REG - Air China Ld - Circulars - [Major Transaction]
20/06/2024 07:00
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RNS Number : 1995T Air China Ld 20 June 2024
If you are in any doubtas to any aspect of this circular, you should consult a
stockbroker or other registered dealer in securities, bank manager, solicitor,
professional accountant or other professional adviser.
If you have sold or transferredall your shares of Air China Limited, you
should at once hand this circular and the form of proxy to the purchaser or
transferee or to the bank, stockbroker or other agent through whom the sale
was effected for transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this circular, 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 circular.
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
MAJOR TRANSACTION IN RELATION TO THE PURCHASE OF DOMESTIC AIRCRAFT
A letter from the Board is set out on pages 3 to 8 of this circular.
A notice convening the EGM will be dispatched by the Company in due course.
The Company will announce details of the EGM, including the date and venue as
and when available in compliance with the articles of association of the
Company and the Listing Rules.
20 June 2024
Page
DEFINITIONS....................................................................................................................................................... 1
LETTER FROM THE 3
BOARD.........................................................................................................................
I. 3
Introduction.................................................................................................................................................
II. Major Transaction 4
...................................................................................................................................
III. Financial and Trading Prospects 6
..........................................................................................................
IV. Working Capital 7
..........................................................................................................................................
V. 7
EGM..............................................................................................................................................................
VI. Recommendation 7
.....................................................................................................................................
VII. Additional Information 8
.............................................................................................................................
APPENDIX I - FINANCIAL INFORMATION OF THE GROUP 9
........................................................
APPENDIX II - GENERAL INFORMATION 12
............................................................................................
In this circular, unless the context otherwise requires, the following
expressions have the following meanings:
"A Share(s)" ordinary share(s) in the share capital of the Company, with a nominal value of
RMB1.00 each, which are subscribed for and traded in Renminbi and listed on
the Shanghai Stock Exchange
"associate(s)" has the meaning ascribed thereto under the Listing Rules
"Board" the board of Directors
"Cathay Pacific" Cathay Pacific Airways Limited
"CNACG" China National Aviation Corporation (Group) Limited, a company incorporated
under the laws of Hong Kong and a wholly-owned subsidiary of CNAHC and a
substantial shareholder of the Company, which directly holds approximately
11.75% of the Company's issued share capital as at the Latest Practicable Date
"CNAHC" China National Aviation Holding Corporation Limited, a PRC state-owned
enterprise and the controlling shareholder of the Company, directly and
through its wholly-owned subsidiary CNACG, holding approximately 51.32% of the
issued share capital of the Company in aggregate as at the Latest Practicable
Date
"COMAC" The Commercial Aircraft Corporation of China, Ltd., a company incorporated in
the PRC with limited liability
"COMAC Aircraft" 100 C919 aircraft (Extended-range Version) to be purchased by the Company
pursuant to the COMAC Aircraft Purchase Agreement
"COMAC Aircraft Purchase" or "Transaction" the purchase by the Company of the COMAC Aircraft pursuant to the COMAC
Aircraft Purchase Agreement
"COMAC Aircraft Purchase Agreement" the aircraft purchase agreement dated 26 April 2024 entered into between the
Company and COMAC, pursuant to which the Company has agreed to purchase the
COMAC Aircraft from COMAC
"Company" or "Air China" 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
"connected person(s)" has the meaning ascribed thereto under the Listing Rules
"Director(s)" the director(s) of the Company
"EGM" the extraordinary general meeting of the Company to be convened for the
Shareholders to consider and, if thought fit, approve, among other things, the
Transaction
"Group" the Company and its subsidiaries
"HK$" Hong Kong dollar, the lawful currency of Hong Kong
"Hong Kong" Hong Kong Special Administrative Region of the PRC
"H Share(s)" ordinary share(s) in the share capital of the Company, with a nominal value of
RMB1.00 each, which are listed on the Stock Exchange as primary listing venue
and have been admitted into the Official List of the UK Listing Authority as
secondary listing venue
"Latest Practicable Date" 17 June 2024, being the latest practicable date prior to the printing of this
circular for ascertaining certain information contained herein
"Listing Rules" The Rules Governing the Listing of Securities on the Stock Exchange
"RMB" Renminbi, the lawful currency of the PRC
"SASAC" The State-owned Assets Supervision and Administration Commission
"Shareholder(s)" holder(s) of the shares of the Company
"SFO" the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"substantial shareholder(s)" has the meaning ascribed thereto under the Listing Rules
"Supervisor(s)" the supervisor(s) of the Company
"US$" United States dollars, the lawful currency of the United States
"%" per cent
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
Directors: Registered Address:
Executive Directors: 1st Floor-9th Floor 101, Building 1
Mr. Ma Chongxian (Chairman) 30 Tianzhu Road Shunyi District Beijing, the PRC
Mr. Wang Mingyuan
Principal Place of Business in Hong Kong:
Non-executive Directors: 5th Floor, CNAC House 12 Tung Fai Road
Mr. Feng Gang Mr. Patrick Healy Hong Kong International Airport Hong Kong
Employee Representative Director:
Mr. Xiao Peng
Independent Non-executive Directors: Mr. Li Fushen
Mr. He Yun Mr. Xu Junxin
Ms. Winnie Tam Wan-chi
20 June 2024
To the Shareholders
Dear Sir or Madam,
MAJOR TRANSACTION IN RELATION TO THE PURCHASE OF DOMESTIC AIRCRAFT
I. INTRODUCTION
Reference is made to the announcement of the Company dated 26 April 2024 in
relation to, among other things, the COMAC Aircraft Purchase.
The purpose of this circular is to provide you with further information on the
COMAC Aircraft Purchase and all the information reasonably necessary to enable
you to make an informed decision on voting in respect of the relevant
resolution at the EGM.
A notice convening the EGM will be dispatched by the Company in due course.
The Company will announce details of the EGM, including the date and venue as
and when available in compliance with the articles of association of the
Company and the Listing Rules.
II. MAJOR TRANSACTION
1. Background
On 26 April 2024, the Company entered into the COMAC Aircraft Purchase
Agreement with COMAC, pursuant to which the Company has agreed to purchase the
COMAC Aircraft from COMAC.
The details of the Transaction are summarized as follows.
2. The COMAC Aircraft Purchase Agreement
Date:
26 April 2024
Parties:
(a) the Company, as the purchaser, the principal business
activities of which are air passenger, air cargo and airline-related services;
and
(b) COMAC, as the vendor, one of the principal business
activities of which is civil aircraft manufacturing.
As at the Latest Practicable Date, COMAC is owned as to 49.80% by the SASAC of
the State Council, 20.92% by Shanghai Guosheng (Group) Co., Ltd.
(上海國盛（集團）有限公司), which is
directly wholly-owned by Shanghai SASAC, and the remaining 29.28% of the
shareholdings are owned by multiple shareholders, each holding less than 10%
in COMAC. To the best of the knowledge, information and belief of the
Directors after having made all reasonable enquiries, COMAC and its ultimate
beneficial owner(s) are third parties independent of the Company and its
connected persons (as defined under the Listing Rules).
Aircraft to be acquired:
100 C919 aircraft (Extended-range Version)
Consideration:
The aircraft basic price comprises the airframe price, add-on features price
and engine price.
According to the latest price catalogue provided by COMAC, the basic price of
the COMAC Aircraft to be acquired by the Company, in aggregate, is
approximately US$10,800 million (equivalent to approximately HK$84,240 million
at an exchange rate of US$1 = HK$7.80).
COMAC has granted to the Company considerable price concessions with regard to
the COMAC Aircraft. Such price concessions were determined after arm's length
negotiations between the parties and as a result, the actual consideration for
the COMAC Aircraft Purchase is lower than the aircraft basic price mentioned
above.
The COMAC Aircraft Purchase Agreement was negotiated and entered into in
accordance with customary business practice. The Directors confirm that the
extent of the price concessions granted to the Company in the COMAC Aircraft
Purchase is fair and reasonable and comparable with the price concessions
provided under the previous similar transactions. The Company believes that
there is no material impact of the price concessions obtained in the COMAC
Aircraft Purchase on the unit operating cost of the Group's fleet. It is
normal business practice of the global airline industry to disclose the
aircraft basic price, instead of the actual price, for aircraft acquisitions.
Disclosure of the actual consideration will result in the loss of the
considerable price concessions and hence a significant negative impact on the
Group's cost for the COMAC Aircraft Purchase and will therefore not be in the
interests of the Company and the Shareholders as a whole.
Accordingly, the Company has applied to the Stock Exchange and the Stock
Exchange has granted such waiver from strict compliance with Rules 14.58(4)
and 14.66(4) of the Listing Rules in respect of disclosure of the actual
consideration of the COMAC Aircraft Purchase.
Payment and delivery terms:
The aggregate consideration for the COMAC Aircraft Purchase is payable by cash
in instalments. The Company is expecting to take delivery of the COMAC
Aircraft in stages from 2024 to 2031.
Source of funding:
The COMAC Aircraft Purchase will be funded by self-owned cash, commercial bank
loans and other financing methods. The COMAC Aircraft Purchase is expected to
have no material impact on the cash flow and business operation of the
Company.
The COMAC Aircraft Purchase is subject to the approval of the Shareholders.
Such condition is not waivable.
As at the Latest Practicable Date, the abovementioned condition is yet
fulfilled. The Company will convene the EGM for Shareholders to consider and
approve the COMAC Aircraft Purchase.
3. Reasons for and Benefits of the COMAC Aircraft Purchase
The Transaction is in line with the development plan of the Company and the
market demand, which is conducive to the Group's optimization of fleet
structure and long-term supplement of fleet capacity. The Transaction will
expand the fleet capacity of the Group, the Transaction is expected to
increase the fleet capacity of the Group by approximately 7.5%, based on the
number of available tonne kilometers of the Group as at 31 December 2023
without taking into account the potential adjustments to the fleet such as
aircraft withdrawal due to market condition and aircraft aging. The new
aircraft will be delivered in stages from 2024 to 2031, with some aimed at
meeting the renewal needs due to the withdrawal of aging aircraft from the
fleet. The actual net increase in fleet capacity will be maintained within a
manageable range.
4. Listing Rules Implications
As the highest applicable percentage ratio under Rule 14.07 of the Listing
Rules for the COMAC Aircraft Purchase is above 25% but less than 100%, the
COMAC Aircraft Purchase contemplated under the COMAC Aircraft Purchase
Agreement constitutes a major transaction of the Company and is subject to the
reporting, announcement and Shareholders' approval requirements under Chapter
14 of the Listing Rules.
The Directors believe that the COMAC Aircraft Purchase is conducted in the
ordinary and usual course of business of the Group on normal commercial terms
and the terms of the COMAC Aircraft Purchase Agreement are fair and reasonable
and in the interests of the Company and the Shareholders as a whole.
None of the Directors had material interests in the Transaction and thus no
Directors were required to abstain from voting on the board resolution(s) to
approve the COMAC Aircraft Purchase Agreement and the COMAC Aircraft Purchase
at the Board meeting.
III. FINANCIAL AND TRADING PROSPECTS
There is no change in the fundamentals of the Chinese economy with the basic
trend of economic stability and long-term improvement still intact. China
continues to be in a period of strategic opportunities. Leveraging the super
large-scale domestic demand market formed by a population of 1.4 billion,
including a middle income group of over 400 million people, China is striving
to build a new development paradigm centred around domestic circulation, with
the international and domestic circulations mutually reinforcing each other.
The demand for civil aviation in China will continue to maintain a positive
growth momentum.
It is expected that the competitive pressures in the domestic aviation market
will alleviate. On the demand side, with the continued rebound and improvement
of the national economy, the foundation for industrial recovery and
development will become more solid. This will lead to steady growth in the
domestic passenger transportation market, and the international passenger
transportation market will sooner recover, effectively alleviating the
situation of oversupply in the domestic aviation market. In terms of policy,
the Civil Aviation Administration of China has been advancing a series of
reform measures to strengthen the
foundation for the industry building and development, enhance the
international competitiveness of aviation hubs, leading to diversified
operations among various types of airlines in the market and reducing
disorderly market competition.
In the "14th Five-Year Plan" period, Air China will adhere to the development
goal of "accelerating the construction of a world-class aviation
transportation group with global competitiveness", adhere to the four
strategic directions of "hub network, passenger and cargo balance, cost
leadership, brand strategy", focus on key areas such as safety management
improvement, market layout optimization, resource structure adjustment,
product service upgrade, digital innovation development, green and low-carbon
development, and promote work implementation.
The Company has established its operational focuses for 2024, which included
(1) to unwaveringly uphold the principle of safety first and firmly secure the
bottom line of safety; (2) to vigorously enhance efficiency and quality, and
significantly boosting the level of profitability; (3) to intensify efforts in
reform and innovation, and accelerating the development into a world-class
enterprise; (4) to focus on creating "four excellence" and promoting
comprehensive improvement in service quality; (5) to strengthen the leading
and supporting roles, further enhancing the Party's leadership and Party
building.
In addition, the Directors are of the view that the Transaction is not
expected to have any material impact on earnings, assets and liabilities of
the Group.
IV. WORKING CAPITAL
Taking into account the financial resources available to the Group and the
effect of the Transaction, the Directors are of the opinion that the Group
will have sufficient working capital for the Group's present requirements for
the next 12 months following the date of this circular.
V. EGM
The Company will convene the EGM to consider and, if thought fit, to pass the
resolution in respect of the COMAC Aircraft Purchase Agreement and the COMAC
Aircraft Purchase.
To the best knowledge, information and belief of the Directors, having made
all reasonable enquiries, no Shareholder or any of their respective associates
have a material interest in the COMAC Aircraft Purchase. As such, no
Shareholders is required to abstain from voting at the EGM in respect of the
resolution to approve the COMAC Aircraft Purchase Agreement and the COMAC
Aircraft Purchase.
A notice convening the EGM will be dispatched by the Company in due course.
The Company will announce details of the EGM, including the date and venue as
and when available in compliance with the articles of association of the
Company and the Listing Rules.
VI. RECOMMENDATION
The Board recommends the Shareholders to vote in favour of the resolution
regarding the COMAC Aircraft Purchase Agreement and the COMAC Aircraft
Purchase contemplated thereunder.
VII. ADDITIONAL INFORMATION
Your attention is also drawn to the additional information set out in
appendices to this circular.
By order of the Board
Air China Limited
Ma Chongxian
Chairman
Beijing, the PRC
1. CONSOLIDATED FINANCIAL STATEMENTS
The Company is required to set out in this circular information for the last
three financial years with respect to the profits and losses, financial record
and position and the latest published balance sheet together with the notes to
the consolidated financial statements of the Group for the last financial
year.
The audited consolidated financial statements of the Group for the years ended
31 December 2021, 2022 and 2023, together with the accompanying notes to the
financial statements, can be found on pages 84 to 188 of the annual report of
the Company for the year ended 31 December 2021, pages 85 to 188 of the annual
report of the Company for the year ended 31 December 2022 and pages 92 to 200
of the annual report of the Company for the year ended 31 December 2023,
respectively. Please see below the hyperlinks to the said annual reports:
https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0425/2022042502186.pdf
https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0424/2023042401849.pdf
https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0425/2024042502352.pdf
2. INDEBTEDNESS
As at 30 April 2024, being the latest practicable date for the purpose of
determining the indebtedness of the Group prior to the printing of this
circular, except for the authorised or created but unissued debt securities
and contingent liabilities, the Group had total outstanding indebtedness of
RMB236,943 million, details of which are as follows:
Note RMB
(in million)
Bank loans
- unsecured and unguaranteed 125,482
- secured and unguaranteed (i) 708
126,190
Loans from the ultimate holding company
- unsecured and unguaranteed 16,829
Loans from a fellow subsidiary
- unsecured and unguaranteed 301
Corporate bonds
- unsecured and unguaranteed 11,313
Short-term commercial papers payable
- unsecured and unguaranteed 2,004
Note RMB
(in million)
Lease liabilities
- leases of aircraft containing a purchase option
- unsecured and unguaranteed 46,186
- leases of aircraft not containing a purchase option
- secured and unguaranteed (ii) 17,156
- unsecured and guaranteed (iii) 15,107
- unsecured and unguaranteed 816
33,079
- leases of buildings and others
- unsecured and unguaranteed 1,041
34,120
Total 236,943
Notes:
(i) The Group's bank loans with an aggregate amount of
approximately RMB708 million as at 30 April 2024 were secured by charges over
certain of the Group's assets, including aircraft, engines and flight
equipment, buildings and land use rights, and other intangible assets.
(ii) The Group's secured and unguaranteed lease liabilities with
an aggregate amount of approximately RMB17,156 million as at 30 April 2024
were related to leases of aircraft not containing a purchase option and
secured by rental deposits.
(iii) The Group's unsecured and guaranteed lease liabilities with
an aggregate amount of approximately RMB15,107 million as at 30 April 2024
were related to leases of aircraft not containing a purchase option and
guaranteed by letters of guarantee.
As at 30 April 2024, the Group had a total amount of authorised or created but
unissued debt securities of RMB19,000 million, which was unsecured and
unguaranteed, including RMB18,000 million with a validity period ended 9 June
2024, and RMB1,000 million with a validity period ended 21 December 2024.
Contingent liabilities
As at 30 April 2024, the Group had the following significant contingent
liabilities:
Pursuant to the restructuring of China National Aviation Holding Corporation
Limited (the "CNAHC") in preparation for the listing of the Company's H shares
on The Stock Exchange of Hong Kong Limited and the London Stock Exchange, the
Company entered into a restructuring agreement (the "Restructuring Agreement")
with CNAHC and China National Aviation Corporation (Group) Limited ("CNACG", a
wholly-owned subsidiary of CNAHC) on 20 November 2004. According to the
Restructuring Agreement, except for liabilities constituting or arising out of
or relating to business undertaken by the Company after the restructuring, no
liabilities would be assumed by the Company and the Company would not be
liable, whether severally, or jointly and severally, for debts and obligations
incurred prior to the restructuring by CNAHC and CNACG. The Company has also
undertaken to indemnify CNAHC and CNACG against any damage suffered or
incurred by CNAHC and CNACG as a result of any breach by the Company of any
provision of the Restructuring Agreement.
Except as disclosed above and apart from intra-group liabilities and normal
trade payables, as at 30 April 2024, the Group did not have any debt
securities issued and outstanding, or authorised or otherwise created but
unissued, term loans, debentures, any other borrowings or indebtedness in the
nature of borrowing of the Group including bank overdrafts and liabilities
under acceptances (other than normal trade bills) or acceptance credits,
recognised lease obligations or hire purchase commitments, mortgages, charges,
material contingent liabilities or guarantees.
1. RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept
full responsibility, includes particulars given in compliance with the Listing
Rules for the purpose of giving information with regard to the Group. The
Directors, having made all reasonable enquiries, confirm that to the best of
their knowledge and belief, the information contained in this circular is
accurate and complete in all material respects and not misleading or
deceptive, and there are no other matters the omission of which would make any
statement herein or this circular misleading.
2. DISCLOSURE OF INTERESTS OF DIRECTORS AND SUPERVISORS
As at the Latest Practicable Date, none of the Directors, Supervisors or chief
executive of the Company had interests or short positions in the shares,
underlying shares and/or debentures (as the case may be) of the Company or its
associated corporations (within the meaning of Part XV of the SFO) which were
notifiable to the Company and the Stock Exchange pursuant to the SFO, or were
recorded in the register maintained by the Company pursuant to section 352 of
the SFO, or which were notifiable to the Company and the Stock Exchange
pursuant to the Model Code for Securities Transactions by Directors of Listed
Issuers.
As at the Latest Practicable Date, none of the Directors or Supervisors of the
Company had any direct or indirect interest in any assets which have been,
since 31 December 2023 (being the date to which the latest published audited
financial statements of the Group were made up), acquired or disposed of by or
leased to any member of the Group or are proposed to be acquired or disposed
of by or leased to any member of the Group.
As at the Latest Practicable Date, none of the Directors or Supervisors of the
Company was materially interested in any contract or arrangement which is
significant in relation to the business of the Group and subsisting as at the
Latest Practicable Date.
Mr. Patrick Healy, a non-executive Director, is concurrently the chairman and
an executive director of Cathay Pacific. Cathay Pacific is a substantial
shareholder of the Company, holding 2,633,725,455 H Shares of the Company
(representing approximately 15.87% of the total issued shares of the Company)
as at the Latest Practicable Date. Mr. Ma Chongxian and Mr. Wang Mingyuan,
both are executive Directors, are concurrently non-executive directors of
Cathay Pacific. Cathay Pacific competes or is likely to compete either
directly or indirectly with some aspects of the business of the Company as it
operates airline services to certain destinations, which are also served by
the Company.
Save as disclosed above, as at the Latest Practicable Date, none of the
Directors or Supervisors of the Company and their respective close associates
(as defined in the Listing Rules) had any competing interests which would be
required to be disclosed under Rule 8.10 of the Listing Rules.
3. DISCLOSURE OF INTERESTS OF SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as the Directors were aware, the
following persons (not being a Director or Supervisor or chief executive of
the Company or their associate) had an interest or short position (if any) in
the Shares or the underlying Shares which would fall to be disclosed to the
Company under Divisions 2 and 3 of Part XV of the SFO, or which were recorded
in the register of the Company required to be kept under section 336 of the
SFO:
Approximate percentage of the total number of Shares in issue Percentage of the total issued A Shares of the Company Percentage of the total issued H Shares of the Company
Type and number of shares
held
Name Type of interests
CNAHC Beneficial owner 6,566,761,847 (L) 39.57% 56.42% -
A Shares
CNAHC((1)) Equity attributable 1,332,482,920 (L) 8.03% 11.45% -
A Shares
CNAHC((1)) Equity attributable 616,779,308 (L) 3.72% - 12.45%
H Shares
CNACG Beneficial owner 1,332,482,920 (L) 8.03% 11.45% -
A Shares
CNACG Beneficial owner 616,779,308 (L) 3.72% - 12.45%
H Shares
Cathay Pacific Beneficial owner 2,633,725,455 (L) 15.87% - 53.15%
H Shares
Swire Pacific Limited((2)) Equity attributable 2,633,725,455 (L) 15.87% - 53.15%
H Shares
John Swire & Sons (H.K.) Limited((2)) Equity attributable 2,633,725,455 (L) 15.87% - 53.15%
H Shares
John Swire & Sons Limited((2)) Equity attributable 2,633,725,455 (L) 15.87% - 53.15%
H Shares
Notes:
(1) By virtue of CNAHC's 100% interest in CNACG, CNAHC was
deemed to be interested in the 1,332,482,920 A Shares and 616,779,308 H Shares
directly held by CNACG.
(2) By virtue of John Swire & Sons Limited's 100% interest
in John Swire & Sons (H.K.) Limited and their approximately 60.31% equity
interest and 68.13% voting rights in Swire Pacific Limited, and Swire Pacific
Limited's approximately 45.00% interest in Cathay Pacific as at the Latest
Practicable Date, John Swire & Sons Limited, John Swire & Sons (H.K.)
Limited and Swire Pacific Limited were deemed to be interested in the
2,633,725,455 H Shares of the Company directly held by Cathay Pacific.
(3) The letter "L" denotes a long position in the Shares.
Save as disclosed above, as at the Latest Practicable Date, no other persons
(not being a Director or Supervisor or chief executive of the Company or their
associate) had any interest or short position (if any) in the Shares or the
underlying Shares which would fall to be disclosed to the Company under
Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the
register of the Company required to be kept under section 336 of the SFO.
4. SERVICE CONTRACTS OF DIRECTORS AND SUPERVISORS
As at the Latest Practicable Date, none of the Directors or Supervisors had
any existing or proposed service contract with any member of the Group which
is not expiring or terminable by the Group within one year without payment of
compensation (other than statutory compensation).
5. DIRECTORS' AND SUPERVISORS' EMPLOYMENT WITH SUBSTANTIAL SHAREHOLDERS
The followings are the particulars of Directors' and Supervisors' employment
with substantial Shareholders (holding interests or short positions in the
shares and underlying shares of the Company required to be disclosed to the
Company pursuant to Divisions 2 and 3 of Part XV of the SFO) as at the Latest
Practicable Date:
Directors
Mr. Ma Chongxian, an executive Director, the chairman of the Board and the
secretary of the Party Committee of the Company, serves as a director, the
chairman and the secretary of the Party Leadership Group of CNAHC. He is also
a non-executive director of Cathay Pacific.
Mr. Wang Mingyuan, an executive Director, the vice chairman of the Board, the
president and the deputy secretary of the Party Committee of the Company,
serves as a director, the general manager and the deputy secretary of the
Party Leadership Group of CNAHC. He is also a non- executive director of
Cathay Pacific.
Mr. Feng Gang, a non-executive Director and the deputy secretary of the Party
Committee of the Company, serves as a director and the deputy secretary of the
Party Leadership Group of CNAHC.
Mr. Patrick Healy, a non-executive Director of the Company, is the chairman of
the board of directors and an executive director of Cathay Pacific, a director
of Swire Pacific Limited, and a director of John Swire & Sons (H.K.)
Limited.
Mr. Xiao Peng, the employee representative Director of the Company, serves as
the chairman of the labour union and the employee representative director of
CNAHC.
Supervisor
Ms. Lyu Yanfang, a Supervisor of the Company, serves as the general manager of
the law department of CNAHC.
6. NO MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, there has been no material adverse change
in the Group's financial or trading position since 31 December 2023, being the
date to which the latest published audited financial statements of the Group
have been made up.
7. LITIGATION
As at the Latest Practical Date, the Company was not involved in any
significant litigation or arbitration and to the knowledge of the Company,
there were no litigation or claims of material importance pending or
threatened against any member of the Group.
8. MATERIAL CONTRACTS
The Group has entered into the following material contracts within the two
years immediately preceding the date of this circular.
(a) the COMAC Aircraft Purchase Agreement;
(b) the conditional subscription agreement dated 30 January 2024
entered into between the Company and CNACG in respect of the issuance of H
Shares to specific investor, pursuant to which, the Company has agreed to
issue, and CNACG has agreed to subscribe for new H Shares in the amount of not
more than HK$2.00 billion at HK$5.09 per share;
(c) the conditional subscription agreement dated 22 December
2023 entered into between the Company and CNAHC in respect of the issuance of
A Shares to specific investor, pursuant to which, the Company has agreed to
issue, and CNAHC has agreed to subscribe for new A Shares in the amount of not
more than RMB6.00 billion at RMB7.02 per share;
(d) the conditional subscription agreement dated 2 August 2022 in
respect of the 2022 non-public issuance of A Shares entered into between the
Company and CNAHC, pursuant to which, the Company has agreed to issue, and
CNAHC has agreed to subscribe for A Shares in the amount of not less than
RMB5.5 billion;
(e) the agreement dated 1 July 2022 entered into between
Shenzhen Airlines Company Limited ("Shenzhen Airlines") and Airbus S.A.S.
("Airbus Company"), pursuant to which Shenzhen Airlines has agreed to purchase
and Airbus Company has agreed to sell 32 Airbus A320NEO series aircraft. The
basic price of the 32 Airbus aircraft, in aggregate, is approximately US$3.923
billion (price quoted as at January 2020); and
(f) the agreement dated 1 July 2022 entered into among the
Company, Air China Import and Export Co., Ltd. (國航進出口有限公司)
and Airbus Company, pursuant to which the
Company has agreed to purchase and Airbus Company has agreed to sell 64 Airbus
A320NEO series aircraft. The basic price of the 64 Airbus aircraft, in
aggregate, is approximately US$8.290 billion (price quoted as at January
2020).
9. MISCELLANEOUS
a. The joint company secretaries of the Company are Mr. Xiao
Feng and Mr. Huen Ho Yin. Mr. Huen Ho Yin is a practicing solicitor of the
High Court of Hong Kong.
b. The registered address of the Company is at 1st Floor - 9th
Floor 101, Building 1, 30 Tianzhu Road, Airport Industrial Zone, Shunyi
District, Beijing, the PRC. The head office of the Company is at No. 30
Tianzhu Road, Airport Industrial Zone, Shunyi District, Beijing, the PRC.
c. The H Share registrar and transfer office of the Company is
Computershare Hong Kong Investor Services Limited, the address of which is
Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong
Kong.
10. DOCUMENTS ON DISPLAY
Copies of the following documents will be published on the websites of the
Stock Exchange (www.hkexnews.hk) and the Company (www.airchina.com.cn) for a
period of 14 days from the date of this circular:
a. the COMAC Aircraft Purchase Agreement; and
b. this circular.
In respect of the Transaction, the Company has applied for, and the Stock
Exchange has granted, a waiver from strict compliance with Rule 14.66(10) and
paragraph 43(2)(c) of Appendix D1B to the Listing Rules so that information in
relation to the Consideration, price calculation mechanism, payment
arrangement, specific information in relation to aircraft models, the aircraft
delivery plan, exchange rate and notice, all of which are core trade secrets
for contracting parties and have comparable commercial sensitivity, will be
redacted pursuant to a request for confidential treatment by COMAC. The above
redacted information is commercial sensitive information strictly personal and
exclusive to each party to the COMAC Aircraft Purchase Agreement and generally
recognized as customized and confidential information in the aviation
industry, the disclosure of which will be competitively harmful to the
Company. In addition, information in relation to the bank accounts and contact
information will also be redacted. Such information are solely for the purpose
of the performance of the COMAC Aircraft Purchase Agreement and are not
material to the decision of the Shareholders in respect of the COMAC Aircraft
Purchase, the disclosure of which may create unnecessary contact between the
public and contracting parties. The material terms stipulated under the COMAC
Aircraft Purchase Agreement have been summarised and disclosed in this
circular, from which the Shareholders and the investing public will be able to
have sufficient information and knowledge about the COMAC Aircraft Purchase
and assess the impact of the COMAC Aircraft Purchase so that the Shareholders
and the investing public would make an informed voting decision on the
Transaction. In addition, the Shareholders and the investing public are
provided with sufficient information regarding the reasons for and benefits of
the COMAC Aircraft Purchase. Therefore, the redacted version of the COMAC
Aircraft Purchase Agreement is unlikely to mislead the Shareholders regarding
to the facts and circumstances, knowledge of which is essential for the
informed assessment of the Transaction. Accordingly, only the redacted version
of the COMAC Aircraft Purchase Agreement will be available for display to the
public.
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