GCL Poly Energy : Announcements and Notices - Continuing Connected Transaction - New Coal Supply Framework Agreement

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GCL-POLY ENERGY HOLDINGS LIMITED

保 利 協 鑫 能 源 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3800) CONTINUING CONNECTED TRANSACTION NEW COAL SUPPLY FRAMEWORK AGREEMENT NEW COAL SUPPLY FRAMEWORK AGREEMENT

Reference is made to the announcement of the Company dated 24 May 2016 in relation to the Existing Coal Supply Framework Agreement. The Board announces that due to the surging coal price in the PRC, Jiangsu Zhongneng and Suzhou GCL entered into the New Coal Supply Framework Agreement on 6 January 2017, pursuant to which Suzhou GCL agreed to supply coal to Jiangsu Zhongneng for a period of three years commencing from 1 January 2017. Upon the New Coal Supply Framework Agreement becoming effective, the Existing Coal Supply Framework Agreement will be terminated and superseded by the New Coal Supply Framework Agreement.

LISTING RULES IMPLICATION

As at the date of the New Coal Supply Framework Agreement, 72% of the equity interest in Suzhou GCL is held by the Zhu Family Trust, under which Mr. Zhu Gongshan and his family (including Mr. Zhu Yufeng) are beneficiaries. As Mr. Zhu Gongshan and Mr. Zhu Yufeng are both Directors and therefore connected persons of the Company and Suzhou GCL is an associate of them, Suzhou GCL is a connected person of the Company. Accordingly, the transactions contemplated under the New Coal Supply Framework Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

As the applicable percentage ratios in respect of the Annual Caps exceed 5%, the New Coal Supply Framework Agreement and the Annual Caps are subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Independent Board Committee has been established to advise the Independent Shareholders in respect of the terms of the New Coal Supply Framework Agreement and the transactions contemplated thereunder (including the Annual Caps). The Company has appointed the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the fairness and reasonableness of the New Coal Supply Framework Agreement and the Annual Caps.

GENERAL

The EGM will be convened by the Company for the Independent Shareholders to consider and, if thought fit, approve the New Coal Supply Framework Agreement, the transactions contemplated thereunder and the Annual Caps.

A circular containing, among other things, (i) further information on the New Coal Supply Framework Agreement and the Annual Caps, (ii) the recommendation from the Independent Board Committee to the Independent Shareholders, (iii) the advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the EGM, will be despatched to the Shareholders on or before 27 January 2017.

NEW COAL SUPPLY FRAMEWORK AGREEMENT

Reference is made to the announcement of the Company dated 24 May 2016 in relation to the Existing Coal Supply Framework Agreement. The Board announces that due to the surging coal price in the PRC, Jiangsu Zhongneng and Suzhou GCL entered into the New Coal Supply Framework Agreement on 6 January 2017, the details of which are set out below:

Date

6 January 2017

Parties

1. Jiangsu Zhongneng, as customer

2. Suzhou GCL, as supplier

Term

The term of the New Coal Supply Framework Agreement is for a period of three years commencing from 1 January 2017 and ending on 31 December 2019.

Subject matter

Suzhou GCL has agreed to supply, and Jiangsu Zhongneng has agreed to purchase coal on a net calorific value as received basis with a value of Qnet,ar = 4,500-6,000 kcal/kg during the Term.

The New Coal Supply Framework Agreement serves as a framework agreement between the parties pursuant to which specific purchase orders and delivery requests for coal may be made by Jiangsu Zhongneng during the Term. The actual volume of the supply of coal is to be determined by both parties based on actual purchase orders made by Jiangsu Zhongneng, although the New Coal Supply Framework Agreement provides that the anticipated monthly volume of coal to be supplied during the Term would be approximately 125,000 tonnes.

Consideration and basis of consideration

The price of coal to be supplied by Suzhou GCL to Jiangsu Zhongneng pursuant to the New Coal Supply Framework Agreement from time to time shall not be higher than the market price of coal of comparable quality as may be obtained through quotations from independent third party coal suppliers (the "Reference Price"). The final purchase price will be agreed between the parties under the sale and purchase agreement to be entered into between Suzhou GCL and Jiangsu Zhongneng on a monthly basis.

In order to ensure that the price for the coal to be supplied by Suzhou GCL is determined so that the transactions under the New Coal Supply Framework Agreement are conducted on normal commercial terms, or on terms no less favourable than terms offered by independent third parties, Jiangsu Zhongneng will collect and compare the Reference Price with the price offered by Suzhou GCL.

Payment for each purchase shall be settled by Jiangsu Zhongneng in arrears within 10 business days after delivery of the invoice in respect of the coal supplied by Suzhou GCL.

The consideration for the coal under the New Coal Supply Framework Agreement was determined after arm's length negotiations between the parties taking into account the market prices being a fair and transparent means of ascertaining the price.

Conditions precedent

The effectiveness of the New Coal Supply Framework Agreement shall be conditional upon the New Coal Supply Framework Agreement and the transactions contemplated thereunder having been approved by the Independent Shareholders at the EGM.

Upon the New Coal Supply Framework Agreement becoming effective, the Existing Coal Supply Framework Agreement will be terminated and superseded by the New Coal Supply Framework Agreement.

Annual Caps

The Annual Caps for the purchase of coal by Jiangsu Zhongneng under the New Coal Supply Framework Agreement are as follows:

For the year from 1 January 2017 to 31 December 2017 For the year from 1 January 2018 to 31 December 2018 For the year from 1 January 2019 to 31 December 2019

(RMB) (RMB) (RMB)

Annual Caps 1,122,000,000 (equivalent to approximately

HK$1,268,000,000)

1,200,000,000

(equivalent to approximately

HK$1,356,000,000)

1,200,000,000

(equivalent to approximately

HK$1,356,000,000)

The Annual Caps were calculated after taking into account (i) the amount paid by Jiangsu Zhongneng for the supply of coal during the period from June 2016 to November 2016, being approximately RMB305,000,000 (approximately HK$345,000,000); (ii) the estimated consumption of coal by Jiangsu Zhongneng during the Term of the New Coal Supply Framework Agreement; and (iii) the potential price movement of coal.