown in the register of members of the
Company on that date is(are) outside Hong Kong
“PRC” The People’s Republic of China which, for the purpose of this
circular excludes Hong Kong, the Macau Special
Administrative Region and Taiwan
“Prospectus” this prospectus issued by the Company specifying details of
the Open Offer
“QIBs” qualified institutional buyers as defined in Rule 144A under
the U.S. Securities Act
“Qualifying Shareholders” the Shareholder(s), other than the Excluded Shareholder(s),
whose name(s) appear(s) on the register of members of the
Company as at the close of business on the Record Date
“Record Date” 20 May 2014, being the record date for determining
entitlements to participate in the Open Offer
“Registrar” Computershare Hong Kong Investor Services Limited, located
at Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Wanchai, Hong Kong, the Company’s
share registrar and registrar for the Mandatory Convertible
Securities
“Regulation S” Regulation S under the U.S. Securities Act
“SFO” the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong)
“Shareholders” the holders of Ordinary Shares
DEFINITIONS
— 4 —
“Share Options” outstanding options granted under the Share Option Scheme
“Share Option Scheme” collectively, the new share option scheme adopted at the
extraordinary general meeting of the Company held on 9
December 2011 and the share option scheme adopted at the
extraordinary general meeting of the Company held on 20
December 2001 and terminated on 9 December 2011
“Specified Territories” Canada and the United States
“Stock Exchange“ The Stock Exchange of Hong Kong Limited
“Subscription Price” the subscription price of HK$30.26 for each unit of Offered
Mandatory Convertible Securities
“subsidiary(ies)” has the meaning ascribed to this term in the Listing Rules
“U.S.” or “United States” the United States of America, its territories and possessions,
any State of the United States, and the District of Columbia
“U.S. Securities Act” the United States Securities Act of 1933
“Undertaking” the deed of undertaking dated 31 March 2014 provided by
CMG to the Company in connection with the Open Offer
“Underwriter” CMU
“Underwriting Agreement” the underwriting agreement dated 31 March 2014 entered into
between the Company and CMU in relation to the Open Offer
DEFINITIONS
— 5 —
The expected timetable for the Open Offer is set out below:
2014
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 20 May
Despatch of Open Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 21 May
Register of members to be re-opened . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 26 May
Latest time for acceptance of and payment forthe Offered Mandatory Convertible Securities . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 5 June
Latest time for termination of Underwriting Agreement . . . . . . . . . . . . 5:00 p.m. on Friday, 6 June
Announcement of allotment results of the Open Offer . . . . . . . . . . . . . . . . . . . . Thursday, 12 June
Refund cheques in respect of wholly orpartially unsuccessful applications for excessOffered Mandatory Convertible Securitiesexpected to be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 13 June
Certificates for Offered Mandatory Convertible Securities expectedto be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 13 June
All dates and times referred to in this Prospectus are Hong Kong local dates and times.Dates or deadlines specified in this Prospectus for events in the timetable for (or otherwise inrelation to) the Open Offer are indicative only and may be extended or varied by the Company.Further announcement(s) will be made in the event that there is any change to the expectedtimetable for the Open Offer.
EFFECT OF BAD WEATHER ON THE LATEST TIME FOR APPLICATION ANDPAYMENT FOR THE OFFERED MANDATORY CONVERTIBLE SECURITIES
If there is a tropical cyclone warning signal no. 8 or above, or a ‘‘black’’ rainstorm warning:
i. before 12:00 noon (Hong Kong time) but no longer in force after 12:00 noon (Hong Kongtime) on the latest date for acceptance of and payment for the Offered MandatoryConvertible Securities in Hong Kong, the Latest Time for Acceptance will be extended to5:00 p.m. (Hong Kong time) on the same day; or
ii. between 12:00 noon and 4:00 p.m. (Hong Kong time) on the latest date for acceptance ofand payment for the Offered Mandatory Convertible Securities in Hong Kong, the LatestTime for Acceptance will be postponed to 4:00 p.m. (Hong Kong time) on the followingBusiness Day which does not have either of those warnings in force at any time between9:00 a.m. and 4:00 p.m.
If the Latest Time for Acceptance does not take place on 5 June 2014, the dates mentioned in thissection above may be affected. The Company will notify the Shareholders by way of announcementson any change to the expected timetable as soon as practicable.
EXPECTED TIMETABLE
— 6 —
A1B18(1)
You should carefully consider all the information in this Prospectus, including the risks anduncertainties described below, before making an investment decision with respect to the MandatoryConvertible Securities.
RISKS RELATED TO THE MANDATORY CONVERTIBLE SECURITIES
Holders of the Mandatory Convertible Securities may not receive the scheduled Distributionsat the Distribution Payment Date or at all.
Holders of the Mandatory Convertible Securities are entitled to fixed coupon payablesemi-annually in accordance with the rates set out in the sub-section headed “Summary of thePrincipal Terms of the Mandatory Convertible Securities - Distributions” in the Letter from the Board.Under the terms and conditions of the Mandatory Convertible Securities, the Company may at its solediscretion elect to defer or cancel any scheduled Distributions. Deferral of a scheduled Distributionmeans that the Company will postpone payment of scheduled Distributions to a date which is later thana Distribution Payment Date, and for the avoidance of doubt, such deferred Distributions shall not bearinterest. If the Company decides to cancel any scheduled Distributions, any Distributions so cancelledare non-cumulative. Therefore, holders of the Mandatory Convertible Securities may not receive anyscheduled Distributions.
The Mandatory Convertible Securities will be mandatorily converted into the Ordinary Shareson the third anniversary following the Issue Date.
Any Mandatory Convertible Securities not converted before 20 trading days prior to themandatory conversion date, being the third anniversary following the Issue Date (the “MandatoryConversion Date”), shall be mandatorily converted into new Ordinary Shares at the Conversion Priceon the Mandatory Conversion Date. The initial Conversion Price is HK$30.26 per Ordinary Share,same as the Subscription Price and represents a premium of 18% to the average closing price perOrdinary Share for the last 5 full trading days up to and including the Last Trading Day. There canbe no assurance that the then prevailing trading price of the Ordinary Shares on the MandatoryConversion Date will be at or higher than the initial Conversion Price. If the then prevailing tradingprice of the Ordinary Shares falls below the Conversion Price when the Mandatory ConvertibleSecurities are mandatorily converted into the Ordinary Shares, holders of the Mandatory ConvertibleSecurities may incur a financial loss.
There is no open market for Mandatory Convertible Securities.
The Mandatory Convertible Securities may be assigned or transferred by their holders withoutrestriction but will not be listed on the Stock Exchange or any other stock exchanges. In order tofacilitate the trading of the Mandatory Convertible Securities, during the period from the Issue Dateto the Mandatory Conversion Date, the Company has arranged for a provider to stand in the marketto provide matching service for the Mandatory Convertible Securities. Further details of this matchingservice are set out in the sub-section headed “Transfer and Conversion of Mandatory ConvertibleSecurities - Matching Service for the Mandatory Convertible Securities” in the Letter from the Board.Such matching service is provided to ensure that holders of the Mandatory Convertible Securities havea platform to resell their Mandatory Convertible Securities. However, there is no assurance that anactive market will develop. If an active market for the Mandatory Convertible Securities does notdevelop, the Mandatory Convertible Securities could trade at a price lower than the Subscription Price,and holders of the Mandatory Convertible Securities may not be able to resell their MandatoryConvertible Securities for an extended period of time, or at all.
RISK FACTORS
— 7 —
TERMINATION OF THE UNDERWRITING AGREEMENT
The Underwriting Agreement contains customary rights of termination. If at any time prior to theLatest Time for Termination certain events have occurred, including (but not limited to):
(i) any matter or circumstance arises as a result of which any of the conditions set out in thesection headed “Conditions of the Underwriting Agreement” below has become incapableof satisfaction as at the required time;
(ii) any breach of any of the representations, warranties or undertakings given by the Companypursuant to the Underwriting Agreement comes to the knowledge of CMU, or there has beena breach on the part of the Company of any other provision of the Underwriting Agreement,or CMU has cause to believe that any such breach has occurred and such breach has notbeen cured to the satisfaction of the Underwriter;
(iii) any event occurs or matter arises or is discovered, which, if it had occurred before the dateof the Underwriting Agreement or before any of the dates or before any time on which therepresentations, warranties and undertakings are deemed to be given by the Company underthe Underwriting Agreement would have rendered any of those representations, warrantiesor undertakings untrue, inaccurate, incomplete or misleading in any material respect, comesto the knowledge of CMU;
(iv) any statement contained in the Prospectus has become or been discovered to be untrue,inaccurate, incomplete or misleading in any material respect;
(v) any matter arises or is discovered which would, if the Prospectus was to be issued at thetime, constitute a material omission therefrom;
(vi) the Company’s application to the Main Board of the Stock Exchange for permission for thelisting of the Conversion Shares on the Stock Exchange is withdrawn by the Companyand/or refused by the Stock Exchange;
(vii) there has occurred, happened, come into effect or become public knowledge any event,series of events or circumstances concerning or relating to (whether or not foreseeable)changes in certain financial, political, economic, legal, tax and market conditions or anyevent of force majeure in certain jurisdictions as set out in the Underwriting Agreement,which, in the sole opinion of CMU:
(A) is or will be, or is likely to be, materially adverse to the general affairs, management,business, financial trading or other condition or prospects of the Group;
(B) has or will have or is likely to have a material adverse impact on the success of theOpen Offer; or
(C) makes it impracticable, inadvisable or inexpedient to proceed with the Open Offer onthe terms and in the manner contemplated in the Announcement and the Open OfferDocuments,
then in any such case CMU may by notice in writing to the Company, served prior to the Latest Timefor Termination, rescind or terminate the Underwriting Agreement.
TERMINATION OF THE UNDERWRITING AGREEMENT
— 8 —
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 00144)
Executive Directors:Mr. LI Jianhong (Chairman)
Mr. LI Yinquan
Mr. HU Zheng
Mr. MENG Xi
Mr. SU Xingang
Mr. YU Liming
Mr. HU Jianhua (Managing Director)
Mr. WANG Hong
Mr. ZHENG Shaoping
Independent non-executive Directors:Mr. KUT Ying Hay
Mr. LEE Yip Wah Peter
Mr. LI Kwok Heem John
Mr. LI Ka Fai David
Mr. BONG Shu Ying Francis
Registered Office:38th Floor
China Merchants Tower
Shun Tak Centre
168-200 Connaught Road Central
Hong Kong
21 May 2014
To the Qualifying Shareholders and,
for information only, the Excluded Shareholders
Dear Sir or Madam,
OPEN OFFER OF UNLISTED MANDATORY CONVERTIBLE SECURITIES
ON THE BASIS OF ONE UNIT OF UNLISTED
MANDATORY CONVERTIBLE SECURITIES FOR EVERY FIVE (5)
ORDINARY SHARES HELD ON THE RECORD DATE
INTRODUCTION
Reference is made to the Announcement in relation to the Open Offer of the Offered Mandatory
Convertible Securities at the Subscription Price of HK$30.26 per unit of Offered Mandatory
Convertible Securities, on the basis of one unit of Offered Mandatory Convertible Securities for every
five Ordinary Shares held by the Qualifying Shareholders as determined on the Record Date.
The purpose of this Prospectus is to provide you with further details of the Open Offer, including
(i) the procedures for application of and payment for, and transfer and conversion of, the Offered
Mandatory Convertible Securities; (ii) certain financial information of the Group; and (iii) general
information of the Group.
LETTER FROM THE BOARD
— 9 —
2.14A1B36
PROPOSED OPEN OFFER
Issue Statistics
Basis of the Open Offer: One unit of Offered Mandatory Convertible Securities for
every five Ordinary Shares held by Qualifying Shareholders
on the Record Date
Subscription Price for the Offered
Mandatory Convertible
Securities:
HK$30.26 per unit of Offered Mandatory Convertible
Securities
Number of Ordinary Shares in
issue on the Record Date:
2,527,004,412 Ordinary Shares
Offered Mandatory Convertible
Securities proposed to be
issued:
505,400,882 units of Offered Mandatory Convertible
Securities
Offered Mandatory Convertible
Securities CMG and its
associates (including CMU)
have undertaken to take up in
respect of its Assured
Entitlement:
278,448,414 units of Offered Mandatory Convertible
Securities
Offered Mandatory Convertible
Securities underwritten by
CMU:
All the Offered Mandatory Convertible Securities other than
those which have been undertaken to be subscribed by CMG
and its associates (including CMU), being 226,952,468 units
of Offered Mandatory Convertible Securities
Under the Open Offer, the Offered Mandatory Convertible Securities (if converted into
Conversion Shares) represent approximately 20% of the share capital immediately after completion of
Open Offer.
No part of the share capital or any other securities of the Company is listed or dealt in any other
stock exchange other than the Stock Exchange and no application is being made or is currently
proposed or sought for the Ordinary Shares or any other securities of the Company to be listed or dealt
in any other stock exchange.
LETTER FROM THE BOARD
— 10 —
A1B10A1B22(1)
A1B6
Summary of the Principal Terms of the Mandatory Convertible Securities
A summary of the principal terms and conditions of the Mandatory Convertible Securities is set
out below.
Subscription Price: HK$30.26 per unit of Mandatory Convertible Securities
Issue Date 13 June 2014
Ranking: The obligations of the Company under the Mandatory
Convertible Securities constitute direct, unsecured and
subordinated obligations. In the event of the winding-up of
the Company, the rights and claims of the holders of the
Mandatory Convertible Securities (the “Holders” and each a
“Holder”) shall be subordinated in right of payment to the
claims of all other present and future senior and subordinated
creditors of the Company, other than Parity Securities and
shall rank senior in right of payment to the Junior Securities.
“Parity Securities” refer to any instrument or security
(including without limitation any preference share) issued,
entered into or guaranteed by the Company which ranks or is
expressed to rank, by its terms or by operation of law, pari
passu with the Mandatory Convertible Securities.
“Junior Securities” refer to Ordinary Shares or any other
securities ranking pari passu therewith and in respect of
which all payments of dividends and other distributions are
discretionary.
Distributions: Fixed coupon payable semi-annually (each a “Distribution”)
in accordance with the following rates and subject to
applicable laws and regulations provided that, in the event of
an Optional Conversion (as defined below) before a
Distribution Payment Date, the relevant Holder shall not be
entitled to any accrued Distribution before the date of the
Optional Conversion and any Distribution to be paid after the
Conversion Date:
Year 1: 8.00% per annum;
Year 2: 6.00% per annum; and
Year 3: 4.00% per annum,
(each a “Distribution Payment Date”).
LETTER FROM THE BOARD
— 11 —
A1B18(2)
Deferral of Distributions(Note):
The Company may at its sole discretion elect to defer or
cancel any scheduled Distributions by giving notice to the
Holders not more than 60 and not less than 30 Business Days
prior to each relevant Distribution Payment Date. For the
avoidance of doubt, any such deferred Distributions shall not
bear interest and if the Company decides to cancel any
scheduled Distributions, any Distributions so cancelled are
non-cumulative.
Optional Conversion: The Holders shall have the right to convert any of their
Mandatory Convertible Securities into new Ordinary Shares
at any time during the period from (but excluding) the Issue
Date to (and including) the day falling 20 trading days prior
to the Mandatory Conversion Date (the “ConversionPeriod”), subject to the minimum conversion requirement set
out below.
Mandatory Conversion: Any Mandatory Convertible Securities not converted before
20 trading days prior to the Mandatory Conversion Date,
being the third anniversary following the date of issuance of
the Mandatory Convertible Securities, shall be mandatorily
converted on the Mandatory Conversion Date into new
Ordinary Shares at the Conversion Price.
Accelerated MandatoryConversion:
If the Company declares, makes or pays any dividends,
distributions or other payments to the holders of any Junior
Securities or undertake any redemption, reduction,
cancellation, buy-back or acquisition of, any Junior Securities
or Parity Securities (except on a pro rata basis) during the
period when any scheduled Distribution has been deferred or
cancelled, the Company shall notify the Holders and shall
convert all of the outstanding Mandatory Convertible
Securities into new Ordinary Shares at the Conversion Price
and the Company shall pay a cash amount equal to the sum of
the Make-whole Amount and any unpaid Distributions that are
due prior to the conversion date (“Accelerated ConversionDate”).
The Make-whole Amount shall represent the net present value
(NPV) of all Distributions to be made after the Accelerated
Conversion Date calculated pursuant to the following
formula:
M = A x (c/t)
where:
“M” = the Make-whole Amount;
LETTER FROM THE BOARD
— 12 —
“A” = NPV of total Distributions under the Mandatory
Convertible Securities discounted at the 3-year HKD swap
mid-rate on pricing date plus 200 basis points;
“c” = the number of days from and including the Accelerated
Conversion Date to but excluding the Mandatory Conversion
Date; and
“t” = the number of days from and including the Issue Date to
but excluding the Mandatory Conversion Date.
Conversion Price: HK$30.26 per Ordinary Share, same as the Subscription Price
(subject to adjustments in certain customary circumstances
and certain other market standard dilutive events as set out in
Appendix III headed “Adjustments to the Conversion Price”
in this Prospectus).
Minimum conversionrequirement:
The minimum amount of Mandatory Convertible Securities
which a Holder may convert into Ordinary Shares (the
“Minimum Conversion Multiple”) is such Hong Kong dollar
amount where conversion would result in 2,000 Ordinary
Shares, being 2,000 units representing an aggregate amount of
HK$60,520 based on the initial Conversion Price of
HK$30.26. A Holder may convert a larger amount of
Mandatory Convertible Securities in integral multiples of the
Minimum Conversion Multiple or otherwise all the
Mandatory Convertible Securities held by the Holder. A
Holder holding less than the Minimum Conversion Multiple
may convert his Mandatory Convertible Securities into
Ordinary Shares provided that all the Mandatory Convertible
Securities held by the Holder are converted.
Voting: The Mandatory Convertible Securities do not carry any voting
rights.
Lock-up: No additional equity raising will be conducted by the
Company from the date of the Announcement to 90 days after
the Open Offer closes, except for any new Ordinary Shares to
be issued (i) to the Company’s Ordinary Shareholders
pursuant to its scrip dividend scheme or (ii) as a result of the
exercise of any of the Share Options.
Transferability: The Mandatory Convertible Securities may be assigned or
transferred by the Holders without restriction.
LETTER FROM THE BOARD
— 13 —
Note: Notwithstanding that under the terms and conditions of the Mandatory Convertible Securities the Company has the
discretion to defer or cancel any scheduled Distributions, the Company has no present intention to exercise such
discretion and the Company will consider, among other things, the then financial and operating conditions of the
Company if and when it decides whether to exercise its discretion to defer or cancel any scheduled Distributions.
Furthermore, based on the current financial and operating conditions of the Company, the Company does not have any
current intention to exercise such discretion. The Company expects that such discretion will only be exercised in
extreme circumstances, including when the Company expects it does not have sufficient cashflow to pay the
Distributions whilst maintaining target gearing level and credit ratings.
Conditions of the Open Offer
Under the Listing Rules, the Open Offer is not subject to the approval of the Ordinary
Shareholders. However, the Open Offer is conditional upon the Underwriting Agreement having
become unconditional and CMU not having terminated the Underwriting Agreement in accordance
with the terms thereof. The conditions to the Underwriting Agreement and the circumstances in which
CMU may terminate the Underwriting Agreement are set out in the sections headed “Conditions of the
Underwriting Agreement” below and “Termination of the Underwriting Agreement” above. If the
conditions to the Open Offer are not fulfilled, the Open Offer will not proceed.
Basis of Open Offer
One unit of Offered Mandatory Convertible Securities for every five Ordinary Shares held by the
Qualifying Shareholders as at the close of business on the Record Date. Acceptance for all or part of
a Qualifying Shareholder’s Assured Entitlement to the Open Offer should be made by completing the
Assured Allotment Application Form and lodging the same with a remittance for the Offered
Mandatory Convertible Securities being accepted.
Fractions of Entitlements to the Offered Mandatory Convertible Securities
Entitlements to the Offered Mandatory Convertible Securities will be rounded down to the
nearest whole unit. Fractional entitlements to the Offered Mandatory Convertible Securities will not
be allotted and will be aggregated and made available for application by the Qualifying Shareholders
who wish to apply for Offered Mandatory Convertible Securities in excess of their own entitlements.
Subscription Price
The Subscription Price is HK$30.26 per unit of Offered Mandatory Convertible Securities,
payable in full on application.
The Subscription Price was determined based on a premium of 18% to the average closing price
per Ordinary Share for the last 5 full trading days up to and including the Last Trading Day, being
HK$25.64, after arm’s length negotiations between the Company and CMU and taking into account the
market environment and the prevailing market prices of the Ordinary Shares. The Subscription Price
represents:
(i) a premium of approximately 27.14% to the average closing price of HK$23.80 per Ordinary
Share quoted on the Stock Exchange on the Latest Practicable Date;
LETTER FROM THE BOARD
— 14 —
A1B18(2)
(ii) a premium of approximately 13.55% to the closing price of HK$26.65 per Ordinary Share
quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 19.13% to the average closing price of HK$25.40 per Ordinary
Share for the last 10 full trading days up to and including the Last Trading Day;
(iv) a premium of approximately 14.75% to the average closing price of HK$26.37 per Ordinary
Share for the last 30 full trading days up to and including the Last Trading Day;
(v) a premium of approximately 11.33% to the average closing price of HK$27.18 per Ordinary
Share for the last 90 full trading days up to and including the Last Trading Day; and
(vi) a premium of approximately 13.29% to the average closing price of HK$26.71 per Ordinary
Share for the last 180 full trading days up to and including the Last Trading Day.
The Directors consider the terms of the Open Offer and the Subscription Price to be fair and
reasonable and are in the interests of the Company and the Ordinary Shareholders as a whole.
Qualifying Shareholders
To qualify for the Open Offer, a Shareholder must:
(a) be registered as a member of the Company on the Record Date; and
(b) not be an Excluded Shareholder.
In order to be registered as members of the Company at the close of business on the Record Date,
all transferees of Ordinary Shares must lodge all transfers of Ordinary Shares (together with the
relevant share certificate(s)) by 4:30 p.m. (Hong Kong time) on Thursday, 15 May 2014 with the
Company’s Registrar, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th
Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.
Based on the register of members of the Company as at the close of business on the Record Date,
there were a total of eight Overseas Shareholder(s) with registered addresses located in Canada,
Macau, the PRC, the United Kingdom and the United States holding in aggregate 0.004% of the total
number of issued Ordinary Shares of the Company as at the close of business on the Record Date. The
Directors have, in compliance with Rule 13.36(2) of the Listing Rules, conducted enquiries regarding
the feasibility of extending the Open Offer to such Overseas Shareholder(s).
After making enquiries with the Company’s overseas legal advisers regarding the legal
restrictions under the laws of the relevant jurisdictions and the requirements of the relevant regulatory
bodies or stock exchanges for the Company to offer the Mandatory Convertible Securities to such
Overseas Shareholders in accordance with Rule 13.36(2) of the Listing Rules, the Directors have been
advised by the legal advisers in the relevant jurisdictions that either (i) there is no legal restriction
under the applicable legislation of the relevant jurisdictions or requirement of any relevant regulatory
body or stock exchange with respect to extending the Open Offer to the Overseas Shareholders with
LETTER FROM THE BOARD
— 15 —
A1B18(2)
registered addresses in Macau, the PRC and the United Kingdom or (ii) the Company would be exempt
from obtaining approval from, and/or registration of the Open Offer Documents with, the relevant
regulatory authorities under the applicable laws and regulations of these jurisdictions. Accordingly,
the Open Offer will be extended to the Overseas Shareholders with registered addresses in Macau, the
PRC and the United Kingdom.
Excluded Shareholders
Excluded Shareholders are Overseas Shareholders and Shareholders or Beneficial Shareholders
who are otherwise known by the Company to be residents in places outside Hong Kong, and in respect
of whom the Directors, based on enquiries made by the Directors, consider it necessary or expedient
not to extend the Open Offer to such Shareholders or Beneficial Owners on account either of the legal
and/or regulatory restrictions under the laws of the relevant jurisdictions in which such Shareholders
or Beneficial Shareholders (as the case may be) are located or the requirements of the relevant
regulatory body or stock exchange in those relevant jurisdictions. The Open Offer has not been, and
will not be, extended to the Excluded Shareholders.
In accordance with Rule 13.36(2)(a) of the Listing Rules, the Board has made enquiries with the
Company’s overseas legal advisers regarding the legal restrictions under the applicable securities
legislation of the relevant jurisdictions including the Specified Territories and the requirements of the
relevant regulatory bodies or stock exchanges with respect to the offer of the Mandatory Convertible
Securities to the Shareholders in those territories. Based on the legal advice of the Company’s legal
advisers in relation to the laws of the Specified Territories, the extension of the Open Offer to the
Overseas Shareholders with registered addresses in the Specified Territories would, or might, in the
absence of compliance with relevant registration and/or filings and/or other special formalities in the
Specified Territories, be unlawful or impracticable, and the compliance with the registration and other
special formalities in the Specified Territories could be both costly, time-consuming or impracticable,
and therefore inexpedient to do so. Having considered the circumstances, likely costs, time involved
and impracticability if overseas compliance was to be observed in the Specified Territories, the
Directors are of the view that the costs and/or time involved and/or impracticability of overseas
compliance would outweigh the benefits which the Company and its Shareholders as a whole would
receive by including the Overseas Shareholders in the Specified Territories in the Open Offer and have
therefore decided not to extend the Open Offer to the Overseas Shareholders with registered addresses
in the Specified Territories. The attention of Shareholders with registered addresses in the United
States or holding Ordinary Shares on behalf of persons with such addresses is drawn to the section
headed “Limited category of persons in the United States who may be able to participate in the Open
Offer” below.
Accordingly, for the purposes of the Open Offer, the Excluded Shareholders are:
(a) Shareholders whose name(s) appeared in the register of members of the Company at the
close of business on the Record Date and whose address(es) as shown on such register is/are
in any of the Specified Territories, except those Shareholders with addresses in the United
States who fulfil the relevant requirements to the satisfaction of the Company; and
LETTER FROM THE BOARD
— 16 —
(b) any Shareholder(s) or Beneficial Shareholder(s) at that time who is/are otherwise known by
the Company to be residents in any of the Specified Territories, except for those
Shareholders or Beneficial Shareholders resident in the United States who fulfil the
relevant requirements to the satisfaction of the Company.
Notwithstanding any other provision in this Prospectus or the Assured Allotment Application
Form or the Excess Application Form, the Company reserves the right to permit any Shareholder to
take up his/her/its entitlement to Offered Mandatory Convertible Securities if the Company, in its
absolute discretion, is satisfied that the transaction in question is exempt from or not subject to the
legislation or regulations or requirements giving rise to the restrictions in question.
In any event, it is the responsibility of any person (including but without limitation to custodian,
nominee, agent and trustee) receiving the Open Offer Documents outside Hong Kong and wishing to
take up the Offered Mandatory Convertible Securities under the Open Offer to satisfy
himself/herself/itself as to the full observance of the laws of the relevant territory or jurisdiction,
including obtaining any governmental or other consents or observing any other formalities which may
be required in such territory or jurisdiction, and to pay any taxes, duties and other amounts required
to be paid in such territory or jurisdiction in connection with taking up any Offered Mandatory
Convertible Securities.
Each subscriber (including but without limitation to custodian, nominee, agent and trustee) of
Offered Mandatory Convertible Securities being offered and sold outside the U.S. will be deemed (by
accepting delivery of this Prospectus) to have given each of the following representations and
warranties to the Company and to any person acting on their behalf, unless in its sole discretion the
Company waives such requirement:
• He/she/it was a Shareholder as at the Record Date;
• He/she/it may lawfully be offered, take up, obtain, subscribe for and receive the Offered
Mandatory Convertible Securities in the jurisdiction in which he/she/it resides or is
currently located;
• Subject to certain exceptions, he/she/it is not resident or located in, or a citizen of, the
United States;
• Subject to certain exceptions, he/she/it is not accepting an offer to acquire or take up the
Offered Mandatory Convertible Securities on a non-discretionary basis for a person who is
resident or located in, or a citizen of the United States at the time the instruction to accept
was given;
LETTER FROM THE BOARD
— 17 —
• He/she/it is not taking up for the account of any person who is located in the United States,
unless:
(i) the instruction to take up was received from a person outside the United States; and
(ii) the person giving such instruction has confirmed that (x) it has the authority to give
such instruction, and (y) either (A) has investment discretion over such account or (B)
is an investment manager or investment company that it is acquiring the Offered
Mandatory Convertible Securities in an “offshore transaction” within the meaning of
Regulation S;
• He/she/it is acquiring the Offered Mandatory Convertible Securities in an “offshore
transaction” as defined in Regulation S;
• He/she/it has not been offered the Offered Mandatory Convertible Securities by means of
any “directed selling efforts” as defined in Regulation S;
• He/she/it is not acquiring Offered Mandatory Convertible Securities with a view to the
offer, sale, transfer, delivery or distribution, directly or indirectly, of such Offered
Mandatory Convertible Securities or Conversion Shares into the United States; and
• He/she/it understands that neither the Offered Mandatory Convertible Securities nor the
Conversion Shares have been or will be registered under the U.S. Securities Act or with any
securities regulatory authority of any State, territory, or possession of the U.S. and the
Offered Mandatory Convertible Securities are being distributed and offered outside the U.S.
in reliance on Regulation S. Consequently he/she/it understands the Offered Mandatory
Convertible Securities and the Conversion Shares may not be offered, sold, pledged or
otherwise transferred in or into the U.S., except in reliance on an exemption from, or in
transactions not subject to, the registration requirements of the U.S. Securities Act.
For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to the
representations and warranties above.
Furthermore, any acceptance of the Offered Mandatory Convertible Securities by any person will
be deemed to constitute a representation and warranty from such person to the Company that those
local laws and requirements of the relevant territory or jurisdiction have been fully complied with. If
you are in any doubt as to your position, you should consult your professional advisers. Any Offered
Mandatory Convertible Securities which would otherwise have been comprised in the Assured
Entitlements of the Excluded Shareholders will be available for application by the Qualifying
Shareholders who wish to apply for Offered Mandatory Convertible Securities in excess of their own
Assured Entitlements.
LETTER FROM THE BOARD
— 18 —
Limited category of persons in the United States who may be able to participate in the Open
Offer
Notwithstanding what is said in the section headed “Excluded Shareholders” above, a limited
number of Shareholders and Beneficial Shareholders in the United States who the Company
reasonably believes are institutional Accredited Investors who are also QIBs may be able to subscribe
for the Offered Mandatory Convertible Securities being offered in the Open Offer in transactions
exempt from registration requirements under the U.S. Securities Act, provided they fulfil relevant
requirements to the satisfaction of the Company. In any event, the Company reserves absolute
discretion in determining whether to allow such participation as well as the identity of the persons who
may be allowed to do so.
Distribution of the Open Offer Documents
The Company will send the Open Offer Documents to the Qualifying Shareholders on
Wednesday, 21 May 2014.
Distribution of the Open Offer Documents into jurisdictions other than Hong Kong may be
restricted by law. Any person who receives the Open Offer Documents (including, without limitation,
any agent, custodian, nominee and trustee) should be aware of and comply with the applicable
restriction in the relevant jurisdiction(s). Failure to comply with any applicable restrictions may
constitute a violation of the securities laws of the relevant jurisdiction. Any Shareholder or Beneficial
Shareholder who is in doubt as to his/her/its position should consult an appropriate professional
adviser without delay. In particular, subject to certain exceptions as determined by the Company, this
Prospectus should not be distributed, forwarded to or transmitted in, into or from any of the Specified
Territories together with the Assured Allotment Application Form or the Excess Application Form.
The Open Offer Documents will not be registered in any jurisdiction other than Hong Kong.
Certificates for the Offered Mandatory Convertible Securities
Subject to the fulfilment of the conditions of the Open Offer, certificates for fully-paid Offered
Mandatory Convertible Securities are expected to be posted to successful applicants at their own risk
on or before 13 June 2014. The principal amount of the certificates for Offered Mandatory Convertible
Securities will be in Hong Kong dollar amount determined based on the Subscription Price of
HK$30.26 per unit of Offered Mandatory Convertible Securities. Refund cheques in respect of wholly
or partially unsuccessful applications for Offered Mandatory Convertible Securities in excess of
Assured Entitlements are also expected to be posted on or before 13 June 2014 by ordinary post to the
applicants at their own risk.
LETTER FROM THE BOARD
— 19 —
Application for Listing
No application will be made for the listing of, and permission to deal in, the Offered Mandatory
Convertible Securities on the Stock Exchange or any other stock exchanges. The Company will apply
to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the
Conversion Shares issuable upon the conversion of the Offered Mandatory Convertible Securities.
Dealings in the Conversion Shares on the Stock Exchange will be subject to the payment of the
applicable stamp duty, the Stock Exchange trading fee, the transaction levy payable to the Securities
and Futures Commission, or any other applicable fees and charges in Hong Kong.
Outstanding Share Options
As at the Latest Practicable Date, the Company has outstanding Share Options which upon
exercise in full would require the Company to issue and allot an aggregate of 22,147,000 new Ordinary
Shares.
In accordance with the terms of the Share Option Scheme, the number of Ordinary Shares
comprised in each Share Option and/or the option price may be adjusted in such manner as the Board
may deem appropriate as a result of the Open Offer. If the Board decides to make any adjustment, it
will, in accordance with the terms of the Share Option Scheme, engage the auditor of the Company
or an independent financial adviser to confirm whether in their opinion the adjustments proposed are
fair and reasonable. The Company will make a further announcement about the adjustments in due
course.
Save as aforesaid, the Company has no other outstanding convertible securities, options or
warrants in issue which confer any right to subscribe for, convert or exchange into Ordinary Shares
as at the Latest Practicable Date.
UNDERWRITING ARRANGEMENTS
Undertaking to Subscribe for Assured Entitlement
As at the Latest Practicable Date, CMG and its associates (including CMU) are, in aggregate,
interested in 1,392,242,072 Ordinary Shares, representing approximately 55.1% of the total number of
Ordinary Shares of the Company in issue. CMG and its associates (including CMU) will receive their
pro rata entitlement to the Offered Mandatory Convertible Securities in respect of the Ordinary Shares
in which they are interested. Pursuant to the Undertaking, CMG has irrevocably undertaken to the
Company that it will procure its associates (other than CMU) to subscribe, in full their Assured
Entitlement under the Open Offer, and lodge acceptance for such Offered Mandatory Convertible
Securities that will constitute their entitlement. In addition, CMU has also irrevocably undertaken to
the Company in the Underwriting Agreement that (i) it will subscribe in full its Assured Entitlement
under the Open Offer and lodge acceptance for its Assured Entitlement of Offered Mandatory
Convertible Securities; and (ii) it will not sell, contract to sell, or otherwise transfer or dispose of
either directly or indirectly, conditionally or unconditionally, any of such Offered Mandatory
Convertible Securities subscribed under the Open Offer during the period from (and including) the
Issue Date to (and including) the Mandatory Conversion Date.
LETTER FROM THE BOARD
— 20 —
A1B9(1)
A1B18(3)
Underwriting Agreement
As at the Latest Practicable Date, CMU, an associate of CMG in which CMG holds 50% interest,
is interested in 572,652,008 Ordinary Shares, representing approximately 22.7% of the total number
of Ordinary Shares in issue. Pursuant to the Underwriting Agreement, CMU has agreed (i) to
underwrite the Offered Mandatory Convertible Securities other than those which have been undertaken
to be subscribed by CMG and its associates; and (ii) not to sell, contract to sell, or otherwise transfer
or dispose of either directly or indirectly, conditionally or unconditionally, any of such underwritten
Offered Mandatory Convertible Securities during the period from (and including) the Issue Date to
(and including) the Mandatory Conversion Date. The Directors are of the view that the Underwriting
Agreement has been entered into on normal commercial terms and the principal terms of the
Underwriting Agreement are set out below:
Date: 31 March 2014
Underwriter: China Merchants Union (BVI) Limited
CMU is principally engaged in investment holding and its
ordinary course of business does not include the underwriting
of securities.
Total number of Offered
Mandatory Convertible
Securities underwritten (Note):
All the Offered Mandatory Convertible Securities other than
those which have been undertaken to be subscribed by CMG
and its associates (including CMU), being 226,952,468 units
of Offered Mandatory Convertible Securities
Commission payable to the
Underwriter:
Nil
Note: These figures excludes the entitlement to 114,530,402 units of Offered Mandatory Convertible Securities in respect of
the beneficial holding of CMU in the Ordinary Shares, which CMU has undertaken to subscribe for in full pursuant to
the Underwriting Agreement, and the entitlement to 163,918,012 units of Offered Mandatory Convertible Securities in
respect of the beneficial holding of CMG and its associates (other than CMU) in the Ordinary Shares, which CMG has
undertaken to procure its associates (other than CMU) to subscribe, pursuant to the Undertaking.
Conditions of the Underwriting Agreement
The obligations of CMU under the Underwriting Agreement are conditional upon, amongst other
things:
(i) the Listing Committee of the Stock Exchange granting listing of, and permission to deal in,
the Conversion Shares either unconditionally or subject to such conditions which the
Company accepts and the satisfaction of such conditions (if any and where relevant) by no
later than three business days after the Record Date, and such approval not having been
withdrawn or revoked on or prior to the Latest Time for Termination;
LETTER FROM THE BOARD
— 21 —
7.24(3)
(ii) the Stock Exchange issuing a certificate authorising registration of the Prospectus with the
Hong Kong Companies Registry in accordance with section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance not later than the Record Date (or
such later time and/or date as the Company and CMU may agree in writing) and, following
registration of the Prospectus as referred to in paragraph (iii) below, a copy of the
Prospectus having been published on the HKExnews website not later than the second
Business Day following the Record Date (or such later time and/or date as the Company and
CMU may agree in writing);
(iii) a duly certified copy of the Prospectus (and other required documents) having been lodged
with the Hong Kong Companies Registry not later than the Record Date, and the Hong
Kong Companies Registry issuing a confirmation of registration letter not later than the
Record Date;
(iv) none of the Company’s representations, warranties or undertakings contained in the
Underwriting Agreement being breached, untrue, inaccurate or misleading in any material
respect; and
(v) compliance by the Company with its obligations under the Underwriting Agreement.
The Company shall use its best endeavours to procure the fulfilment of each of the conditions
set out above. In particular, the Company shall furnish such information, supply such documents, pay
such fees, give such undertakings and do all such acts and things as may reasonably be required by
CMU and the Stock Exchange in connection with the matters contemplated in the Underwriting
Agreement.
CMU may at any time in writing waive any of the conditions set out in paragraphs (iv) and (v)
above or extend the time or date for fulfilment of any of the above conditions (in which case a
reference in the Underwriting Agreement to the time or date for the satisfaction of such condition shall
be to its fulfilment by the time or date as so extended) and such waiver or extension may be made
subject to such terms and conditions as determined by CMU.
If any of the conditions set out above (which has not previously been waived by CMU if capable
of being waived under the Underwriting Agreement) is not fulfilled, or becomes incapable of
fulfilment, at or before the time and date specified therein or, in the absence of such specification, the
Latest Time for Termination (or, in any such case, such later date or dates as CMU may agree with
the Company in writing), the Underwriting Agreement (save in respect of certain rights and
obligations under the Underwriting Agreement) shall terminate and no party will have any claim
against any other for costs, damages, compensation or otherwise, provided that such termination shall
be without prejudice to the rights of the parties in respect of any breach of the Underwriting
Agreement occurring prior to such termination.
LETTER FROM THE BOARD
— 22 —
CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM
THE OPEN OFFER
The shareholding structure of the Company as at the Latest Practicable Date and immediately
after completion of the Open Offer is set out below:
As the Latest Practicable Date andbefore completion of the Open Offer
No. of
Ordinary Shares %
No. of units
of Mandatory
Convertible
Securities
CMG and its associates
(excluding CMU) 819,590,064 32.4 —
CMU 572,652,008 22.7 —
CMG and its associates 1,392,242,072 55.1 —
Public 1,134,762,340 44.9 —
Total 2,527,004,412 100.0 —
Immediately after completion of Open Offer,
assuming all the Offered Mandatory Convertible
Securities are taken up by Qualifying
Shareholders
Immediately after completion of Open Offer,
assuming all the Offered Mandatory Convertible
Securities are taken up by Qualifying
Shareholders and the Offered Mandatory
Convertible Securities are converted in full (note)
No. of
Ordinary Shares %
No. of units
of Mandatory
Convertible
Securities
No. of
Ordinary Shares %
No. of units
of Mandatory
Convertible
Securities
CMG and its
associates
(excluding
CMU) 819,590,064 32.4 163,918,012 983,508,076 32.4 —
CMU 572,652,008 22.7 114,530,402 687,182,410 22.7 —
CMG and its
associates 1,392,242,072 55.1 278,448,414 1,670,690,486 55.1 —
Public 1,134,762,340 44.9 226,952,468 1,361,714,808 44.9 —
Total 2,527,004,412 100.0 505,400,882 3,032,405,294 100.0 —
LETTER FROM THE BOARD
— 23 —
Immediately after completion of Open Offer,
assuming none of the Offered Mandatory
Convertible Securities are taken up by Qualifying
Shareholders (except CMG and its associates)
Immediately after completion of Open Offer,
assuming none of the Offered Mandatory
Convertible Securities are taken up by Qualifying
Shareholders (except CMG and its associates) and
the Offered Mandatory Convertible Securities are
converted in full (note)
No. of
Ordinary Shares %
No. of units
of Mandatory
Convertible
Securities
No. of
Ordinary Shares %
No. of units
of Mandatory
Convertible
Securities
CMG and its
associates
(excluding
CMU) 819,590,064 32.4 163,918,012 983,508,076 32.4 —
CMU 572,652,008 22.7 341,482,870 914,134,878 30.2 —
CMG and its
associates 1,392,242,072 55.1 505,400,882 1,897,642,954 62.6 —
Public 1,134,762,340 44.9 — 1,134,762,340 37.4 —
Total 2,527,004,412 100.0 505,400,882 3,032,405,294 100.0 —
Note: The figures also assume that all Shareholders are Qualifying Shareholders.
WARNING OF THE RISKS OF DEALING IN ORDINARY SHARES
The Open Offer is conditional upon the Underwriting Agreement having become
unconditional and CMU not having terminated the Underwriting Agreement in accordance with
the terms thereof. The conditions to the Underwriting Agreement and the circumstances in which
CMU may terminate the Underwriting Agreement are set out in the paragraphs headed
“Conditions of the Open Offer” and “Conditions of the Underwriting Agreement” above and the
section headed “Termination of the Underwriting Agreement” above. If the conditions to the
Open Offer are not fulfilled, the Open Offer will not proceed.
Any persons contemplating buying or selling Ordinary Shares from the date of the
Announcement up to the date on which all the conditions of the Open Offer are fulfilled bear the
risk that the Open Offer may not become unconditional or may not proceed. Potential investors
should exercise caution when dealing in Ordinary Shares, and if they are in any doubt about their
position, they are recommended to consult their professional adviser(s).
LETTER FROM THE BOARD
— 24 —
APPLICATION FOR ASSURED ENTITLEMENT TO OFFERED MANDATORY
CONVERTIBLE SECURITIES
The Assured Allotment Application Form is enclosed with this Prospectus which entitles
Qualifying Shareholders to whom it is addressed to apply for the number of units of Offered
Mandatory Convertible Securities on an assured basis as shown therein subject to payment in full by
the Latest Time for Acceptance. Qualifying Shareholders should note that they may apply on an
assured basis for any number of Offered Mandatory Convertible Securities only up to the number set
out in the Assured Allotment Application Form.
If Qualifying Shareholders wish to apply for all of their Assured Entitlements to the Offered
Mandatory Convertible Securities as specified in the Assured Allotment Application Form or wish to
apply for any number less than their Assured Entitlement under the Open Offer, they must complete,
sign and lodge the Assured Allotment Application Form in accordance with the instructions printed
thereon, together with remittance for the full amount payable in respect of such number of Offered
Mandatory Convertible Securities they have applied for with Computershare Hong Kong Investor
Services Limited, the Registrar, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road
East, Wanchai, Hong Kong by no later than 4:00 p.m. on Thursday, 5 June 2014. All remittance(s) must
be made in Hong Kong dollars and cheques must be drawn on an account with, or banker’s cashier
orders must be issued by, a licensed bank in Hong Kong and made payable to “CHINA MERCHANTS
HOLDINGS (INTL) CO LTD — PAL” and crossed “Account Payee Only”.
It should be noted that unless the duly completed and signed Assured Allotment Application
Form, together with the appropriate remittance, have been lodged with the Registrar by no later
than 4:00 p.m. on Thursday, 5 June 2014, the Assured Entitlement under the Open Offer and all
rights in relation thereto shall be deemed to have been declined and will be cancelled.
APPLICATION FOR EXCESS OFFERED MANDATORY CONVERTIBLE SECURITIES
Qualifying Shareholders will have the right to apply for Offered Mandatory Convertible
Securities in excess of their own Assured Entitlements under the Excess Application Form, but are not
assured of being allocated any Offered Mandatory Convertible Securities in excess of those comprised
in their Assured Entitlements.
Any Offered Mandatory Convertible Securities (i) not taken up by the Qualifying Shareholders
in accordance with their proportional allocation; (ii) to which the Excluded Shareholders would
otherwise have been entitled; or (iii) created by the aggregation of fractional Offered Mandatory
Convertible Securities, will be made available for excess applications by Qualifying Shareholders.
The Directors will allocate the Offered Mandatory Convertible Securities in excess of Assured
Entitlement at their discretion, but on a fair and equitable basis, to Qualifying Shareholders who have
applied for excess Offered Mandatory Convertible Securities on a pro rata basis with reference to the
units of excess Offered Mandatory Convertible Securities applied for by the relevant Qualifying
LETTER FROM THE BOARD
— 25 —
Shareholders. For the avoidance of doubt, the allocation of the Offered Mandatory Convertible
Securities in excess of Assured Entitlement will not be based on the number of the Ordinary Shares
held by the relevant Qualifying Shareholders and no preference will be given to topping-up odd lots
to whole board lots.
The Board will regard any nominee company whose name appears on the register of members of
the Company (“Registered Nominee Company”) as a single shareholder. Beneficial owners who hold
their Ordinary Shares through a Registered Nominee Company are advised to consider whether they
would like to arrange registration of their Ordinary Shares in their own names prior to the relevant
book close period.
Application for excess Offered Mandatory Convertible Securities may be made by completing
and signing the enclosed Excess Application Form in accordance with the instructions printed thereon
and lodging it, together with a separate remittance for the full amount payable on application in
respect of the excess Offered Mandatory Convertible Securities applied for, with Computershare Hong
Kong Investor Services Limited, the Registrar, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Wanchai, Hong Kong no later than 4:00 p.m. on Thursday, 5 June 2014. All
remittances must be made in Hong Kong dollars and cheques must be drawn on an account with, and
banker’s cashier orders must be issued by, a licensed bank in Hong Kong and made payable to
“CHINA MERCHANTS HOLDINGS (INTL) CO LTD — EAF” and crossed “Account Payee Only”.
All cheques or banker’s cashier orders will be presented for payment upon receipt and all interest
earned on such monies, if any, will be retained for the benefit of the Company. Completion and return
of the Excess Application Form together with a cheque or banker’s cashier order in payment for the
excess Offered Mandatory Convertible Securities applied for will constitute a warranty by the
applicant that the cheque or banker’s cashier order will be honoured on first presentation. If the
cheque or banker’s cashier order is dishonoured on first presentation, the application for excess
Offered Mandatory Convertible Securities is liable to be rejected.
If no excess Offered Mandatory Convertible Securities are allotted to the Qualifying
Shareholders, the amount tendered on application is expected to be returned to such Qualifying
Shareholders in full without interest by ordinary post at their own risk to their registered addresses
on or before 13 June 2014. If the number of excess Offered Mandatory Convertible Securities allotted
to the Qualifying Shareholders is less than that applied for, the surplus application money is also
expected to be returned to them by ordinary post at their own risk to their registered addresses on or
before 13 June 2014.
The Excess Application Form is for use only by the person(s) to whom it is addressed and is not
transferable. All documents, including cheques or banker’s cashier orders for amounts due, will be
sent at the risk of the persons entitled thereto to their registered addresses by the Registrar.
LETTER FROM THE BOARD
— 26 —
If the conditions of the Open Offer are not fulfilled by the Latest Time for Termination, the Open
Offer will not proceed and the monies received in respect of application for excess Offered Mandatory
Convertible Securities without interest will be returned to the applicants by means of cheques crossed
“Account Payee Only” to be despatched by post to their registered addresses and, in the case of joint
applicants, to the registered address of the applicant whose name appears first on the register of
members of the Company, at the risk of such applicants, on or before 13 June 2014.
TRANSFER AND CONVERSION OF THE MANDATORY CONVERTIBLE SECURITIES
Persons holdings the Mandatory Convertible through CCASS
The Mandatory Convertible Securities will not be listed on the Stock Exchange (or any other
stock exchange). Accordingly, the Mandatory Convertible Securities will not be accepted as eligible
securities by HKSCC for deposit, clearance or settlement in CCASS. The Mandatory Convertible
Securities received by any persons holding their Ordinary Shares through CCASS will initially be held
in the name of HKSCC Nominees Limited. HKSCC will not however provide any transfer or
conversion services in respect of any Mandatory Convertible Securities. Any person holding any
Mandatory Convertible Securities through HKSCC Nominees Limited must arrange for withdrawal of
such Mandatory Convertible Securities from CCASS and the registration of the Mandatory
Convertible Securities in his own name. Once the Mandatory Convertible Securities have been
withdrawn from CCASS and registered in the name of the Holder or his/her/its designated CCASS
Participant or Intermediary, the Holder can transfer the Mandatory Convertible Securities or convert
the Mandatory Convertible Securities into Ordinary Shares pursuant to the procedures set out below.
Procedures for transfer of the Mandatory Convertible Securities
The Registrar is appointed as the transfer agent to receive documents in respect of the splitting
and registration of transfer of the Mandatory Convertible Securities.
A transfer of the Mandatory Convertible Securities shall be effected by completing and signing
an instrument of transfer by both the transferor and transferee after stamping under the hand of their
officers duly authorised in writing or otherwise by a duly authorised person. The form of transfer can
be obtained at the office of the Registrar at 17M Floor, Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong.
The certificates for the Mandatory Convertible Securities must be delivered for registration
during normal business hours (Monday to Friday: 9:00 a.m. to 4:30 p.m.) at the office of the Registrar,
Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong,
accompanied by (i) a duly executed transfer form; (ii) in case of the execution of the transfer form on
behalf of a corporation by its officers, the authority of that person or those persons to do so; and (iii)
such other evidence (including legal opinions) as the Company may reasonably require if the transfer
form is executed by some other persons on behalf of the Holders. The Company shall, within 10
Business Days of receipt of such documents by the Registrar from the Holders, cancel the existing
certificate and issue a new certificate of the Mandatory Convertible Securities in favour of the
transferee or assignee as applicable.
LETTER FROM THE BOARD
— 27 —
A1B21(2)
Each new certificate to be issued upon a transfer of the Mandatory Convertible Securities will
be made available for personal collection by the holder entitled thereto during normal business hours
(Monday to Friday: 9:00 a.m. to 4:30 p.m.) at the office of the Registrar, Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, from the 10th Business Day onwards
following receipt of the documents specified above by the Registrar and upon production of such
identification papers as may be reasonably requested by the Company or the Registrar.
Any Holder wishing to transfer only part of his holding of Mandatory Convertible Securities
evidenced by a certificate must first split the certificate by lodging it with the Registrar. A fee will
be charged by the Registrar for the splitting of Mandatory Convertible Securities certificates,
currently being HK$2.50 per certificate using the 10 Business Days’ service. The new Mandatory
Convertible Securities certificates will be made available for personal collection by such holder
during normal business hours (Monday to Friday: 9:00 a.m. to 4:30 p.m.) at the office of the Registrar,
Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, from
the 10th Business Day onwards following receipt of the documents specified above by the Registrar
and upon production of such identification papers as may be reasonably requested by the Company or
the Registrar.
Registration of transfer of the Mandatory Convertible Securities will be effected upon (a)
payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock
Exchange) for each certificate cancelled or each new certificate issued, whichever number of
certificates cancelled/issued is higher; and (b) payment in respect of any tax, stamp or other
governmental charges which may be imposed in relation to such transfer. Both charges shall be borne
by the Holder or transferee who lodges the request with the Registrar.
Matching Service for the Mandatory Convertible Securities
In order to facilitate the trading of the Mandatory Convertible Securities, the Company has
appointed South China Securities Limited as the designated broker to arrange for the matching of the
sales and purchases of Mandatory Convertible Securities on a best-effort basis during the period from
the Issue Date of the Mandatory Convertible Securities to the Mandatory Conversion Date. Holders
or other potential purchasers of Mandatory Convertible Securities who wish to take advantage of this
facility to dispose of or purchase Mandatory Convertible Securities should contact Ms. Michelle Lee
of South China Securities Limited at 28/F, Bank of China Tower, No. 1, Garden Road, Central, Hong
Kong at (852) 2111 2222 during the trading hours in each trading day of the Stock Exchange who will
be able to provide the relevant information to the Holders or potential purchasers in connection with
such matching service (including information on how to utilise the matching service and the current
trading price (if any) of the Mandatory Convertible Securities).
Any person who wishes to use this matching platform (whether as transferor or transferee) must
open a securities trading account with South China Securities Limited. Alternatively, if Mandatory
Convertible Securities are held through a CCASS Participant, the CCASS Participant can use this
matching platform on behalf of such person (whether as transferor or transferee) so long as the CCASS
Participant maintains a Professional Investor (Type A) account with South China Securities Limited.
CCASS participants should note that they are required to withdraw the Mandatory Convertible
Securities from CCASS before they can use the matching platform provided by South China Securities
LETTER FROM THE BOARD
— 28 —
Limited. The matching service provided by South China Securities Limited operates within the trading
hours in each trading day of the Stock Exchange. All price quotes for the Mandatory Convertible
Securities are based on matching instructions from the transferor or transferee. Successful matching
of the sale and purchase of the Mandatory Convertible Securities is not guaranteed. Upon completion
of matching of the Mandatory Convertible Securities, all matched instructions will be subject to stamp
duty and the applicable fees payable to Computershare Hong Kong Investor Services Limited (the
Registrar of the Company) and South China Securities Limited. Holders and potential purchasers of
Mandatory Convertible Securities should note that successful matching of the sale and purchase of the
Mandatory Convertible Securities is not guaranteed and they are recommended to consult their
professional advisers if there are any doubt about this matching service.
Procedures for exercise of the conversion rights attached to the Mandatory ConvertibleSecurities
The Converting Securities Holder(s) may, subject to the minimum conversion requirement set out
in the paragraph headed “Summary of the Principal Terms of the Mandatory Convertible Securities”
above, on any Business Day within the Conversion Period, exercise the conversion rights attached to
such Mandatory Convertible Securities by delivering to the office of the Registrar at Shops
1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, the
Conversion Notice during normal business hours (from 9:00 a.m. to 4:30 p.m.) stating his/her/its
intention to convert together with the original certificate of the Mandatory Convertible Securities and
proof reasonably satisfactory to the Company of the authority of the person or person(s) to execute
the Conversion Notice. The form of the Conversion Notice will be placed on the reverse side of the
certificate of the Mandatory Convertible Securities. The Conversion Notice shall be irrevocable and
shall oblige the Converting Securities Holder to accept the Conversion Shares arising on such
conversion on and subject to the Articles of the Company. The Company shall be responsible for
payment of all taxes and stamp, issue and registration fees and duties (if any), and Stock Exchange
levies and charges (if any) arising on any such conversion. Any calculation by the Company of the
number of Conversion Shares falling to be issued on a conversion shall, in the absence of manifest
error, be conclusive and binding on the Converting Securities Holder.
As soon as practicable and in any event not later than 15 Business Days after the Conversion
Date, the Company shall register the Converting Securities Holder (or such other person(s) as it may
direct in the Conversion Notice) as holder(s) of the relevant number of Ordinary Shares in the
Company’s register of members. The certificate for the new Ordinary Shares will be made available
for personal collection by the holder entitled thereto during normal business hours (Monday to Friday:
9:00 a.m. to 4:30 p.m.) at the office of the Registrar, Shops 1712-1716, 17th Floor, Hopewell Centre,
183 Queen’s Road East, Wanchai, Hong Kong, from the 15th Business Day after such Convertible
Securities Holder surrenders the certificate of the Mandatory Convertible Securities and delivers the
duly executed Conversion Notice.
Any Holder wishing to convert only part of his holding of Mandatory Convertible Securities
evidenced by a certificate must first split the certificate by lodging it with the Registrar. A fee will
be charged by the Registrar for the splitting of Mandatory Convertible Securities certificates,
currently being HK$2.50 per certificate using the 10 Business Days’ service. The new Mandatory
Convertible Securities certificates will be made available for personal collection by such holder
LETTER FROM THE BOARD
— 29 —
during normal business hours (Monday to Friday: 9:00 a.m. to 4:30 p.m.) at the office of the Registrar,
Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, from
the 10th Business Day onwards following receipt of the documents specified above by the Registrar
and upon production of such identification papers as may be reasonably requested by the Company or
the Registrar.
If the number of Ordinary Shares falling to be allotted and issued upon the exercise of any
conversion rights shall exceed the number of unissued Ordinary Shares in respect of which approval
for listing has been granted by the Listing Committee, the issue, deposit and delivery of Ordinary
Shares shall, in respect only of such excess number of Ordinary Shares, be postponed to the Business
Day next following the day on which approval for listing of such Ordinary Shares has been granted.
Mandatory Conversion of the Mandatory Convertible Securities
Any Mandatory Convertible Securities not converted on the date which is 20 trading days prior
to the Mandatory Conversion Date based on the register of holders of Mandatory Convertible
Securities shall be mandatorily converted into new Ordinary Shares at the Conversion Price on the
Mandatory Conversion Date. As soon as practicable and in any event not later than 15 Business Days
after the Mandatory Conversion Date, the Company shall register such Holder as holder of the relevant
number of Ordinary Shares in the Company’s register of members and will send by post at the risk of
such Holder to its address as stands on the register of holders of Mandatory Convertible Securities a
certificate for the relevant Ordinary Shares in the name(s) of such Holder, and the original certificates
of the Mandatory Convertible Securities shall lapse. The Company shall be responsible for payment
of all taxes and stamp, issue and registration fees and duties (if any), and Stock Exchange levies and
charges (if any) arising on any such conversion.
REASONS FOR THE OPEN OFFER AND USE OF PROCEEDS
The estimated net proceeds of the Open Offer will be approximately HK$15,286 million. The
Company intends to use the net proceeds of the Open Offer for the following purposes:
(i) approximately 55% of the net proceeds (equivalent to approximately HK$8,407 million)
will be used for debt repayment, of which approximately HK$3,869 million will be used to
repay the Company’s US$500 million listed notes maturing in 2015 and approximately
HK$4,538 million will be used to partly repay its bank borrowings and loan from CMU;
(ii) approximately 40% of the net proceeds (equivalent to approximately HK$6,114 million)
will be used for the Group’s capital expenditures in 2014, including (i) the continued
construction of the overseas port projects; (ii) the ongoing maintenance and improvement
of the other existing port projects of the Group; and (iii) acquisition of property, plant and
equipment for existing ports and ports related business, including, inter alia, those in the
PRC and overseas. To the extent the Group has identified any new investment opportunities
in other new projects, the Group might also consider utilizing a portion of such proceeds
LETTER FROM THE BOARD
— 30 —
A1B11
to invest in such new projects and the Group will make an appropriate announcement in
accordance with the Listing Rules if and when such investment opportunities materialize.
As of the Latest Practicable Date, the Group does not have, and is not having any
negotiation on, any such target investment or project; and
(iii) approximately 5% of the net proceeds will be used for providing funding for general
working capital.
The Company has confirmed with its auditor that the Mandatory Convertible Securities qualify
as equity instruments in the financial statements of the Company. Whilst the Mandatory Convertible
Securities carry fixed coupons at pre-determined rates in each of the three years before the Mandatory
Conversion Date, the Company has sole discretion to defer or cancel any scheduled Distribution and
any cancelled Distributions are non-cumulative. Furthermore, the Mandatory Convertible Securities
will be mandatorily convertible into Ordinary Shares by a specified date based on the pre-determined
Conversion Price. Based on the above, the Mandatory Convertible Securities can be regarded as equity
instruments in the financial statements of the Company.
In light of the above, the Board believes that the Open Offer is in the interests of both the
Company and its Ordinary Shareholders as a whole as it provides the Company’s Qualifying
Shareholders with the opportunity to maintain their respective pro rata shareholding in the Company
and continue to participate in the long-term growth and development of the Group. Further, as the
Mandatory Convertible Securities will be qualified as equity instruments in the financial statements
of the Company and since part of the new proceeds of the Open Offer will be used for debt repayment,
this will result in a lower gearing ratio for the Company and hence lower borrowing costs in the future.
In addition, it is expected that the issuance of the Mandatory Convertible Securities will strengthen
the Group’s capital structure and credit rating.
The Board is also of the view that the structure of the Mandatory Convertible Securities allows
flexibility where the Holders can choose either to hold the Mandatory Convertible Securities which
will entitle them to semi-annual coupons, or convert to Ordinary Shares at any time during the
Conversion Period to take advantage of any increase in share price over the Subscription Price. In
addition, the Board believes that the Subscription Price, representing a premium of 18% to the average
closing price per Ordinary Share for the last 5 full trading days up to and including the Last Trading
Day, reflects the long term value of the Company. The undertaking and underwriting commitments by
CMG, the ultimate controlling shareholder of the Company, and CMU, an associate of CMG,
demonstrate that the ultimate controlling shareholder of the Company shares the same view with
respect to the value of the Company and is supportive of the Company’s fund raising exercise. The
terms of the Open Offer apply to all Shareholders and should be fair to all Shareholders.
Furthermore, the Board chose to conduct the fund raising through offering Mandatory
Convertible Securities since it was the understanding of the Company that rights issue of unlisted
convertible instruments is rather uncommon and therefore may result in practical difficulties in terms
of settlement and trading of the nil paid rights of such unlisted convertible instruments. It is also
uncommon for rights offering or share placement to be conducted at a premium to the current share
LETTER FROM THE BOARD
— 31 —
price. Unlike rights offering and share placement which typically exerts downward pressure on share
price, the Board believes that the offer of Mandatory Convertible Securities at a premium to the
closing price of the Ordinary Shares on the Last Trading Day sends a positive message to the market
and could provide upward support for the share price of the Company.
FUND RAISING EXERCISES IN THE PRIOR 12-MONTH PERIOD
The Company has not conducted any fund raising activities in the past 12 months immediately
preceding the date of Announcement of the Open Offer.
ADDITIONAL INFORMATION
Your intention is drawn to the additional information contained in the appendices to this
Prospectus.
Yours faithfully
By Order of the Board
China Merchants Holdings (International) Company LimitedLi Jianhong
Chairman
LETTER FROM THE BOARD
— 32 —
1 FINANCIAL STATEMENTS OF THE GROUP
The audited consolidated financial statements of the Group for each of the three years ended 31
December 2011, 2012 and 2013 are included in the annual reports of the Company for the years ended
31 December 2011 (pages 59 to 165), 2012 (pages 61 to 162), and 2013 (pages 75 to 188) respectively,
which are published on both the website of the Stock Exchange (www.hkexnews.hk) and the website
of the Company (http://www.cmhi.com.hk). The auditor of the Company have issued unqualified
opinions on the audited consolidated financial statements of the Group for each of the three years
ended 31 December 2011, 2012, and 2013.
2 MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, the Directors were not aware of any material adverse change
in the financial or trading position of the Group since 31 December 2013 (being the date to which the
latest published audited financial statements of the Company were made up).
3 STATEMENT OF INDEBTEDNESS
At the close of business on 31 March 2014, being the latest practicable date for this indebtedness
statement prior to the printing of this Prospectus, the Group had borrowings of approximately
HK$29,417 million, which comprised secured bank loans of approximately HK$3,453 million,
unsecured bank loans of approximately HK$4,366 million, unsecured guaranteed listed notes with
carrying amount of approximately HK$9,238 million (principal amount of approximately HK$9,308
million), unsecured non-guaranteed unlisted notes of approximately HK$1,884 million (principal
amount of approximately HK$1,891 million), unsecured loans from shareholders of the company of
approximately HK$10,182 million, and unsecured loans from a non-controlling equity holder of a
subsidiary of approximately HK$294 million.
The secured bank loans were secured by certain property, plant and equipment, land use right and
the entire shareholdings in two subsidiaries owned by the Group and the guaranteed listed notes were
secured by corporate guarantees given by the Company.
At the close of business on 31 March 2014, the other shareholder of an associate of which the
Group held as to 49% of its issued share capital provided corporate guarantees to the full amount for
certain loan facilities granted by banks to and other obligations borne by the relevant associate. A
counter indemnity in favour of the other shareholder of the associate, in the aggregate amount of
HK$241 million, is executed pursuant to which the Group undertakes to indemnify the other
shareholder 49% of the liabilities arising from the above loan facilities and other obligations. The
directors assessed the risk of default of the relevant associate as at 31 March 2014 and consider the
risk to be insignificant and it is not likely that any guaranteed amount will be claimed by the other
shareholder.
APPENDIX I FINANCIAL INFORMATION OF THE GROUP
— 33 —
A1B31(3)(a)
A1B32
A1B28(1)(2)(3)(4)
Save as aforesaid or as otherwise disclosed herein, and apart from the intra-group liabilities and
normal trade debts payable, the Group did not have outstanding at the close of business on 31 March
2014 any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other
similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages,
charges, hire purchases commitments, guarantees or other material contingent liabilities.
4 WORKING CAPITAL
Taking into account the financial resources available to the Group, including internally generated
funds, the available banking facilities, notes payable, loans from the shareholders of the Company and
a non-controlling equity holder of a subsidiary, other financial resources available to the Group and
the proceeds from the proposed Open Offer, and in the absence of unforeseen circumstances, the
Directors are of the opinion that the Group has sufficient working capital for its present requirements
for at least 12 months following the date of this Prospectus.
5 BUSINESS TREND AND PROSPECTS
The Company is the leading port investor and operator in China with international presence. At
present, the Company’s investments and operations span across China Coastal, including Hong Kong,
Shenzhen, Shanghai, Ningbo, Qingdao, Tianjin, Zhanjiang, Xiamen Bay, and Taiwan, Sri Lanka,
Nigeria, Djibouti, Togo and Vietnam.
The IMF, in its World Economic Outlook report published in January 2014 pointed out that, since
the second half of 2013, global economic activities and world trade have gradually been on an upward
trend with developed economies’ demand expanding as anticipated, whilst export rebound would be
the main driver behind improved activity of emerging economies. The report also projected the global
economy to grow 3.7% in 2014, of which growth of developed economies at 2.2%, up 0.9 percentage
point from that of 2013, and growth of emerging economies at 5.1%, or 0.4 percentage point up from
that of 2013. In addition, the report expected world trade volume (goods and service) to expand by
4.5%, reflecting a 1.8 percentage points increase from that of 2013.
Notwithstanding the macro-economic environment having somewhat improved, the international
maritime shipping companies’ operating environment is expected to remain difficult in the foreseeable
future, caused by excessive supply of shipping capacity, intensified competition within the industry,
and pressure on tariffs. The Group remains cautious to cautiously optimistic on its ports operation in
2014. The Group expects the global ports business performance for 2014 to be slightly better than that
for 2013, derived from a gradual increase in global economic and trade velocity growth. However, the
further allying of shipping companies would present the global port industry with both opportunities
and threats. The uneven deployment of port resources within individual regions along coastal China
would impact the operational behaviour of the ports at these regions. Besides, the trend towards
deploying more mega-sized vessels would necessitate the upgrading and restructuring of port
infrastructure and facilities.
To better position the operations of the Group amid the further allying of shipping companies,
the Group aims to forge deeper working relationships already existing with its strategic customers by
providing them, where possible, with comprehensive, multi-route and multi-stop, solutions by fully
leveraging on its expanding global port network, integrating ports resources and commercial
collaboration offered by such network.
APPENDIX I FINANCIAL INFORMATION OF THE GROUP
— 34 —
A1B30
A1B29
As for improvements at its homebase capabilities, the Group will strive to accelerate the
construction and upgrading of the infrastructure and operating environment at West Shenzhen,
including berth upgrading and channel widening, in anticipation of the service demand from the
mega-vessels that are increasingly deployed. With the Group’s equity control in the equity interests
in its homebase ports in West Shenzhen having been consolidated in 2013, the Group plans to continue
its effort in the unifying and integrating these West Shenzhen ports through sharing of resources
within the region to enhance asset utilization and service quality. Meanwhile, the Group will continue
to streamline the cargo collection-distribution capabilities at ports, to improve the sea-rail inter-modal
connectivity in conjunction with expanding the barge network in the Pearl River Delta, and to further
explore new operation mode. All these endeavours aim to offer optimal value to its customers, thereby
increasing the attractiveness of the homebase port to shipping liners and the related cargo sources.
To further enhance its network portfolio, the Group will continue to explore the possibilities of
deepening the cooperation with its existing projects both in China and overseas while monitoring other
potential investment opportunities with a view to enhancing its global ports network through investing
prudently, building a balanced port portfolio, and creating mutually-beneficial synergies.
APPENDIX I FINANCIAL INFORMATION OF THE GROUP
— 35 —
The unaudited pro forma financial information should be read in conjunction with Appendix I
headed “Financial Information of the Group” in this Prospectus, and the annual report of the Company
for the year ended 31 December 2013.
UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS
The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group
attributable to the equity holders of the Company (the “Unaudited Pro Forma Financial
Information”) prepared in accordance with Rule 4.29 of the Listing Rules is set out below to illustrate
the effect of the Open Offer on the consolidated net tangible assets of the Group as if the Open Offer
had taken place on 31 December 2013.
The Unaudited Pro Forma Financial Information of the Group has been prepared for illustrative
purposes only, and because of its hypothetical nature, it may not give a true picture of the financial
position of the Group had the Open Offer been completed as at 31 December 2013 or at any future
date.
The Unaudited Pro Forma Financial Information of the Group is prepared based on the published
audited consolidated statement of financial position of the Group as at 31 December 2013, as extracted
from the annual report of the Group for the year ended 31 December 2013, with adjustments described
below:
Audited
consolidated
net assets of
the Group
attributable to
the equity
holders of the
Company as at
31 December
2013
Adjustments
for goodwill,
intangible
assets and
related
deferred tax
liabilities
Unaudited
consolidated
net tangible
assets of the
Group
attributable to
the equity
holders of the
Company as at
31 December
2013
Estimated net
proceeds from
the Open Offer
Unaudited pro
forma adjusted
consolidated
net tangible
assets of the
Group
attributable to
the owners of
the Company
immediately
after the
completion of
the Open Offer
as at 31
December 2013
HK$’million HK$’million HK$’million HK$’million HK$’million
(Note 1) (Note 2) (Note 4) (Note 5)
Based on 505,400,882 units of
Offered Mandatory Convertible
Securities to be issued 48,599 (6,201) 42,398 15,286 57,684
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE GROUP
— 36 —
Audited
consolidated
net assets of
the Group
attributable to
the equity
holders of the
Company as at
31 December
2013
Adjustments
for goodwill,
intangible
assets and
related
deferred tax
liabilities
Unaudited
consolidated
net tangible
assets of the
Group
attributable to
the equity
holders of the
Company as at
31 December
2013
Estimated net
proceeds from
the Open Offer
Unaudited pro
forma adjusted
consolidated
net tangible
assets of the
Group
attributable to
the owners of
the Company
immediately
after the
completion of
the Open Offer
as at 31
December 2013
HK$’million HK$’million HK$’million HK$’million HK$’million
(Note 1) (Note 2) (Note 4) (Note 5)
HK$
Unaudited consolidated net tangible
assets of the Group attributable to
the ordinary shareholders of the
Company per Ordinary Share as
at 31 December 2013 (Note 3) 16.78
Unaudited pro forma adjusted
consolidated net tangible assets of
the Group as at 31 December
2013 attributable to the ordinary
shareholders of the Company per
Ordinary Share immediately after
the completion of the Open Offer
(assuming none of the Mandatory
Convertible Securities was
converted into Ordinary Shares)
(Note 6) 16.78
1. The audited consolidated net assets of the Group attributable to the equity holders of the Company as at 31 December
2013 is extracted from the published audited annual report of the Group for the year ended 31 December 2013.
2. These represent the Group’s goodwill of HK$3,318 million and intangible assets of HK$5,274 million as at 31 December
2013, net of related deferred tax liabilities arising from intangible assets of HK$398 million and amounts of
non-controlling interests attributable to these account balances of HK$1,993 million as at 31 December 2013.
The amounts for goodwill and intangible assets are extracted from the published audited annual report of the Group for
the year ended 31 December 2013. The amounts for the related deferred tax liabilities and non-controlling interests are
extracted from schedules prepared by the Group of the same year.
3. The calculation of consolidated net tangible assets of the Group attributable to the ordinary shareholders of the Company
per share is based on the 2,526,690,412 Shares in issue as at 31 December 2013.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE GROUP
— 37 —
4. The estimated net proceeds from the Open Offer of HK$15,286 million are based on 505,400,882 units of Mandatory
Convertible Securities to be issued (based on 2,527,004,412 Shares in issue on the Record Date) at the Subscription Price
of HK$30.26 per unit of Mandatory Convertible Securities and after deduction of the estimated related professional
expenses, which are directly attributable to the Open Offer of HK$7 million. The Mandatory Convertible Securities are
classified as an equity instrument of the Company. Before conversion or mandatory conversion, the amount is attributable
to the holders of the Mandatory Convertible Securities.
5. The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company
represents the unaudited consolidated net tangible assets of the Group attributable to the equity holders of the Company
as at 31 December 2013 plus the estimated net proceeds from the Open Offer as set out in Note 4 above.
6. The calculation of unaudited pro forma adjusted consolidated net tangible assets of the Group as at 31 December 2013
attributable to the equity holders of the Company per Ordinary Share immediately after the completion of the Open Offer,
assuming 505,400,882 units of Mandatory Convertible Securities are issued, is based on a pro forma adjusted
consolidated net tangible assets of the Group as at 31 December 2013 attributable to the owners of the Company
(including ordinary shareholders of the Company and holders of the Mandatory Convertible Securities) of HK$57,684
million, less carrying amount of HK$15,286 million described in note 4 that is attributable to the holders of Mandatory
Convertible Securities in arriving at the amount attributable to ordinary shareholders of the Company of HK$42,398
million, divided by the number of Ordinary Shares which comprise of 2,526,690,412 Ordinary Shares in issue as at 31
December 2013.
Had all of the 505,400,882 units of Mandatory Convertible Securities issued been converted into Ordinary Shares of the
Company on the Record Date, the unaudited pro forma adjusted consolidated net tangible assets of the Group as at 31
December 2013 attributable to the ordinary shareholders of the Company per Ordinary Share would have been HK$19.02,
based on a pro forma adjusted consolidated net tangible assets of the Group as at 31 December 2013 attributable to the
owners of the Company of HK$57,684 million divided by the pro forma adjusted number of Ordinary Shares of
3,032,091,294 Ordinary Shares.
7. No adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent
to 31 December 2013.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE GROUP
— 38 —
ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA FINANCIALINFORMATION
The following is the text of an accountants’ report received from Deloitte Touche Tohmatsu,
Certified Public Accountants, Hong Kong, for inclusion in this Prospectus, in respect of the unaudited
pro forma financial information relating to the Group as set out in this Appendix II.
INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THECOMPILATION OF PRO FORMA FINANCIAL INFORMATION
TO THE DIRECTORS OF CHINA MERCHANTS HOLDINGS (INTERNATIONAL)COMPANY LIMITED
We have completed our assurance engagement to report on the compilation of pro forma financial
information of China Merchants Holdings (International) Company Limited (the “Company”) and its
subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the
“Directors”) for illustrative purposes only. The pro forma financial information consists of the pro
forma statement of adjusted consolidated net tangible assets of the Group attributable to the equity
holders of the Company as at 31 December 2013 and related notes as set out on pages 36 to 38 of
Appendix II to the prospectus issued by the Company dated 21 May 2014 (the “Prospectus”). The
applicable criteria on the basis of which the Directors have compiled the pro forma financial
information are described on pages 36 to 38 of Appendix II to the Prospectus.
The pro forma financial information has been compiled by the Directors to illustrate the impact
of the proposed open offer of unlisted mandatory convertible securities on the basis of one unit of
unlisted mandatory convertible securities for every five ordinary shares on the Group’s financial
position as at 31 December 2013 as if the proposed offer had taken place at 31 December 2013. As
part of this process, information about the Group’s consolidated net tangible assets attributable to the
equity holders of the Company has been extracted by the Directors from the Group’s consolidated
financial statements for the year ended 31 December 2013, on which an independent auditor’s report
has been published.
Directors’ Responsibility for the Pro Forma Financial Information
The Directors are responsible for compiling the pro forma financial information in accordance
with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 Preparation of Pro
Forma Financial Information for Inclusion in Investment Circulars (“AG 7”) issued by the Hong Kong
Institute of Certified Public Accountants (“HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE GROUP
— 39 —
A1B13A1B5(3)
Reporting Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules,
on the pro forma financial information and to report our opinion to you. We do not accept any
responsibility for any reports previously given by us on any financial information used in the
compilation of the pro forma financial information beyond that owed to those to whom those reports
were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements (“HKSAE”) 3420 Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus issued by the HKICPA. This standard requires that the
reporting accountant comply with ethical requirements and plan and perform procedures to obtain
reasonable assurance about whether the Directors have compiled the pro forma financial information
in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the pro forma financial
information, nor have we, in the course of this engagement, performed an audit or review of the
financial information used in compiling the pro forma financial information.
The purpose of pro forma financial information included in the Prospectus is solely to illustrate
the impact of a significant event or transaction on unadjusted financial information of the Group as
if the event had occurred or the transaction had been undertaken at an earlier date selected for
purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of
the event or transaction at 31 December 2013 would have been as presented.
A reasonable assurance engagement to report on whether the pro forma financial information has
been properly compiled on the basis of the applicable criteria involves performing procedures to
assess whether the applicable criteria used by the Directors in the compilation of the pro forma
financial information provide a reasonable basis for presenting the significant effects directly
attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:
• The related pro forma adjustments give appropriate effect to those criteria; and
• The pro forma financial information reflects the proper application of those adjustments to
the unadjusted financial information.
The procedures selected depend on the reporting accountant’s judgment, having regard to the
reporting accountant’s understanding of the nature of the Group, the event or transaction in respect of
which the pro forma financial information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the pro forma financial
information.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE GROUP
— 40 —
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion
In our opinion:
a) the pro forma financial information has been properly compiled on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and
c) the adjustments are appropriate for the purposes of the unaudited pro forma financial
information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Deloitte Touche TohmatsuCertified Public Accountants
Hong Kong
21 May 2014
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATIONOF THE GROUP
— 41 —
The Conversion Price shall from time to time be adjusted after the first date of issue of theMandatory Convertible Securities in accordance with the following provisions:
(a) Consolidation, subdivision or reclassification: If and whenever there shall be an alterationto number of Ordinary Shares in issue as a result of consolidation, subdivision orreclassification, the Conversion Price shall be adjusted by multiplying the Conversion Pricein force immediately before such alteration by the following fraction:
A
B
where:
A is the number of Ordinary Shares in issue immediately before such alteration; and
B is the number of Ordinary Shares in issue immediately after such alteration.
Such adjustment shall become effective on the date the alteration takes effect.
(b) Capitalisation of profits or reserves:
(i) If and whenever the Company shall issue any Ordinary Shares credited as fully paidto the Shareholders by way of capitalisation of profits or reserves including, OrdinaryShares paid up out of distributable profits or reserves (except any Scrip Dividend), theConversion Price shall be adjusted by multiplying the Conversion Price in forceimmediately before such issue by the following fraction:
A
B
where:
A is the number of Ordinary Shares in issue immediately before such issue; and
B is the number of Ordinary Shares in issue immediately after such issue.
(ii) In the case of an issue of Ordinary Shares by way of a Scrip Dividend where theCurrent Market Price on the date of announcement of the terms of such issue of suchOrdinary Shares exceeds the issue price for the Ordinary Shares under such ScripDividend, the Conversion Price shall be adjusted by multiplying the Conversion Pricein force immediately before the issue of such Ordinary Shares by the followingfraction:
A+B
A+C
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 42 —
where:
A is the number of issued Ordinary Shares immediately before such issue;
B is the number of Ordinary Shares issued by way of such Scrip Dividend
multiplied by a fraction of which (i) the numerator is the issue price for the
Ordinary Shares under such Scrip Dividend and (ii) the denominator is such
Current Market Price of the Ordinary Shares issued by way of Scrip Dividend;
and
C is the number of Ordinary Shares issued by way of such Scrip Dividend;
or by making such other adjustment as an Independent Investment Bank shall
certify to the Company is fair and reasonable.
Such adjustment shall become effective on the date of issue of such Ordinary Shares
or if a record date is fixed therefor, immediately after such record date.
(c) Share Repurchase: If and whenever the Company conducts any Share Repurchase, the
Conversion Price shall be adjusted by multiplying the Conversion Price in force
immediately before such Share Repurchase by the following fraction:
A-B
A
where:
A is the Current Market Price of one Ordinary Share on the last Trading Day preceding
the date of the Share Repurchase; and
B is the Fair Market Value on the date of such announcement of the portion of the Share
Repurchase attributable to one Ordinary Share.
Such adjustment shall become effective on the date that such Share Repurchase is actually
made or if a record date is fixed therefor, immediately after such record date.
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 43 —
(d) Rights Issues of Ordinary Shares or Options over Ordinary Shares: If and whenever theCompany shall issue Ordinary Shares to all or substantially all Shareholders as a class byway of rights, or issue or grant to all or substantially all Shareholders as a class by way ofrights, options, warrants or other rights to subscribe for or purchase or otherwise acquireany Ordinary Shares, in each case at less than 95 per cent. of the Current Market Price perOrdinary Share on the last Trading Day preceding the date of the announcement of the termsof the issue or grant, the Conversion Price shall be adjusted by multiplying the ConversionPrice in force immediately before such issue or grant by the following fraction:
A+B
A+C
where:
A is the number of Ordinary Shares in issue immediately before such announcement;
B is the number of Ordinary Shares which the aggregate amount (if any) payable for theOrdinary Shares issued by way of rights or for the options or warrants or other rightsissued or granted by way of rights and for the total number of Ordinary Sharescomprised therein would subscribe, purchase or otherwise acquire at such CurrentMarket Price per Ordinary Share; and
C is the aggregate number of Ordinary Shares issued or, as the case may be, comprisedin the rights, options, warrants or other rights granted.
Such adjustment shall become effective on the date of issue of such Ordinary Shares orissue or grant of such options, warrants or other rights (as the case may be) or where arecord date is set, the first date on which the Ordinary Shares are traded ex-rights,ex-options or ex-warrants as the case may be.
(e) Rights Issues of Other Securities: If and whenever the Company shall issue any securities(other than Ordinary Shares or options, warrants or other rights to subscribe, purchase orotherwise acquire any Ordinary Shares) to all or substantially all Shareholders as a class byway of rights or issue or grant to all or substantially all Shareholders as a class by way ofrights, options, warrants or other rights to subscribe for, purchase or otherwise acquire anysecurities (other than Ordinary Shares or options, warrants or other rights to subscribe for,purchase or otherwise acquire Ordinary Shares), the Conversion Price shall be adjusted bymultiplying the Conversion Price in force immediately before such issue or grant by thefollowing fraction:
A-B
A
where:
A is the Current Market Price of one Ordinary Share on the last Trading Day precedingthe date on which such issue or grant is publicly announced; and
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 44 —
B is the Fair Market Value on the date of such announcement of the portion of the rights
attributable to one Ordinary Share.
Such adjustment shall become effective on the date of issue of the securities or the issue
or grant of such rights, options or warrants (as the case may be) or where a record date is
set, the first date on which the Ordinary Shares are traded ex-rights, ex-options or
ex-warrants as the case may be on the Stock Exchange.
(f) Issues at less than Current Market Price: If and whenever the Company shall issue
(otherwise than as mentioned in paragraph (d) above) any Ordinary Shares (other than
Ordinary Shares issued on the conversion of the Mandatory Convertible Securities or on the
exercise of any other rights of conversion into, or exchange or subscription for Ordinary
Shares) or issue or grant (otherwise than as mentioned in paragraph (d) above) any options,
warrants or other rights to subscribe for, purchase or otherwise acquire any Ordinary
Shares, in each case at a price per Ordinary Share which is less than 95 per cent. of the
Current Market Price on the last Trading Day preceding the date of announcement of the
terms of such issue, the Conversion Price shall be adjusted by multiplying the Conversion
Price in force immediately before such issue by the following fraction:
A+B
A+C
where:
A is the number of Ordinary Shares in issue immediately before the issue of such
additional Ordinary Shares or the grant of such options, warrants or other rights to
subscribe, purchase or otherwise acquire any Ordinary Shares;
B is the number of Ordinary Shares which the aggregate consideration (if any)
receivable for the issue of such additional Ordinary Shares or would purchase at such
Current Market Price; and
C is the number of Ordinary Shares to be issued pursuant to such issue of Ordinary
Shares or, as the case may be, the maximum number of Ordinary Shares which may
be issued upon exercise of such options, warrants or rights calculated as at the date
of issue or grant of such options, warrants or rights.
References to additional Ordinary Shares in the above formula shall, in the case of an issue
by the Company of options, warrants or other rights to subscribe or purchase Ordinary
Shares, mean such Ordinary Shares to be issued assuming that such options, warrants or
other rights are exercised in full at the initial exercise price on the date of issue of such
options, warrants or other rights.
Such adjustment shall become effective on the date of issue of such additional Ordinary
Shares or, as the case may be, the grant of such options, warrants or other rights.
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 45 —
(g) Other Issues at less than Current Market Price: Save in the case of an issue of securities
arising from a conversion or exchange of other securities in accordance with the terms
applicable to such securities themselves falling within this paragraph (g), if and whenever
the Company or any of its Subsidiaries (otherwise than as mentioned in paragraph (d), (e)
or (f)), or (at the direction or request of or pursuant to any arrangements with the Company
or any of its Subsidiaries), any other company, person or entity shall issue any securities
(other than the Mandatory Convertible Securities excluding for this purpose any further
Mandatory Convertible Securities) which by their terms of issue carry rights of conversion
into, or exchange or subscription for, Ordinary Shares at a consideration per Ordinary Share
which is less than 95 per cent. of the Current Market Price on the last Trading Day
preceding the date of announcement of the terms of issue of such securities, the Conversion
Price shall be adjusted by multiplying the Conversion Price in force immediately before
such issue by the following fraction:
A+B
A+C
where:
A is the number of Ordinary Shares in issue immediately before such issue;
B is the number of Ordinary Shares which the aggregate consideration receivable by the
Company for the Ordinary Shares to be issued on conversion or exchange or on
exercise of the right of subscription attached to such securities would purchase at such
Current Market Price; and
C is the maximum number of Ordinary Shares to be issued on conversion or exchange
of such securities or on the exercise of such rights of subscription attached thereto at
the initial conversion, exchange or subscription price or rate.
Such adjustment shall become effective on the date of issue of such securities.
(h) Modification of Rights of Conversion etc.: If and whenever there shall be any modification
of the rights of conversion, exchange or subscription attaching to any such securities as are
mentioned in paragraph (g) (other than in accordance with the terms of such securities) so
that the consideration per Ordinary Share (for the number of Ordinary Shares available on
conversion, exchange or subscription following the modification) is less than 95 per cent.
of the Current Market Price on the last Trading Day preceding the date of announcement
of the proposals for such modification, the Conversion Price shall be adjusted by
multiplying the Conversion Price in force immediately before such modification by the
following fraction:
A+B
A+C
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 46 —
where:
A is the number of Ordinary Shares in issue immediately before such modification;
B is the number of Ordinary Shares which the aggregate consideration receivable by the
Company for the Ordinary Shares to be issued on conversion or exchange or on
exercise of the right of subscription attached to the securities so modified would
purchase at such Current Market Price or, if lower, the existing conversion, exchange
or subscription price of such securities; and
C is the maximum number of Ordinary Shares to be issued on conversion or exchange
of such securities or on the exercise of the right of subscription attached thereto at the
modified conversion, exchange or subscription or purchase price or rate but giving
credit in such manner as an Independent Investment Bank, considers appropriate (if at
all) for any previous adjustment under this paragraph (h) or paragraph (g) above.
Such adjustment shall become effective on the date of modification of the rights of
conversion, exchange or subscription attaching to such securities.
(i) Other Offers to Shareholders: If and whenever the Company or any of its Subsidiaries or
(at the direction or request of or pursuant to any arrangements with the Company or any of
its Subsidiaries) any other company, person or entity issues, sells or distributes any
securities in connection with which an offer pursuant to which the Shareholders generally
are entitled to participate in arrangements whereby such securities may be acquired by them
(except where the Conversion Price falls to be adjusted under paragraph (d), (e), (f) or (g)),
the Conversion Price shall be adjusted by multiplying the Conversion Price in force
immediately before such issue by the following fraction:
A-B
A
where:
A is the Current Market Price of one Ordinary Share on the last Trading Day preceding
the date on which such issue is publicly announced; and
B is the Fair Market Value on the date of such announcement of the portion of the rights
attributable to one Ordinary Share.
Such adjustment shall become effective on the date of issue, sale or delivery of the
securities.
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 47 —
(j) For the purpose of the adjustments of Conversion Price set out in paragraphs (a) to (i)
above:
“Closing Price” for the Ordinary Shares for any Trading Day shall be the price published
in the Daily Quotation Sheet published by the Stock Exchange for such day.
“Current Market Price” means, in respect of an Ordinary Share at a particular date, the
arithmetic average of the Closing Price for one Ordinary Share (being an Ordinary Share
carrying a full entitlement to dividends) for the five consecutive Trading Days ending on
such date; provided that if at any time during the said five Trading Day period the Ordinary
Shares shall have been quoted ex-dividend and during some other part of that period the
Ordinary Shares shall have been quoted cum-dividend then:
(i) if the Ordinary Shares to be issued in such circumstances do not rank for the dividend
in question, the quotations on the dates on which the Ordinary Shares shall have been
quoted cum-dividend shall for the purpose of this definition be deemed to be the
amount thereof reduced by an amount equal to the amount of that dividend per
Ordinary Share; or
(ii) if the Ordinary Shares to be issued in such circumstances rank for the dividend in
question, the quotations on the dates on which the Ordinary Shares shall have been
quoted ex-dividend shall for the purpose of this definition be deemed to be the amount
thereof increased by the such similar amount;
and provided further that if the Ordinary Shares on each of the said five Trading Days have
been quoted cum-dividend in respect of a dividend which has been declared or announced
but the Ordinary Shares to be issued do not rank for that dividend, the quotations on each
of such dates shall for the purpose of this definition be deemed to be the amount thereof
reduced by an amount equal to the amount of that dividend per Ordinary Share.
“Fair Market Value” means, with respect to any asset, security, option, warrant or other
right on any date, the fair market value of that asset, security, option, warrant or other right
as determined by an Independent Investment Bank provided that (i) the fair market value
of a cash dividend paid or to be paid per Ordinary Share shall be the amount of such cash
dividend per Ordinary Share determined as at the date of announcement of such dividend;
(ii) where options, warrants or other rights are publicly traded in a market of adequate
liquidity (as determined by such Independent Investment Bank) the fair market value of
such options, warrants or other rights shall equal the arithmetic mean of the daily closing
prices of such options, warrants or other rights during the period of five trading days on the
relevant market commencing on the first such trading day such options, warrants or other
rights are publicly traded.
“Independent Investment Bank” means an independent investment bank of international
repute (acting as an expert) selected by the Company.
“Relevant Cash Dividend” means any cash dividend specifically declared by the Company.
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 48 —
“Scrip Dividend” means any Ordinary Shares issued in lieu of the whole or any part of any
Relevant Cash Dividend being a dividend which the Shareholders concerned would or could
otherwise have received.
“Share Repurchase” means a purchase or redemption of Ordinary Shares by or on behalf
of the Company (or a purchase of Ordinary Shares by or on behalf of a Subsidiary of the
Company), where the weighted average price (before expenses) on any one day in respect
of such purchases exceeds 110 per cent. of the Current Market Price of the Ordinary Shares
as published in the Daily Quotation Sheet of the Stock Exchange, either (1) on that date,
or (2) where an announcement has been made of the intention to purchase Ordinary Shares
at some future date at a specified price, on the Trading Day immediately preceding the date
of such announcement and, if in the case of either (1) or (2), the relevant day is not a
Trading Day, the immediately preceding Trading Day.
“Subsidiary” or “subsidiary” has the meaning ascribed to this term in the Companies
Ordinance (Chapter 622 of the Laws of Hong Kong).
“Trading Day” means a day when the Stock Exchange is open for dealing business,
provided that if no Closing Price is reported for one or more consecutive dealing days such
day or days will be disregarded in any relevant calculation and shall be deemed not to have
been dealing days when ascertaining any period of dealing days.
(k) On any adjustment, the relevant Conversion Price, if not an integral multiple of one Hong
Kong cent, shall be rounded down to the nearest Hong Kong cent. No adjustment shall be
made to the Conversion Price where such adjustment (rounded down if applicable) would
be less than one per cent. of the Conversion Price then in effect. Any adjustment not
required to be made, and any amount by which the Conversion Price has not been rounded
down, shall be carried forward and taken into account in any subsequent adjustment. Notice
of any adjustment shall be given to Holders as soon as practicable after the determination
thereof.
(l) Where more than one event which gives or may give rise to an adjustment to the Conversion
Price occurs within such a short period of time that in the opinion of an Independent
Investment Bank, the foregoing provisions would need to be operated subject to some
modification in order to give the intended result, such modification shall be made to the
operation of the foregoing provisions as may be advised by such Independent Investment
Bank to be in its opinion appropriate in order to give such intended result.
(m) No adjustment will be made to the Conversion Price when Ordinary Shares or other
securities (including rights or options) are issued, offered or granted to employees
(including directors) of the Company or any Subsidiary of the Company pursuant to any
employee share option scheme of the Company (and which is in compliance with the Listing
Rules).
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 49 —
(n) No adjustment involving an increase in the Conversion Price will be made, except in the
case of a consolidation of the Ordinary Shares as referred to in paragraph (a) above or
where there has been a manifest error in the calculation of the Conversion Price.
The Registrar shall not be under any duty to monitor whether any event or circumstance has
happened or exists which may require an adjustment to be made to the Conversion Price or any
calculation (or verification thereof) in connection with the Conversion Price and will not be
responsible to Holders for any loss arising from any failure by them to do so.
APPENDIX III ADJUSTMENTS TO THE CONVERSION PRICE
— 50 —
RESPONSIBILITY STATEMENT
This Prospectus, for which the Directors collectively and individually accept full responsibility,
includes particulars given in compliance with the Listing Rules for the purpose of giving information
with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the
best of their knowledge and belief the information contained in this Prospectus is accurate and
complete in all material respects and not misleading or deceptive, and there are no other matters the
omission of which would make any statement herein or this Prospectus misleading.
DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN
SHARES, UNDERLYING SHARES OR DEBENTURES
As at the Latest Practicable Date, the Directors and the chief executive of the Company have the
following interests and short positions in shares, underlying shares or debentures of the Company or
any associated corporation (within the meaning of Part XV of the SFO) which (i) 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 in which the Directors and the chief executive of the Company
are deemed or taken to have under such provisions of the SFO); or (ii) are required, pursuant to
Section 352 of the SFO, to be entered in the registrar referred to therein; or (iii) are required, pursuant
to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the
Company of the Stock Exchange:
(i) Directors’ interests in Ordinary Shares
Name of Director CapacityNumber of
Ordinary SharesPercentage of issued
Ordinary Shares
Mr. Yu Liming Beneficial owner 397,645(L) 0.016%
Mr. Wang Hong Beneficial owner 529,277(L) 0.021%
Mr. Lee Yip Wah Peter Beneficial owner 164,902(L) 0.006%
Mr. Lee Kwok Heem John Interest of spouse 1,617,296(L) 0.064%
Total 2,709,120(L) 0.107%
Note: (L) refer to long position
APPENDIX IV GENERAL INFORMATION
— 51 —
A1B2
A1B38(1)A1B38(1A)
A1B25
(ii) Directors’ interests in Share Options
Name of Directors Date of grant
Exerciseprice
(HK$)
Total ShareOptions granted(and percentage
of issued Shares)
Outstanding ShareOptions not exercised
as at the LatestPracticable Date
(and percentage ofissued Shares)
Mr. Li Yinquan 25 May 2006 23.03 400,000 0.016% 400,000 0.016%
Mr. Hu Zheng 27 October 2004 11.08 500,000 0.020% 14,000 0.001%
25 May 2006 23.03 400,000 0.016% 400,000 0.016%
Mr. Meng Xi 25 May 2006 23.03 400,000 0.016% 200,000 0.008%
Mr. Su Xingang 25 May 2006 23.03 350,000 0.014% 350,000 0.014%
Mr. Yu Liming 25 May 2006 23.03 500,000 0.020% 500,000 0.020%
Mr. Wang Hong 25 May 2006 23.03 650,000 0.025% 150,000 0.005%
Mr. Zheng Shaoping 25 May 2006 23.03 300,000 0.012% 300,000 0.012%
3,500,000 0.139% 2,314,000 0.092%
The above outstanding Share Options not exercised as at the Latest Practicable Date may be
exercised at any time during a period of ten years commencing on the date of grant of the Share
Options.
Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief
executive of the Company had any interest or short positions in shares, underlying shares or
debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO)
which are required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions
7 and 8 of Part XV of the SFO; or (ii) entered in the registrar kept by the Company pursuant to Section
352 of the SFO; or (iii) notified to the Company of the Stock Exchange pursuant to the Model Code
for Securities Transactions by Directors of Listed Companies.
(iii) Other positions of Directors in the Shareholders
The following Directors hold executive positions with the following Shareholders:
(1) Mr. Li Jianhong, Mr. Li Yinquan, Mr. Hu Zheng, Mr. Meng Xi, Mr. Su Xingang, Mr. Yu
Liming, Mr. Hu Jianhua and Mr. Wang Hong hold executive positions with CMG; and
(2) Mr. Li Jianhong, Mr. Li Yinquan, Mr. Hu Zheng, Mr. Meng Xi, Mr. Su Xingang and Mr. Yu
Liming also hold executive positions with CMHK.
Save as disclosed herein, none of the Directors is a director or employee of a company which has,
or is deemed to have, 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.
APPENDIX IV GENERAL INFORMATION
— 52 —
SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as is known to the Directors or the chief executive, the
persons/entities (other than the Directors or the chief executive of the Company) who had an interest
or short positions in the shares and underlying shares of the Company which would fall to be disclosed
to the Company and the Stock Exchange under provisions of Divisions 2 and 3 of Part XV of the SFO
were as follows:
Name of Shareholders CapacityNumber of Ordinary
Shares interested
Approximatepercentage ofshareholding
CMG Interest of Controlled
Corporation
1,392,242,072(1, 2, 3) 55.09%
China Merchants Steam
Navigation Company
Limited
Interest of Controlled
Corporation
1,389,242,072(2) 54.98%
CMHK Interest of Controlled
Corporation
1,389,242,072(2) 54.98%
China Merchants Union
(BVI) Limited
Beneficial Owner 572,652,008(2, 4) 22.66%
China Merchants
Investment
Development Company
Limited
Beneficial Owner 596,165,519(2) 23.59%
Hoi Tung Marine
Machinery Suppliers
Limited
Interest of Controlled
Corporation
202,800,480(2) 8.03%
Hoi Tung Investment
(Yantai) Limited
Beneficial Owner 202,800,480(2) 8.03%
Pagoda Tree Investment
Company Limited
Interest of Controlled
Corporation
572,652,008(4) 22.66%
Compass Investment
Company Limited
Interest of Controlled
Corporation
572,652,008(4) 22.66%
GUOXIN International
Investment Corporation
Limited
Interest of Controlled
Corporation
572,652,008(4) 22.66%
Verise Holdings Company
Limited
Interest of Controlled
Corporation
572,652,008(4) 22.66%
Notes:
(1) Each of China Merchants Steam Navigation Company Limited and China Merchants Shekou Industrial Zone Company
Limited is wholly-owned by CMG. CMG is deemed to be interested in 1,392,242,072 shares, which represents the
aggregate of 1,389,242,072 shares deemed to be interested by China Merchants Steam Navigation Company Limited (see
Note 2 below) and 3,000,000 shares deemed to be interested by China Merchants Shekou Industrial Zone Company
Limited (see Note 3 below).
APPENDIX IV GENERAL INFORMATION
— 53 —
A1B38(2)
(2) CMHK is wholly-owned by China Merchants Steam Navigation Company Limited. Each of China Merchants Investment
Development Company Limited, Hoi Tung Marine Machinery Suppliers Limited and China Merchants International
Finance Company Limited is in turn wholly-owned by CMHK and CMU is 50%-owned by CMHK.
China Merchants Steam Navigation Company Limited is deemed to be interested in 1,389,242,072 shares which are
deemed to be interested by CMHK. Such shares represent the aggregate of 572,652,008 shares beneficially held by CMU,
596,165,519 shares beneficially held by China Merchants Investment Development Company Limited, 202,800,480
shares deemed to be interested by Hoi Tung Marine Machinery Suppliers Limited and 17,624,065 shares deemed to be
interested by China Merchants International Finance Company Limited.
As Hoi Tung Investment (Yantai) Limited is wholly-owned by Hoi Tung Marine Machinery Suppliers Limited, Hoi Tung
Marine Machinery Suppliers Limited is deemed to be interested in the 202,800,480 shares beneficially held by Hoi Tung
Investment (Yantai) Limited. As Best Winner Investment Limited is wholly-owned by China Merchants International
Finance Company Limited, China Merchants International Finance Company Limited is deemed to be interested in the
17,624,065 shares beneficially held by Best Winner Investment Limited.
(3) Top Chief Company Limited is wholly-owned by China Merchants Shekou Industrial Zone Company Limited and
Orienture Holdings Company Limited is in turn wholly-owned by Top Chief Company Limited. China Merchants Shekou
Industrial Zone Company Limited is deemed to be interested in the 3,000,000 shares which are deemed to be interested
by Top Chief Company Limited. Such shares represent the 3,000,000 shares beneficially held by Orienture Holdings
Company Limited.
(4) The remaining 50% interest in CMU is owned by Verise Holdings Company Limited, which is wholly-owned by GUOXIN
International Investment Corporation Limited, which is in turn 90%-owned by Compass Investment Company Limited,
which is in turn wholly-owned by Pagoda Tree Investment Company Limited. Therefore, each of Verise Holdings
Company Limited, GUOXIN International Investment Corporation Limited, Compass Investment Company Limited and
Pagoda Tree Investment Company Limited is deemed to be interested in the 572,652,008 shares beneficially held by
CMU.
Save as disclosed herein, according to the register of interests kept by the Company under section
336 of the SFO and so far as was known to the Directors or the chief executive of the Company, there
is no other person or entity (other than a Director or the chief executive of the Company) who, as at
the Latest Practicable Date, had any interests or short positions in the shares or underlying shares of
the Company which would fall to be disclosed to the Company and the Stock Exchange under
Divisions 2 and 3 of Part XV of the SFO.
INFORMATION ON DIRECTORS AND SENIOR MANAGEMENT
The business address of all Directors and members of senior management is at 38th Floor, China
Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong and their brief
biographies are set out below:
Executive Directors
Mr. Li Jianhong, aged 57, is the Chairman of the Company, a Director and the President of
China Merchants Group Limited. He is also a Director of China Merchants Holdings (Hong Kong)
Company Limited. He holds a professional title of “Senior Economist” and graduated from East
London University, England with Master Degree in Business Administration and also obtained Master
Degree in Economy and Management from Jilin University. Before joining the Company, he worked
APPENDIX IV GENERAL INFORMATION
— 54 —
A1B34
with China Ocean Shipping (Group) Company. He was Factory Manager of Nantong Shipyard, General
Manager of COSCO Industry Company, Assistant to the President, Chief Economist and Executive
Vice President of China Ocean Shipping (Group) Company, Chairman of COSCO Corporation
(Singapore) Limited, Sino-Ocean Land Holdings Ltd., COSCO Shipyard Group Co., Ltd. and Nantong
COSCO KHI Ship Engineering Co., Ltd. He was also a Director of China COSCO Holdings Co., Ltd.,
COSCO Pacific Limited and COSCO International Holdings Limited, shares of all of which are listed
on The Stock Exchange of Hong Kong Limited. Besides, he was also Vice Chairman and Chairman of
China International Marine Containers (Group) Limited, shares of which are listed on the Shenzhen
Stock Exchange. He was also an Executive Vice Chairman of the Chinese Society of Naval Architects
and Marine Engineers and Vice President of China Association of the National Shipbuilding Industry
and was awarded as an outstanding entrepreneur for the third year in 1993, a paragon of transportation
and labour section in 1994 and 1995 respectively in China. Mr. Li is the Chairman of China Merchants
Energy Shipping Company Limited, shares of which are listed on the Shanghai Stock Exchange and
China International Marine Containers (Group) Co., Ltd., shares of which are listed on the Shenzhen
Stock Exchange. He was appointed to the Board of Directors as Executive Director on 14 October
2010 and was appointed as the Chairman of the Company on 9 May 2014.
Mr. Li Yinquan, aged 59, is the Vice President of China Merchants Group Limited and the
Chairman of China Merchants Finance Holdings Company Limited. He is also a Director of China
Merchants Holdings (Hong Kong) Company Limited. He graduated from the Shaanxi Institute of
Finance and Economics with a Bachelor of Economics, and holds a Master in Economics from The
People’s Bank of China Graduate School in Beijing. He also holds a Master in Banking and Finance
from the Finafrica Institute in Milan, Italy. Prior to joining China Merchants Group Limited in 2000,
he worked in the Agricultural Bank of China from 1985 to 1999 where his last position was Deputy
General Manager of Hong Kong branch. He is currently an Executive Director and the Chairman of
China Merchants China Direct Investments Limited, shares of which are listed on The Stock Exchange
of Hong Kong Limited and a Non-executive Director of China Merchants Bank Co., Ltd, shares of
which are listed on both the Shanghai Stock Exchange and The Stock Exchange of Hong Kong
Limited. He is a Hong Kong Deputy to the 12th National People’s Congress of the People’s Republic
of China. He was appointed to the Board of Directors as Executive Director on 20 June 2001.
Mr. Hu Zheng, aged 58, is the Vice President of China Merchants Group Limited, concurrently
serving as Chairman of China Merchants Logistics Holding Co., Ltd., Officer of Management
Committee of Zhangzhou China Merchants Economic and Technological Development Zone,
Chairman of China Merchants Zhangzhou Development Zone Co., Ltd. and Chairman of Board of
Trustees of China Merchants Charitable Foundation. He is also a Director of China Merchants
Holdings (Hong Kong) Company Limited. Moreover, he is Vice Chairman of The Hong Kong Chinese
Enterprises Association, China Association of Purchasing and Logistics and China Association of
Communications Enterprises Management. He obtained a Master Degree in Business Administration
from Murdoch University, Australia and holds a professional title of “Senior Economist”. Mr. Hu
successively served as the Secretary of the General Office of the Ministry of Communications,
Secretary of the board of directors, General Manager of the Executive Department, Assistant President
and General Legal Counsel of China Merchants Group Limited, and No. 1 Deputy General Manager
of China Merchants Shekou Industrial Zone Company Limited. He was appointed to the Board of
Directors as Executive Director on 29 June 2004.
APPENDIX IV GENERAL INFORMATION
— 55 —
Mr. Meng Xi, aged 58, is the Vice President of China Merchants Group Limited. He is also a
Director of China Merchants Holdings (Hong Kong) Company Limited. He graduated from the Beijing
Construction Engineering College and was awarded “Senior Engineer” in the PRC. He joined China
Merchants Group Limited in 1983 and was formerly the Deputy General Manager of China Merchants
Shekou Industrial Zone Company Limited, Deputy General Manager of Enterprises and Projects
Division, General Manager of Management Information Division, General Manager of Strategic
Planning Department of China Merchants Group Limited. Mr. Meng has extensive experience in the
field of management of enterprises, strategic investment, management information system and
strategic planning. He was appointed to the Board of Directors as Executive Director on 20 June 2001.
Mr. Su Xingang, aged 55, is the Vice President of China Merchants Group Limited. He is also
a Director of China Merchants Holdings (Hong Kong) Company Limited. He graduated from Ship
Navigation and Harbour Superintendency Administration Specialty of Navigation Department of
Dalian Maritime University (formerly Dalian Marine College). He holds the professional title of
“Senior Engineer”. He is a Director of China Merchants Energy Shipping Company Limited, shares
of which are listed on the Shanghai Stock Exchange, Vice Chairman of China LNG Shipping
(Holdings) Limited, a Director and the Vice Chairman of Shanghai International Port (Group)
Company Limited, shares of which are listed on the Shanghai Stock Exchange, and a Director of
Ningbo Port Company Limited, shares of which are listed on the Shanghai Stock Exchange. Before
joining China Merchants Group Limited, he served as Deputy Division Chief of Department of
Transportation Administration, Assistant Director General of Department of Water Transportation of
Ministry of Communications, Vice President of China Changjiang National Shipping (Group) Corp.,
Deputy Director General, Director General of Department of Water Transportation of Ministry of
Communications. He was appointed to the Board of Directors as Executive Director on 25 May 2007.
Mr. Yu Liming, aged 51, is the Vice President of China Merchants Group Limited. He is also
a Director of China Merchants Holdings (Hong Kong) Company Limited. He graduated from the South
China University of Science and Technology in 1982. He holds a PhD Degree at the Business School
of Fudan University, the PRC. He studied in The International Institute of Infrastructural Hydraulic
and Environmental Engineering (IHE), Delft University of Holland and Port of Rotterdam from 1987
to 1988. He joined China Merchants Group Limited in 1984 and has extensive experience in the field
of strategic planning, mergers and acquisitions, port management and construction business. He was
appointed to the Board of Directors as Executive Director on 8 January 1999.
Mr. Hu Jianhua, aged 51, is the Assistant President of China Merchants Group Limited and the
Managing Director of the Company. He graduated from the Dalian University of Technology in the
PRC with a Bachelor Degree in Port and Waterway Engineering. He then obtained his Master Degree
in Construction Management at the University of Birmingham of the United Kingdom and his Doctor
Degree in Business Administration at the University of South Australia. He is the Professorial Senior
Engineer conferred by MOC of China, a fellow member of the Hong Kong Institution of Engineers
(FHKIE) and also a fellow member of Institution of Civil Engineering Surveyors of the United
Kingdom (FlnstCES) respectively. Prior to joining the Company, he was the Managing Director of
Hong Kong Zhen Hua Engineering Co., Ltd, Deputy Chief Economist cum General Manager of
Overseas Division of China Harbor Engineering Company Group and Managing Director of China
Harbor Engineering Company Limited. Having rich working experiences in overseas, he has extended
the business to over 30 countries and regions in the development, construction and operation of large
APPENDIX IV GENERAL INFORMATION
— 56 —
infrastructure projects such as ports, roads and bridges. With experiences as corporate executive, he
also holds the post of executive director in several companies in China and overseas. He was appointed
to the Board of Directors as Executive Director on 25 May 2007 and was appointed as the Managing
Director of the Company on 26 March 2010.
Mr. Wang Hong, aged 51, is the Chief Economist and the General Manager of Strategic Planning
Department of China Merchants Group Limited. He is also a Director of China International Marine
Containers (Group) Co., Ltd., shares of which are listed on Shenzhen Stock Exchange, a Director of
China Merchants Energy Shipping Company Limited, shares of which are listed on the Shanghai Stock
Exchange and a Director of China Merchants Property Development Company Limited, shares of
which are listed on the Shenzhen Stock Exchange. He graduated from Dalian Maritime University in
the PRC in Marine Engineering in 1982, as a holder of Master of Business Administration of Graduate
School of Beijing University of Science and Technology, and a holder of PhD of Management of
Graduate School of China Academy of Social Science. Mr. Wang successively served as Engineer in
COSCO Guangzhou, General Manager of Shipping Department, General Manager of Finance and
Accounting Department, and Vice President of China Communications Import & Export Corp.,
Managing Director of Hoi Tung Marine Machinery Suppliers Ltd., General Manager of Performance
Evaluation Department, Human Resources Department and Strategic and Research Department of
China Merchants Group Limited. He was the Deputy Managing Director and Chief Operational Officer
of the Company, the Vice Chairman of Shanghai International Port (Group) Co., Ltd., shares of which
are listed on the Shanghai Stock Exchange and the Chairman of China Merchants Holdings (Pacific)
Limited, shares of which are listed on Singapore Exchange Limited. Mr. Wang has extensive
experience in shipping industry, international trading, financing and accounting and human resource
management. He was appointed to the Board of Directors as Executive Director on 11 May 2005.
Mr. Zheng Shaoping, aged 51, is the Deputy General Manager of the Company. He graduated
from Dalian Maritime University with Postgraduate Diploma in International Maritime Law, and
obtained a Master Degree of Business Administration at University of Wales. Mr. Zheng has over 20
years’ experience in the field of port management and successively served as the General Manager of
Chiwan Container Terminal Co., Ltd., the General Manager and the Chairman of Shenzhen Chiwan
Harbour Container Co., Ltd. and the Managing Director and the Vice Chairman of Shenzhen Chiwan
Wharf Holdings Limited. He is also the Vice Chairman of China Merchants Bonded Logistics Co.,
Ltd., the Chairman of Shekou Container Terminals Ltd., the Chairman of Chiwan Container Terminal
Co., Ltd. and the Chairman of Shenzhen Chiwan Wharf Holdings Limited, shares of which are listed
on the Shenzhen Stock Exchange. He was appointed to the Board of Directors as Executive Director
on 10 February 2012.
Independent non-executive directors
Mr. Kut Ying Hay, aged 59, is a solicitor and a notary public in Hong Kong and had been in
practice in the name of Kut & Co. for more than 25 years. He is also a solicitor of the Supreme Court
of England and Wales, the Supreme Court of Victoria, Australia, and the Supreme Court of Singapore,
and is an associate member of the Institute of Chartered Arbitrators and the Institute of Arbitrators,
Australia. He was appointed by the Hong Kong Government as a member of the Board of Review for
the period from 1995 to 1998. He has also been appointed by the Ministry of Justice of the PRC as
APPENDIX IV GENERAL INFORMATION
— 57 —
a China Appointed Attesting Officer. Mr. Kut was formerly an Independent Non-executive Director of
publicly-listed China Merchants China Direct Investments Limited from June 1993 to October 2011.
He was appointed to the Board of Directors as Independent Non-executive Director on 6 June 1992.
Mr. Lee Yip Wah Peter, aged 72, is a retired solicitor. He is also a Non-executive Director of
SHK Hong Kong Industries Limited, an Independent Non-executive Director of Sinotrans Shipping
Limited. Both the said companies are listed on The Stock Exchange of Hong Kong Limited. He was
appointed to the Board of Directors as Independent Non-executive Director on 20 June 2001.
Mr. Li Kwok Heem John, aged 58, was a partner at PricewaterhouseCoopers, Certified Public
Accountants. He graduated from the Imperial College of the University of London with a Bachelor of
Science degree and also obtained a Master of Business Administration degree from the Wharton
School of Business of the University of Pennsylvania. He is a Fellow of The Institute of Chartered
Accountants in England and Wales. Mr. Li is the Chairman of the United Christian Medical Service
and the United Christian Hospital, a member of the Board of the Hospital Governing Committee of
Pamela Youde Nethersole Eastern Hospital and Alice Ho Mui Ling Nethersole Hospital, and a member
of the Board of Trustees of Chung Chi College, The Chinese University of Hong Kong. He was
appointed to the Board of Directors as Independent Non-executive Director on 8 October 2004.
Mr. Li Ka Fai David, aged 59, is currently the deputy managing partner of Li, Tang, Chen &
Co. CPA (Practising). He is also a fellow of the Hong Kong Institute of Certified Public Accountants
and The Association of Chartered Certified Accountants, UK as well as The Institute of Chartered
Secretaries and Administrators, UK and an associate member of The Institute of Chartered
Accountants in England and Wales. He is an Independent Non-executive Director and Chairman of
audit committee of China-Hongkong Photo Products Holdings Limited, an Independent Non-executive
Director, Chairman of audit committee, member of remuneration committee and member of
nomination committee of Cosmopolitan International Holdings Limited, an Independent
Non-executive Director, Chairman of audit committee, member of remuneration committee and
member of nomination committee of Goldlion Holdings Limited, an Independent Non-executive
Director and Chairman of audit committee of Shanghai Industrial Urban Development Group Limited,
and an Independent Non-executive Director, member of audit committee and member of remuneration
committee of AVIC International Holding (HK) Limited, shares of the above five companies are listed
on The Stock Exchange of Hong Kong Limited. He retired as an Independent Director and Chairman
of audit committee of China Vanke Co., Ltd. (2005-2011), a company listed on the Shenzhen Stock
Exchange, and retired as an advisor of that Company on 30 March 2013. He was appointed to the
Board of Directors as Independent Non-executive Director on 1 June 2007.
Mr. Bong Shu Ying Francis, aged 72, OBE, JP, is currently a Non-executive Director of
Cosmopolitan International Holdings Limited, a company listed on The Stock Exchange of Hong Kong
Limited. Mr. Bong holds a Bachelor’s degree of Sciences in Engineering from the University of Hong
Kong and is a Past President of Hong Kong Academy of Engineering Sciences and Chairman of the
Hong Kong University Engineering Advisory Committee. He is a Past President of the Hong Kong
Institution of Engineers, a Fellow of the Institution of Civil Engineers (UK) and a Fellow of the
Institution of Structural Engineers (UK). Mr. Bong is an Honorary Fellow of the University of Hong
Kong and he was appointed a Justice of Peace in 1992 by the Government of Hong Kong and he
APPENDIX IV GENERAL INFORMATION
— 58 —
received an OBE award in 1997 for his outstanding contribution to the development of the engineering
profession in Hong Kong. Mr. Bong retired as a Director of AECOM Technology Corporation, a
company listed on the New York Stock Exchange, on 5 March 2014. He was appointed to the Board
of Directors as Independent Non-executive Director on 14 July 2010.
Senior management
Mr. Liu Yunshu, aged 49, joined the Company in 2004 and is Overseas Operation Officer of the
Company and Chief Executive Officer of Colombo International Container Terminals Limited. He
obtained his Master of Business Administration at Roosevelt University of America. Mr. Liu has vast
experience in ports and logistics industries. Before joining the Company, he was a Director and
Deputy General Manager of Shenzhen Shekou China Merchants Port Services Co., Ltd., Vice
Chairman and General Manager of Shenzhen Shekou Anda Industry Co. Ltd., a Director and Chief
Operating Officer of China Merchants Logistics Group Co., Ltd. He was an Executive Director of the
Company for the period from 3 June 2009 to 10 February 2012.
Ms. Wong Sin Yue Cynthia, aged 62, joined the Company in 2004 and is a Deputy General
Manager of the Company, responsible for finance. Prior to joining the Company, she took various
senior positions at reputable international investment banks including Société Générale, Deutsche
Morgan Grenfell, Samuel Montague and Bear Stearns Asia for over 15 years, during which period she
had advised more than 50 companies in Greater China and Asia in their equity, equity finance or
equity-related activities. She was, until February 2009, a Non-executive Director of China Merchants
Holdings (Pacific) Limited, the shares of which are listed on the Singapore Exchange Limited. She
holds a Master of Business Administration Degree from the University of East Asia in Macau. She is
also an Independent Non-executive Director of China Gas Holdings Limited, the shares of which are
listed on The Stock Exchange of Hong Kong Limited.
Mr. Zhang Rizhong, aged 45, joined the Company in 2005 and is the Deputy General Manager
and the Financial Controller of the Company, responsible for accounting, finance and internal control
and audit. He holds a Master of Business Administration Degree from The University of Westminster
of UK, and graduated with a Bachelor degree of Economics from The Central Finance and Economics
University in the PRC. He is a Member of Association of Chartered Certified Accountants. With over
22 years in Finance and Accounting area, he has extensive experience in finance management. Before
joining the Company, he was Deputy General Manager of Financial Department of China Merchants
Group Limited, Financial Controller of China Merchants Holdings (UK) Co. Ltd, and a director of
several companies.
Mr. Deng Weidong, aged 46, joined the Company in July 2009 and is the Deputy General
Manager of the Company. He graduated from Nanjing University with a PhD of Physical Geography
in 1994. He obtained a Master Degree of Marine Management from Dalhousie University, Canada in
2002. He has vast experience in port management and port operation. Prior to joining the Company,
he worked in Administration Bureau of Hainan Yangpu Economic Development Zone, and he was the
General Manager of Business Development Department of China Nanshan Development (Group) Inc.
and the Deputy General Manager of Chiwan Container Terminal Co., Ltd.
APPENDIX IV GENERAL INFORMATION
— 59 —
Mr. Wang Zhixian, aged 49, joined the Company in July 1992 and is the Deputy GeneralManager of the Company. He graduated from Tianjin University, Shanghai Jiaotong University witha Master of Science. He obtained a master degree of Business Administration from Peking University.Mr. Wang has extensive management experience in port and shipping industry. Prior to joining theCompany, he worked in Hempel-Hai Hong Paint Company as sales manager. After joining theCompany, he was the Deputy General Manager of Industrial Management Department, GeneralManager of Business Planning Department, and he was the Deputy General Manager of ShenzhenMawan Port Services Co., Ltd, the Chairman and CEO of Ningbo Daxie China Merchants InternationalTerminal Co., Ltd and the Managing Director of China Merchants Port Services (Shenzhen) Co., Ltd.and Shenzhen Haixing Harbour Development Co., Ltd.
Mr. Yu Shixin, aged 51, joined the Company in 2007 and is the Deputy General Manager of theCompany. He graduated from Zhengzhou University with a Bachelor Degree in English. He thenobtained his Master Degree in Economics at University of International Business and Economics andhis Executive Master Degree in Business Administration at China Europe International BusinessSchool. Mr. Yu has over 20 years’ experience in the field of port management and successively servedas the Deputy General Manager and General Manager of China Communications Import and ExportCorporation, and the Deputy General Manager of Hoi Tung Marine Machinery Suppliers Limited. Heis also the Managing Director of China Merchants Bonded Logistics Co., Ltd., the Deputy Chairmanof Tianjin Haitian Bonded Logistic Company Limited and the Deputy Chairman of Asia AirfreightTerminal Company Limited.
COMPETING INTERESTS
As at the Latest Practicable Date, none of the Directors and their respective associates wasinterested in any business, apart from the Company’s business, that competes or competed or is or waslikely to compete, either directly or indirectly, with the Company’s business and there is no contractor arrangement subsisting at the Latest Practicable Date in which any Director is materially interestedand which is significant in relation to the Group’s business.
DIRECTORS’ INTEREST IN ASSETS
As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in anyassets which have been acquired or disposed of by, or leased to, or which were proposed to be acquiredor disposed of by or leased to, any member of the Group since 31 December 2013 (being the date towhich the latest published audited consolidated financial statements of the Company were made up).
DIRECTORS’ INTEREST IN CONTRACT OR ARRANGEMENT
As at the Latest Practicable Date, none of the Directors is materially interested in any contractor arrangement which is significant to the business of the Group.
SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors has entered into any existing or proposedservice contracts with the Company, or any other member of the Group, save for those expiring ordeterminable by the relevant employer within one year without payment of compensation (other thanstatutory compensation).
LITIGATION
As at the Latest Practicable Date, none of the members of the Group was engaged in anylitigation or claims of material importance and, so far as the Directors are aware, no litigation or claimof material importance is pending or threatened by or against any member of the Group.
APPENDIX IV GENERAL INFORMATION
— 60 —
A1A40(1)
A1B40(2)
A1B39
A1B33
QUALIFICATION AND CONSENT OF EXPERT
The following is the qualification of the expert (the “Expert”) who has given its letter for the
inclusion in this Prospectus:
Name Qualification
Deloitte Touche Tohmatsu Certified Public Accountants
As at the Latest Practicable Date, Deloitte Touche Tohmatsu has given and has not withdrawn its
written consent to the issue of this Prospectus, with the inclusion herein of its letter or references to
its name and/or its opinion in the form and context in which they respectively appear.
As at the Latest Practicable Date, Deloitte Touche Tohmatsu did not have any shareholding,
direct or indirect, in any member of the Group or any right (whether legally enforceable or not) to
subscribe for or to nominate persons to subscribe for securities in any member of the Group.
As at the Latest Practicable Date, Deloitte Touche Tohmatsu did not have any direct or indirect
interest in any asset which had been acquired, or disposed of by, or leased to any member of the Group,
or was proposed to be acquired, or disposed of by, or leased to any member of the Group since 31
December 2013, being the date to which the latest published audited consolidated financial statements
of the Group were made up.
MATERIAL CONTRACTS
The following contracts are all the material contracts (not being entered into in the ordinary
course of business of the Group) entered into by members of the Group, within the two years preceding
the Latest Practicable Date:
(a) the termination agreement dated 28 December 2012 entered into between the Company and
CMHK, pursuant to which the Company and CMHK agreed to terminate the entrustment
agreement dated 18 June 2010, under which CMHK granted the management rights and the
power to direct the voting right over the 117,465,000 ordinary shares of 中國南山開發(集團)股份有限公司 (China Nanshan Development (Group) Incorporation) (“China
Nanshan”) held by 廣東省廣業投資控股有限公司 (Guangdong Guangye Investment
Holdings Limited), representing approximately 23% of the issued share capital of China
Nanshan, to the Company;
(b) the entrustment agreement dated 17 September 2012 entered into between the Company and
China Nanshan, pursuant to which China Nanshan granted to the Company the management
rights and the power to direct the voting right over the entire interest in
深圳赤灣港航股份有限公司 (Shenzhen Chiwan Wharf Holdings Limited) held by China
Nanshan;
APPENDIX IV GENERAL INFORMATION
— 61 —
A1B5(1),(2),(3)
A1B40(1)
A1B42
(c) the property interest transfer agreement dated 28 September 2012 entered into between
Shenzhen China Merchants Venture Co., Ltd (深圳市招商創業有限公司) (“CMV”),
Shenzhen China Merchants Real Estates Co., Ltd (深圳招商房地產有限公司) (“CMRE”)
and Shenzhen Malai Storage Company Limited (碼來倉儲(深圳)有限公司) (“SWZ”),
pursuant to which SWZ agreed to acquire the entire property interest in the Immigration
Building and the related parking spaces of China Merchants Ocean Centre (招商海運中心)
(“Ocean Centre”), located on Linhai Avenue of the Nanshan District in the PRC, from
CMV, which represents 46.7% property interest in the Ocean Centre;
(d) the share purchase agreement dated on 25 January 2013 entered into among China
Merchants (Luxembourg) S.à r.l., an indirect wholly-owned subsidiary of the Company, the
Company, CMA CGM SA, CMA Terminals Holding SAS and Terminal Link SAS whereby,
among other things, China Merchants (Luxembourg) S.à r.l. agreed to purchase and CMA
Terminals Holding SAS agreed to sell shares representing 49% of the issued shares in
Terminal Link SAS at an aggregate consideration of EUR400,000,000;
(e) the land use rights transfer agreement dated 25 March 2013 entered into between China
Merchants Zhangzhou Economic Development Zone Co., Ltd.
(招商局漳州開發區有限公司) (“China Merchants Zhangzhou”) and Xia Men Bay China
Merchants Terminals Co., Ltd. (漳州招商局廈門灣港務有限公司) (“Zhangzhou Xiamen
Bay”), pursuant to which China Merchants Zhangzhou agreed to sell and Zhangzhou
Xiamen Bay agreed to purchase the land use rights in respect of a parcel of land situated
at the Fourth District of the Zhangzhou Economic Development Zone located in Fujian, the
PRC, with a total site area of 299,232.859 square meters (including the sea use rights with
a site area of 172,831.724 square meters) at a total consideration of RMB134,654,787;
(f) the land use rights confirmation contract dated 23 July 2013 entered into between China
Merchants Shekou Industrial Zone Company Limited (招商局蛇口工業區有限公司)
(“CMSIZ”) and Antongjie Port and Warehouse Services (Shenzhen) Company Limited
(安通捷碼頭倉儲服務(深圳)有限公司)(“Antongjie”), pursuant to which CMSIZ agreed to
sell and Antongjie agreed to purchase the land use rights in respect of a parcel of land
situated at Mawan Road West, Shenzhen Qianhaiwan Logistics Park, Nanshan District,
Shenzhen, the PRC with a total site area of 13,108.93 square metres at a total consideration
of RMB9,940,895; and
(g) the Underwriting Agreement.
EXPENSES
The estimated expenses in connection with the Open Offer (including but not limited to the
printing, registration, legal, professional and accounting charges) are approximately HK$7 million and
are payable by the Company.
APPENDIX IV GENERAL INFORMATION
— 62 —
A1B12
GENERAL
(a) The registered office of the Company is at 38th Floor, China Merchants Tower, Shun Tak
Centre, 168-200 Connaught Road Central, Hong Kong.
(b) The company secretary of the Company is Mr. Leung Chong Shun who is a solicitor of the
High Court of Hong Kong.
(c) The authorised representatives of the Company are Mr. Li Jianhong and Mr. Wang Hong of
38th Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central,
Hong Kong.
(d) The Registrar of the Company is Computershare Hong Kong Investor Services Limited,
located at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong.
(e) The principal bankers of the Company are China Construction Bank Corporation, Industrial
and Commercial Bank of China Ltd., China Merchants Bank Co., Ltd. and Bank of China
Ltd.
(f) The legal adviser of the Company is Linklaters of 10th Floor, Alexandra House, Chater
Road, Hong Kong.
(g) The auditor of the Company is Messrs. Deloitte Touche Tohmatsu, Certified Public
Accountants of 35/F One Pacific Place, 88 Queensway, Hong Kong.
(h) The English text of this Prospectus shall prevail over the Chinese text.
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
A copy of each of the Open Offer Documents and the written consent referred to in the paragraph
headed “Qualification and Consent of Expert” in this appendix have been registered with the Registrar
of Companies in Hong Kong pursuant to section 38D of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection during normal business hours
(Saturdays and public holidays excepted) at the registered office of the Company at 38th Floor, China
Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong from the date of
this Prospectus up to and including Wednesday, 4 June 2014:
(a) the Memorandum and Articles;
(b) the material contracts referred to in the section headed “Material Contracts” of this
appendix;
APPENDIX IV GENERAL INFORMATION
— 63 —
A1B36
A1B35A1B3A1B4
A1B43
(c) the annual reports of the Company for each of the three financial years ended 31 December
2011, 2012 and 2013;
(d) the accountants’ report from Deloitte Touche Tohmatsu relating to the unaudited pro forma
financial information of the Group, the text of which is set out in Appendix II to this
Prospectus; and
(e) the written consent from Deloitte Touche Tohmatsu referred to in the section headed
“Qualification and Consent of Expert” in this appendix.
APPENDIX IV GENERAL INFORMATION
— 64 —