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COSCO Pacific expanding into China's rapidly growing logistics sector

Date:2003-09-22     Publish:本站

1) COSCO Pacific Limited ("COSCO Pacific"), through its wholly owned subsidiary COSCO Pacific Logistics Company Limited ("CPLCL"), has entered into agreements with its ultimate controlling shareholder, China Ocean Shipping (Group) Company ("COSCO"), on 22 September 2003.

2) Pursuant to the agreements and subject to the fulfillment of certain conditions, COSCO Pacific will through CPLCL acquire 49% of the equity interest of COSCO Logistics Company Limited ("COSCO LOGISTICS"), the wholly owned subsidiary of COSCO, for a total consideration of RMB1,180.41 million (approximately HK$1,113.6 million), by a combination of:-

    a. contribution to the registered capital of COSCO LOGISTICS for a cash amount of RMB734.0 million, and

    b. acquisition of existing equity interests in COSCO LOGISTICS from COSCO for a cash amount of RMB446.41 million.

The total consideration represents an implied price earnings multiple of approximately 9.1 time (pre-money) or 13.1 times (post-money) of the Pro Forma combined net profit for the year ended 31 December 2002.

3) CPLCL has further agreed to pay COSCO an additional amount equivalent to RMB50 million (approximately HK$47.2 million), if the pro forma net profit of COSCO LOGISTICS for the year ending 31 December 2003 exceeds RMB200 million (the "Transactions").

4) As a leading logistics service provider in China, COSCO LOGISTICS provides shipping agency, freight forwarding, third party logistics and supporting services that spans the major coastal and economic areas in China mainland, including Dalian, Beijing, Qingdao, Shanghai, Ningbo, Xiamen, Guangzhou and Wuhan regions.

5) COSCO LOGISTICS has well established brand names including "PENAVICO", a large existing customer base consisting of domestic and multinational companies, and enjoys strong support from its parent COSCO in its development into a leading logistics service provider in China.

6) COSCO LOGISTICS has been undergoing a reorganization to streamline its businesses and operations. For the year ended 31 December 2002, the pro forma combined turnover and net profit of the reorganized COSCO LOGISTICS and its subsidiaries, jointly controlled entities and associated companies, prepared on the basis as if the reorganization had been completed prior to 1 January 2002, were approximately RMB4,607.7 million and RMB183.8 million, respectively.

7) COSCO Pacific is one of the world's leading shipping-related conglomerates, with an increasingly integrated range of activities spanning container leasing, container terminal and related businesses. COSCO Pacific's mission is to be the global leader in container leasing, the regional leader in container terminal operations, and the leading logistics service provider in China mainland and Hong Kong. The investment in COSCO LOGISTICS will allow COSCO Pacific immediate access to the rapidly growing logistics service industry in China via an already well-established platform, thus providing an additional growth engine for the future earnings of COSCO Pacific.

8) COSCO Pacific believes the Transactions should create synergies that benefit COSCO LOGISTICS and itself. Given that COSCO Pacific already holds significant equity interests in container terminals located at major coastal areas in China mainland, COSCO LOGISTICS could enhance its competitive advantage by partnering with these container terminals to provide better logistics services. On the other hand, through investing in COSCO LOGISTICS, COSCO Pacific can enhance the attractiveness of its container terminals by offering integrated sea freight logistics service to its shipping customers.

9) Capt. WEI Jiafu, President of COSCO and Chairman of COSCO Pacific said: "We are confident that COSCO Pacific could further enhance shareholders value through this win-win investment into COSCO LOGISTICS. We are excited about the potential of the logistics service business in China and are confident that our investment in COSCO LOGISTICS will help us achieve our mission of becoming the leading logistics service provider in China mainland and Hong Kong.".

10) The Transactions constitute connected transactions for COSCO Pacific within the meaning of The Rules Governing the Listing and Securities on the Stock Exchange of Hong Kong Limited, and are subject to approval by the independent shareholders of COSCO Pacific. COSCO Pacific has appointed The Hong Kong and Shanghai Banking Corporation Limited as its financial adviser in connection with the Transactions. An independent board committee comprising Dr. David LI Kwok Po and Mr. Alexander Reid HAMILTON (the "Independent Board Committee") has been appointed by the Board of COSCO Pacific to advise its independent shareholders as to the fairness and reasonableness of the Transactions. N M Rothschild & Sons (Hong Kong) Limited has been appointed as the independent financial advisor to provide opinions to the Independent Board Committee in connection with the Transactions. A special general meeting of COSCO Pacific for the purposes of considering and, if thought fit, passing resolution to approve the Transactions will be convened as soon as practicable.