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Zhejiang Southeast Electric Power Company Limited 

Announcement on Resolutions of the Third Meeting of the Fifth Session of the Board of Directors and Convening the First Extraordinary General Meeting of 2009

 

The Third Meeting of the Fifth Session of the Board of Directors of Zhejiang Southeast Electric Power Company Limited (the 'Company') was convened on 5 June 2009 by way of communication (the 'Meeting'). The written notice of the Meeting was issued on 31 May 2009. Fifteen directors should be present and fifteen directors were present at the Meeting. The supervisors of the Company were present at the Meeting. The convening of the Meeting was in compliance with the stipulations of the Company Law and the articles of association of the Company and was therefore legal and effective.  The Meeting was chaired by Mr. Mao Jianhong, the Chairman of the Company.

The following proposals were reviewed and approved at the Meeting:

1. Proposal on the Capital Increase in Jiahua Company to Invest and Construct Jiadian Phase III Project

Under abstaining of Connected Directors, namely, Mao Jianhong, Zhang Qian, Cao Lu and Wang Lina, the following proposals were approved:

(1) It was agreed to increase equity interest held by the Company in Zhejiang  Jiahua Power Generation Co., Ltd. by no more than RMB 379.2 million according to existing shareholding percentage. The increased capital shall be used to invest and construct Zhejiang Jiaxing Power Plant Phase III 'Keeping and Promoting the Large and Holding or Closing Down the Small' Expansion Project.

(2)It was agreed to authorize the management to increase equity interest held by the Company in Zhejiang Jiahua Power Generation Co., Ltd. in several tranches within the amount of RMB 379.2 million according to project progress and resolutions of the board meetings and shareholders' meetings of Zhejiang Jiahua Power Generation Co., Ltd.

(3) It was agreed to submit the proposal for review and approval at the First Extraordinary General Meeting of the Company in 2009 ('EGM').

Voting results: votes in favour of the resolution: 11 votes; votes against the resolution: 0 vote; votes abstained: 0 vote.

I. Overview of the Connected Transaction

Pursuant to Approval of Zhejiang Jiaxing Power Plant Phase III ' Keeping and Promoting the Large and Holding or Closing Down the Small ' Expansion Project issued by National Development and Reform Commission (Fa Gai Neng Yuan [2009] No. 1338), Zhejiang Jiahua Power Generation Co., Ltd. ('Jiahua Company') will construct 2 x 1000 MW coal-fired units of Zhejiang Jiaxing Power Plant Phase III ' Keeping and Promoting the Large and Holding or Closing Down the Small' Expansion Project ('Jiadian Phase III Project'). The Company proposes to increase equity interest held in Jiahua Comppany according to existing shareholding percentage in Jiahua Company to invest and construct Jiadian Phase III Project. 

As the largest shareholder of the Company, Zhejiang Provincial Electric Power Development Co., Ltd. is also the largest shareholder of Jiahua Company. Pursuant to Listing Rules of Shanghai Stock Exchange, the capital increase in Jiahua Company by the Company and Zhejiang Provincial Electric Power Development Co., Ltd. constitutes connected transaction.

Pursuant to Listing Rules of Shanghai Stock Exchange and articles of association of the Company, the proposal is subject to approval of shareholders' meeting, and the connected persons which have interest in the connected transaction shall be abstained from voting at shareholders' meeting.

II. Information on the Connected Parties

       (I) Basic Information of the Connected Parties

Zhejiang Provincial Electric Power Development Co., Ltd. was established on 14 March 1992 with registered share capital of RMB 3.3 billion. The business scope of Zhejiang Provincial Electric Power Development Co., Ltd includes raising funds for electric power construction, power industry development, generation and sale of unplanned electric power and renovation for energy conservation. Zhejiang Provincial Electric Power Development Co., Ltd. is a wholly-owned subsidiary of Zhejiang Provincial Energy Group Corp. As of the end of 2008, the total asset and net asset of Zhejiang Provincial Electric Power Development Co., Ltd. are RMB 50.16 billion and RMB 17.26 billion respectively. The total revenue of Zhejiang Provincial Electric Power Development Co., Ltd. in 2008 is RMB 22.92 billion.

(II) The Connected Relationship

 Zhejiang Provincial Electric Power Development Co., Ltd. is the largest shareholder    of Jiahua Company, holding 53% equity interest in Jiahua Company. The Company holds 24% equity interest in Jiahua Company. Zhejiang Provincial Electric Power Development Co., Ltd. is also the largest shareholder of the Company, holding 39.8% equity interest in the Company. The capital increase in Jiahua Company by the Company and Zhejiang Provincial Electric Power Development Co., Ltd. constitutes connected transaction.

III. Key Information of the Connected Transaction

Pursuant to Approval of Zhejiang Jiaxing Power Plant Phase III 'Keeping and Promoting the Large and Holding or Closing Down the Small ' Expansion Project issued by National Development and Reform Commission (Fa Gai Neng Yuan [2009] No. 1338), Jiadian Phase III Project includes the construction of two domestic 1000 MW ultra super coal-fired units. The project company is Jiahua Company. The total dynamic investment is RMB 7.89 billion, of which project capital fund is RMB 1.58 billion, accounting for 20% of the total dynamic investment. The project capital fund shall be contributed by shareholders of Jiahua Company according to their existing shareholding percentage. Another RMB 6.31 billion beyond project capital fund shall be financed by bank loans.

The Company holds 24% equity interest of Jiahua Company. Accordingly, the Company shall increase equity interest held in Jiahua Company by RMB 379.2 million.

The capital increase in Jiahua Company shall be made by tranches. The shareholders of Jiahua Company shall increase their respective equity interests in Jiahua Company in tranches based on the progress of Jiadian Phase III Project. 

 

IV. Objectives and Effects of the Connected Transaction

According to state energy industry policy, coal-fired plants shall develop units with high parameter, large capacity and high-efficiency. Million KW ultra super units are the most advanced coal-fired units in China. They have the highest efficiency, lowest energy consumption and best environmental protection effect among coal-fired units. Million KW ultra super unites are therefore apparently profitable.

The increasing in investment in units with large capacity and high parameter will facilitate upgrading industry structure of the Company and strengthening integrated competitiveness of the Company. 

      V.  Views of the Independent Directors 

(I) In respect of increasing equity interest held by the Company in Jiahua Company to   invest and construct Jiadian Phase III Project, the Independent Directors are of the view that it will expand the Company's installed capacity on equity basis, increase the percentage of units with large capacity and high parameter in the Company's total  installed capacity and strengthen the market competitiveness of the Company.

(II) As the shareholder of Jiahua Company, the Company increases equity interest held in Jiahua Company in cash together with other shareholders based on existing shareholding percentage. The Independent Directors are of the view that it has no adverse effect to the interests of the medium and small shareholders of the Company.

(III)When the Board of Directors of the Company reviewed the aforementioned connected transaction, the Connected Directors abstained from the voting, the process of which was in compliance with related provisions under laws of PRC and articles of association of the Company.

2. Proposal on the Implementation of Heating Reconstruction Project in connection with 2 x 130 MW coal-fired units in Xiaoshan Power Plant

It was agreed to implement heating reconstruction for 2 x 130 MW coal-fired units in Xiaoshan Power Plant according to requirements under the approval document of Zhejiang Provincial Development and Reform Commission.

Voting results: votes in favour of the resolution: 15 votes; votes against the resolution: 0 vote; votes abstained: 0 vote.

According to the state principles in respect of heating reconstruction of existing 300MW or below coal-fired units and heating planning of Xiaoshan District, Xiaoshan Power Plant utilizes existing power plant resources to implement heating reconstruction and develops centralized heating. These measures are essential to raise unit energy consumption rate and meet the regional heating demand.

Pursuant to Approval of Heating Reconstruction Project in connection with 2 x 130 MW Coal-fired Units in Xiaoshan Power Plant issued by Zhejiang Provincial Development and Reform Commission(Zhe Fa Gai Neng Yuan [2008] No. 798), it is estimated that the total investment is RMB 169.75 million (including heating network construction investment) based on installation material price in 2006 and construction material price in 2008.

 

3. Notice on Convening the First Extraordinary General Meeting of 2009

     (1)    Time:     2:00PM, 22 June 2009   

     (2)     Venue:  Conference Room at 5/F, Zheneng Building, 152 Tianmushan  Road, Hangzhou 

     (3)    Issue to be reviewed at the EGM:  Proposal on the Capital Increase in Jiahua Company to Invest and Construct Jiadian Phase III Project

      (4)     Attendees of the EGM

    I.   All the shareholders of the Company who have registered at China Securities Depositary and Clearing Corporation Limited, Shanghai Branch by the time the market closes in the afternoon of 17 June 2009 (the last trading day for B shares shall be 12 June 2009);

      II.  Shareholders who are unable to attend the meeting due to certain reasons may appoint their proxies to attend the meeting (please find below the proxy form); 

      III.   Directors, supervisors and senior management of the Company.

(5)    Registration Method

  I.    Registration Formalities:

        Legal person shareholders complying with the above conditions shall produce their shareholders' account cards, copies of business licenses and legal representative proxy forms and identity cards of the attendees and complete the registration formalities; 

       Individual shareholders complying with the above conditions shall produce their shareholders' account cards, identity cards and shareholding evidence and complete the registration formalities; 

       Proxies shall produce proxy forms, identity cards, shareholder account cards of the appointers and shareholding evidence of the appointers and complete the registration formalities.

II.    Time and Place of Registration:  1:30 - 2:00 PM, 22 June 2009, at the meeting place. 

(6)  The shareholders attending the meeting shall bear their own costs of board and lodging and transportation and the meeting will last half a day.

   

                                                                                              Board of Directors

                                                                       Zhejiang Southeast Electric Power Company Limited   

                                                                                                    6 June 2009

Proxy Form

 

I hereby authorize Ms./Mr. _____________ to attend the first Extraordinary General Meeting of 2009 of Zhejiang Southeast Electric Power Company Limited on behalf of the company/on my behalf and exercise shareholders' rights according to the following power:

1.           To vote for the matter as stated in the announcement on convening the shareholders' meeting; □

2.           To vote against the matter as stated in the announcement on convening the shareholders' meeting; □

3.           To abstain from voting in relation to the matter as stated in the announcement on convening the shareholders' meeting; □

4.           As regards the matter for which specific instructions have not been given in items 1 - 3 above, the proxy ______________  (may / may not) vote according to his own intention.

 

Appointer: ___________________ 

Business license/identity card number of the appointer:   _____________________

Shareholder number of the appointer: ________________

Number of shares held by the appointer: _____________________

Appointee: ___________________________

Identity card number of the appointee:  ___________________________                          

Date of appointment:     ___________________________                          

Signature of the appointer (seal):     ___________________________                         

       

              

        

  

 

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