On 28 September 2017, Shandong Company entered into the Transfer Agreement with HETHC, pursuant to which Shandong Company proposed to transfer its 56.53% equity interests in Taishan Power to HETHC at a price of RMB780.7774 million. Following the completion, Shandong Company will no longer hold any interest in Taishan Power, and Taishan Power will no longer be included in the consolidated financial statements of the Company.

 

As of the date of this announcement, the Company holds an 80% equity interest in Shandong Company and Huaneng Group holds a 100% interest in HETHC. Huaneng Group holds a 75% direct interest and a 25% indirect interest in HIPDC, while HIPDC, being the direct controlling shareholder of the Company, holds a 33.33% interest in the Company. Huaneng Group also holds a 10.23% direct interest in the Company and holds a 3.11% indirect interest in the Company through Huaneng HK and a 0.49% indirect interest in the Company through China Huaneng Finance Corporation Limited. HETHC is an associate of Huaneng Group. Under relevant provisions of the Hong Kong Listing Rules, the Transfer constitutes a connected transaction of the Company.

 

According to relevant percentage ratios as defined pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Transfer constitutes a discloseable transaction under Chapter 14 of the Hong Kong Listing Rules. The Transfer also constitutes a connected transaction under Chapter 14A of the Hong Kong Listing Rules. As the scale of the Transfer exceeds 0.1% but does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, therefore, the Company is only required to comply with the reporting and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirements.

1.

Date:

28 September 2017

2.

Parties:

(i)

Shandong Company; and

(ii)

HETHC.

3.

Consideration: Shandong Company agrees to transfer its equity interests in Taishan Power to HETHC, while HETHC agrees to pay the consideration of RMB780.7774 million to Shandong Company. The consideration is agreed by both parties after arm’s length negotiation and is determined primarily by taking into account the following factors and having regard to the results of the asset valuation report: (i) the undistributed profits of the Target Company as of the base date and the corresponding portion of the Target Interests to which HETHC shall be entitled, whether or not the same was declared before or after the completion; (ii) the profit and loss and other aggregate income of Target Company arising from 1 July 2017 to the completion date proportional to the Target Interests which HETHC shall be entitled to and assumed.

4.

Method of Payment: HETHC will pay the consideration by way of cash.

5.

Payment Schedule: Unless otherwise agreed between the parties, HETHC shall pay 50% of the consideration on 30 September 2017, and pay the remaining 50% within 5 working days following the completion of registration of change of business in relation to the Target Interest.

6.

Completion and Timing for Registration: Subject to satisfaction or waiver of all the conditions precedent, and unless otherwise specified by the parties, Shandong Company and HETHC shall complete the Transfer on 30 September 2017.

7.

Condition Precedent

(i)

Conditions to the Transfer for fulfilment by both parties

Both parties bear their respective obligations to procure the Transfer and shall make their best efforts to satisfy the following conditions (where any or all of which may be wholly or partly waived by Shandong Company and HETHC, as the case may be, to the extent which are permissible under applicable laws and regulations). Neither party shall have any obligation to complete the Transfer unless and until all the following conditions are satisfied or waived:

 

 

(a)

Transfer Agreement and the Transfer have been approved by the internal decision- making bodies of both parties in accordance with necessary procedures pursuant to their respective articles of association and applicable laws and regulations;

\

(b)

no government agency of competent jurisdiction has published or promulgated any law, rule or regulation that prohibits the completion of the Transfer; and no court of competent jurisdiction has released any order or injunction that prevents the completion of the Transfer;

(c)

all necessary approvals, consents, filings and certificates required from governments or their designated authorities as well as all material third-party consents required for the Transfer Agreement and the Transfer have been obtained, except for legal proceedings that can only be attended to after the completion of the Transfer in accordance with applicable laws and regulations and the documents derived therefrom.

(ii)

Conditions to the Transfer for fulfilment by Shandong Company

The obligations of Shandong Company to complete the Transfer are conditional upon the satisfaction of each of the following conditions on or before the completion date, which may be wholly or partly waived by Shandong Company to the extent which and permissible under applicable laws and regulations:

(a)

the representations and warranties made by HETHC in the Transfer Agreement are true and accurate in all material respects and there are no material omissions as at the completion date; and

(b)

HETHC has performed and observed the terms under the Transfer Agreement to be performed and observed on its part in all material respects.

(iii)

Conditions to the Transfer for fulfilment by HETHC

The obligations of HETHC to complete the Transfer are conditional upon the satisfaction of each of the following conditions on or before the completion date, which may be wholly or partly waived by HETHC to the extent permitted by applicable laws and regulations:

(a)

the representations and warranties made by Shandong Company in the Transfer Agreement are true and accurate in all material respects and there are no material omissions as at the Completion Date; and

(b)

Shandong Company has performed and observed the terms under the Transfer Agreement to be performed and observed on its part in all material respects.

8.

Effectiveness: The Transfer Agreement shall become effective upon being duly signed by Shandong Company and HETHC.

9.

Transition Arrangements: Both parties agree that HETHC shall be entitled to assume the profit and loss and other aggregate income of Target Company arising from 1 July 2017 to the completion date proportional to the Target Interests. Shandong Company undertakes to perform its duty of diligence in relation to the Target Interests, and to maintain Target Company and relevant businesses under reasonable and normal management and operation.

10.

Indemnity/compensation: Each party shall promptly indemnify and hold the other party harmless from and against any and all losses and expenses arising out of or in connection with its breach of any provisions (including any of its representations, warranties, commitments and undertakings) of the Transfer Agreement. For avoidance of doubt, the parties agree that the amount of indemnity to be made under the Transfer Agreement shall be calculated by either Shandong Company or HETHC (as appropriate) based on the percentage of equity interests in the Target Company to be transferred to HETHC under the Transfer.

No.

Company name

Registered
Capital
(RMB)

Shareholding
percentage by
Taishan Power

Business Scope

1

Shandong Liaocheng Heat Power Property Limited Liability Company

50,658,000

75%

Maintenance of housing and living infrastructure; green cleaning; road freight; sale of general merchandise, local sundry goods, office articles; internal labour protection appliance; catering and accommodation service (only guest house business) (Projects subject to approval shall be approved by the relevant authorities for business operation.)

1-1

Shandong Liaocheng Heat Power Property Limited Liability Company Guest House

N/A

branch company

Accommodation; catering service (including cold dishes; excluding decorative cakes and raw seafood). (Valid Catering Service Licence, Sanitation Permit, Special Trade Licence are required, with term of validity defined therein.)

2

Huaneng Shandong Taifeng New Energy Limited Liability Company

200,000,000

60%

Investment, development, construction and management of photovoltaic power generation project; R&D, manufacture and sale of optical fibre preform (Projects subject to approval shall be approved by the relevant authorities for business operation).

As at
31 December 2015

As at
31 December 2016

As at
30 June 2017

(RMB10,000)

(RMB10,000)

(RMB10,000)

Operating revenue

330,122.34

5,100.83

452.85

Profit before tax

17,966.03

127,843.86

8,188.78

Net profit

13,103.51

97,357.92

6,581.78

Total assets

598,901.06

144,317.09

187,361.86

Net assets

133,415.11

129,140.28

135,722.06

Company name

Percentage of
equity interest

Book value

of
shareholders’

equity

Approach of
application

Approach of conclusion

Appraised
value of
shareholders’
equity

Increase/
Decrease
(amount)

Target Company

Huaneng Taishan Power Generation Limited

56.53% held by Huaneng Shandong Power Generation

Limited

133,175.70

Asset-based approach

Asset-based approach

138,117.36

4,941.66

3.71

“associate(s)”

has the meaning ascribed to it in the Hong Kong Listing Rules;

“Company”

Huaneng Power International, Inc.;

“Director(s)”

the director(s) (including independent non-executive directors);

“HETHC”

Huaneng Energy and Transportation (Holding) Company Limited;

“HIPDC”

Huaneng International Power Development Corporation;

“Hong Kong Listing Rules”

the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange;

“Huaneng Group”

China Huaneng Group;

“Huaneng HK”

China Hua Neng Group Hong Kong Limited;

“PRC” or “China”

the People’s Republic of China;

“RMB”

Renminbi, the lawful currency of the PRC;

“Shandong Company”

Huaneng Shandong Power Generation Limited;

“Stock Exchange”

The Stock Exchange of Hong Kong Limited;

“Taishan Power” or “Target Company”

Huaneng Taishan Power Generation Limited;

“Taishan Power Group”

Taishan Power and its subsidiaries;

“Target Interests”

the 56.53% equity interests held by Shandong Company in the registered capital of Taishan Power;

“Transfer”

Subject to term and condition of Transfer Agreement, the Company transfer its 56.53% interest in Taishan Power to HETHC at a price of RMB780.7774 million; and

“Transfer Agreement”

the agreement regarding the transfer of equity interests in Huaneng Taishan Power Generation Limited entered into between Shandong Company and HETHC on 28 September 2017.

 

By order of the Board

Huaneng Power International, Inc.

Huang Chaoquan

Company Secretary

 

Cao Peixi (Executive Director)

Guo Junming (Non-executive Director)

Liu Guoyue (Executive Director)

Fan Xiaxia (Executive Director)

Huang Jian (Non-executive Director)

Wang Yongxiang (Non-executive Director)

Mi Dabin (Non-executive Director)

Guo Hongbo (Non-executive Director)

Cheng Heng (Non-executive Director)

Lin Chong (Non-executive Director)

Yue Heng (Independent Non-executive Director)

Xu Mengzhou (Independent Non-executive Director)

Liu Jizhen (Independent Non-executive Director)

Xu Haifeng (Independent Non-executive Director)

Zhang Xianzhi (Independent Non-executive Director)