TIDMAIRC
RNS Number : 3748P
Air China Ld
31 August 2017
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/3748P_1-2017-8-31.pdf
Hong Kong Exchanges and Clearing Limited and The Stock Exchange
of Hong Kong Limited take no responsibility for the contents of
this announcement, make no representation as to its accuracy or
completeness and expressly disclaim any liability whatsoever for
any loss howsoever arising from or in reliance upon the whole or
any part of the contents of this announcement.
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's
Republic of China with limited liability)
(Stock Code: 00753)
(1) CONTINUING CONNECTED TRANSACTIONS AND DISCLOSEABLE
TRANSACTIONS: FINANCIAL SERVICES AGREEMENTS; AND
(2) CONTINUING CONNECTED TRANSACTION: TRADEMARK LICENSE FRAMEWORK AGREEMENT
FINANCIAL SERVICES AGREEMENTS
On 30 August 2017 (after trading hours), the Company and CNAF
entered into the Air China Financial Services Agreement to renew
and amend the 2015 Air China Financial Services Agreement. On the
same date, CNAHC and CNAF entered into the CNAHC Financial Services
Agreement to renew and amend the 2015 CNAHC Financial Services
Agreement.
CNAHC is the controlling shareholder of the Company and is
therefore a connected person of the Company as defined under the
Hong Kong Listing Rules, and the transactions contemplated under
CNAHC Financial Services Agreement constitute continuing connected
transactions of the Company. CNAF is a non-wholly owned subsidiary
of the Company. Since CNAHC can exercise more than 10% of the
voting power at CNAF's general meeting, CNAF is a connected
subsidiary of the Company as defined under Rule 14A.16 of the Hong
Kong Listing Rules, and the transactions contemplated under Air
China Financial Services Agreement constitute continuing connected
transactions of the Company.
As one or more of the applicable Percentage Ratios (other than
the profits ratio) in respect of the Air China New Annual Caps
exceed 5% and the maximum annual consideration is more than
HK$10,000,000, the deposit services to be provided to the Group by
CNAF under the Air China Financial Services Agreement are subject
to the reporting, announcement and independent shareholders'
approval requirements under Chapter 14A of the Hong Kong Listing
Rules.
As one or more of the applicable Percentage Ratios (other than
the profits ratio) in respect of the CNAHC New Annual Caps exceed
5% and the maximum annual consideration is more than HK$10,000,000,
the Credit Services to be provided to CNAHC Group by CNAF under the
CNAHC Financial Services Agreement are subject to the reporting,
announcement and independent shareholders' approval requirements
under Chapter 14A of the Hong Kong Listing Rules.
As one or more of the applicable Percentage Ratios in respect of
the Proposed Annual Caps exceed 5% but are less than 25%, the
relevant transactions contemplated under the Financial Services
Agreements also constitute discloseable transactions of the Company
under Chapter 14 of the Hong Kong Listing Rules.
TRADEMARK LICENCE FRAMEWORK AGREEMENT
The Company and CNAHC (for itself and on behalf of its
controlled companies, excluding the Group) entered into the
Trademark Licence Framework Agreement on 28 October 2014. As the
current term of the Trademark Licence Framework Agreement will
expire on 31 December 2017, and the Company and CNAHC expect that
the Trademark Licence Transaction will be carried out after 31
December 2017, the Company and CNAHC propose to renew the Trademark
Licence Framework Agreement for three years from 1 January 2018 to
31 December 2020.
The Trademark Licence Transaction under the Trademark Licence
Framework Agreement constitutes a continuing connected transaction
of the Company under the Hong Kong Listing Rules. As the
transaction is on normal commercial terms or better and on a
royalty-free basis, it falls below the de minimis threshold as
stipulated under Rule 14A.76(1) of the Hong Kong Listing Rules and
therefore is fully exempt from independent shareholders' approval,
annual review and all disclosure requirements under Chapter 14A of
the Hong Kong Listing Rules. Pursuant to the Shanghai Listing
Rules, the Trademark Licence Transaction is subject to the
Independent Shareholders' approval.
SHAREHOLDERS' CIRCULAR
A circular containing, among other things, (i) details of the
Air China Financial Services Agreement and the CNAHC Financial
Services Agreement and the Proposed Annual Caps; (ii) a letter from
an independent financial adviser to the Independent Board Committee
and the Independent Shareholders containing its advice on the
Non-exempt Continuing Connected Transactions contemplated
thereunder and the Proposed Annual Caps; and (iii) the
recommendation of the Independent Board Committee in respect of
such transactions and the Proposed Annual Caps, will be despatched
to Shareholders on or about 7 September 2017 in accordance with the
Hong Kong Listing Ru
I. FINANCIAL SERVICES AGREEMENTS
1. Introduction
Reference is made to the announcement of the Company dated 29
April 2015 and the circular of the Company dated 8 May 2015 in
relation to the 2015 Air China Financial Services Agreement entered
between the Company and CNAF on 29 April 2015 and the 2015 CNAHC
Financial Services Agreement entered between CNAHC and CNAF on 29
April 2015. The current terms of the 2015 Air China Financial
Services Agreement and the 2015 CNAHC Financial Services Agreement
will expire on 31 December 2017.
As the Company expects that the transactions under 2015 Air
China Financial Services Agreement will continue to be conducted
after 31 December 2017, on 30 August 2017 (after trading hours),
the Company and CNAF entered into the Air China Financial Services
Agreement to renew and amend the 2015 Air China Financial Services
Agreement. Air China Financial Services Agreement contains no
material changes to the 2015 Air China Financial Services
Agreement.
As CNAF expects that the transactions under 2015 CNAHC Financial
Services Agreement will continue to be conducted after 31 December
2017, on 30 August 2017 (after trading hours), CNAF and CNAHC
entered into the CNAHC Financial Services Agreement to renew and
amend the 2015 CNAHC Financial Services Agreement. CNAHC Financial
Services Agreement contains no material changes to the 2015 CNAHC
Financial Services Agreement.
2. The Air China Financial Services Agreement
Date
30 August 2017
Parties
The Company and CNAF
Financial services to be provided by CNAF to the Group
Pursuant to the Air China Financial Services Agreement, CNAF has
agreed to provide the Group with a range of financial services
including the following:
a. deposit services;
b. Credit Services;
c. other financial services, including but not limited to:
(i) negotiable instrument and letter of credit services;
(ii) trust loan and trust investment services;
(iii) underwriting services for debt issuances;
(iv) intermediary and consulting services;
(v) guarantee services;
(vi) settlement services;
(vii) internet banking services;
(viii) insurance agency services;
(ix) spot exchange settlement and sale services;
(x) cross-border bilateral RMB capital pooling services; and
(xi) other businesses of CNAF approved by CBRC, PBOC and SAFE.
Pricing basis
Deposit services
The interest rates applicable to the Group for deposits with
CNAF shall (i) be in compliance with the requirements prescribed by
PBOC on such type of deposit; (ii) be not lower than the interest
rates charged by state-owned commercial banks to the Group for the
same type of services under the same conditions; and (iii) be not
lower than the interest rates charged by CNAF to other CNAHC Member
Companies for the same type of services under the same
conditions.
Credit Services
The interest rates applicable to the Credit Services provided by
CNAF to the Group shall (i) be in compliance with the requirements
prescribed by PBOC on such type of loan; (ii) be not higher than
the interest rates charged by state-owned commercial banks to the
Group for the same type of services under the same conditions; and
(iii) be not higher than the interest rates charged by CNAF to
other CNAHC Member Companies for the same type of services under
the same conditions.
Other financial services
The fees charged by CNAF to the Group for providing paid
services in the other financial services shall (i) be in line with
the relevant standards (if any) prescribed by PBOC, CBRC, CSRC,
NAFMII or other regulatory authorities; (ii) be not higher than the
fees charged by state-owned commercial banks to the Group for the
same type of services under the same conditions; and (iii) be not
higher than the fees charged by CNAF to other CNAHC Member
Companies for the same type of services under the same
conditions.
Currently, other financial services which are free of charge and
provided by CNAF to the Group include the settlement services and
financial information services (namely, providing statistics and
information in relation to different types of financing products in
the market). If CNAF charges fees for the settlement services and
financial information services during the term of the Air China
Financial Services Agreement, the pricing basis set out in the
above paragraph shall apply, and the relevant transaction amount
will be monitored closely to ensure that the aggregate annual fees
to be paid by the Group to CNAF for other financial services will
not exceed the de minimis threshold as stipulated under Rule
14A.76(1) of the Hong Kong Listing Rules.
Other terms
Pursuant to the Air China Financial Services Agreement, CNAF
shall not carry out any business that has not been approved by CBRC
or any illegal activities. CNAF is not allowed, during the term of
the Air China Financial Services Agreement, to make use of the
deposits of the Group for investments involving high risks
including, but not limited to, investments in equity securities and
corporate bonds. CNAF is obliged to provide convenience for the
auditors of the Company. If the auditors of the Company intend to
inspect the accounts of CNAF, CNAF shall make arrangement for such
inspection after receiving notice from the Company.
The Air China Financial Services Agreement is subject to the
approval by the Independent Shareholders at the EGM. The initial
term of the Air China Financial Services Agreement is three years
commencing from 1 January 2018 and ending on 31 December 2020,
which is automatically renewable for successive terms of three
years after the expiry of its initial term subject to the
requirements under Hong Kong Listing Rules and the required
approval procedures thereof. Upon expiry of the Air China Financial
Services Agreement, the Board will re-assess the terms and
conditions of the Air China Financial Services Agreement, and the
Company will re-comply with the relevant rules governing connected
transactions under the Hong Kong Listing Rules. During the term of
the Air China Financial Services Agreement, the agreement can be
terminated on any 31 December by either party thereto by serving
the other party a written notice of termination of not less than
three months.
Reasons and benefits for the transaction
The Directors believe that it is in the best interest of the
Group to enter into the above transactions with CNAF having taken
into account the following factors:
a. in respect of transactions between the Group and CNAHC Group,
CNAF is able to provide more efficient settlement services compared
with independent third party banks;
b. CNAF is able to provide safe, convenient, fast, comprehensive
and tailor-made financial services to the Group. From 2015 and up
to the date hereof, the connected transactions between CNAF and the
Group have been carried out in compliance with the relevant laws
and regulations and the relevant listing rules, and CNAF has a good
track record on compliance. With its continuous improvement of
professional level and financial services, CNAF is fully qualified
for providing the relevant services to the Group;
c. as a professional financial institution in the Group, CNAF
could act more proactively in protecting the interest of the Group
than external institutions; and
d. a good cooperative relationship has been established between
CNAF and the relevant departments of the Group over the years which
makes their cooperation more efficient.
The Directors (including the independent non-executive
Directors) consider that the Air China Financial Services Agreement
is on normal commercial terms or better and in the ordinary and
usual course of business of the Group, and the terms and conditions
contained therein are fair and reasonable and in the interests of
the Company and the Shareholders as a whole.
Historical Figures and Air China New Annual Caps
Set forth below is a summary of the historical annual caps, the
actual maximum amount and the Air China New Annual Caps for the
daily balance of deposits (including accrued interests) placed or
to be placed by the Group with CNAF:
Historical Annual Actual maximum amount Air China New Annual
Caps Caps
for the
for the for the for the for the for the period for the for the for the
year year year year year from year year year
ended ended ending ended ended 1 January ending ending ending
31 31 31 December 31 31 to 30 31 31 31
December December 2017 December December June December December December
Transaction 2015 2016 2015 2016 2017 2018 2019 2020
Financial
Services RMB12 RMB14 RMB15 RMB3.996 RMB4.772 RMB6.403 RMB12 RMB14 RMB15
(daily balance billion billion billion billion billion billion billion billion billion
of deposits)
Basis for the Air China New Annual Caps
The Air China New Annual Caps are determined based on the
following factors:
a. The historical amount of the Group's daily balance of
deposits placed with CNAF for the two years ended 31 December 2016
and the six months ended 30 June 2017 as shown in the table above.
The historical utilization ratios are relatively low mainly because
the planned cross-border bilateral RMB capital polling services
were not carried out due to the market interest rates and foreign
exchange control, etc.. As market uncertainties still exist and
specific business model is still under discussion, for the sake of
prudence, the cross-border bilateral RMB capital polling services
are not taken into account in determining the annual caps for the
three years ending 31 December 2020.
b. The annual caps for the daily balance of deposits to be
placed by the Group with CNAF in the next three years are mainly
determined based on the highest cash and bank balance of the Group,
and the possible proportion of the Group's monetary funds deposited
with CNAF. For the past three years, the highest cash and bank
balance of the Group increased at a growth rate of 12%, and the
average amount of the highest cash and bank balance of the Group
for the three years ended 31 December 2016 and the first three
months of 2017 is approximately RMB11.6 billion. Based on such
average highest cash and bank balance and the historical growth
rate of 12%, it is estimated that the highest cash and bank balance
of the Group for each of the three years ending 31 December 2020
will reach up to RMB13 billion, RMB14.6 billion and RMB16.3
billion, respectively. In addition, as at the end of 2017, the
proportion of the Group's monetary funds deposited in CNAF is
expected to reach 62%, representing an increase of 14 percentage
points as compared
to that as at the end of 2016. Considering the historical growth
of the proportion of such deposits of monetary funds, the Group's
demands for fund utilisation, and the requirements of
centralisation of fund management and improvement of efficiency of
fund utilisation by relevant regulatory authorities, for each of
the three years ending 31 December 2020, the Group's proportion of
deposits of monetary funds in CNAF is expected to be no less than
70%. Based on the above, it is estimated that the Group's deposits
placed with CNAF for each of the three years ending 31 December
2020 will reach up to RMB9 billion, RMB11 billion and RMB12 billion
respectively.
c. In addition to the factor mentioned in paragraph b above, the
Company will continue to deposit unutilized proceeds from issue of
debts financing instruments with CNAF in the next three years. In
2016, the Company has been approved to issue super short-term
commercial papers with principal amount of RMB10 billion. During
the year of 2016, the Company issued super short-term commercial
papers of RMB7.2 billion, among which a total of RMB3 billion were
issued within one month, and some of the unutilized proceeds had
been deposited with CNAF. As the Company will continue to issue
direct financing instruments to raise funds in the next three years
and the unutilized proceeds will continue to be deposited with
CNAF, with reference to the historical maximum net proceeds
received within a month, it is estimated that an additional deposit
of approximately RMB3 billion will be placed by the Company with
CNAF for each of the three years ending 31 December 2020.
Taking into account the aforesaid various factors, it is
proposed that the maximum daily balance of deposits (including
accrued interests) placed by the Group with CNAF for each of the
three years ending 31 December 2020 shall be RMB12 billion, RMB14
billion and RMB15 billion, respectively.
3. The CNAHC Financial Services Agreement
Date
30 August 2017
Parties
CNAF and CNAHC
Financial services to be provided by CNAF to CNAHC Group
Pursuant to the CNAHC Financial Services Agreement, CNAF has
agreed to provide CNAHC Group with a range of financial services
including the following:
a. deposit services;
b. Credit Services;
c. other financial services, including but not limited to:
(i) negotiable instrument and letter of credit services;
(ii) trust loan and trust investment services;
(iii) underwriting services for debt issuances;
(iv) intermediary and consulting services;
(v) guarantee services;
(vi) settlement services;
(vii) internet banking services;
(viii) insurance agency services;
(ix) spot exchange settlement and sale services;
(x) cross-border bilateral RMB capital pooling services; and
(xi) other businesses of CNAF approved by CBRC, PBOC and SAFE.
Pricing basis
Deposit services
The interest rates applicable to CNAHC Group's deposits with
CNAF shall (i) be in compliance with the requirements prescribed by
PBOC on such type of deposit; (ii) be not higher than the interest
rates charged by state-owned commercial banks to the CNAHC Group
for the same type of services under the same conditions; and (iii)
be not higher than the interest rates charged by CNAF to other
CNAHC Member Companies for the same type of services under the same
conditions.
Credit Services
The interest rates applicable to the Credit Services provided by
CNAF to CNAHC Group shall (i) be in compliance with the
requirements prescribed by PBOC on such type of loan; (ii) be not
lower than the interest rates charged by state-owned commercial
banks to the
CNAHC Group for the same type of services under the same
conditions; and (iii) be not lower than the interest rates charged
by CNAF to other CNAHC Member Companies for the same type of
services under the same conditions.
Other financial services
The fees charged by CNAF to the CNAHC Group for providing paid
services in the other financial services shall (i) be in line with
the relevant rate standards (if any) prescribed by the PBOC, CBRC,
CSRC, NAFMII or other regulatory authorities; (ii) be not lower
than the fees charged by state-owned commercial banks to CNAHC
Group for the same type of services under the same conditions; and
(iii) be not lower than the fees charged by CNAF to other CNAHC
Member Companies for the same type of services under the same
conditions.
Currently, other financial services which are free of charge and
provided by CNAF to the CNAHC Group include the settlement services
and financial information services (namely, providing statistics
and information in relation to different types of financing
products in the market). If CNAF charges fees for the settlement
services and financial information services during the term of the
CNAHC Financial Services Agreement, the pricing basis set out in
the above paragraph shall apply, and the relevant transaction
amount will be monitored closely to ensure that the aggregate
annual fees to be paid by CNAHC Group to CNAF for other financial
services will not exceed the de minimis threshold as stipulated
under Rule 14A.76(1) of the Hong Kong Listing Rules.
Other terms
Pursuant to the CNAHC Financial Services Agreement, CNAF shall
not carry out any business that has not been approved by CBRC or
any illegal activities.
The CNAHC Financial Services Agreement is subject to the
approval by the Independent Shareholders at the EGM. The initial
term of the CNAHC Financial Services Agreement is three years
commencing from 1 January 2018 and ending on 31 December 2020,
which is automatically renewable for successive terms of three
years after the expiry of its initial term subject to the
requirements under Hong Kong Listing Rules/Shanghai Listing Rules
and the required approval procedures thereof. Upon expiry of the
CNAHC Financial Services Agreement, the Board will re-assess the
terms and conditions of the CNAHC Financial Services Agreement, and
the Company will re-comply with the relevant rules governing
connected transactions under the Hong Kong Listing Rules/Shanghai
Listing Rules. During the term of the CNAHC Financial Services
Agreement, the agreement can be terminated on any 31 December by
either party thereto by serving the other party a written notice of
termination of not less than three months.
Reasons and benefits for the transaction
CNAF has been providing financial services to CNAHC Group for
years. The business with CNAHC Group contributed a steady and
significant portion to CNAF's revenues in the past. The Directors
believe that it would be in the best interest of CNAF and the Group
to continue the provision of financial services by CNAF to CNAHC
Group.
The Directors (including the independent non-executive
Directors) consider that the CNAHC Financial Services Agreement is
on normal commercial terms or better and in the ordinary and usual
course of business of the Group, and the terms and conditions
contained therein are fair and reasonable and in the interests of
the Company and the Shareholders as a whole.
Historical Figures and CNAHC New Annual Caps
Set forth below is a summary of the historical annual caps, the
actual maximum amount and the CNAHC New Annual Caps of the daily
balance of Credit Services (including accrued interests) granted or
to be granted by CNAF to CNAHC Group:
Historical Annual Actual maximum amount CNAHC New Annual
Caps Caps
for the
for the for the for the for the for the period for the for the for the
year year year year year from year year year
ended ended ending ended ended 1 January ending ending ending
31 31 31 December 31 31 to 30 31 31 31
December December 2017 December December June December December December
Transaction 2015 2016 2015 2016 2017 2018 2019 2020
Financial
Services RMB8 RMB9 RMB10 RMB2.2 RMB2.146 RMB3.125 RMB8 RMB9 RMB10
(daily balance billion billion billion billion billion billion billion billion billion
of Credit
Services)
Basis for the CNAHC New Annual Caps:
The CNAHC New Annual Caps are determined based on the following
factors:
a. The historical maximum amount of daily balance of Credit
Services provided by CNAF to CNAHC Group for the two years ended 31
December 2015 and 2016 and the period from 1 January 2017 to 30
June 2017.
b. On the foundation of consolidating its principal business
activity, the CNAHC Group will promote the development of the
industries which are highly related to aviation, expand the
production scale of on-board catering and services products,
increase infrastructure investments in the fields such as air
logistics network construction, development and innovation of new
media, as well as the logistics and warehousing
which supports hub construction, and gradually expand the
operation scale of related industries. With the continuous
expansion of operation scale of CNAHC Group, the loans obtained
from CNAF will steadily increase. The maximum amount of daily
balance in relation to the Credit Services provided by CNAF to the
CNAHC Group was approximately RMB1.9 billion, RMB2.2 billion,
RMB2.146 billion and RMB3.125 billion during the three years ended
31 December 2014, 2015 and 2016 and the first six months of 2017
respectively, with a growth rate of approximately 19%. Taking the
maximum amount of daily balance for the six months ended 30 June
2017 as the basis and assuming the historical growth rate of 19%
will be maintained in the next three years, it is estimated that
the maximum amount of daily balance of Credit Services provided by
CNAF to CNAHC Group for each of the three years ending 31 December
2020 will reach RMB3.7 billion, RMB4.5 billion and RMB5.4 billion
respectively.
c. CNAF can fully function as a financial company and become the
lender of CNAHC Group in place of banks, so as to effectively
improve the overall efficiency of the utilization of funds. Taking
into account the amount of borrowings previously obtained from
banks by the CNAHC Group and its future fund use plan, it is
estimated that an additional borrowings of RMB4.0 billion, RMB4.2
billion and RMB4.5 billion will be obtained from CNAF in place of
banks for each of the three years ending 31 December 2020
respectively.
d. According to the project planning of certain subsidiaries of
CNAHC, they will conduct the construction of auxilliary facilities
of a project, and the estimated total investment amount is
approximately RMB1 billion. CNAHC Group will borrow up to
approximately RMB0.7 billion in aggregate from CNAF for this
purpose. It is estimated that CNAHC Group will therefore require
additional loans from CNAF amounting to RMB0.3 billion, RMB0.3
billion and RMB0.1 billion for each of the three years ending 31
December 2020 respectively.
Taking into account the various factors as mentioned above, it
is proposed that the maximum daily balance of Credit Services
(including accrued interests) to be provided by CNAF to CNAHC Group
for each of the three years ending 31 December 2020 shall be RMB8
billion, RMB9 billion and RMB10 billion, respectively.
4. Parties and Connected Relationship of the Parties
The Company
The Company's principal business activity is air passenger, air
cargo and airline-related services.
CNAF
CNAF is a company with limited liability incorporated in the
PRC, and is a non-wholly owned subsidiary of the Group. CNAF is
primarily engaged in providing financial services to CNAHC Member
Companies. Since CNAHC can exercise more than 10% of the voting
power at CNAF's general meeting, CNAF is a connected subsidiary of
the Company as defined under Rule 14A.16 of the Hong Kong Listing
Rules.
CNAHC
CNAHC is a state-owned company incorporated in the PRC with a
registered capital of RMB10,027,830,000. Its registered address is
Air China Plaza, 36 Xiaoyun Road, Chaoyang District, Beijing, the
PRC and its legal representative is Mr. Cai Jianjiang. It is
primarily engaged in managing its state-owned assets and its equity
interest in investees, charter of aircraft and maintenance of
aviation equipment. CNAHC is the controlling shareholder of the
Company and is therefore a connected person of the Company as
defined under the Hong Kong Listing Rules.
5. Hong Kong Listing Rules Implications
The Air China Financial Services Agreement
Deposit services
As one or more of the applicable Percentage Ratios (other than
the profits ratio) in respect of the Air China New Annual Caps
exceed 5% and the maximum annual consideration is more than
HK$10,000,000, the deposit services to be provided to the Group by
CNAF under the Air China Financial Services Agreement are subject
to the reporting, announcement and independent shareholders'
approval requirements under Chapter 14A of the Hong Kong Listing
Rules.
Credit Services
Credit services to be provided to the Group by CNAF are expected
to be conducted on normal commercial terms or better, and not to be
secured by the assets of the Group. Therefore, such transactions
will be fully exempt from the reporting, annual review,
announcement and independent shareholders' approval requirements
for continuing connected transactions in accordance with Rule
14A.90 of the Hong Kong Listing Rules.
Other financial services
The other financial services to be provided by CNAF to the Group
will be carried out on normal commercial terms or better and the
aggregate annual fees to be paid by the Group to CNAF for such
services for each of the three years ending 31 December 2018,
2019
and 2020 are expected to fall below the de minimis threshold as
stipulated under Rule 14A.76(1) of the Hong Kong Listing Rules.
Therefore, such transactions will be fully exempt from the
reporting, annual review, announcement and independent
shareholders' approval requirements under the Hong Kong Listing
Rules.
The CNAHC Financial Services Agreement
Deposit services
The deposits placed by CNAHC Group with CNAF are expected to be
conducted on normal commercial terms or better, and not to be
secured by the assets of the Group. Therefore, such transactions
will be fully exempt from the reporting, annual review,
announcement and independent shareholders' approval requirements
for continuing connected transactions as provided under Rule 14A.90
of the Hong Kong Listing Rules.
Credit Services
As one or more of the applicable Percentage Ratios (other than
the profits ratio) in respect of the CNAHC New Annual Caps exceed
5% and the maximum annual consideration is more than HK$10,000,000,
the Credit Services to be provided to CNAHC Group by CNAF under the
CNAHC Financial Services Agreement are subject to the reporting,
announcement and independent shareholders' approval requirements
under Chapter 14A of the Hong Kong Listing Rules.
Other financial services
The other financial services to be provided by CNAF to the CNAHC
Group will be carried out on normal commercial terms or better and
the aggregate annual fees to be paid by the CNAHC Group to CNAF for
such services for each of the three years ending 31 December 2018,
2019 and 2020 are expected to fall below the de minimis threshold
as stipulated under Rule 14A.76(1) of the Hong Kong Listing Rules.
Therefore, such transactions will be fully exempt from the
reporting, annual review, announcement and independent
shareholders' approval requirements for continuing connected
transactions.
Discloseable Transactions
As one or more of the applicable Percentage Ratios in respect of
the Proposed Annual Caps exceed 5% but are less than 25%, the
relevant transactions contemplated under the Financial Services
Agreements also constitute discloseable transactions of the Company
under Chapter 14 of the Hong Kong Listing Rules.
6. Shanghai Listing Rules Implications
Pursuant to the Shanghai Listing Rules, the CNAHC Financial
Services Agreement shall be approved or ratified by Independent
Shareholders at the EGM.
7. General
The Company will seek Independent Shareholders' approval for the
Financial Services Agreements, the Non-exempt Continuing Connected
Transactions and the Proposed Annual Caps.
The Independent Board Committee comprising all independent
non-executive Directors has been set up to advise the Independent
Shareholders in respect of the Non-exempt Continuing Connected
Transactions contemplated under the Air China Financial Services
Agreement and the CNAHC Financial Services Agreement and the
Proposed Annual Caps. Octal Capital Limited has been appointed as
the independent financial advisor to advise the Independent Board
Committee and the Independent Shareholders in this regard.
II. TRADEMARK LICENCE FRAMEWORK AGREEMENT
1. Renewal of the Trademark Licence Framework Agreement
Description of the Trademark Licence Framework Agreement
The Company and CNAHC (for itself and on behalf of its
controlled companies, excluding the Group) entered into the
Trademark Licence Framework Agreement on 28 October 2014. According
to the Trademark Licence Framework Agreement, the Company granted
CNAHC and its controlled companies (excluding the Group) a
non-exclusive licence for the use of a total of 83 registered
trademarks of the Company. The granting of the non-exclusive
licence under the Trademark Licence Framework Agreement is made on
a royalty free basis at nil consideration. CNAHC and its controlled
companies undertook to use such licensed trademarks subject to the
terms of the non-competition agreement, and to ensure the quality
of the services using the licensed trademarks in order to maintain
their reputation.
Pricing of and reasons for the Transaction
The licensed trademarks had been contributed by CNAHC to the
Company as its intangible assets upon its incorporation at nil
consideration. As the trademarks are related to the daily business
of CNAHC and its controlled companies, the Company licensed certain
trademarks to CNAHC and its controlled companies at nil
consideration for its use in its ordinary course of business as a
reciprocal arrangement pursuant to the 2004 Trademark Licence
Agreement. On 1 November 2004, the Company and CNAHC entered into
the 2004 Trademark Licence Agreement, which expired on 31 December
2014; on 28
October 2014, the Company and CNAHC entered into Trademark
License Framework Agreement, which expires on 31 December 2017.
Given the above circumstances, the current extension period of the
Trademark Licence Framework Agreement still adopts the same method
of trademark licencing at nil consideration.
As the current validity period of the Trademark Licence
Framework Agreement will expire on 31 December 2017. To maintain
the consistency of the business operation, the Company and CNAHC
have proposed to extend the valid period of the Trademark Licence
Framework Agreement to 31 December 2020.
2. Parties and the Relationship between the Parties
The Company
The Company's principal business activity is air passenger, air
cargo and airline-related services.
CNAHC
CNAHC is a state-owned company incorporated in the PRC with a
registered capital of RMB10,027,830,000. Its registered address is
Air China Plaza, 36 Xiaoyun Road, Chaoyang District, Beijing, the
PRC and the legal representative is Mr. Cai Jianjiang. It is
primarily engaged in managing its state-owned assets and its equity
interest in investees, charter of aircraft and maintenance of
aviation equipment. CNAHC is a substantial shareholder of the
Company and is therefore a connected person of the Company as
defined under the Hong Kong Listing Rules.
3. Hong Kong Listing Rules Implications
The Trademark Licence Transaction under the Trademark Licence
Framework Agreement constitutes a continuing connected transaction
of the Company under the Hong Kong Listing Rules. As the
transaction is on normal commercial terms or better and on a
royalty-free basis, it falls below the de minimis threshold as
stipulated under Rule 14A.76(1) of the Hong Kong Listing Rules and
therefore is fully exempt from independent shareholders' approval,
annual review and all disclosure requirements under Chapter 14A of
the Hong Kong Listing Rules.
4. Shanghai Listing Rules Implications
Pursuant to the Shanghai Listing Rules, the Trademark Licence
Transaction is subject to the Independent Shareholders' approval.
The Company therefore seeks approval from Independent Shareholders
at the EGM of the renewal of the Trademark Licence Framework
Agreement for a term of three years from 1 January 2018 to 31
December 2020.
III. SHAREHOLDERS' CIRCULAR
A circular containing, among other things, (i) details of the
Air China Financial Services Agreement and the CNAHC Financial
Services Agreement and the Proposed Annual Caps; (ii) a letter from
an independent financial adviser to the Independent Board Committee
and the Independent Shareholders containing its advice on the
Non-exempt Continuing Connected Transactions contemplated
thereunder and the Proposed Annual Caps; and (iii) the
recommendation of the Independent Board Committee in respect of
such transactions and the Proposed Annual Caps, will be despatched
to Shareholders on or about 7 September 2017 in accordance with the
Hong Kong Listing Rules.
DEFINITIONS
In this announcement, unless the context otherwise requires, the
following terms shall have the following meanings:
"2004 Trademark Licence the trademark licensing agreement entered into
Agreement" between the Company and CNAHC on 1 November 2004
"2015 Air China Financial the financial services framework agreement entered
Services Agreement" into between the Company and CNAF on 29 April
2015
"2015 CNAHC Financial the financial services framework agreement entered
Services Agreement" into between CNAF and CNAHC on 29 April 2015
"Air China Financial Services the financial services framework agreement entered
Agreement" into between the Company and CNAF on 30 August
2017
"Air China New Annual RMB12 billion, RMB14 billion and RMB15 billion,
Caps" being the proposed maximum daily balance of deposits
(including accrued interests) to be placed by
the Group with CNAF under the Air China Financial
Services Agreement for each of the three years
ending 31 December 2020, respectively
"Board" the board of Directors of the Company
"CBRC" China Banking Regulatory Commission
"CNAF" China National Aviation Finance Co., Ltd. ( ),
a limited liability company incorporated under
the laws of the PRC
"CNAHC" China National Aviation Holding Company ( )
"CNAHC Financial Services the financial services framework agreement entered
Agreement" into between CNAHC and CNAF on 30 August 2017
"CNAHC Group" CNAHC, its subsidiaries and their associates,
companies falling within the definition of commonly
held entity under the Hong Kong Listing Rules,
as well as any other CNAHC Member Company which,
in accordance with the listing rules of the places
where the shares of the Company are listed as
in force and as amended from time to time, is
a connected person or related party of the Company,
but excluding the Group
"CNAHC Member Companies" the member companies of the enterprise group
of which CNAHC is the parent company, specific
scope of the CNAHC Member Companies shall be
determined in accordance with the Administrative
Measures for Finance Companies of Enterprise
Groups and other relevant regulations
"CNAHC New Annual Caps" RMB8 billion, RMB9 billion and RMB10 billion,
being the proposed maximum daily balance of Credit
Services (including accrued interests) to be
provided by CNAF to the CNAHC Group under the
CNAHC Financial Services Agreement for each of
the three years ending 31 December 2020, respectively
"Company" Air China Limited, a company incorporated in
the PRC, whose H shares are listed on the Stock
Exchange as its primary listing venue and on
the Official List of the UK Listing Authority
as its secondary listing venue, and whose A shares
are listed on the Shanghai Stock Exchange
"Credit Services" loan, finance lease, and other credit services
"CSRC" China Securities Regulatory Commission
"Director(s)" the director(s) of the Company
"EGM" the extraordinary general meeting of the Company
to be held on Friday, 27 October 2017
"Financial Services Agreements" the Air China Financial Services Agreement and
the CNAHC Financial Services Agreement
"Group" the Company and its subsidiaries
"HK$" Hong Kong dollars, the lawful currency of Hong
Kong
"Hong Kong" Hong Kong Special Administrative Region of the
PRC
"Hong Kong Listing Rules" The Rules Governing the Listing of Securities
on the Stock Exchange
"Independent Board Committee" a board committee comprising Mr. Wang Xiaokang,
Mr. Liu Deheng, Mr. Stanley Hui Hon-chung and
Mr. Li Dajin, all being the independent non-executive
Directors
"Independent Financial Octal Capital Limited, a corporation licensed
Adviser" or "Octal Capital" to carry out Type 1 (dealing in securities) and
Type 6 (advising on corporate finance) and Type
9 (asset management) regulated activities under
the SFO, being the independent financial adviser
to the Independent Board Committee and the Independent
Shareholders in connection with the Non-exempt
Continuing Connected Transactions and the Proposed
Annual Caps
"Independent Shareholders" the independent shareholders of the Company
"NAFMII" National Association of Financial Market Institutional
Investors
"Non-exempt Continuing the deposit services to be provided by CNAF to
Connected Transactions" the Group under the Air China Financial Services
Agreement and the Credit Services to be provided
by CNAF to CNAHC Group under the CNAHC Financial
Services Agreement
"PBOC" the People's Bank of China
"Percentage Ratio" shall have the meaning ascribed to it by the
Hong Kong Listing Rules
"PRC" the People's Republic of China, excluding, for
the purpose of this circular only, Hong Kong,
Macau and Taiwan
"Proposed Annual Caps" the Air China New Annual Caps and the CNAHC New
Annual Caps
"RMB" Renminbi, the lawful currency of the PRC
"SAFE" the State Administration of Foreign Exchange
of the PRC
"Shanghai Listing Rules" the Rules Governing the Trading of Stocks on
the Shanghai Stock Exchange
"Shareholder(s)" holder(s) of the shares of the Company
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Trademark Licence Framework the trademark licence framework agreement, dated
Agreement" 28 October 2014, entered into between the Company
and CNAHC in respect of the Trademark Licence
Transaction
"Trademark Licence Transaction" the continuing connected transaction contemplated
under the Trademark Licence Framework Agreement
in relation to the granting by the Company to
CNAHC and its controlled companies (excluding
the Group) of a non-exclusive licence for the
use of 83 registered trademarks of the Company
By Order of the Board
Air China Limited
Zhou Feng Tam Shuit Mui
Joint Company Secretaries
Beijing, the PRC, 30 August 2017
As at the date of this announcement, the directors of the
Company are Mr. Cai Jianjiang, Mr. Song Zhiyong, Mr. Cao Jianxiong,
Mr. Feng Gang, Mr. John Robert Slosar, Mr. Ian Sai Cheung Shiu, Mr.
Wang Xiaokang*, Mr. Liu Deheng*, Mr. Stanley Hui Hon-chung* and Mr.
Li Dajin*.
* Independent non-executive director of the Company
This information is provided by RNS
The company news service from the London Stock Exchange
END
AGRUARORBOAWORR
(END) Dow Jones Newswires
August 31, 2017 02:01 ET (06:01 GMT)
Air China Ld (LSE:AIRC)
Historical Stock Chart
From Apr 2024 to May 2024
Air China Ld (LSE:AIRC)
Historical Stock Chart
From May 2023 to May 2024