SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the month of November, 2005
CHINA PETROLEUM & CHEMICAL CORPORATION
A6, Huixindong Street,
Chaoyang District Beijing, 100029
People's Republic of China
Tel: (8610) 6499-0060
(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 T 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 T
--------- --------
(If "Yes" is marked, indicate below the file number assigned
to registrant in connection with Rule 12g3-2(b): 82-__________. )
N/A
This Form 6-K consists of:
The announcement on (1) proposed privatization of Sinopec Zhenhai Refining &
Chemical Company Limited ("ZRCC") through Ningbo Yonglian by way of merger by
absorption of ZRCC under Article 184 of the PRC Company Law at the
cancellation price of HK$ 10.60 per ZRCC H Share, (2) resumption of trading of
ZRCC, and (3) amendment of articles of association of ZRCC, jointly made by
the board of China Petroleum & Chemical Corporation (the "Registrant") and the
board of ZRCC in English on November 12, 2005.
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 undersigned, thereunto duly authorized.
China Petroleum & Chemical Corporation
By: /s/ Chen Ge
-----------
Name: Chen Ge
Title: Secretary to the Board of Directors
Date: November 12, 2005
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.
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
(a joint stock limited company Sinopec Zhenhai Refining & Chemical
incorporated in the People's Company Limited (a joint stock
Republic of China with limited liability) limited company incorporated in the
(Stock Code: 0386) People's Republic of China)
(Stock code: 1128)
JOINT ANNOUNCEMENT
(1) PROPOSED PRIVATISATION OF ZRCC THROUGH
NINGBO YONGLIAN
BY WAY OF MERGER BY ABSORPTION OF ZRCC
UNDER ARTICLE 184 OF THE PRC COMPANY LAW
AT THE CANCELLATION PRICE OF HK$ 10.60 PER ZRCC H SHARE
(2) RESUMPTION OF TRADING OF ZRCC
AND
(3) AMENDMENT OF ARTICLES OF ASSOCIATION OF ZRCC
Financial Adviser to Sinopec Corp.
[GRAPHIC OMITTED]
CHINA INTERNATIONAL CAPITAL
CORPORATION (HONG KONG) LIMITED
Financial Adviser to ZRCC
[GRAPHIC OMITTED]
LEHMAN BROTHERS ASIA LIMITED
-------------------------------------------------------------------------------
MERGER BY ABSORPTION
The Sinopec Directors and the ZRCC Directors jointly announce that on 12
November 2005:
(a) Sinopec Corp.'s wholly owned subsidiary, Ningbo Yonglian, entered into
the Merger Agreement with ZRCC; and
(b) the ZRCC Directors agreed to put forward to the ZRCC Shareholders the
Proposal, which involves the cancellation of all the ZRCC Shares.
Pursuant to the Proposal, Ningbo Yonglian will (i) pay a cancellation price of
HK$10.60 per ZRCC H Share in cash to the ZRCC H Shareholders for the
cancellation of all ZRCC H Shares, and (ii) issue RMB 1,800,000,000 of new
registered capital of Ningbo Yonglian, representing an amount equal to 71.3% of
the total registered capital of ZRCC, to Sinopec Corp., being the sole holder
of all the ZRCC Domestic Shares. The Cancellation Price represents a premium of
approximately 12.2% over the closing price of HK$ 9.450 per ZRCC H Share as
quoted on the Hong Kong Stock Exchange on 2 November 2005 (being the last date
of trading prior to the suspension of trading of the ZRCC H Shares pending the
issue of this announcement).
The Proposal will be implemented by way of "merger by absorption" in accordance
with Article 184 of the PRC Company Law. The Proposal is conditional upon the
fulfillment (unless waived, as applicable) of the Conditions as described in
the section headed "Principal Terms of the Merger Agreement - Conditions of the
Merger" below. All Conditions will have to be fulfilled (unless waived, as
applicable) on or before 31 December 2006 (or such other date as ZRCC and
Ningbo Yonglian may agree). On the Delisting Date, the ZRCC Listing will be
withdrawn. Upon de-registration of ZRCC, ZRCC will be dissolved and will cease
to exist.
The amount of cash consideration required to be paid by Ningbo Yonglian under
the Proposal is approximately HK$ 7,672 million.
Sinopec Corp. and Ningbo Yonglian intend to finance the cash consideration
required for the Proposal from existing banking facilities of Sinopec Corp.
granted by Industrial and Commercial Bank of China Limited and Bank of China
and made available to Sinopec Corp. and its subsidiaries. CICC, being a
financial adviser to Sinopec Corp., is satisfied that sufficient financial
resources are available to Sinopec Corp. and Ningbo Yonglian for the
satisfaction of Ningbo Yonglian's obligations under the Proposal.
SHAREHOLDING IN ZRCC
As at the date of this announcement, Sinopec Corp. owned 1,800,000,000 ZRCC
Domestic Shares, representing approximately 71.3% of the issued share capital
of ZRCC and ZRCC H Shareholders were interested in 723,754,468 ZRCC H Shares,
representing approximately 28.7% of the issued share capital of ZRCC. As at the
date of this announcement, there were no outstanding options, warrants or
convertible securities issued by ZRCC.
AMENDMENT TO ZRCC ARTICLES
Incidental to the promulgation of the new PRC Company Law on 27 October 2005,
which will become effective on 1 January 2006, the statutory right of a
creditor to claim against a company in a merger has been changed to lapse on
the expiry of 45 days instead of 90 days from the date the company announces
its merger after the merger is approved by its shareholders. ZRCC Directors
believe it to be in the interest of the ZRCC to make the Proposed Amendment to
reduce the relevant period provided in ZRCC Articles from 90 days to 45 days so
as to bring them in line with the latest PRC Company Law in force.
DESPATCH OF THE COMPOSITE DOCUMENT
The Composite Document containing, inter alia, further details of the Proposal
and the Merger and the Proposed Amendment, the recommendation from the
Independent Board Committee with respect to the Proposal and the advice of the
Independent Financial Adviser to the Independent Board Committee, a notice of
the Special General Meeting and a notice of the Special General Meeting of
Independent ZRCC Shareholders to approve the Proposal and the Proposed
Amendment, will be despatched to the ZRCC Shareholders as soon as practicable
in compliance with the PRC law, the Listing Rules and the Takeovers Code.
SUSPENSION AND RESUMPTION OF TRADING OF ZRCC H SHARES
At the request of ZRCC, trading in the ZRCC H Shares on the Hong Kong Stock
Exchange was suspended from 9:30a.m. on 3 November 2005 pending the issue of
this announcement. Application has been made by ZRCC to the Hong Kong Stock
Exchange for the resumption of trading in the ZRCC H Shares with effect from
9:30 a.m. on 14 November 2005.
Shareholders of Sinopec Corp. and ZRCC and potential investors should be aware
that the implementation of the Proposal is subject to the Conditions as set out
below being fulfilled (or waived, as applicable), and thus the Proposal may or
may not become effective. They are advised to exercise caution when dealing in
the shares of Sinopec Corp. and ZRCC respectively.
The ZRCC Directors intend that the ZRCC Listing will be withdrawn if the Merger
is implemented or be maintained in the event that the Merger is not approved or
lapses.
-------------------------------------------------------------------------------
INTRODUCTION
Pursuant to the Merger Agreement entered into between Ningbo Yonglian and ZRCC
on 12 November 2005, ZRCC Directors unanimously agreed to put forward the
Proposal to the ZRCC Shareholders.
Ningbo Yonglian was incorporated in the PRC for the purposes of the Proposal
and Merger and is wholly owned by Sinopec Corp.. Sinopec Corp. is a joint stock
company incorporated in the PRC with limited liability, and is owned as to
approximately 67.9% by China Petrochemical Corporation, which is a PRC
state-owned enterprise, approximately 9.5% by shareholders of domestic
non-public shares of Sinopec Corp. (other than China Petrochemical
Corporation), approximately 3.2% by public shareholders of A shares of Sinopec
Corp. and approximately 19.4% by public shareholders of H shares of Sinopec
Corp. Sinopec Corp. is the controlling shareholder of ZRCC, being interested in
approximately 71.3% of the issued share capital of ZRCC (representing 100% of
the ZRCC Domestic Shares). A chart showing the shareholding structure of
Sinopec Corp., Ningbo Yonglian and ZRCC is set out below:
_____________________ _____________________ _____________________ _____________________
|China Petrochemical | |Other shareholders | |Other shareholders | | Public |
| Corporation | |of domestic non- | |of domestic non- | | shareholders |
|____________________| |public shares | |public shares | | of H shares |
67.9%| |____________________| |____________________| |____________________|
| | 9.5% |3.2% | 19.4%
|_________________________|________________________|________________________|
|
|
_____________________ _____________________
| | | Public shareholders|
| Sinopec Corp. | | of ZRCC H Share |
|____________________| |____________________|
| | |
100% | | 71.3% | 28.7%
| |___________________|
_____________________
| |
| Sinopec United | __________________
|____________________| | |
| ZRCC |
10% 90% |_________________|
_____________________
| |
| Sinopec Corp. |
|____________________|
TERMS OF THE PROPOSAL
The Proposal is made pursuant to and in accordance with Article 184 of the PRC
Company Law.
Pursuant to the Proposal, Ningbo Yonglian will (i) pay a cancellation price of
HK$10.60 per ZRCC H Share in cash to the ZRCC H Shareholders for the
cancellation of all ZRCC H Shares and (ii) issue RMB1,800,000,000 of new
registered capital of Ningbo Yonglian to Sinopec Corp., the sole holder of all
the ZRCC Domestic Shares, representing an amount equal to 71.3% of the total
registered capital of ZRCC. The Cancellation Price represents a premium of
approximately 12.2% over the closing price of HK$9.450 per ZRCC H Share as
quoted on the Hong Kong Stock Exchange on 2 November 2005 (being the last date
of trading prior to the suspension of trading in the ZRCC H Shares pending the
issue of this announcement).
The Proposal requires approvals from the relevant PRC governmental and
regulatory bodies (including approvals of, inter alia, SASAC and SAFE and the
CSRC (if applicable)).
Under the Merger Agreement, on the date of de-registration of ZRCC which will
take place after the fulfillment (or waiver, as applicable) of all the
Conditions, (i) ZRCC will be merged into Ningbo Yonglian and will cease to
exist as a separate legal entity, with Ningbo Yonglian as the surviving
corporation; and (ii) the assets and liabilities (together with the rights and
obligations attached to such assets) and the employees of ZRCC will be assumed
by Ningbo Yonglian. This "merger by absorption" is provided for under the PRC
Company Law and the ZRCC Articles.
According to the ZRCC Articles, any ZRCC Shareholder who has voted against the
Proposal may request ZRCC or other ZRCC Shareholders who have approved the
Proposal to acquire their ZRCC Shares at a "fair price". The Merger Agreement
provides that if any dissenting ZRCC Shareholder elects to request ZRCC or
other ZRCC Shareholders who have voted for the Proposal to purchase its ZRCC
Shares at a "fair price", Ningbo Yonglian shall, at the request of ZRCC or such
ZRCC Shareholder, assume any reasonable obligations which ZRCC or such ZRCC
Shareholder who has received such a request may have towards the dissenting
ZRCC Shareholder. There is no administrative guidance on the substantive as
well as procedural rules under the PRC laws and regulations as to how the "fair
price" will be determined and thus, no assurance can be given as to how long
the process will take.
ZRCC is also required by the PRC Company Law and the ZRCC Articles to notify
its creditors of the Proposal. ZRCC's creditors may require ZRCC to pay off its
indebtedness or provide a satisfactory guarantee for such indebtedness, failing
which, according to the PRC Company Law and the ZRCC Articles, the Proposal may
not proceed. If the Independent ZRCC Shareholders approve the Merger during the
Special General Meeting of the Independent ZRCC Shareholders, ZRCC and Ningbo
Yonglian will each publish an announcement on the day immediately after the
Special General Meeting of the Independent ZRCC Shareholders was convened
giving notice to their respective creditors of the Proposal. If any creditor
requests repayment of the indebtedness owed by ZRCC or Ningbo Yonglian (as
appropriate) or requests for any guarantee in relation to such indebtedness,
such request will have to be made within a 45-day period (provided that ZRCC
Shareholders approve the Proposed Amendment at the Special General Meeting)
from the date of such announcement. Upon the expiry of the relevant period
specified in the above announcement, such creditor's right to claim against
ZRCC or Ningbo Yonglian (as appropriate) shall lapse under PRC law.
CANCELLATION PRICE
The Cancellation Price per ZRCC H Share represents:
(i) a premium of approximately 12.2% over the closing price of HK$9.450 per
ZRCC H Share, as quoted on the Hong Kong Stock Exchange on 2 November
2005 (being the last traded price prior to the suspension of trading in
the ZRCC H Shares pending the issue of this announcement);
(ii) a premium of approximately 17.5% over the average closing price of
approximately HK$9.020 per ZRCC H Share, based on the daily closing
prices as quoted on the Hong Kong Stock Exchange over the 5 trading days
up to and including 2 November 2005;
(iii) a premium of approximately 22.9% over the average closing price of
approximately HK$8.623 per ZRCC H Share, based on the daily closing
prices as quoted on the Hong Kong Stock Exchange over the 1-month period
up to and including 2 November 2005;
(iv) a premium of approximately 26.7% over the average closing price of
approximately HK$8.369 per ZRCC H Share, based on the daily closing
prices as quoted on the Hong Kong Stock Exchange over the 3-month period
up to and including 2 November 2005;
(v) a premium of approximately 33.1% over the average closing price of
approximately HK$7.965 per ZRCC H Share, based on the daily closing
prices as quoted on the Hong Kong Stock Exchange over the 6-month period
up to and including 2 November 2005; and
(vi) a premium of approximately 29.9% over the average closing price of
approximately HK$8.159 per ZRCC H Share, based on the daily closing
prices as quoted on the Hong Kong Stock Exchange over the 12-month period
up to and including 2 November 2005.
The Cancellation Price per ZRCC H Share represents a premium of approximately
148.8% to the NAV per ZRCC H Share of approximately HK$4.26 as at 31 December
2004 (based on the figures in the 2004 annual report of ZRCC), and a premium of
approximately 133.0% to the unaudited net asset value per ZRCC H Share of
approximately HK$4.55 as at 30 June 2005 (based on the figures in the 2005
interim report of ZRCC).
The Cancellation Price was arrived at based on the principle of fairness after
taking into consideration, among other things, prevailing and historical market
prices of the ZRCC H Shares, the NAV per ZRCC H Share as at 31 December 2004
and the unaudited net asset value per ZRCC H Share as at 30 June 2005. The
Sinopec Directors believe that the terms of the Merger Agreement are fair and
reasonable and in the interests of the shareholders of Sinopec Corp. as a
whole.
Funding For The Proposal
Sinopec Corp. and Ningbo Yonglian intend to finance the cash consideration
required for the Proposal from existing banking facilities of Sinopec Corp.
granted by Industrial and Commercial Bank of China Limited and Bank of China
and made available to Sinopec Corp. and its subsidiaries. CICC, being a
financial adviser to Sinopec Corp., is satisfied that sufficient financial
resources are available to Sinopec Corp. and Ningbo Yonglian for the
satisfaction of Ningbo Yonglian's obligations under the Proposal.
INFORMATION ON ZRCC
Background
ZRCC was incorporated as a joint stock limited company in accordance with the
PRC Company Law on 28 June 1994. ZRCC became listed on the Hong Kong Stock
Exchange on 2 December 1994.
Principal business of ZRCC
ZRCC is principally engaged in the production and sale of petroleum products,
(including gasoline, diesel, kerosene, naphtha, liquefied petroleum gas,
solvent oil and fuel oil), intermediate petrochemical products, asphalt, urea
and petrochemical products such as aromatics (including benzene, toluene,
orthoxylene and paraxylene) and polypropylene.
ZRCC possesses oil refinery plants and facilities with a scale of operation up
to international standards. It is also one of the 10 largest refineries in the
Asia Pacific region. At present, ZRCC has a comprehensive processing capacity
of 18.5 million tones per annum ("tpa") and a processing capacity of sour crude
oil of 12 million tpa. ZRCC is well-equipped for achieving clean production,
with a hydro-treating capacity of 14 million tpa. ZRCC is also the largest
processing base of imported crude oil and sour crude oil, as well as the
largest export base for petroleum products in the PRC.
Shareholding in ZRCC
As at the date of this announcement, ZRCC has 2,523,754,468 ZRCC Shares in
issue, with 1,800,000,000 ZRCC Domestic Shares and 723,754,468 ZRCC H Shares.
Sinopec Corp. owned 1,800,000,000 ZRCC Domestic Shares, representing
approximately 71.3% of the issued share capital of ZRCC, and ZRCC H
Shareholders were interested in 723,754,468 ZRCC H Shares, representing
approximately 28.7% of the issued share capital of ZRCC. The rights of the
holders of ZRCC Domestic Shares and ZRCC H Shares rank pari passu to each
others, including voting rights and the right to receive dividend payment,
except that payment of dividend will be made in RMB to ZRCC Domestic
Shareholders and in Hong Kong dollars to ZRCC H Shareholders. As at the date of
this announcement, there were no outstanding options, warrants or convertible
securities issued by ZRCC.
Financial information
Summary financial information
A summary of the published audited results and NAV of ZRCC for each of the
three years ended 31st December 2004 and the unaudited results and net asset
value of ZRCC for the six months ended 30th June 2005 is set out below:
(audited) (unaudited)
For the years ended 31st December
For the six months
ended 30th June
2002 2003 2004 2005
RMB'000 HKD'000 RMB'000 HKD'000 RMB'000 HKD'000 RMB'000 HKD'000
Turnover 22,484,667 21,211,950 29,070,343 27,424,852 41,991,481 39,614,605 25,858,192 24,394,521
Operating Profit/(loss) 1,457,884 1,375,362 1,696,399 1,600,376 3,786,010 3,571,708 1,584,421 1,494,737
before financing costs
Profit /(loss) before 1,393,066 1,314,213 1,609,594 1,518,485 3,765,434 3,552,296 1,576,065 1,486,854
taxation
Profit/(loss) after tax 973,257 918,167 1,088,029 1,026,442 2,613,359 2,465,433 1,261,173 1,189,786
but before minority
interests
Profit/(loss) attributable 973,257 918,167 1,087,987 1,026,403 2,613,288 2,465,366 1,261,148 1,189,762
to ZRCC Shareholders
Earnings/(loss) per ZRCC RMB0.39 HK$0.37 RMB0.43 HK$0.41 RMB1.04 HK$0.98 RMB0.50 HK$0.47
Share (on a fully-diluted
basis)
Earnings/(loss) per ZRCC RMB0.39 HK$0.37 RMB0.43 HK$0.41 RMB1.04 HK$0.98 RMB0.50 HK$0.47
Share (on a weighted
average basis)
Net asset value per ZRCC RMB3.35 HK$3.16 RMB3.66 HK$3.45 RMB4.52 HK$4.26 RMB4.82 HK$4.55
Share
Note: Amounts denominated in RMB have been translated into HK$ at the exchange
rate of RMB 1.06 to HK$1.00. No representation is made that the HK$ amounts
could have been or could be converted into RMB at such rates or at any other
rate or at all.
INFORMATION ON SINOPEC CORP.
Background
Sinopec Corp. is a joint stock limited liability company incorporated on 25
February 2000 in accordance with the PRC Company Law whose H shares are listed
on the Hong Kong Stock Exchange, and ADSs are listed on the New York Stock
Exchange and the London Stock Exchange, and whose A shares are listed on the
Shanghai Stock Exchange. Sinopec Corp. is approximately 67.9% owned by China
Petrochemical Corporation, which is a PRC state-owned enterprise.
Principal business of Sinopec Corp.
The principal operations of Sinopec Corp. include exploring for and developing,
producing and trading crude oil and natural gas, processing crude oil into
refined oil products, producing refined oil products and trading, transporting,
distributing and marketing refined oil products and producing, distributing and
trading petrochemical products.
Exploring for and developing, producing and trading crude oil and natural gas
Sinopec Corp. is the second largest crude oil and gas producer in China. Most
of the crude oil and a small portion of the natural gas it produced are used
for its refining and chemical operations. Most of the natural gas and a small
portion of crude oil it produced are sold to refineries that are not owned by
Sinopec Corp. and third party customers.
Processing crude oil into refined oil products, producing refined oil products
and trading, transporting, distributing and marketing refined oil products
Sinopec Corp. is the largest oil refiner in China, producing gasoline, diesel,
jet fuel, lubricants, fuel oil, various petrochemical feedstock and other
refined oil products. Sinopec Corp. also has the largest distribution network
for refined oil products in China.
Producing, distributing and trading petrochemical products
Sinopec Corp. is the largest petrochemical producer and distributor in China.
The major products it produces and sells include intermediate petrochemicals,
synthetic resins, synthetic rubber, chemical fertilizers, and synthetic fiber
and its monomers and polymers.
INFORMATION ON NINGBO YONGLIAN
Ningbo Yonglian is a wholly owned subsidiary of Sinopec Corp. established on 3
November 2005 in the PRC. It is 90% owned by Sinopec Corp. and 10% owned by
Sinopec United. Sinopec United is a wholly owned subsidiary of Sinopec Corp..
Ningbo Yonglian has been established for the purpose of the Merger and has no
substantive business.
STRATEGIC REASONS FOR THE MERGER
Sinopec Corp. and ZRCC have identified a number of strategic reasons for the
Proposal and Merger. These include:
1. The Merger can fully integrate ZRCC's oil refining business into the
value chain of Sinopec Corp., enhance the integrated business structure
of Sinopec Corp., improve the risk resistance ability of ZRCC, and
synergize their capital allocation, investment, branding, resources,
marketing and distribution channel.
2. The Merger can reduce management layers and improve the efficiency of
Sinopec Corp. and ZRCC in terms of production, management and sales.
3. The Merger can effectively eliminate connected party transactions and
intra-group competition between Sinopec Corp. and ZRCC. At present, both
Sinopec Corp. and ZRCC are engaged in the oil refining business, and they
have significant amount of connected transactions between them. After the
Merger, combined production and sales will effectively eliminate such
connected transactions and intra-group competition.
PRINCIPAL TERMS OF THE MERGER AGREEMENT
Conditions of the Merger
The Merger is conditional upon the fulfilment (or waived, as applicable) of all
of the following events on or before 31 December 2006 (or such other date as
ZRCC and Ningbo Yonglian may agree):
(i) approval of the Merger Agreement by the requisite votes of the
shareholders of ZRCC (a summary of the relevant requirements is set out
in the section headed "Meeting" of this Announcement) and Ningbo Yonglian
(by two-thirds of the shareholders of Ningbo Yonglian at the special
general meeting of Ningbo Yonglian) has been obtained;
(ii) Authorisations have been obtained from all appropriate governmental
and/or governmental bodies or regulatory bodies in Hong Kong and any
other relevant jurisdiction (except the PRC) (if applicable);
(iii) all necessary PRC Approvals in respect of the Merger Agreement and the
Merger have been obtained or made (and such PRC Approvals must not
include any conditions which may have a material adverse impact on the
business operation on the surviving corporation after the Merger becoming
effective);
(iv) approval from SAFE on exchanging the necessary foreign currencies to pay
the Cancellation Price and other fees or expenses incurred in connection
with the Merger has been obtained by or on behalf of Ningbo Yonglian
(such approvals must not include any conditions which may have a material
adverse impact on the business operation on the surviving corporation
after the Merger becoming effective);
(v) all requisite procedures (including any filing procedures to effect the
same) in connection with the remittance by or on behalf of Ningbo
Yonglian of the aggregate consideration representing the Cancellation
Price and other fees or expenses incurred in connection with the Merger
have been completed;
(vi) an announcement has been published by ZRCC and Ningbo Yonglian in
accordance with the PRC Company Law and their respective articles of
association to give notice to their respective creditors of the Proposal
and the relevant period specified in the announcement for the creditors
to request for repayment of the indebtedness owned by ZRCC or Ningbo
Yonglian (as appropriate) or request for any guarantee in relation to
such indebtedness has been expired;
(vii) no statute, rule or regulation shall have been enacted or promulgated by
any governmental authority prohibiting the completion of the Merger; and
there shall be no order or injunction of a court of competent
jurisdiction in effect prohibiting completion of the Merger;
(viii) upon fulfillment (or waiver, as appropriate) of the Conditions in (i) to
(vii) above, ZRCC having applied to the Hong Kong Stock Exchange for
withdrawal of ZRCC Listing and the withdrawal of ZRCC Listing from the
Hong Kong Stock Exchange in accordance with the Listing Rules becoming
effective;
(ix) the undertakings given by ZRCC and Ningbo Yonglian in the Merger
Agreement shall have been complied with in all material respects and, to
the extent that there is failure to comply, such non-compliance shall not
be of material significance to the Merger;
(x) the representations and warranties made by ZRCC and Ningbo Yonglian in
the Merger Agreement shall not contain mistakes or omissions which will
be of material significance to the Merger on the Delisting Date.
Pursuant to the Merger Agreement, ZRCC and Ningbo Yonglian may, by mutual
agreement, waive any of the Conditions in (ix) and (x), and by mutual agreement
and with the consent of the relevant regulatory authorities (as applicable),
waive any of the Conditions in (ii) to (vii).
------------------------------------------------------------------------------
Warning:
Shareholders of Sinopec Corp. and ZRCC and potential investors should be aware
that the implementation of the Proposal is subject to the Conditions as set
out above being fulfilled (or waived, as applicable). Thus, the Proposal may
or may not become effective. They are advised to exercise caution when dealing
in the shares of Sinopec Corp. and ZRCC, respectively.
------------------------------------------------------------------------------
Delisting and de-registration of ZRCC
After all the Conditions have been fulfilled (or waived, if applicable), the
Merger will become unconditional, and upon all the Conditions specified in (i)
to (vii) under the section headed "Principal Terms of the Merger Agreement -
Conditions of the Merger" being fulfilled (or waived, as applicable), ZRCC will
apply for the ZRCC Listing to be withdrawn pursuant to Rule 6.15(2) of the
Listing Rules on the basis that the Proposal is akin to a scheme of
arrangement, such that the general principles of the Takeovers Code, including
Rule 2.10 of the Takeovers Code, are deemed to be applicable. Payment of the
Cancellation Price will be made to ZRCC H Shareholders (other than the
dissenting ZRCC Shareholders who have requested for a fair value buyout of its
ZRCC H Shares) as soon as possible but in any event no later than 10 days after
all the Conditions have been fulfilled (or waived, as applicable). After
payment of the Cancellation Price had been made to all the eligible ZRCC
Shareholders, the relevant ZRCC H Shares shall be deemed as cancelled
thereafter, and the share certificates for such ZRCC H Shares will thereafter
cease to have effect as documents or evidence of title. The register of ZRCC H
Shareholders will remain closed after the record date for determination of the
entitlement of ZRCC H Shareholders until ZRCC is de-registered. After the
45-day period (provided that ZRCC Shareholders approve the Proposed Amendment
at the Special General Meeting) expires, ZRCC will apply to the Ningbo SAIC for
its de-registration. After the de-registration process of ZRCC is completed,
ZRCC will cease to exist as a legal entity and all the ZRCC Shares will be
legally cancelled.
Termination of the Merger Agreement
The Merger Agreement can be terminated at any time prior to the Delisting Date
by:
o either Ningbo Yonglian or ZRCC if:
(i) any governmental body has issued an order, decree or ruling or
taken any other action (which order, decree, ruling or other action
the parties hereto shall use their reasonable efforts to lift),
which permanently restrains, enjoins or otherwise prohibits the
Merger and such order, decree, ruling or other action shall have
become final and non-appealable;
(ii) the Conditions have not been satisfied or waived (if applicable) by
31 December 2006;
(iii) ZRCC has not obtained the requisite vote at the Special General
Meeting and the Special General Meeting of the Independent ZRCC
Shareholders for approving the Proposal.
o ZRCC if Ningbo Yonglian has breached in any material respect any of its
representations, warranties, covenants or other agreements contained in
the Merger Agreement, which breach cannot be or has not been cured within
30 days after the giving of written notice by ZRCC to Ningbo Yonglian, if
applicable; or
o Ningbo Yonglian if ZRCC has breached any representation, warranty,
covenant or other agreement contained in the Merger Agreement which
breach cannot be or has not been cured within 30 days after the giving of
written notice by Ningbo Yonglian to ZRCC, if applicable.
REGULATORY APPROVALS
The Merger requires approvals from the relevant PRC governmental and regulatory
bodies, including SASAC, SAFE and CSRC (if applicable). In addition, Sinopec
Corp., Ningbo Yonglian and ZRCC will seek such consents, approvals, orders and
other governmental authorizations necessary or advisable to complete the
Merger. Whilst Sinopec Corp., Ningbo Yonglian and ZRCC believe that they will
obtain the requisite regulatory approvals, there can be no assurance that these
will be obtained.
All Conditions will have to be fulfilled (or waived, as applicable), on or
before 31 December 2006 (or such other date as ZRCC and Ningbo Yonglian may
agree). Otherwise, the Merger will lapse.
WITHDRAWAL OF LISTING OF ZRCC
Please refer to the section headed "Principal Terms of the Merger Agreement -
Delisting and de-registration of ZRCC" for details of the proposed arrangements
for the withdrawal of ZRCC Listing. ZRCC Shareholders will be notified by way
of an announcement of the exact date on which the relevant Conditions have been
fulfilled (unless waived, as applicable) and the date on which the ZRCC Listing
is withdrawn. The Merger will lapse if the Conditions are not fulfilled (or
waived, as applicable) on or before 31 December 2006 (or such other date as
ZRCC and Ningbo Yonglian may agree) and the ZRCC Shareholders will be notified
by way of an announcement accordingly. A detailed timetable for the Proposal
will be included in the Composite Document to be despatched to ZRCC
Shareholders, which will also contain, inter alia, further details of the
Proposal and the Merger.
Pursuant to the Merger Agreement, any ZRCC Shareholder who has opposed the
Proposal and who has requested for a fair value buyout of its ZRCC Shares will
not be entitled to receive the Cancellation Price for the ZRCC H Shares unless
it withdraws or loses its right to make such request. Dissenting ZRCC
Shareholders will after the de-registration of ZRCC continue to have the right
to request ZRCC or other ZRCC Shareholders who have approved the Proposal or
Ningbo Yonglian (if requested by ZRCC and / or such ZRCC Shareholders to assume
their respective liabilities after receiving the request from the dissenting
ZRCC Shareholders) to acquire its ZRCC Shares at a "fair price".
The ZRCC Listing will not be withdrawn if the Merger is not approved or if the
Proposal lapses or if any Condition is not fulfilled (unless waived, as
applicable).
OVERSEAS ZRCC SHAREHOLDERS
Overseas ZRCC Shareholders will be entitled to receive the Composite Document
and the notices of the Special General Meetings, as well as to attend and vote
at the Special General Meetings. The making of the Proposal to the Overseas
ZRCC Shareholders may be subject to the laws of the relevant jurisdictions.
Overseas ZRCC Shareholders should observe any applicable legal or regulatory
requirements. It is the responsibility of the Overseas ZRCC Shareholders
wishing to accept the Proposal to satisfy themselves as to the full observance
of the laws of the relevant jurisdiction in connection therewith, including the
obtaining of any governmental, exchange control or other consents which may be
required, or the compliance with other necessary formalities and the payment of
any issue, transfer or other taxes due in such jurisdiction.
MEETINGS
As required under the PRC Company Law, the Merger requires the approval of no
less than two-thirds of the ZRCC Shareholders attending the Special General
Meeting. According to the PRC Company Law and the ZRCC Articles, Sinopec Corp.
is eligible to vote in the Special General Meeting. Sinopec Corp. intends to
vote for the Proposal in the Special General Meeting.
Under Rule 2.10 of the Takeovers Code, which is deemed to be applicable to the
Proposal, the resolution of the Independent ZRCC Shareholders will be voted on
by way of a poll and will only be considered to have been passed if (i) the
Proposal is approved by at least 75% of the votes attaching to the ZRCC H
Shares of the Independent ZRCC Shareholders that are cast either in person or
by proxy at the Special General Meeting of the Independent ZRCC Shareholders;
and (ii) the number of votes cast against the resolution at the Special General
Meeting of the Independent ZRCC Shareholders is not more than 10% of the votes
attaching to all the ZRCC H Shares held by all the Independent ZRCC
Shareholders (that is, not more than 72,375,446 ZRCC H Shares, based on
723,754,468 ZRCC H Shares issued and held by the Independent ZRCC Shareholders
as at the Latest Practicable Date).
Accordingly, both the Special General Meeting and the Special General Meeting
of the Independent ZRCC Shareholders will be convened to consider, among other
things, the Proposal and the Proposal will only be approved by ZRCC upon
obtaining the requisite votes of its shareholders in the respective Special
General Meetings as described above. Sinopec Corp. and the parties acting in
concert with it will not vote in the Special General Meeting of the Independent
ZRCC Shareholders.
Notices of the above two meetings will be sent to the ZRCC Shareholders
together with the Composite Document.
AMENDMENT TO ZRCC ARTICLES
Incidental to the promulgation of the new PRC Company Law on 27 October 2005,
which become effective on 1 January 2006, the statutory right of a creditor to
claim against a company in a merger has been changed to lapse on the expiry of
45 days instead of 90 days from the date the company announces its merger after
the merger is approved by its shareholders, ZRCC Directors believe it to be in
the interest of the ZRCC to make the Proposed Amendments to reduce the relevant
period provided in ZRCC Articles from 90 days to 45 days so as to bring them in
line with the latest PRC Company Law in force.
A special resolution in relation to the Proposed Amendment will be proposed at
the Special General Meeting.
SUSPENSION AND RESUMPTION OF TRADING OF ZRCC H SHARES
At the request of ZRCC, trading in the ZRCC H Shares on the Hong Kong Stock
Exchange was suspended from 9:30a.m. on 3 November 2005 pending the issue of
this announcement. Application has been made by ZRCC to the Hong Kong Stock
Exchange for the resumption of trading in the ZRCC H Shares with effect from
9:30 a.m. on 14 November 2005.
FINANCIAL ADVISERS, INDEPENDENT FINANCIAL ADVISER, INDEPENDENT BOARD COMMITTEE
AND GENERAL INFORMATION
Sinopec Corp. has appointed CICC as its financial adviser in connection with
the Proposal. ZRCC has appointed Lehman Brothers as its financial adviser. The
Independent Board Committee will be formed to advise Independent ZRCC
Shareholders on the Proposal and the independence of each member of the
Independent Board Committee will be confirmed with the Executive. The
Independent Board Committee will appoint the Independent Financial Adviser to
advise the Independent Board Committee in connection with the Proposal. An
announcement will be made when the Independent Board Committee is formed and
the Independent Financial Adviser is appointed and their independence is
confirmed with the Executive.
The Composite Document containing, inter alia, further details of the Proposal
and the Merger and the Proposed Amendment, the recommendation from the
Independent Board Committee with respect to the Proposal and the advice of the
Independent Financial Adviser to the Independent Board Committee, a notice of
the Special General Meeting, a notice of the Special General Meeting of
Independent ZRCC Shareholders to approve the Proposal and the Proposed
Amendment, will be despatched to the ZRCC Shareholders as soon as practicable
in compliance with PRC law, the Listing Rules and the Takeovers Code.
There have been no dealings in the ZRCC H Shares by Sinopec Corp. and parties
who are acting in concert with Sinopec Corp., during the 6 months prior to the
date of this announcement, save in relation to dealings for the account of
non-discretionary clients by the brokerage division of a subsidiary of CICC.
Save as disclosed above, and the 1,800,000,000 ZRCC Domestic Shares owned by
Sinopec Corp., neither Sinopec Corp. nor any parties acting in concert with it
have any holdings in the ZRCC Shares.
Save for the Proposal itself, there are no arrangements (whether by way of
option, indemnity or otherwise) of the kind referred to in Note 8 to Rule 22 of
the Takeovers Code between Sinopec Corp. or any person acting in concert with
it and any other person in relation to shares of Sinopec Corp. or ZRCC which
might be material to the Proposal.
It is noted that a press article appearing in The Standard on 11 November 2005
has reported that BP p.l.c. will take a 30% equity stake in ZRCC after it is
privatised by Sinopec Corp.. Sinopec Corp. has confirmed that there has never
been any discussion or agreement whatever between Sinopec Corp. and BP p.l.c.
about the acquisition of 30% equity stake in ZRCC by BP p.l.c. after the
privatization of ZRCC and the report is purely market speculation.
RESPONSIBILITIES OF STOCKBROKERS, BANKS AND OTHER INTERMEDIARIES
Pursuant to Note 11 of Rule 22 of the Takeovers Code, stockbrokers, banks and
others who deal in relevant securities on behalf of clients have a general duty
to ensure, so far as they are able, that those clients are aware of the
disclosure obligations attaching to associates and other persons under Rule 22
of the Takeovers Code and that those clients are willing to comply with them.
Principal traders and dealers who deal directly with investors should, in
appropriate cases, likewise, draw attention to the relevant rules of the
Takeovers Code. However, this does not apply when the total value of dealings
(excluding stamp duty and commission) in any relevant securities undertaken for
a client during any 7-day period is less than HK$ 1 million.
This dispensation does not alter the obligations of principals, associates and
other persons themselves to initiate disclosure of their own dealings, whatever
total value is involved.
Intermediaries are expected to co-operate with the Executive in its dealings
enquires. Therefore, those who deal in relevant securities should appreciate
that stock brokers and other intermediaries will supply the Executive will
relevant information as to those dealings, including identities of clients, as
part of that co-operation.
In this announcement, the following expressions have the meanings set out below
unless the context requires otherwise.
"Authorisations" all necessary authorisations,
registrations, filings, consents,
permissions and approvals in
connection with the Proposal
"Cancellation Price" the cancellation price of HK$10.60
per ZRCC H Share payable in cash by
Ningbo Yonglian to the ZRCC H
Shareholders
"CICC" China International Capital
Corporation (Hong Kong) Limited
which is licensed for Type 1
regulated activity (dealing in
securities), Type 4 regulated
activity (advising on securities),
Type 6 regulated activity (advising
on corporate finance) and Type 9
regulated activity (asset
management) under the Securities and
Futures Ordinance of Hong Kong
"Composite Document" the document to be issued to the
ZRCC Shareholders in accordance
with the Takeovers Code and the
Listing Rules
"Conditions" the conditions to which the
Proposal is subject and "Condition"
means any of them
"CSRC" China Securities Regulatory
Commission
"Delisting Date" the date on which ZRCC Listing at
the Hong Kong Stock Exchange has
beenwithdrawn
"Executive" the Executive Director of the
Corporate Finance Division of the
Securities and Futures Commission
of Hong Kong or any delegate of the
Executive Director
"HK$" Hong Kong dollars, the lawful
currency of Hong Kong "Hong Kong"
the Hong Kong Special
Administrative Region of the PRC
"Hong Kong Stock Exchange" The
Stock Exchange of Hong Kong Limited
"Independent Board Committee" an
independent committee of the ZRCC
Board to be formed to advise
Independent ZRCC Shareholders in
relation to the Proposal
"Independent Financial Adviser" the independent financial adviser to
the Independent Board Committee to
be retained pursuant to Rule 2.1 of
the Takeovers Code in connection with
the Proposal
"Independent ZRCC Shareholders" shareholders of ZRCC, other than
Sinopec Corp. and parties acting in
concert with Sinopec Corp. (which
are presumed to be acting in concert
with Ningbo Yonglian under the
Takeovers Code)
"Latest Practicable Date" 11 November 2005, being the latest
practicable date prior to the issue
of this announcement
"Lehman Brothers" Lehman Brothers Asia Limited, a
company incorporated in Hong Kong,
is licensed for Type 1 regulated
activity (dealing in securities),
Type 2 regulated activity (dealing
in future contracts), Type 4
regulated activity (advising on
securities) and Type 6 regulated
activities (advising on corporate
finance) under the Securities and
Future Ordinance (Chapter 571 of
the Laws of Hong Kong)
"Listing Rules" the Rules Governing the Listing of
Securities on the Stock Exchange
(as amended from time to time)
"London Stock Exchange" London Stock Exchange plc
"Merger" the proposed merger by absorption
of ZRCC by Ningbo Yonglian
"Merger Agreement" the agreement entered into between
Ningbo Yonglian and ZRCC on 12
November 2005 in relation to the
Merger
"NAV" the audited net asset value of ZRCC
as set out in its published audited
accounts
"New York Stock Exchange" New York Stock Exchange, Inc.
"Ningbo SAIC" the Administration of Industry and
Commerce of Ningbo
"Ningbo Yonglian" Ningbo Yonglian Petrochemical Co.,
Ltd., a limited liability company
established on 3 November 2005 in
the PRC and a wholly owned
subsidiary of Sinopec Corp.
"Overseas ZRCC Shareholders" ZRCC Shareholders who are not
residents in Hong Kong
"PRC" the People's Republic of China,
excluding for the purposes of this
announcement, Hong Kong, Macau and
Taiwan
"PRC Approvals" the approvals from the relevant PRC
governmental and regulatory bodies
(including approvals of, inter
alia, SASAC and CSRC (if
applicable))
"PRC Company Law" the Company Law of the PRC, as
amended, supplemented or otherwise
modified from time to time
"Proposal" the proposal for the privatisation
of ZRCC by Sinopec Corp. through
Ningbo Yonglian by way of merger by
absorption of ZRCC by Ningbo
Yonglian pursuant to Article 184 of
the PRC Company Law
"Proposed Amendment" the proposed amendment of article
178 of ZRCC Articles to reduce the
period within which a creditors may
claim against a company in a merger
from 90 days to 45 days from the
date the company announces its
merger after the merger is approved
by its shareholders
"RMB" Renminbi, the lawful currency of
the PRC
"SASAC" State Assets Supervision and
Administration Commission of the
State Council of the PRC
"SAFE" State Administration of Foreign
Exchange
"Sinopec Board" the board of Sinopec Directors
"Sinopec Corp." China Petroleum & Chemical
Corporation, a joint stock limited
company incorporated in the PRC
with limited liability, the H
shares of which are listed on the
Hong Kong Stock Exchange
"Sinopec Directors" director(s) of Sinopec Corp.
"Sinopec United" China International United
Petroleum & Chemical Co., Ltd., a
company incorporated in the PRC
with limited liability and a wholly
owned subsidiary of Sinopec Corp.
"Special General Meeting" the special general meeting of ZRCC
proposed to be convened and held in
respect of the approval of the
Proposal and the Proposed Amendment
"Special General Meetings" the Special General Meeting and
the Special General Meeting of
the Independent ZRCC Shareholders
"Special General Meeting of the special general meeting of the
the Independent ZRCC Independent ZRCC Shareholders
Shareholders" proposed to be convened and held
in respect of the approval of the
Proposal
"Takeovers Code" the Hong Kong Code on Takeovers and
Mergers
"ZRCC" Sinopec Zhenhai Refining & Chemical
Company Limited, a joint stock
limited company incorporated in the
PRC with limited liability, the H
Shares of which are listed on the
Hong Kong Stock Exchange
"ZRCC Articles" the articles of association of ZRCC
"ZRCC Board" the board of ZRCC Directors
"ZRCC Director(s)" director(s) of ZRCC
"ZRCC Domestic Share(s)" state-owned shares of RMB1.00 each
in the issued share capital of ZRCC
"ZRCC H Shareholder(s)" registered holder(s) of ZRCC H Shares
"ZRCC H Share(s)" H share(s) of RMB1.00 each in the
issued share capital of ZRCC which
are listed on the Hong Kong Stock
Exchange
"ZRCC Listing" the listing of ZRCC H Shares on the
Hong Kong Stock Exchange
"ZRCC Shareholders" the ZRCC H Shareholders and Sinopec
Corp.
"ZRCC Shares" ZRCC Domestic Shares and ZRCC H
Shares
On behalf of the board of On behalf of the board of
China Petroleum and Chemical Corporation Sinopec Zhenhai Refining and Chemical
Chen Ge Company Limited
Secretary to the Board of Directors Su Dewen
Secretary to the Board of Directors
Beijing, PRC, 12 November, 2005
The Sinopec Directors jointly and severally accept full responsibility for the
accuracy of the information contained in this announcement (other than that
relating to ZRCC and/or the ZRCC Board) and confirm, having made all reasonable
enquiries, that to the best of their knowledge, opinions expressed in this
announcement have been arrived at after due and careful consideration and there
are no other facts not contained in this announcement, the omission of which
would make any statement in this announcement misleading.
As at the date hereof, the Sinopec Board comprises: Messrs. Chen Tonghai, Wang
Jiming, Mou Shuling, Zhang Jiaren, Cao Xianghong, LiuGenyuan, Gao Jian and Fan
Yifei, as executive directors; Messrs.Chen Qingtai, Ho Tsu Kwok Charles, Shi
Wanpeng and Zhang Youcai, as independent non-executive directors; and Mr. Cao
Yaofeng, as the employee representative director.
The ZRCC Directors jointly and severally accept full responsibility for the
accuracy of the information contained in this announcement (other than that
relating to Sinopec Corp. and/or the Sinopec Board) and confirm, having made
all reasonable enquiries, that to the best of their knowledge, opinions
expressed in this announcement have been arrived at after due and careful
consideration and there are no other facts not contained in this announcement,
the omission of which would make any statement in this announcement misleading.
As at the date hereof, the ZRCC Board comprises: Sun Weijun, Zhan Juping, Xu
Liqiao, Sun Jianli and Yu Renming as executive directors, Wang Lisheng and Hu
Weiqing as non-executive directors, and Sun Yongsen, Cen Kefa, Li Linghong and
Qiu Yun as independent non-executive directors.