FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
For
the month of October, 2008,
(Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.)
Form
20-F ü
Form 40-F _____
(Indicate
by check mark whether the registrant by furnishing the information contained in
this form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934. )
Yes
____ No ü
(If
"Yes" is marked, indicate below the file number assigned to registrant in
connection with Rule 12g3-2(b): 82-__________. )
N/A
Huaneng
Power International, Inc.
West
Wing, Building C, Tianyin Mansion
No.
2C Fuxingmennan Street
Xicheng
District
Beijing,
100031 PRC
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This
Form 6-K consists of:
an
announcement of Continuing Connected Transactions of Huaneng Power
International, Inc. (the "Registrant"), made by the Registrant on October 22,
2008.
2
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the under-signed, thereunto duly
authorized.
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HUANENG
POWER INTERNATIONAL, INC.
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By /s/ Gu
Biquan
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Name: Gu
Biquan
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Title:
Company Secretary
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Date: October
22, 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.
(a
Sino-foreign joint stock limited company incorporated in the People’s Republic
of China)
(Stock Code: 902)CONTINUING
CONNECTED TRANSACTIONS
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Huaneng
Group Framework Agreement
On
21 October 2008, the Company entered into the Huaneng Group Framework
Agreement with Huaneng Group, its ultimate controlling shareholder, for a
term commencing on 1 January 2009 expiring on 31 December 2009. Pursuant
to the Huaneng Group Framework Agreement, the Company will conduct the
following transactions with Huaneng Group and its subsidiaries and
associates: (i) purchase of ancillary equipment and parts; (ii) purchase
of coal and transportation services; (iii) provision of management
services; (iv) leasing of power transmission facilities, land and office
spaces; and (v) purchase of technical services and engineering contracting
services. Such transactions will be conducted on an on-going basis and
constitute continuing connected transactions under the Hong Kong Listing
Rules. Among those five types of transactions, since the transaction scale
in relation to the purchase of coal and transportation services exceeds
2.5% of the applicable percentage ratios as calculated in accordance with
Rule 14.07 of the Hong Kong Listing Rules, the conduct of such
transactions shall be subject to the compliance with the reporting,
announcement and independent shareholders’ approval requirements under
Rules 14A.45 to 14A.48. The transaction scale in relation to the provision
of management services is less than 0.1% of the applicable percentage
ratios as calculated in accordance with Rule 14.07 of the Hong Kong
Listing Rules, the conduct of such transactions shall be exempted from the
reporting, announcement and independent shareholders’ approval
requirements. The transaction scale of each of the remaining three types
of transactions does not exceed 2.5% of the applicable percentage ratios
as calculated in accordance with Rule 14.07 of the Hong Kong Listing
Rules, thus the conduct of such transactions shall only be subject to the
compliance with the reporting and announcement requirements under Rules
14A.45 to 14A.47 of the Hong Kong Listing Rules but are exempt from the
independent shareholders’ approval requirement.
Huaneng
Finance Framework Agreement
On
21 October 2008, the Company entered into the Huaneng Finance Framework
Agreement with Huaneng Finance, a subsidiary of the Company’s ultimate
controlling shareholder (i.e. Huaneng Group), for a term commencing on 1
January 2009 and expiring on 31 December 2011. Pursuant to the Huaneng
Finance Framework Agreement, the Company will enter into the following
transactions with Huaneng Finance: (i) placing cash deposits by the
Company with Huaneng Finance; (ii) provision of notes discounting services
by Huaneng Finance to the Company; and (iii) provision of loan advancement
by Huaneng Finance to the Company. Such transactions will be conducted on
an on-going basis and will constitute continuing connected transactions
under the Hong Kong Listing Rules. During the period from 2009 to 2011,
the maximum outstanding balance of the deposits to be placed with Huaneng
Finance under the Huaneng Finance Framework Agreement, on a daily basis,
will not exceed RMB 6 billion. As the transaction scale of the deposit
transactions exceeds 2.5% of the applicable percentage ratios calculated
in accordance with Rule 14.07 of the Hong Kong Listing Rules, the conduct
of such deposits transactions shall be subject to the compliance with the
reporting, announcement and independent shareholders’ approval
requirements under Rules 14A.45 to 14A.48 of the Hong Kong Listing Rules.
Further, as the transaction scale of the deposit transactions exceeds 5%
of the applicable percentage calculated in accordance with Rule 14.07 of
the Hong Kong Listing Rules, such deposit transactions also constitute
discloseable transactions under Chapter 14 of the Hong Kong Listing
Rules.
Huaneng
Finance will also provide notes discounting services and loan advancement
services to the Company under the Huaneng Finance Framework Agreement.
Given that the notes discounting services and loan advancement services
are provided by Huaneng Finance for the benefit of the Company and on
normal commercial terms that are comparable to or more favorable than
those offered by independent third parties for similar services in the PRC
and that no security over the assets of the Company is granted in respect
of such services, the transactions for notes discounting services and loan
advancement services contemplated under the Huaneng Finance Framework
Agreement are exempt from reporting, announcement and independent
shareholders’ approval requirements under Rule 14A.65(4) of the Hong Kong
Listing Rules.
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1
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Extraordinary
General Meeting
The
Company is prepared to convene an extraordinary general meeting in
December 2008 to prepare the relevant resolutions for obtaining the
approval from the Independent Shareholders for the conduct of the
continuing connected transactions (including the relevant proposed caps)
contemplated under the Huaneng Group Framework Agreement and the Huaneng
Finance Framework Agreement.
The
Independent Directors of the Company will advise the Independent
Shareholders on the terms of the continuing connected transactions
(including their respective proposed caps) under the Huaneng Group
Framework Agreement and the Huaneng Finance Framework Agreement. An
independent financial adviser will be appointed to advise the Independent
Directors and the Independent Shareholders on the transactions of purchase
of coal and transportation services under the Huaneng Group Framework
Agreement and the deposits transactions under the Huaneng Finance
Framework Agreement.
A
circular containing, inter alia, further details regarding the continuing
connected transactions under the Huaneng Group Framework Agreement and the
Huaneng Finance Framework Agreement, a letter from the Independent
Directors, an opinion of the Independent Financial Adviser, together with
a notice to convene the extraordinary general meeting to approve the
continuing connected transactions (including their respective proposed
caps) under the Huaneng Group Framework Agreement and the Huaneng Finance
Framework Agreement will be issued by the Company to the shareholders as
soon as practicable (but not later than 21 days from the date of this
announcement).
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Relationship
between the Company, Huaneng Group and Huaneng Finance
The
Company and its subsidiaries mainly develop, construct, operate and manage
large-scale power plants in China nationwide. It is one of the largest
independent electricity power suppliers in China, owning a generation capacity
of 37,593 MW on equity basis.
Huaneng
Group is principally engaged in the operation and management of industrial
investments; the development, investment, construction, operation and management
of power source; organizing the generation and sale of power (and heat); and the
development, investment, construction, production and sale of products in
relation to information, transportation, new energy and environmental protection
industries.
Huaneng
Finance is a non-bank financial institution in the PRC. The principal business
of Huaneng Finance includes deposit-taking, loans handling, acceptance and
discounting of bills, inter-bank borrowing and foreign investment.
Huaneng
Group is the controlling shareholder of HIPDC, holding a 51.98% direct interest
and a 5% indirect interest in HIPDC. At the same time, Huaneng Group holds an
8.75% direct interest in the issued shares of the Company. Through its
wholly-owned subsidiary, China Hua Neng Group Hong Kong Limited (“China Hua Neng
Group HK”), Huaneng Group indirectly holds certain H shares of the Company,
representing 0.16% of the issued shares of the Company. As at the date of this
announcement, HIPDC is the controlling shareholder of the Company, holding
42.03% of the issued shares of the Company. In addition, Huaneng Group holds a
51% interest in Huaneng Finance.
The
relationship between the Company, Huaneng Group and Huaneng Finance is
illustrated as follows:
2
* Huaneng
Group, through China Hua Neng Group HK, indirectly holds a 50% interest in
Pro-Power Investment Limited while Pro-Power Investment Limited holds a 10%
interest in HIPDC. Therefore, Huaneng Group holds a 5% indirect interest in
HIPDC.
# Of
the 8.91% interest, 0.16% represents the interest in the H shares of the Company
held by Huaneng Group through China Hua Neng Group HK.
Under
the Hong Kong Listing Rules, Huaneng Group and Huaneng Finance are connected
persons of the Company while the transactions between the Company and Huaneng
Group, and Huaneng Finance (each include their respective subsidiaries and
associates) constitute connected transactions of the Company, subject to the
compliance with the relevant disclosures and/or independent shareholders
approval requirements as stipulated in the Hong Kong Lising Rules (as the case
may be).
Huaneng
Group Framework Agreement
The
Company has entered into various framework agreements with Huaneng Group’s
subsidiaries on 3 January 2008 for the purpose of governing the conduct of
certain continuing connected transactions between the Company and Huaneng Group
(and its subsidiaries and associates) in 2008. Such agreements will expire on 31
December 2008. In order to continue such transactions, the Company, as approved
by the Board, entered into the Huaneng Group Framework Agreement with Huaneng
Group on 21 October 2008 for a term commencing on 1 January 2009 and expiring on
31 December 2009. Pursuant to the agreement, the Company will conduct the
following transactions with Huaneng Group and its subsidiaries and associates on
an on-going basis:
(1) Purchase
of ancillary equipment and parts
Due
to operational need, the Company has to outsource ancillary equipments and parts
(mainly including the raw materials and equipments for the infrastructure
construction work for power plants) for the purpose of renovation and
maintenance. Pursuant to the framework agreement endered into on 3 January 2008
with respect to the purchase of ancillary equipment and parts in 2008 by the
Company from Huaneng Group and its subsidiaries and associates, the annual cap
of such transactions for 2008 was set at RMB 1.056 billion (please refer to the
announcement of the Company dated 3 January 2008). During the period from 1
January 2008 to 31 August 2008, the aggregate transaction amount (unaudited) in
respect of the purchase of ancillary equipment and parts by the Company from
Huaneng Group and its subsidiaries and associates was approximately RMB 256
million. According to the management policy of the Company and its subsidiaries,
the Company will through tender process enter into arrangement with entities
which can offer the lowest prices/most favorable terms to the Company for the
purchase of ancillary equipment and parts. The Company and its subsidiaries thus
purchased part of the ancillary equipment and parts during 2008 from independent
third parties at prices which were relatively lower than the prices offered by
Huaneng Group and its subsidiaries and associates. For 2009, the aggregate
transaction amount with respect to the purchase of ancillary equipment and parts
by the Company from Huaneng Group and its subsidiaries and associates under the
Huaneng Group Framework Agreement is estimated not to exceed RMB1.12 billion.
Such cap is estimated on the basis of the existing overall business scale and
operation of the power plants of the Company, the anticipated development and
growth of such power plants as deemed reasonable by the Company, as well as
taking into account the benefit of offering favourable prices on bulk purchases
by Huaneng Group and its subsidiaries and associates and the increase in the
controlling generation capacity of the Company in 2009. Up to 30 September 2008,
a total of two new thermal generating units of the Company commenced operation
in 2008. The total generation capacity on an equity basis increased by 1,200 MW.
As a result of the increase in operating generating units and generation
capacity, the Company has been experiencing an increasing demand for ancillary
equipment and parts to meet its operational need. The transaction amount in
relation to the connected transactions of purchasing ancillary equipment and
parts in 2009 will therefore increase.
The
competitive advantage of Huaneng Group and its subsidiaries and associates in
the supply of ancillary equipment and parts is that they are able to offer more
favourable prices for bulk purchase of ancillary equipment and parts. Taking
into consideration the ability of Huaneng Group and its subsidiaries and
associates to offer more favourable prices for ancillary equipment and parts,
and owing to their close relationship with the Company, Huaneng Group and its
subsidiaries and associates are able to provide the Company with the ancillary
equipment and parts in a timely and reliable manner, thereby minimizing the
management and operational costs of the Company.
3
Pursuant
to the Huaneng Group Framework Agreement, the terms and the prices with respect
to the purchase of ancillary equipment and parts by the Company from Huaneng
Group and its subsidiaries and associates are negotiated at arm’s length terms,
taking into account the then prevailing market conditions; but in any event at
the terms and prices no less favourable than those offered to the Company by an
independent third parties for the same or similar type of ancillary equipment
and parts. In addition, the payment of such purchases will be settled in cash in
arrears, or in accordance with the payment terms agreed by the relevant parties
in the contracts to be entered into pursuant to the framework
agreement.
The
Board (including the Independent Directors) is of the view that the transactions
for the purchase of ancillary equipment and parts as contemplated by the Huaneng
Group Framework Agreement were entered into (1) in the ordinary and usual course
of business of the Company; (2) on normal commercial terms (on arm’s length
basis or on terms no less favourable to the Company than terms available from
independent third parties); and (3) on terms that are fair and reasonable and in
the interest of the Company and its shareholders as a whole.
As
the applicable percentage ratios relating to the scale of the subject
transactions calculated in accordance with Rule 14.07 of the Hong Kong Listing
Rules do not exceed 2.5%, such transactions are therefore only subject to the
reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Hong
Kong Listing Rules but are exempt from the independent shareholders’ approval
requirements. In addition, the Company will with respect to the subject
transactions comply with the requirements under Rule 14A.37 to 14A.40 of the
Hong Kong Listing Rules in respect of the annual review of these continuing
connected transactions. If the actual aggregate amount of such transactions
during the year ending 31 December 2009 exceeds the above cap (i.e. RMB1.12
billion), the Company will further comply with the requirements under Rule
14A.36 of the Hong Kong Listing Rules.
(2) Purchase
of coal and transportation services
Coal
is the major raw material of the Company for power generation. Pursuant to the
Huaneng Group Framework Agreement, the Company will purchase coal and coal
transportation services from Huaneng Group and its subsidiaries and associates
at prices and charges calculated by reference to RMB/ton and the actual weight
of carriage, with arm’s length terms taking into account the then market
conditions, and in any event the terms of the purchases of coal and the
transportation service shall be no less favourable than those offered by
independent third parties to the Company for the same or similar type of coal
supply or transportation services.
Pursuant
to the framework agreement entered into on 3 January 2008 with respect to the
purchase of coal and transportation services in 2008 by the Company from Huanang
Group’s subsidiaries and associates, the cap of the aggregate transaction amount
for 2008 was set at RMB 5.9 billion (please refer to the announcement dated 3
January 2008 and the circular dated 17 January 2008 issued by the Company).
During the period from 1 January 2008 to 31 August 2008, the aggregate
transaction amount (unaudited) for purchase of coal and transportation services
by the Company from Huaneng Group and its subsidiaries and associates was
approximately RMB 3.873 billion. For 2009, the aggregate transaction amount with
respect to the purchase of coal and transportation services by the Company from
Huaneng Group and its subsidiaries and associates under the Huaneng Group
Framework Agreement is estimated not to exceed RMB8.39 billion. The payment of
the consideration will be settled in cash in arrears, or in accordance with the
payment terms agreed by the relevant parties in the contracts to be entered into
pursuant to the framework agreement. The cap of such amount is set on the basis
of the prevailing overall business scale and operation of the power plants of
the Company, and the anticipated development and growth of such power plants as
deemed reasonable by the Company, taking into account the benefit of offering
favourable terms on bulk purchase by Huaneng Group and its subsidiaries and
associates. The relatively substantial increase in the cap of the aforementioned
estimates transaction amount of 2009 as compared to the cap of 2008 is due to:
(1) substantial increase in coal demanded by the newly operating generation
units of the Company; and (2) the need for increasing coal supply from Huaneng
Group and its subsidiaries and associates for the purpose of stabilizing the
source of coal supply.
The
competitive advantage of Huaneng Group and its subsidiaries and associates in
the supply of coal and transportation services is that they can offer more
favourable terms for bulk purchase of coal and transportation services. Taking
into consideration the ability of Huaneng Group and its subsidiaries and
associates to offer more favourable terms for purchases of coal and
transportation services, and owing to their close relationship with the Company,
Huaneng Group and its subsidiaries and associates are able to provide the
Company with coal and transportation in a timely and reliable manner, thereby
minimizing the management and operational costs of the Company. In addition,
Huaneng Group and its subsidiaries and associates operate a sizeable fleet
specializing in the provision of domestic maritime transportation services in
China. Given that the reliability and the relative high quality of management
and transportation services provided by Huaneng Group and its subsidiaries and
associates could reduce the operational risks and enhance the efficiency of the
daily operation of the Company, the Directors (including the Independent
4
Directors)
are of the view that the transactions for the purchase of coal and
transportation services from Huaneng Group and its subsidiarties and associates
contemplated under the Huaneng Group Framework Agreement were entered into (1)
in the ordinary and usual course of business of the Company; (2) on normal
commercial terms (on arm’s length basis or on terms no less favourable to the
Company than terms available from independent third parties); and (iii) on terms
that are fair and reasonable and in the interest of the Company and its
shareholders as a whole.
As
the applicable percentage ratios relating to the transaction scale for the
purchase of coal and transportation services from Huaneng Group and its
subsidiaries and associates calculated in accordance with Rule 14.07 of the Hong
Kong Listing Rules exceed 2.5%, such transactions are therefore subject to the
reporting, announcement and independent shareholders’ approval requirements
under Rules 14A.45 to 14A.48 of the Hong Kong Listing Rules.
(3) Provision
of management services
Due
to operational need, Huaneng Group and its subsidiaries and associates has to
outsource certain services for its power plants. During the period from 1
January 2008 to 31 August 2008, the aggregate transaction amount (unaudited) in
respect of provision of power plants management services by the Company to
Huaneng Group and its subsidiaries and associates was approximately RMB 25
million. The Company estimates that the aggregage transaction amount with
respect to the provision of power plants management services by the Company to
Huaneng Group and its subsidiaries and associates in 2009 under the Huaneng
Group Framework Agreement will not exceed RMB 42 million. The estimate of such
cap is based on the prevailing overall business scale and operation of such
party of the Company, the anticipated development and growth of such party as
deemed reasonable by the Company. The Company believes that the provision of
management services to Huaneng Group and its subsidiaries and associates by the
Company will bring operating benefits to the Company.
Pursuant
to the Huaneng Group Framework Agreement, the terms and prices with respect to
the provision of power plants management services by the Company to Huaneng
Group and its subsidiaries and associates are negotiated at arm’s length terms,
taking into account the then prevailing market conditions; but in any event at
the terms and conditions no less favourable than those offered by the Company to
the independent third parties for the provision of the same and similar type of
management services. In addition, the payment of the service fees will be
settled in cash in arrears, or in accordance with the payment terms agreed by
the relevant parties in the contracts to be entered into pursuant to the
framework agreement.
The
Board (including the Independent Directors) is of the view that the transactions
for the provision of power plants management services contemplated under the
Huaneng Group Framework Agreement were entered into: (1) in the ordinary and
usual course of business of the Company; (2) on normal commercial terms (on
arm’s length basis or on terms no more favourable than those offered by the
Company to third parties); and (3) on terms that are fair and reasonable and in
the interest of the Company and its shareholders as a whole.
As
the applicable percentage ratios relating to the scale of the subject
transactions calculated in accordance with Rule 14.07 of the Hong Kong Listing
Rules do not exceed 0.1%, such transactions are therefore exempt from the
reporting, announcement and the independent shareholders’ approval requirements.
If the actual aggregate amount of such transactions during the year ending 31
December 2009 exceeds the above cap (i.e. RMB 42 million), the Company will
further comply with the requirements under Rule 14A.36 of the Hong Kong Listing
Rules.
(4) Leasing
of power transmission facilities, land and office spaces
For
operational need, the Company has to rent power transmission facilities, land
and office spaces for power plants from Huaneng Group and its subsidiaries and
associates. Pursuant to an agreement relating to provision of transmission and
transformer facilities entered into between the Company and HIPDC on 4 December
1997, HIPDC agreed to lease the transmission and transformer facilities to the
Company for a term of 20 years starting from 1 July 1997, the annual fees of
which shall not exceed 12% of the book value of such transmission and
transformer facilities. For compliance with the Shanghai Listing Rules, such
agreement (and the transactions contemplated thereby) will be terminated upon
the taking effect of the Huaneng Group Framework Agreement. In 2007, the fees
paid by the Company under such agreement were RMB140,771,000. In 2007, the
aggregate amount of rent paid by the Company to Huaneng Group and its
subsidiaries and associates for renting the land and office spaces was
RMB27,334,000. During the period from 1 January 2008 to 31 August 2008, the
aggregate fees (unaudited) which have already been paid by the Company to
Huaneng Group and its subsidiaries and associates for leasing of the power
transmission facilities, land and office were RMB18 million. Pursuant to the
Huaneng Group Framework Agreement, the Company will obtain leasing services of
power transmission facilities, land and office spaces from Huaneng Group and its
subsidiaries and associates in 2009. The aggregate transaction amount with
respect to the leasing of power transmission facilities, land and office spaces
by
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Huaneng
Group and its subsidiaries and associates to the Company in 2009 is estimated
not to exceed RMB169 million. The estimate of such cap amount is based on the
prevailing overall business scale and operation of the power plants of the
Company, the anticipated development and growth of such power plants as deemed
reasonable by the Company, taking into account the benefit of offering
favourable prices by Huaneng Group and its subsidiaries and
associates.
On
aspect of leasing facilities, land and office space, taking into consideration
the ability of Huaneng Group and its subsidiaries and associates to offer more
favourable prices for leasing power transmission facilities, land and office
spaces, and owing to their close relationship with the Company, Huaneng Group
and its subsidiaries and associates are able to provide the Company with the
facilities, land and office spaces in a timely and reliable manner, thereby
minimizing the management and operational costs of the Company.
Pursuant
to the Huaneng Group Framework Agreement, the terms and the prices with respect
to the leasing of power transmission facilities, land and office spaces to the
Company by Huaneng Group and its subsidiaries and associates are negotiated at
arm’s length terms, taking into account the then prevailing market conditions;
but in any event at the leasing terms and prices no less favourable than those
offered to the Company by independent third parties for the same or similar type
of facilities, land and office spaces. In addition, the payment will be settled
in cash in arrears, or in accordance with the payment terms agreed by the
relevant parties in the contracts to be entered into pursuant to the framework
agreement.
The
Board (including the Independent Directors) is of the view that the transactions
for the leasing of power transmission facilities, land and office spaces
contemplated under the Huaneng Group Framework Agreement were entered into: (1)
in the ordinary and usual course of business of the Company; (2) on normal
commercial terms (on arm’s length basis or on terms no less favourable to the
Company than terms available from independent third parties); and (3) on terms
that are fair and reasonable and in the interest of the Company and its
shareholders as a whole.
As
the applicable percentage ratios relating to the scale of the subject
transactions calculated in accordance with Rule 14.07 of the Hong Kong Listing
Rules do not exceed 2.5%, such transactions are therefore only subject to the
reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Hong
Kong Listing Rules but are exempt from the independent shareholders’ approval
requirements. In addition,the Company will with respect to the subject
transactions comply with the requirements under Rule 14A.37 to 14A.40 of the
Hong Kong Listing Rules in respect of the annual review of these continuing
connected transactions. If the actual aggregate amount of such transactions
during the year ending 31 December 2009 exceeds the above cap (i.e. RMB169
million), the Company will further comply with the requirements under Rule
14A.36 of the Hong Kong Listing Rules.
(5) Purchase
of technical services and engineering contracting services
As
a power company, the Company has to outsource information technology services
and industry-specific technical engineering contracting services to meet its
operation and production needs. Such services mainly include maintenance of
power plants monitoring system, real-time consolidation of project data, trial
run of generating units and monitoring of facilities construction work. Pursuant
to the relevant framework agreement entered into on 3 January 2008 with respect
to the purchase of technical services and engineering contracting services by
the Company from Huanang Group and its subsidiaries and associates, the cap for
the aggregate transaction amount for 2008 was set at RMB275 million (please
refer to the announcement of the Company dated 3 January 2008). During the
period from 1 January 2008 to 31 August 2008, the aggregate transaction amount
(unaudited) for purchase of technical services and engineering contracting
services by the Company from Huaneng Group and its subsidiaries and associates
was approximately RMB102 million. For 2009, the aggregate transaction amount
with respect to the purchase of technical services and engineering contracting
services between the Company and Huaneng Group and its subsidiaries and
associates under the Huaneng Group Framework Agreement is estimated not to
exceed RMB237 million. The estimate of such cap is based on the prevailing
overall business scale and operation of the power plants of the Company, the
anticipated development and growth of such power plants as deemed reasonable by
the Company, having taken into account the benefit of offering favourable prices
for purchase of technical services and engineering contracting services by
Huaneng Group and its subsidiaries and associates.
The
competitive advantage of Huaneng Group and its subsidiaries and associates in
the provision of technical services and engineering contracting services is that
they can offer more favourable prices for provision of technical services and
engineering contracting services. Taking into consideration the ability of
Huaneng Group and its subsidiaries and associates to offer more favourable
prices for provision of technical services and engineering contracting services,
and owing to their close relationship with the Company, Huaneng Group and its
subsidiaries and associates are able to provide the Company with the technical
services and engineering contracting services in a timely and reliable manner,
thereby minimizing the management and operational costs of the Company. In
addition, certain subsidiaries and
6
associate
of Huaneng Group specialize in the research of information technology and
domestic renewable energy technology, as well as the installation of thermal
power facilities in the PRC. Given the ability of Huaneng Group and its
subsidiaries and associate to provide reliable and efficient information
technology services, and advanced and comprehensive industry-specific technology
services and engineering contracting services, it is anticipated that the
operation costs of the Company will be reduced.
Pursuant
to the Huaneng Group Framework Agreement, the terms and the prices with respect
to the purchase of technical services and engineering contracting services by
the Company from Huaneng Group and its subsidiaries and associates are
negotiated at arm’s length terms, taking into account the then prevailing market
conditions; but in any event at the terms and prices no less favourable than
those offered to the Company by independent third parties for the same or
similar type of technical services and engineering contracting services. In
addition, the payment of consideration will be settled in cash in arrears, or in
accordance with the payment terms agreed by the relevant parties in the
contracts to be entered into pursuant to the framework agreement.
The
Board (including the Independent Directors) is of the view that the transactions
for the purchase of technical services and engineering contracting services as
contemplated under the Huaneng Framework Agreement were entered into: (1) in the
ordinary and usual course of business of the Company; (2) on normal commercial
terms (on arm’s length basis or on terms no less favourable to the Company than
terms available from independent third parties); and (3) on terms that are fair
and reasonable and in the interest of the Company and its shareholders as a
whole.
As
the applicable percentage ratios relating to the scale of the subject
transactions calculated in accordance with Rule 14.07 of the Hong Kong Listing
Rules do not exceed 2.5%, such transactions are therefore only subject to the
reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Hong
Kong Listing Rules but are exempt from the independent shareholders’ approval
requirements. In addition, the Company will with respect to the subject
transactions comply with the requirements under Rule 14A.37 to 14A.40 of the
Hong Kong Listing Rules in respect of the annual review of these continuing
connected transactions. If the actual aggregate amount of such transactions
during the year ending 31 December 2009 exceeds the above cap (i.e. RMB237
million), the Company will further comply with the requirements under Rule
14A.36 of the Hong Kong Listing Rules.
Huaneng
Finance Framework Agreement
Pursuant
to the relevant framework agreement entered into between the Company and Huaneng
Finance dated 7 March 2006, the Company has from time to time placed deposits
with Huaneng Finance at rates which are no less favourable than the rates
available from an independent third party for similar services in the PRC. In
addition, the Company has also utilized the notes discounting services provided
by Huaneng Finance by paying it a service fee lower than the service fees
charged by an independent third party for similar services in the PRC. For the
period from 2006 to 2008, the outstanding balances of the deposits should not
exceed RMB6 billion on a daily basis and the total amount of the notes
discounting should not exceed RMB1,850 million per annum (please refer to the
announcement dated 10 March 2006 and the circular dated 31 March 2006 issued by
the Company). As such framework agreement would expire on 31 December 2008, the
Company entered into the Huaneng Finance Framework Agreement with Huaneng
Finance on 21 October 2008 to extend the arrangement for another term of 3 years
commencing on 1 January 2009 and expiring on 31 December 2011. For the years
2006, 2007 and the period from January to August 2008 (unaudited), the maximum
outstanding balances of the deposits placed with Huaneng Finance, on a daily
basis, were RMB5,544 million, RMB4,907 million and RMB5,055 million,
respectively. The Company estimates that the during the period from 2009 to
2011, the outstanding balances of the deposits to be placed with Huaneng Finance
on a daily basis will not exceed RMB6 billion.
The
proposed cap for the deposits has taken into the following consideration: (1)
the increasing asset scale and the amount of deposits of the Company; (2) the
increase in the daily outstanding balances of deposits placed at Huaneng Finance
arising from financing transactions such as issuance of the short-term financial
instruments (the Company has approved the issuance of short-term financial
instruments with an aggregate principal amount up to RMB10 billion at the annual
general meeting of 2007, of which RMB5 billion has already been issued); and (3)
the fact that the Company has acquired a 20% equity interest in Huaneng Finance
since December 2005, and the Company will generate a higher return deriving from
a growth of profits at Huaneng Finance as a result of the Company’s support to
Huaneng Finance.
The
deposit transactions form part of the daily operations of the Company. The
commercial terms (including the rates) offered by Huaneng Finance in respect of
such transaction are no less favourable than those offered by domestic
commercial banks for provision of similar services to the Company. The Directors
are of the view that the deposit transactions do not have any effect on the
assets and liabilities of the Company. Instead, the Company can earn interests
out of the deposit transactions. As the Company has already deposited the
remaining cash with a number of other
7
independent
financial institutions, the Company considers that the arrangement of deposits
with Huaneng Finance helps diversify the Company’s risk in relation to its
deposits.
In
addition, the Company will also use the notes discounting services and loan
advancement services provided by Huaneng Finance as Huaneng Finance is more
efficient in terms of notes discounting services and loan advancement services
than the general domestic commercial banks that perform similar services for the
Company (mainly due to the fact that less time is required to process the
transactions). As such, the Company considers that the provision of notes
discounting services and loan advancement services by Huaneng Finance will
benefit the Company by increasing the operation efficiency in the use of fund.
For the years 2006, 2007 and the period from January to August 2008, the total
amount of notes discounting services provided by Huaneng Finance were RMB114
million, RMB350 million and RMB0 million, respectively, while the maximum
outstanding loan amount provided by Huaneng Finance to the Company, on a daily
basis, were RMB374.3 million, RMB355.3 million and RMB309.2 million,
respectively. The Company estimates that for each of the three years from 2009
to 2011, the total amount of notes discounting will not exceed RMB1 billion and
the total outstanding amount of loan, on a daily basis, will not exceed RMB6
billion.
Pursuant
to the Huaneng Finance Framework Agreement, Huaneng Finance shall provide
deposit interest, notes discounting services and loan advancement services on
normal commercial terms that are no less favourable than those offered by
independent third parties for similar services to the Company.
The
Board (including the Independent Directors) is of the view that the Huaneng
Finance Framework Agreement was entered into: (1) in the ordinary and usual
course of business of the Company; (2) on normal commercial terms (on arm’s
length basis or on terms no less favourable to the Company than terms available
from independent third parties); and (3) on terms that are fair and reasonable
and in the interest of the Company and its shareholders as a whole.
As
the applicable percentage ratios relating to the scale of the deposit
transactions with Huaneng Finance and its subsidiaries and associates
contemplated under the Huaneng Finance Framework Agreement calculated in
accordance with Rule 14.07 of the Hong Kong Listing Rules exceed 2.5%, such
transactions are therefore subject to the reporting, announcement and
independent shareholders’ approval requirements under Rules 14A.45 to 14A.48 of
the Hong Kong Listing Rules. Further, as the proposed cap for such deposit
transactions exceed 5% of all applicable percentage ratios calculated in
accordance with Rule 14.07 of the Hong Kong Listing Rules, such deposit
transactions also constitute discloseable transactions under Chapter 14 of the
Hong Kong Listing Rules.
With
respect to the notes discounting and loan advancement, given that the notes
discounting services and loan advancement services are provided by Huaneng
Finance for the benefit of the Company and on normal commercial terms that are
comparable to or more favourable than those offered by independent third parties
for similar services in the PRC and that no security over the assets of the
Company is granted in respect of such services, the transactions for notes
discounting services and loan advancement services contemplated under the
Huaneng Finance Framework Agreement are exempt from reporting, announcement and
independent shareholders’ approval requirements under Rule 14A.65(4) of the Hong
Kong Listing Rules.
EXTRAORDINARY
GENERAL MEETING
Under
the Hong Kong Listing Rules, the conduct of purchase of coal and transportation
services by the Company from Huaneng Group and its subsidiaries and associates
under the Huaneng Group Framework Agreement and the conduct of deposit
transactions under the Huaneng Finance Framework Agreement both require
independent shareholders’ approvals. However, pursuant to the Shanghai Listing
Rules, the conduct of all transactions with Huaneng Group (together with its
subsidiaries and associates, all being treated as the concerted related parties
of the Company under the Shanghai Listing Rules) as set out in this announcement
shall be approved by the Independent Shareholders of the Company. The Company is
prepared to convene an extraordinary general meeting in December 2008 to seek
approval from Independent Shareholders for the conduct of the continuing
connected transactions (including the relevant proposed caps) contemplated under
the Huaneng Group Framework Agreement and the Huaneng Finance Framework
Agreement. Huaneng Group and its associates (holding an aggregate of
6,141,786,667 ordinary shares in the Company, representing approximately 50.94%
of the total issued shares of the Company as at the date of this announcement)
will abstain from voting at such extraordinary general meeting, at which the
proposed resolutions will be passed by way of ordinary resolutions and voting
will be taken by way of poll in accordance with the requirements of the Hong
Kong Listing Rules.
To
comply with the requirements of the Hong Kong Listing Rules, the Independent
Directors of the Company will advise the Independent Shareholders in connection
with the terms of the continuing connected transactions (including the
respective proposed caps) regarding the purchase of coal and transportation
services contemplated under the
8
Huaneng
Group Framework Agreement and the deposit transactions contemplated under the
Huaneng Finance Framework Agreement. An independent financial adviser will be
appointed to advise the Independent Directors and the Independent Shareholders
regarding the continuing connected transactions regarding the purchase of coal
and transportation services contemplated under the Huaneng Group Framework
Agreement and the deposit transactions contemplated under the Huaneng Group
Finance Framework Agreement.
A
circular containing, inter alia, further details of the continuing connected
transactions for the purchase of coal and transportation services contemplated
under the Huaneng Group Framework Agreement and the continuing connected
transactions for the deposit transactions contemplated under the Huaneng Finance
Framework Agreement, a letter from the Independent Directors, an opinion of the
Independent Financial Advisor together with a notice to convene the
extraordinary general meeting to approval the continuing connected transactions
(including the proposed caps) for the purchase of coal and transportation
services contemplated under the Huaneng Group Framework Agreement and the
deposit transactions contemplated under the Huaneng Finance Framework Agreement
will be issued by the Company to shareholders as soon as practicable (but not
later than 21 days from the date of this announcement).
Under
the Hong Kong Listing Rules, the Independent Financial Adviser is only required
to opine on the continuing connected transactions relating to the purchase of
coal and transportation services contemplated under the Huaneng Group Framework
Agreement and the deposit transactions contemplated under the Huaneng Finance
Framework Agreement and, in which case, the Independent Financial Adviser will
not provide opinion on the other transactions contemplated under the Huaneng
Group Framework Agreement and, where applicable, the Huaneng Finance Framework
Agreement (the “Other Transactions”). Notwithstanding such arrangement, the
Company is still prepared to include details of the Other Transactions in the
circular to be issued so that shareholders of the Company will have a full
picture of all transactions as contemplated under the Huaneng Group Framework
Agreement and the Huaneng Finance Framework Agreement. The Company believes that
on such basis, the Independent Shareholders will be provided with sufficient
information so as to make an informed decision in the voting of the relevant
proposed resolutions.
DEFINITIONS
|
“associates”
|
has
the meaning ascribed to it in the Hong Kong Listing
Rules;
|
|
“Board”
|
the
board of Directors of the Company;
|
|
“Company”
|
Huaneng
Power International, Inc. and its subsidiaries;
|
|
“Directors”
|
the
directors of the Company;
|
|
“HIPDC”
|
Huaneng
International Power Development Corporation;
|
|
“Hong
Kong Listing Rules”
|
The
Rules Governing the Listing of Securities on the Hong Kong Stock
Exchange;
|
|
“Huaneng
Finance Framework Agreement”
|
the
framework agreement on the continuing connected transactions (for years
2009 to 2011) between Huaneng Power International, Inc. and China Huaneng
Finance Corporation Limited entered into between the Company and Huaneng
Finance on 21 October 2008;
|
|
“Huaneng
Group Framework Agreement”
|
the
framework agreement on the continuing connected transactions (for 2009)
between Huaneng Power International, Inc. and China Huaneng Group entered
into between the Company and Huaneng Group on 21 October
2008;
|
|
“Huaneng
Finance”
|
China
Huaneng Finance Corporation Limited;
|
|
“Huaneng
Group”
|
China
Huaneng Group;
|
|
“Independent
Directors”
|
the
independent non-executive Directors of the Company, including Mr. Liu
Jipeng, Mr. Yu Ning, Mr. Shao Shiwei, Mr. Zheng Jianchao and Mr. Wu
Liansheng;
|
|
“Independent
Financial Adviser”
|
an
independent financial adviser to be appointed to advise the Independent
Directors on the transactions regarding the purchase of coal and
transportation services contemplated under the Huaneng Group Framework
Agreement and the deposit transactions contemplated under the Huaneng
Finance Framework Agreement;
|
|
“Independent
Shareholders”
|
shareholders
of the Company other than Huaneng Group, HIPDC and their respective
associates;
|
|
“PRC”
or “China”
|
The
People’s Republic of China;
|
9
|
“RMB”
|
Renminbi,
the lawful currency of the PRC;
|
|
“Shanghai
Listing Rules”
|
The
Rules Governing the Listing of securities on the Shanghai Stock
Exchange;
|
|
“Stock
Exchange”
|
The
Stock Exchange of Hong Kong Limited; and
|
|
“subsidiaries”
|
has
the meaning ascribed to it in the Hong Kong Listing
Rules.
|
|
By
Order of the Board
Gu Biquan
Company
Secretary
|
As
at the date of this announcement, the directors of the Company are:
|
Cao
Peixi
(Executive
Director)
Huang
Long
(Non-executive
Director)
Wu
Dawei
(Non-executive
Director)
Huang
Jian
(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
22
October 2008
10