The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Huaneng Power International

(a Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: HNP) Document in pdf format: click here

CONTINUING CONNECTED TRANSACTIONS

On 27 June 2008, the Company completed the Acquisition of SinoSing Power from Huaneng Group. Immediately following completion of the Acquisition of SinoSing Power, TPGS became an indirect non-wholly owned subsidiary of Company and is owned as to 75% by Tuas Power, an indirect wholly owned subsidiary of the Company, and 25% by GSPL which is a subsidiary of Temasek. Temasek therefore became a substantial shareholder of a subsidiary of the Company and a connected person of the Company under the Hong Kong Listing Rules. By virtue of being an associate of Temasek, each of Tuas Power Connected Persons became a connected person of the Company for purposes of the Hong Kong Listing Rules.

The Transactions have been, and will continue to be, conducted on a regular and continuing basis and in the ordinary and usual course of business of Tuas Power/TPS. Thus, immediately after completion of the Acquisition, the Transactions constitute continuing connected transactions of the Company under the Hong Kong Listing Rules. Pursuant to Rule 14A.41 of the Hong Kong Listing Rules, the Transactions are subject to all applicable reporting and disclosure requirements of Chapter 14A of the Hong Kong Listing Rules. The Company will comply in full with all applicable reporting, disclosure and, if applicable, independent shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules upon any variation or renewal of the Vesting Contract, MSS Agreement, ROS Agreement or GSPL Agreement.

 

1. BACKGROUND

1.1

Connected persons of the Company

On 27 June 2008, the Company completed the Acquisition of SinoSing Power from Huaneng Group. Immediately following completion of the Acquisition of SinoSing Power, TPGS became an indirect non-wholly owned subsidiary of Company and is owned as to 75% by Tuas Power, an indirect wholly owned subsidiary of the Company, and 25% by GSPL which is a subsidiary of Temasek. Temasek therefore became a substantial shareholder of a subsidiary of the Company and connected person of the Company under the Hong Kong Listing Rules. By virtue of being an associate of Temasek, each of Tuas Power Connected Persons became a connected person of the Company for purposes of the Hong Kong Listing Rules.

The Transactions have been, and will continue to be, conducted on a regular and continuing basis and in the ordinary and usual course of business of Tuas Power/TPS. Thus, immediately after completion of the Acquisition, the Transactions constitute continuing connected transactions of the Company under the Hong Kong Listing Rules.

1.2

Provision of allocation of hedge quantities and fixing of hedge prices by SP

Services Limited to Tuas Power

Pursuant to the Vesting Contract entered into between Tuas Power and SP Services Limited on 23 September 2003 (as supplemented by an addendum dated 1 January 2004 between the parties), SP Services Limited has been allocating certain hedge quantities to Tuas Power and fixing certain hedge prices between the parties in accordance with the terms of the Vesting Contract. The Vesting Contract shall terminate after midnight of 31 December 2009 if the Energy Market Authority of Singapore declares that the control of market power is no longer necessary, or upon an event of default or if a party is unable to perform any material provision of the Vesting Contract due to any law or directive of the Energy Market Authority of Singapore.

In compliance with the requirements by the regulatory authorities and the Energy Market Authority of Singapore and the terms of their licences, Tuas Power and SP Services Limited have entered into, among other things, the Vesting Contract on substantially the same terms and conditions as specified in the standard regulatory agreement by the Energy Market Authority of Singapore. The Vesting Contract is designed to reduce the market power of the larger players and promote price stability for consumers. Being the counterparty to the generators in all of the vesting contracts required to be entered into by the Energy Market Authority of Singapore, SP Services Limited allocates the net benefits or costs of the Vesting Contract to Tuas Power, the non-contestable consumers and the contestable consumers who purchase electricity from the pool.

Depending on the vesting contract reference price and the regulated hedge price from time to time determined in accordance with the terms of the Vesting Contract and by the Energy Market Authority of Singapore, payments are made under the Vesting Contract. The payment under the Vesting Contract is settled through the settlement system of the Energy Market Company of Singapore.

1.3

Provision of market support services by SP Services Limited to TPS

Pursuant to the MSS Agreement entered into between TPS and SP Services Limited on 15 November 2002, SP Services Limited has been providing the market support services to TPS.

The Electricity Act of Singapore requires, among other things, the licensees of the market support services licence (“Market Support Services Licence”) and of the retail electricity licence (“Retail Licence”) to comply with one or more specified codes of practice. One of such specified codes of practice is the Market Support Services Code (“Market Support Services Code”) which set out the minimum conditions that a market support services licensee must meet in carrying out its obligations to provide market services to retailer and contestable consumers and facilitate their access to the wholesale market. A market support services licensee shall not offer to provide market support services to any retail electricity licensee unless the market support services licensee has entered into a market support services agreement with the retail electricity licensee.

In compliance with the Market Support Services Code, the Market Support Services Licence held by SP Services Limited and the Retail Licence held by TPS, TPS and SP Services Limited as market participants have entered into the MSS Agreement on substantially the same terms and conditions as specified in the standard regulatory agreement by the Energy Market Authority of Singapore. The charges payable (inclusive of vesting settlement) under the MSS Agreement are in line with the regulated price from time to time approved by the Energy Market Authority of Singapore. The payment under the MSS Agreement is settled in cash in arrears.

The MSS Agreement continues indefinitely until terminated by TPS upon giving 90 days prior written notice to the other party or upon notice given by the non-defaulting party in an event of default by the defaulting party.

1.4

Provision of electricity transmission services by SP PowerAssets Limited to TPS’s customers where TPS provides retailer-consolidated billing services to customers

Pursuant to the ROS Agreement entered into between TPS and Power Grid Limited

(the predecessor of SP PowerAssets Limited) on 26 September 2002, SP PowerAssets

Limited has been providing electricity transmission services to TPS customers where

TPS is providing retailer-consolidated billing to customers of TPS. The ROS

Agreement continues indefinitely unless terminated by the non-defaulting party in

the event of default by the other party. It may be automatically terminated upon the

voluntary disconnection of all facilities or equipment of TPS’s consumers from the

transmission system where no re-connection has occurred within 30 days of such

disconnection. The ROS Agreement shall also automatically terminate upon the

involuntary disconnection of all TPS’s consumer’s connected facilities in accordance

with the ROS Agreement on the 61st day after the date of disconnection.

The Electricity Act of Singapore requires, among other things, the licensees of the

electricity licence (“Electricity Licence”) and of the Retail Licence to comply with

one or more specified codes of practice. One of such specified codes of practice is

the Code of Conduct for Retail Electricity Licensees (“Retailer Code of Conduct”)

which set out the minimum standards of behaviour that a retail electricity licensee

must observe in retailing to consumers. A retail electricity licensee shall not provide

or offer to provide retailer-consolidated billing to customers unless it has entered into

a retailer use of system agreement with the transmission licensee.

In compliance with the Retailer Code of Conduct, the Electricity Licence held by SP

PowerAssets Limited and the Retail Licence held by TPS, SP PowerAssets Limited

and TPS as market participants have entered into the ROS Agreement on substantially

the same terms and conditions as specified in the standard regulatory agreement by

the Energy Market Authority of Singapore.

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The charges for the services are in line with the regulated price from time to time

approved by the Energy Market Authority of Singapore. The payment under the ROS

Agreement is settled in cash in arrears.

1.5

Provision of Gas by GSPL to Tuas Power

Pursuant to the GSPL Agreement entered into between Tuas Power and GSPL on 11

June 2004 (as supplemented by a letter agreement dated 10 November 2004 and

amended by a supplemental agreement dated 29 October 2007), Tuas Power has been

purchasing gas supply procured by GSPL pursuant to a gas sales agreement between

Pertamina and GSPL and at the contract price which is pegged to the average daily

Singapore spot price of High Sulfur Fuel Oil 180 centistoke (HSFO) as quoted in

Platt’s. The payment under the GSPL Agreement is settled in cash in arrears.

The GSPL Agreement is for a period expiring on 12 August 2023 unless terminated

in accordance with the terms specified therein.

2. REASONS FOR, AND BENEFITS OF, THE TRANSACTIONS

The Transactions have been, and will continue to be, conducted on a regular and

continuing basis and in the ordinary and usual course of business of Tuas Power/TPS.

The terms of the Transactions were negotiated on normal commercial terms or

otherwise in conformity with the requirements of the laws in Singapore.

The Directors (including the independent non-executive Directors) are of the view

that the Transactions will continue as part of the ordinary and usual course of

business of Tuas Power/TPS, and the terms of each of the agreements under each of

the Transactions were negotiated on normal commercial terms or otherwise in

conformity with requirements of the laws in Singapore and that the terms of the

Transactions, the terms of each of the agreements under each Transaction are fair and

reasonable and in the interest of the Company and its shareholders as a whole.

3. IMPLICATIONS UNDER HONG KONG LISTING RULES

Pursuant to Rule 14A.41 of the Hong Kong Listing Rules, the Transactions are

subject to all applicable reporting and disclosure requirements of Chapter 14A of the

Hong Kong Listing Rules. The Company will comply in full with all applicable

reporting, disclosure and, if applicable, independent shareholders’ approval

requirements under Chapter 14A of the Hong Kong Listing Rules upon any variation

or renewal of the Vesting Contract, MSS Agreement, ROS Agreement or GSPL

Agreement.

4. GENERAL INFORMATION REGARDING THE COMPANY, SINOSING

POWER AND TUAS POWER

The Company and its subsidiaries develop, construct, operate and manage power

plants. Excluding the generation capacity of Tuas Power in Singapore, the Company

owns a total generation capacity of 33,723 MW on an equity basis as of 31 March

2008. Currently, it is the largest listed power producer in China.

SinoSing Power was incorporated in Singapore as an investment holding company for

holding 100% issued shares of Tuas Power.

Tuas Power is a power generating company incorporated in Singapore which is

engaged in the business of generation and trading of power. Currently, it has a

generation capacity of 2,670 MW, representing approximately 25% of market share

in Singapore.

— 5 —

5. DEFINITIONS

“Acquisition” the purchase by the Company of the 100% interest in

SinoSing Power from Huaneng Group;

“associate(s)” the meaning ascribed to it in the Hong Kong Listing

Rules;

“Company”, “HPI” Huaneng Power International, Inc.;

“Directors” the directors (including independent non-executive

directors) of the Company;

“GSPL” Gas Supply Pte. Ltd., a subsidiary of Temasek;

“GSPL Agreement” the End User Agreement dated 11 June 2004 entered

into between Tuas Power and GSPL, as supplemented

by a letter agreement dated 10 November 2004 and

amended by a Supplemental Agreement dated 29

October 2007;

“Hong Kong Listing

Rules”

The Rules Governing the Listing of Securities on the

Stock Exchange;

“Huaneng Group” China Huaneng Group;

“MSS Agreement” the Market Support Services Agreement dated 15

November 2002 entered into between TPS and SP

Services Limited;

“ROS Agreement” the Retailer Use of System Agreement dated 26

September 2002 entered into between TPS and Power

Grid Limited which subsequently assigned its rights to

SP PowerAssets Limited;

“PRC” The People’s Republic of China;

“RMB” the lawful currency of the PRC;

“Shareholders” the shareholders of the Company;

“SinoSing Power” SinoSing Power Pte. Ltd.;

“Stock Exchange” The Stock Exchange of Hong Kong Limited;

— 6 —

“substantial

shareholder(s)”

the meaning ascribed to it in the Hong Kong Listing

Rules;

“Temasek” Temasek Holdings (Private) Limited;

“TPGS” TPGS Green Energy Pte. Ltd., a limited company

incorporated in Singapore, which is 75% owed by Tuas

Power and 25% owned by GSPL which is a subsidiary of

Temasek;

“TPS” Tuas Power Supply Pte. Ltd., a limited company

incorporated in Singapore, which is 100% owned by

Tuas Power;

“Transactions” the transactions contemplated under each of the GSPL

Agreement, Vesting Contract, MSS Agreement and ROS

Agreement;

“Tuas Power” Tuas Power Ltd., an indirect wholly owned subsidiary

of the Company;

“Tuas Power Connected

Persons”

each of GSPL, SP Services Limited and SP PowerAssets

Limited; and

“Vesting Contract” the vesting contract dated 23 September 2003 entered

into between Tuas Power and SP Services Limited, as

supplemented by an addendum dated 1 January 2004

between the parties.

By Order of the Board

Huaneng Power International, Inc.

Gu Biquan

Company Secretary

— 7 —

As at the date of this announcement, the directors of the Company are:

Huang Yongda

(Non-executive Director)

Huang Long

(Non-executive Director)

Wu Dawei

(Non-executive Director)

Liu Guoyue

(Executive Director)

Fan Xiaxia

(Executive Director)

Shan Qunying

(Non-executive Director)

Xu Zujian

(Non-executive Director)

Huang Mingyuan

(Non-executive Director)

Liu Shuyuan

(Non-executive Director)

Liu Jipeng

(Independent Non-executive Director)

Yu Ning

(Independent Non-executive Director)

Shao Shiwei

(Independent Non-executive Director)

Zheng Jianchao

(Independent Non-executive Director)

Wu Liansheng

(Independent Non-executive Director)

Beijing, the PRC

4 July 2008

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The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

China Eastern Airlines Co.

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock code: 670) Document in pdf foramt: click here

DISCLOSEABLE TRANSACTION

SALE AND LEASEBACK OF THREE AIRBUS A340 SERIES AIRCRAFT

On 27 June 2008, the Company entered into: (1) the Sale and Purchase Agreements with the Buyer regarding the sale and purchase of the Aircraft; and (2) the Lease Agreements with the Buyer regarding the leasing-back of the Aircraft.

The Transactions constitute a discloseable transaction of the Company under the Listing Rules.

The Company will issue and despatch to its shareholders a circular containing the information required under the Listing Rules in relation to the Transactions.

THE SALE AND PURCHASE AGREEMENTS

On 27 June 2008, the Company entered into the Sale and Purchase Agreements with the Buyer regarding the sale and purchase of the Aircraft in accordance with the terms and conditions thereof.

To the best knowledge, information and belief of the Directors having made all reasonable enquiry, the Buyer and its ultimate beneficial owner(s) are third parties independent of the Company and connected persons (as defined in the Listing Rules) of the Company, and are not connected persons of the Company.

Aircraft to be disposed of	:	The Aircraft.
Consideration	:	An aggregate amount which is equivalent to the unaudited book value of the Aircraft as at the Completion Date. As at 27 June 2008, the unaudited book value of the Aircraft is RMB1.29 billion. The consideration was determined after arm’s length negotiation between the parties and will be paid in cash via telegraphic transfer on the Completion Date.

 

2

Conditions	:	Completion is conditional upon, the fulfillment or waiver by the relevant parties the following conditions:
(1) the Lease Agreements and the ancillary documents having been executed by the respective parties;
(2) the Company has provided the relevant documentary evidence to prove its title ownership of the Aircraft to the Buyer;
(3) each party has provided to the other party copies of its constitutional documents, respective resolutions of the board of directors approving the Sale and Purchase Agreements, business licenses and (for the Company) registration documents relating to the Aircraft;
(4) as at the Completion Date, there is no mortgage or priority right over the Aircraft or the provision of the relevant release documents in respect of such mortgage or priority right (if any) from the Company to the Buyer; and
(5) the warranties and representations under the Sale and Purchase Agreements remain true and accurate.
Completion Date	:	The date upon which the conditions as set out in the Sale and Purchase Agreements have been fulfilled. The parties expect that it will be a date prior to 31 July 2008.

THE LEASE AGREEMENTS

On 27 June 2008, the Company entered into the Lease Agreements with the Buyer regarding the leasing-back of the Aircraft in accordance with the terms and conditions thereof.

Aircraft to be leased-back	:	The Aircraft.
Term	:	72 months, commencing on the Delivery Date.
Rental fee and handling fee	:	The rental fee for the Aircraft will depend on the prevailing interest rates offered by the People’s Bank of China, which will be paid in cash by the Company quarterly. Based on the current rates, it is expected to amount to approximately RMB20,000,000 per quarter for each Aircraft. Pursuant to the Lease Agreements, the Company has to pay to the Buyer an one-off handling fee with reference to a certain percentage of the consideration payable under the Sale and Purchase Agreements. The rental fee and the handling fee were determined after arm’s length negotiation between the parties and on normal commercial terms.

 

3

Conditions	:	Completion is conditional upon, fulfillment or waiver by the relevant parties the following conditions:
(1) the Sale and Purchase Agreements and the ancillary documents having been executed by the respective parties;
(2) the relevant rental fee and the handling fee have been received by the Buyer pursuant to the Lease Agreements;
(3) each party has provided to the other party copies of its constitutional documents, respective resolutions of the board of directors approving the Lease Agreements, business licenses and (for the Company) registration and insurance documents and licenses relating to the Aircraft;
(4) the warranties and representations under the Lease Agreements remain true and accurate; and
(5) there is no event of default as described in the Lease Agreements prior to the Delivery Date.
Buy-back	:	Pursuant to the Lease Agreements, upon the expiry of the term of the Lease Agreements, the Company shall (and not at its discretion) purchase the Aircraft back from the Buyer at a consideration which amounts to not more than 10% of the consideration payable under the Sale and Purchase Agreements. Further announcement(s) will be made the Company in compliance with the relevant Listing Rules, if and when appropriate.

GENERAL

The Company and the Buyer	:	The Company is principally engaged in the business of civil aviation.
The Buyer, to the Directors’ knowledge, is engaged in businesses such as finance lease, receiving rental deposit from lessee, transferring rental proceeds to commercial banks, issuing approved debentures, inter-bank borrowing, lending to financial institutions, lending foreign currency outside the PRC, dispose and administer residual value of leased assets, import and export business and consultancy services.

 

4

Financial impact on, and benefits expected to accure to the Company, and intended application of sale proceeds	:		The Directors expect there will not be any gain or loss expected to accrue to the Company as the consideration of the Sale and Purchase Agreements is based on the unaudited book value of the Aircraft as at the Completion Date. It is technically not viable to determine the net profit attributable to just the Aircraft for the two previous financial years, however, there is no change in relation to the net profit attributable to the Aircraft for the two previous financial years as a result of the Transactions. The Directors expect that the Transactions may improve the allocation and use of the Company’s fixed assets, create new channel for the finance arrangement of the company and enhancing the Company’s cash flow position.
The Directors currently intend to use the proceeds from the Company’s sale of the Aircraft for its normal operating purposes.
The Directors believe that the terms of the Sale and Purchase Agreements and the Lease Agreements are fair and reasonable and in the interests of its shareholders as a whole.
Discloseable transaction	:		The Transactions constitute a discloseable transaction of the Company under the Listing Rules.
The Company will issue and despatch to its shareholders a circular containing the information required under the Listing Rules in relation to the Transactions.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

“Aircraft”	means three Airbus A340 series aircraft, including the engines, accessories and documents in connection with such aircraft;
“Buyer”	means 工銀金融租賃有限公司 (ICBC Financial Leasing Co., Ltd.), a company incorporated in the PRC;
“Company”	means 中國東方航空股份有限公司 (China Eastern Airlines Corporation Limited), a joint stock limited company incorporated in the PRC with limited liability, whose H shares, A shares and American depositary shares are listed on the Stock Exchange, the Shanghai Stock Exchange and the New York Stock Exchange, Inc., respectively;

 

5

“Completion Date”	means the completion date as set out in the Sale and Purchase Agreements;
“Delivery Date”	means the date which the Buyer delivers the Aircraft to the Company pursuant to the Lease Agreements;
“Directors”	means the directors of the Company;
“Hong Kong”	means the Hong Kong Special Administrative Region of the People’s Republic of China;
“Lease Agreements”	means three lease agreements in relation to the leasing-back of each of the Aircraft, all dated 27 June 2008 entered into between the Company as the lessee and the Buyer as the lessor;
“Listing Rules”	means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;
“PRC”	means the People’s Republic of China;
“RMB”	means renminbi, the lawful currency of the PRC;
“Sale and Purchase Agreements”	means three sale and purchase agreements in relation to the sale and purchase of each of the Aircraft, all dated 27 June 2008 entered into between the Company as the seller and the Buyer as the purchaser;
“Stock Exchange”	means The Stock Exchange of Hong Kong Limited; and
“Transactions”	means the transactions contemplated under the Sale and Purchase Agreements and the Lease Agreements.

By order of the board of the directors of

CHINA EASTERN AIRLINES CORPORATION LIMITED

Luo Zhuping

Director and Company Secretary

The Company’s directors as at the date of this announcement are:

Li Fenghua	(Chairman, Non-executive Director)
Li Jun	(Vice Chairman, Non-executive Director)
Cao Jianxiong	(President, Executive Director)
Luo Chaogeng	(Non-executive Director)
Luo Zhuping	(Executive Director)
Hu Honggao	(Independent non-executive Director)
Peter Lok	(Independent non-executive Director)
Wu Baiwang	(Independent non-executive Director)
Zhou Ruijin	(Independent non-executive Director)
Xie Rong	(Independent non-executive Director)

Shanghai, the PRC

4 July, 2008

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