Cathay Pacific 2009 Annual Report Download - page 39

subscription and capital contribution, the equity
interests of Air China, Fine Star and Cathay
Pacific China Cargo Holdings in Air China Cargo
will be 51%, 24% and 25% respectively (with
premium contribution credited as capital reserve
fund of Air China Cargo);
(ii) Advent Fortune Limited (“AFL”) will acquire the
entire issued share capital and shareholder’s
loan of Fine Star held by China National Aviation
Company Limited, a subsidiary of Air China with
a loan of approximately RMB817 million from
the Company. In return, AFL will pledge its
equity interest in Fine Star to the Company and
the Company’s returns on the loan will be equal
to the dividend returns on AFL’s 24% effective
shareholding in Air China Cargo;
(iii) Air China Cargo will purchase from the
Company and Dragonair four Boeing
747-400BCF converted freighters powered by
PW4056-3 engines and two spare engines for a
consideration of approximately RMB1,924
million; and
(iv) the Company will provide a guarantee in favour
of Air China in respect of Cathay Pacific China
Cargo Holdings’ obligations under the relevant
agreements and undertakes to exercise its
contractual rights under the loan agreement
with respect to the loan referred to in (ii) above
and other related agreements to procure Fine
Star to perform its obligations under the joint
venture agreement of Air China Cargo.
As Air China is a substantial shareholder and
therefore a connected person of the Company, the
Joint Venture Transaction constitutes a connected
transaction for the Company under the Listing
Rules, in respect of which an announcement dated
25th February 2010 was published.
Continuing connected transactions
During the year ended 31st December 2009, 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”), Air Hong Kong provides to DHL
services in respect of the sale of space on certain
cargo services operated by Air Hong Kong in the
Asian region for the carriage of DHL’s door to door
air express materials. Payment is made in cash by
DHL within 30 days from the date of receipt of Air
Hong Kong’s monthly invoices. 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 its holding company Deutsche Post AG
holds a 40% attributable interest in the Company’s
subsidiary Air Hong Kong. The transactions under
the DHL Services Agreement are continuing
connected transactions in respect of which
announcements dated 17th October 2002, 27th
June 2005 and 12th March 2007 were published
and circulars dated 12th July 2005 and 21st March
2007 were sent to shareholders.
The fees payable by DHL to Air Hong Kong under
the DHL Services Agreement totalled HK$1,846
million for the year ended 31st December 2009.
(b) Pursuant to an agreement (“JSSHK Services
Agreement”) dated 1st December 2004, as
amended and restated on 18th September 2008,
with JSSHK, JSSHK provides services to the
Company and its subsidiaries. The services
comprise advice and expertise of the directors and
senior officers of the Swire group including (but not
limited to) assistance in negotiating with regulatory
and other governmental or official bodies, full or
part time services of members of the staff of the
Swire group, other administrative and similar
services and such other services as may be agreed
from time to time, and in procuring for the
Company and its subsidiary, jointly controlled and
associated companies the use of relevant
trademarks owned by the Swire group. No fee is
payable in consideration of such procuration
obligation or such use.
Directors’ Report
Cathay Pacific Airways Limited Annual Report 2009 37