Cathay Pacific 2006 Annual Report Download - page 32

Discloseable and connected transactions
The Company entered into a Restructuring Agreement
with Air China, CNAC, CITIC Pacific and Swire Pacific
on 8th June 2006 in respect of the restructuring of the
parties’ shareholdings in the Company and Dragonair
and the acquisition by the Company of additional Air
China H Shares.
Pursuant to the Restructuring Agreement, the
Company purchased 411,034,293 shares (representing
82.2% shareholding) of Dragonair (based on a
valuation of 100% of Dragonair at HK$10 billion
or HK$20.00 per share of Dragonair) which the
Company did not already own for a total consideration
of HK$8,220,685,860 which was satisfied by a
combination of the issue of 548,045,724 new shares
of the Company at an issue price of HK$13.50 each
and HK$822,068,586 in cash; Air China acquired
40,128,292 shares of the Company at HK$13.50
per share from Swire Pacific; Air China acquired
359,170,636 shares of the Company at HK$13.50 per
share from CITIC Pacific; the Company subscribed
for an additional 1,179,151,364 Air China H Shares
at a subscription price of HK$3.45 per share totalling
HK$4,068,072,206.
Swire Pacific and CITIC Pacific are substantial
shareholders of the Company and are therefore
connected persons of the Company under the Listing
Rules. The acquisition of 38,551,808 Dragonair shares
from Swire Pacific, the acquisition of 142,482,484
Dragonair shares from CITIC Pacific, the allotment
of 51,402,411 new shares of the Company to Swire
Pacific, and the allotment of 189,976,645 new
shares of the Company to CITIC Pacific under the
Restructuring Agreement constituted connected
transactions of the Company under the Listing
Rules. The acquisition of the 82.2% shareholding
in Dragonair and the subscription for additional Air
China H Shares under the Restructuring Agreement
constituted discloseable transactions of the
Company under the Listing Rules. In respect of
these discloseable and connected transactions, an
announcement dated 8th June 2006 was published
and a circular dated 6th July 2006 was sent to
shareholders.
Following completion of the Restructuring Agreement
on 28th September 2006, Dragonair became a wholly
owned subsidiary of the Company; the Company
held 2,124,818,455 H Shares (representing 17.3%
shareholding) of Air China; and Swire Pacific, Air China
(including its subsidiary CNAC) and CITIC Pacific
directly or indirectly held 1,572,332,028 shares
(representing 39.99% shareholding), 687,895,263
shares (representing 17.5% shareholding) and
687,895,263 shares (representing 17.5% shareholding)
respectively of the Company.
Continuing connected transactions
During the year ended 31st December 2006, the
Group had the following continuing connected
transactions, details of which are set out below:
(a) Pursuant to an agreement dated 17th October
2002 (the “DHL Services Agreement”) with DHL
International GmbH (formerly DHL International
Limited) (“DHL”), AHK has provided to DHL
services in respect of the sale of space on certain
cargo services operated by AHK in the Asian
region for the carriage of DHL’s door to door air
express materials. Payment is made in cash by
DHL to AHK against invoice presented monthly
within 30 days from the date of receipt of the
invoice. The term of the DHL Services Agreement
is from 17th October 2002 to 31st December 2018.
DHL is a connected person of the Company
because of its 40% attributable interest in the
Company’s subsidiary AHK. The transactions
under the DHL Services Agreement are continuing
connected transactions in respect of which
announcements dated 17th October 2002 and
27th June 2005 were published and a circular
dated 12th July 2005 was sent to shareholders.
Cathay Pacific Airways Limited Annual Report 2006
30
Directors’ Report