Cathay Pacific 2010 Annual Report Download - page 38

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36
(ii) Advent Fortune Limited (“AFL”) would 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 would pledge its equity
interest in Fine Star to the Company and the
Company’s returns on the loan would be equal to
the dividend returns on AFL’s 24% effective
shareholding in Air China Cargo;
(iii) Air China Cargo would 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 would provide a guarantee in favour
of Air China in respect of Cathay Pacific China
Cargo Holdings’ obligations under the relevant
agreements and undertook 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 constituted a connected
transaction for the Company under the Listing Rules,
in respect of which an announcement dated 25th
February 2010 was published and a circular dated 8th
April 2010 was sent to shareholders. The completion
process of the Joint Venture Transaction has
commenced and is in progress.
(b) The Company, Swire Aviation Limited, Swire Finance
Limited, Swire Pacific, CITIC Pacific Limited (as
sellers) entered into a sale and purchase agreement
with Jardine, Matheson & Co., Limited, The Wharf
(Holdings) Limited, Mosgen Limited, Hutchison Port
Holdings Limited and China National Aviation
Corporation (Group) Limited (“CNACG”) (as
purchasers) on 25th May 2010 for the Company to sell
its entire 10% interests in Hong Kong Air Cargo
Terminals Limited (“Hactl”) and Hactl Investment
Holdings Limited (“HIHL”) for a consideration of
HK$640 million. The transaction enabled the Company
to realise cash from its investment in the 10%
interests in Hactl and HIHL.
CNACG is a connected person of the Company
because it is an associate of Air China Limited which
is a substantial shareholder of the Company. Swire
Pacific is a substantial shareholder and therefore a
connected person of the Company. As Swire Pacific is
a controlling shareholder of the Company and was
also a substantial shareholder of Hactl and HIHL, the
sale of the Company’s interests in Hactl and HIHL
constituted a connected transaction of the Company
under the Listing Rules, in respect of which an
announcement dated 25th May 2010 was published.
The transaction was completed on 31st May 2010.
(c) The Company entered into a sale and purchase
agreement with Swire Pacific on 7th June 2010 for
Swire Pacific to purchase and the Company to sell
24,948,728 ordinary shares of HK$1 each in HAECO
(representing approximately 15.00% shareholding in
HAECO) for a consideration of approximately
HK$2,620 million (equivalent to HK$105 per HAECO
share) (the “HAECO Share Transaction”). The HAECO
Share Transaction was driven by the strategic
priorities of the Company and would benefit its core
aviation business. It enabled the Company to apply
the proceeds from the transaction towards other
investments in the Company’s core aviation business,
including investments in new aircraft, in the new
cargo terminal being constructed at the Hong Kong
International Airport, in continuing enhancements in
products and services, as well as towards Cathay
Pacific’s general working capital requirements.
As Swire Pacific is a substantial shareholder and
therefore a connected person of the Company, the
HAECO Share Transaction constituted a connected
transaction for the Company under the Listing Rules,
in respect of which an announcement dated 7th June
2010 was published.
Following completion of the HAECO Share
Transaction on 14th June 2010, the Company’s
shareholding interest in HAECO decreased from
15.00% to nil and Swire Pacific’s shareholding interest
in HAECO increased from 45.96% to 60.96%.
Directors’ Report