Exhibit 1.1
________________________________________________________________________________
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
________________________________________________________________________________
IF YOU ARE IN ANY DOUBT about any of the contents of this circular, you should
obtain independent professional advice.
IF YOU HAVE SOLD OR TRANSFERRED all your shares in China Eastern Airlines
Corporation Limited, you should at once hand this circular to the purchaser or
the transferee or to the bank, licensed securities dealer or other agent through
whom the sale or transfer was effected for transmission to the purchaser or the
transferee.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this circular, 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 circular.
________________________________________________________________________________
[CHINESE CHARACTERS]
CHINA EASTERN AIRLINES CORPORATION LIMITED
(LOGO) (A joint stock limited company incorporated in the
People's Republic of China with limited liability)
(Stock code: 670)
PURCHASE OF SIX BOEING 737-700 AIRCRAFT
DISCLOSEABLE TRANSACTION
________________________________________________________________________________
13th January, 2005
________________________________________________________________________________
CONTENTS
________________________________________________________________________________
Pages
-----
DEFINITIONS ............................................................... 1
LETTER FROM THE BOARD OF DIRECTORS ........................................ 3
Aircraft Purchase Agreement .......................................... 3
General .............................................................. 4
APPENDIX - GENERAL INFORMATION ............................................ 6
________________________________________________________________________________
DEFINITIONS
________________________________________________________________________________
In this circular, unless the context otherwise requires, the following
expressions have the following meanings:
"AIRCRAFT PURCHASE AGREEMENT" means an agreement dated 23rd December, 2004
between the Company and Boeing Company in respect
of the purchase by the Company of six Boeing
737-700 aircraft from Boeing Company;
"BOEING AIRCRAFT" means the six Boeing 737-700 aircraft (with
engines) being acquired by the Company under the
Aircraft Purchase Agreement;
"BOEING COMPANY" means Boeing Company, a company based in Chicago,
the United States of America;
"COMPANY" means [CHINESE CHARACTERS] (China Eastern Airlines
Corporation Limited), a joint stock limited
company incorporated in the People's Republic of
China with limited liability, whose H shares, A
shares and American depositary shares are listed
on the Stock Exchange, the Shanghai Stock Exchange
and the New York Stock Exchange, Inc.,
respectively;
"DIRECTORS" means the directors of the Company;
"GROUP" means the Company and its subsidiaries;
"HK$" means Hong Kong dollar, the lawful currency of
Hong Kong;
"HONG KONG" means the Hong Kong Special Administrative Region
of the People's Republic of China;
"LATEST PRACTICABLE DATE" means 7th January, 2005, being the latest
practicable date for ascertaining certain
information referred to in this circular prior to
the printing of this circular;
"LISTING RULES" means the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong
Limited;
"RMB" means Renminbi, the lawful currency of the
People's Republic of China;
1
________________________________________________________________________________
DEFINITIONS
________________________________________________________________________________
"SFO" means the Securities and Futures Ordinance
(Chapter 571 of the Laws of Hong Kong); and
"STOCK EXCHANGE" means The Stock Exchange of Hong Kong Limited.
2
________________________________________________________________________________
LETTER FROM THE BOARD OF DIRECTORS
________________________________________________________________________________
[CHINESE CHARACTERS]
CHINA EASTERN AIRLINES CORPORATION LIMITED
(LOGO) (A joint stock limited company incorporated in the
People's Republic of China with limited liability)
(Stock code: 670)
DIRECTORS: LEGAL ADDRESS:
Xx Xxxxxxx (Chairman, Executive Director) 00 Xxxxxxx Xxxxxx
Xx Xxxxx (Non-executive Director) Pudong International Airport
Xxx Xxxxxxxxx (Non-executive Director) Xxxxxxxx
Xxx Xxxxxx (Vice President, Executive Director) The People's Republic of China
Xxxxx Xxxxx (Non-executive Director)
Xxx Xxxxxxx (Executive Director) HEAD OFFICE:
0000 Xxxxxxxx Xxxx
XXXXXXXXXXX XXX-XXXXXXXXX XXXXXXXXX: Xxxxxxxx
Xx Xxxxxxx The People's Republic of China
Xxxxx Xxx
Xx Baiwang PLACE OF BUSINESS IN HONG KONG:
Xxxx Xxxxxx 5th Floor, XxXxxxxx'x Building
Xxx Xxxx 00 Xxx Xx Xxxxxx
Xxxx Xxxx
HONG KONG SHARE REGISTRAR AND
TRANSFER OFFICE:
Hong Kong Registrars Limited
Rooms 1712-1716, 17th Floor
Hopewell Centre
000 Xxxxx'x Xxxx Xxxx
Xxxx Xxxx
13th January, 2005
To the shareholders of the Company
Dear Sir or Madam,
PURCHASE OF SIX BOEING 737-700 AIRCRAFT
DISCLOSEABLE TRANSACTION
AIRCRAFT PURCHASE AGREEMENT
As disclosed in the announcement issued by the Company dated 23rd December,
2004, the Company entered into the Aircraft Purchase Agreement with Boeing
Company on 23rd December, 2004, pursuant to which the Company agreed to purchase
from Boeing Company the Boeing Aircraft in accordance with the terms and
conditions thereof.
3
________________________________________________________________________________
LETTER FROM THE BOARD OF DIRECTORS
________________________________________________________________________________
The Aircraft Purchase Agreement constitutes a discloseable transaction of
the Company under the Listing Rules as applied by the Stock Exchange. The
purpose of this circular is to provide the shareholders of the Company with
information in relation to the Aircraft Purchase Agreement and the transaction
in compliance with the Listing Rules.
Boeing company
Boeing Company, to the Directors' knowledge, is a company based in Chicago
and is a leading aerospace company in the world.
To the best of the Directors' knowledge, information and belief having made
all reasonable enquiry, Boeing Company and its ultimate beneficial owner(s) are
third parties independent of the Company and connected persons (as defined in
the Listing Rules) of the Company, and are not connected persons of the Company.
Boeing aircraft
Based on the information provided by Boeing Company, the total asset value
of the Boeing Aircraft, as determined by reference to the market price of the
aircraft, amounts in aggregate to approximately RMB2 billion (approximately
HK$1.9 billion). The Company has not conducted any independent valuation on such
aircraft.
Consideration and payment terms
The aggregate consideration for the Boeing Aircraft, which was determined
as a matter of commercial decision after arm's length negotiations, is
approximately RMB2 billion (approximately HK$1.9 billion). The consideration is
payable by cash in United States dollars in instalments, and is being funded by
way of financing arrangements with financial institutions.
Delivery
The Boeing Aircraft are to be delivered to the Company in stages from
January to August 2006.
General
Reasons for entering into the transaction and benefits expected to accrue to the
company
The Company is principally engaged in the business of civil aviation. The
brand-new Boeing Aircraft will be introduced to the Company's fleet, principally
to cater for the increasing market demand in the foreseeable future. These
aircraft are expected to replace certain existing aircraft of
4
the Company, which, as is anticipated, will be able to provide more comfortable
and high quality services to its passengers, enhancing its operating capability
and strengthening its safety administration in the aviation industry, both
domestic and international alike.
The Directors believe that the terms of the Aircraft Purchase Agreement and
all transactions contemplated thereunder are fair and reasonable and in the
interests of the Company's shareholders as a whole.
Financial impact of the transaction on the group
As mentioned above, the consideration for the Boeing Aircraft is being
funded by way of financing arrangements with financial institutions, and the
transaction may therefore increase the Group's short-term gearing ratio, but is
not expected to impact materially on its business operations and financial
performance. Save as described above, the transaction is not expected to result
in any material impact on the earnings and assets and liabilities of the Company
either.
Discloseable transaction
The Aircraft Purchase Agreement constitutes a discloseable transaction of
the Company under the Listing Rules as applied by the Stock Exchange.
Additional information
Your attention is also drawn to the additional information set out in the
appendix to this circular.
Yours faithfully,
For and on behalf of the board of Directors of
CHINA EASTERN AIRLINES CORPORATION LIMITED
XX XXXXXXX
Chairman
5
________________________________________________________________________________
APPENDIX GENERAL INFORMATION
________________________________________________________________________________
RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Listing
Rules for the purpose of giving information with regard to the Group. The
Directors collectively and individually accept full responsibility for the
accuracy of the information contained in this circular and confirm, having made
all reasonable enquiries, that to the best of their knowledge and belief, there
are no other facts not contained in this circular, the omission of which would
make any statement herein misleading.
DISCLOSURE OF INTERESTS
Directors, supervisors, chief executives and senior management
The interests of the Directors, supervisors, chief executives and senior
management in the issued share capital of the Company as at the Latest
Practicable Date were set out as follows:
NUMBER AND TYPE OF SHARES HELD AND NATURE OF INTEREST
-------------------------------------------------------------------------
CAPACITY
IN WHICH THE
A SHARES
NAME POSITION PERSONAL FAMILY CORPORATE TOTAL WERE HELD
---- -------- -------------- ------ --------- -------------- ------------
Xx Xxxxxxx Chairman, - - - 0 -
Executive Director
Xx Xxxxx Non-executive Director - - - 0 -
Xxx Xxxxxxxxx Non-executive Director 2,800 A shares - - 2,800 A shares Beneficial
(Note 1) (Note 1) owner
Xxx Xxxxxx Vice President, - - - 0 -
Executive Director
Xxxxx Xxxxx Xxx-xxxxxxxxx Director 2,800 A shares - - 2,800 A shares Beneficial
(Note 1) (Note 1) owner
Xxx Xxxxxxx Executive Director, 2,800 A shares - - 2,800 A shares Beneficial
Company secretary (Note 1) (Note 1) owner
Xx Xxxxxxx Independent non-executive - - - 0 -
Director
Xxxxx Xxx Independent non-executive - - - 0 -
Director
Xx Xxxxxxx Independent non-executive - - - 0 -
Director
6
________________________________________________________________________________
APPENDIX GENERAL INFORMATION
________________________________________________________________________________
NUMBER AND TYPE OF SHARES HELD AND NATURE OF INTEREST
-------------------------------------------------------------------------
CAPACITY
IN WHICH THE
A SHARES
NAME POSITION PERSONAL FAMILY CORPORATE TOTAL WERE HELD
---- -------- -------------- ------ --------- -------------- ------------
Xxxx Xxxxxx Independent non-executive - - - 0 -
Director
Xxx Xxxx Independent non-executive - - - 0 -
Director
Xx Xxxxxx Chairman of the - - - 0 -
Supervisory Committee
Xx Xxxxxxx Supervisor 2,800 A shares - - 2,800 A shares Beneficial
(Note 1) (Note 1) owner
Xxxx Xxxxxx Supervisor - - - 0 -
Xxxx Xxx Supervisor - - - 0 -
Xxx Xxxxxxx Supervisor - - - 0 -
Xxx Xxxxxxxx President - - - 0 -
Xx Xxxxx Vice President 2,800 A shares - - 2,800 A shares Beneficial
(Note 1) (Note 1) owner
Xx Xxxxxxx Vice President - - - 0 -
Xxxx Xx Vice President 1,000 A shares - - 1,000 A shares Beneficial
(Note 2) (Note 2) owner
Xxxx Xxxxx Vice President - - - 0 -
Xxxxx Xxxxxxxxx Vice President - - - 0 -
Xxx Xxxxx Chief Financial Officer - - - 0 -
-----------------
Note 1: representing approximately 0.000933% of the Company's total
issued listed A shares, totalling 300,000,000 A shares, as at the
Latest Practicable Date
Note 2: representing approximately 0.000333% of the Company's total
issued listed A shares, totalling 300,000,000 A shares, as at the
Latest Practicable Date
Save as disclosed above, as at the Latest Practicable Date, none of the
Directors, the Company's supervisors, chief executives or members of senior
management of the Company had any interest or short position in the shares,
underlying shares and/or debentures (as the case may be) of the Company and/or
any of its associated corporations (within the meaning of Part XV of the SFO)
which was (i) required to be notified to the Company and the Stock Exchange
pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interest and
short position which he/she was taken or deemed to have under such provisions of
the SFO) or (ii) required to be entered in the register of interests required to
be kept by the Company pursuant to section 352 of the SFO or (iii) otherwise
required to be notified to the Company and the Stock Exchange pursuant to the
Model Code for Securities Transactions by Directors of Listed Companies as set
out in appendix 10 to the Listing Rules.
7
________________________________________________________________________________
APPENDIX GENERAL INFORMATION
________________________________________________________________________________
Each of Xx Xxxxxxx, Xx Xxxxx, Xxx Xxxxxxxxx, Xxxxx Xxxxx, Xx Xxxxxx and Ba
Shengji was as at the Latest Practicable Date a director or employee of China
Eastern Air Holding Company, which, as disclosed below, was a company having, as
at the Latest Practicable Date, an interest in the Company's shares required to
be disclosed to the Company and the Stock Exchange under the provisions of
Divisions 2 and 3 of Part XV of the SFO.
Substantial shareholders
Interests in the Company
So far as is known to the Directors, as at the Latest Practicable Date,
each of the following persons, other than a Director, supervisor, chief
executive or member of the Company's senior management, had an interest and/or
short position in the Company's shares or underlying shares (as the case may be)
which would fall to be disclosed to the Company and the Stock Exchange under the
provisions of Divisions 2 and 3 of Part XV of the SFO:
INTEREST
AS AT THE LATEST
PRACTICABLE DATE
APPROXIMATE APPROXIMATE APPROXIMATE
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
SHAREHOLDING IN SHAREHOLDING IN SHAREHOLDING IN
THE COMPANY'S THE COMPANY'S THE COMPANY'S
NAME OF NATURE OF NUMBER OF TOTAL ISSUED TOTAL ISSUED TOTAL ISSUED SHORT
SHAREHOLDER SHARES HELD SHARES HELD SHARE CAPITAL A SHARES H SHARES POSITION
----------- ------------ ------------- --------------- ---------------- --------------- ---------
China Eastern A shares 3,000,000,000 61.64% 90.91% - -
Air Holding (unlisted
Company State-owned
legal person
shares)
HKSCC
Nominees
Limited (Note) H shares 1,484,301,163 30.50% - 94.73% See Note 1
-----------------
Note: Based on the information available to the Directors as at the
Latest Practicable Date (including such information as was
available on the website of the Stock Exchange) and so far as the
Directors are aware and understand, as at the Latest Practicable
Date:
8
________________________________________________________________________________
APPENDIX GENERAL INFORMATION
________________________________________________________________________________
1. Among the 1,484,301,163 H shares held by HKSCC Nominees Limited,
Xxxxxx Xxxxxxx International Incorporated had an interest in an
aggregate of 104,122,000 H shares of the Company (representing
approximately 6.64% of its then total issued H shares). According to
the information as disclosed in the website of the Stock Exchange and
so far as the Directors are aware and understand, Xxxxxx Xxxxxxx
International Incorporated, which was (or its directors were)
accustomed to act in accordance with the directions of Xxxxxx Xxxxxxx,
held its indirect interest in the Company as at the Latest Practicable
Date in the manner as follows:
(a) 89,874,000 H shares, representing approximately 5.736% of the
Company's then total issued H shares, were held by Xxxxxx Xxxxxxx
Investment Management Company in the capacity of beneficial
owner. Xxxxxx Xxxxxxx Investment Management Company was
ultimately 100% held by Xxxxxx Xxxxxxx Asia Pacific (Holdings)
Limited, which, in turn, was 90% held by Xxxxxx Xxxxxxx
International Incorporated;
(b) 390,000 H shares, representing approximately 0.025% of the
Company's then total issued H shares, were held by Xxxxxx Xxxxxxx
Asset & Investment Trust Management Co., Limited, which was 100%
held by Xxxxxx Xxxxxxx International Incorporated;
(c) 262,000 H shares, representing approximately 0.017% of the
Company's then total issued H shares, were held by Xxxxxx Xxxxxxx
& Co International Limited. Xxxxxx Xxxxxxx & Co International
Limited was ultimately 100% held by Xxxxxx Xxxxxxx Group
(Europe). Xxxxxx Xxxxxxx Group (Europe) was approximately 98.30%
held by Xxxxxx Xxxxxxx International Limited, which, in turn, was
100% held by Xxxxxx Xxxxxxx International Incorporated; and
(d) 1,296,000 H shares, representing approximately 0.083% of the
Company's then total issued H shares, were held by Xxxxxx Xxxxxxx
Capital (Luxembourg) S.A., which was approximately 93.75% held by
Xxxxxx Xxxxxxx International Incorporated.
According to the information as disclosed in the website of the Stock
Exchange and so far as the Directors are aware and understand, as at
the Latest Practicable Date, Xxxxxx Xxxxxxx International Incorporated
also had a short position in 12,300,000 H shares of the Company
(representing approximately 0.78% of its then total issued H shares).
2. Among the 1,484,301,163 H shares held by HKSCC Nominees Limited, X.X.
Xxxxxx Xxxxx & Co. had an interest in an aggregate of 92,424,700 H
shares of the Company (representing approximately 5.90% of its then
total issued H shares). Out of the 92,424,700 H shares, X.X. Xxxxxx
Chase & Co. had an interest in a lending pool comprising 2,098,000 H
shares of the Company (representing approximately 0.13% of its then
total issued H shares). According to the information as disclosed in
the website of the Stock Exchange and so far as the Directors are
aware and understand, X.X. Xxxxxx Xxxxx & Co. held its interest in the
Company in the manner as follows:
(a) 2,098,000 H shares in a lending pool, representing approximately
0.134% of the Company's then total issued H shares, were held by
JPMorgan Chase Bank, N.A. in the capacity as custodian
corporation/approved lending agent, which was 100% held by X.X.
Xxxxxx Xxxxx & Co.;
(b) 792,700 H shares, representing approximately 0.051% of the
Company's then total issued H shares, were held in the capacity
as beneficial owner by X.X. Xxxxxx Xxxxxxxxxxx Inc., which was
ultimately 100% held by X.X. Xxxxxx Xxxxx & Co.; and
(c) 89,534,000 H shares, representing approximately 5.714% of the
Company's then total issued H shares, were held in the capacity
as investment manager by JF Asset Management Limited. JF Asset
Management Limited was approximately 99.99% held by X.X. Xxxxxx
Xxxxxxx Asset Management (Asia) Inc., which, in turn, was
ultimately 100% held by X.X. Xxxxxx Xxxxx & Co..
Interests in other members of the Group
So far as is known to the Directors, as at the Latest Practicable Date,
each of the following persons, other than the Company or any of its directors,
supervisors, chief executives and members
9
________________________________________________________________________________
APPENDIX GENERAL INFORMATION
________________________________________________________________________________
of the senior management, was directly or indirectly interested in 10% or more
of the nominal value of any class of share capital carrying rights to vote in
all circumstances at general meetings of the relevant member of the Group:
NAME OF RELEVANT SUBSTANTIAL APPROXIMATE PERCENTAGE
SUBSIDIARY SHAREHOLDER OF SHAREHOLDING
---------- ---------------------------- ----------------------
[CHINESE CHARACTERS] [CHINESE CHARACTERS] 30%
(China Cargo Airlines (China Ocean Shipping (Group)
Co., Ltd.) Company)
[CHINESE CHARACTERS] [CHINESE CHARACTERS] 30%
[CHINESE CHARACTERS] (Shanghai (China Ocean Shipping (Group)
Eastern Logistics Co. Ltd.) Company)
[CHINESE CHARACTERS] [CHINESE CHARACTERS] 25.41%
[CHINESE CHARACTERS] (China Eastern (Jiangsu Provincial Guoxin Asset
Airlines Jiangsu Co., Ltd.) Management Group Co., Ltd.)
[CHINESE CHARACTERS] Aircraft Engineering Investment Ltd. 40%
[CHINESE CHARACTERS] (Shanghai
Eastern Aircraft
Maintenance Co., Ltd.)
[CHINESE CHARACTERS] [CHINESE CHARACTERS] 45%
[CHINESE CHARACTERS] (Eastern Airlines (Shantou Aviation Equipment
(Shantou) Economic Group Company)
Development Co., Ltd.)
[CHINESE CHARACTERS] [CHINESE CHARACTERS] 49%
(Shanghai Technology (Singapore Technology Aerospace
Aerospace Company Limited)
Limited)
Save as disclosed above and so far as is known to the Directors, as at the
Latest Practicable Date, no other person (other than the Directors, the
Company's supervisors, chief executives or members of senior management of the
Company) had an interest or short position in the Company's shares or underlying
shares (as the case may be) which would fall to be disclosed to the Company and
the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the
SFO, or was directly or indirectly interested in 10% or more of the nominal
value of any class of share capital carrying rights to vote in all circumstances
at general meetings of any other member of the Group.
10
________________________________________________________________________________
APPENDIX GENERAL INFORMATION
________________________________________________________________________________
MISCELLANEOUS
Company's officers
Xx. Xxx Xxxxxxx, who is a holder of a Master's degree in global economics,
has been the secretary of the Company since the listing of the Company's H
shares on the Stock Exchange in 1997.
The Company has not appointed a qualified accountant pursuant to Rule 3.24
of the Listing Rules. The Company proposes to engage Xx. Xxx Xxxxx (the
Company's Chief Financial Officer and a senior accountant recognised in the
People's Republic of China) also as its qualified accountant pursuant to Rule
3.24 of the Listing Rules, and has applied to the Stock Exchange for a waiver
from strict compliance with the requirements under that rule in relation to Xx.
Xxx Xxxxx being appointed as the Company's qualified accountant.
Service contracts
As at the Latest Practicable Date, none of the Directors or proposed
directors of the Company had any existing or proposed service contract with any
member of the Group (excluding contracts expiring or terminable by the employer
within a year without payment of any compensation (other than statutory
compensation)).
Competing interests
Save as disclosed, as at the Latest Practicable Date, none of the Directors
or, so far as is known to them, any of their respective associates (as defined
in the Listing Rules) was interested in any business (apart from the Group's
business) which competes or is likely to compete either directly or indirectly
with the Group's business (as would be required to be disclosed under Rule 8.10
of the Listing Rules if each of them were a controlling shareholder).
Litigation
As at the Latest Practicable Date, the Directors were not aware of any
litigation or claim of material importance pending or threatened against any
member of the Group.
11
