bc8d27f0-8cdf-48f3-8035-899b7bad2ed9.pdf
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
DISCLOSEABLE TRANSACTION GOLD LEASING FINANCING
The Board of the Company hereby announces that, on 6 June 2016, the Company entered into one Gold Leasing Operational Agreement, four Gold Leasing Agreements and one General Hedging Agreement with BOCOM, pursuant to which the Company will develop gold leasing business for working capital financing purpose.
As the highest applicable percentage ratio (as defined under the Hong Kong Listing Rules) for transactions under the Gold Leasing Agreements and the General Hedging Agreement exceeds 5% but is less than 25% on an aggregated basis, the transactions under the Gold Leasing Agreements and the General Hedging Agreement constitute discloseable transactions of the Company on an aggregated basis under Chapter 14 of the Hong Kong Listing Rules and are subject to the reporting and announcement requirements under the Hong Kong Listing Rules.
INTRODUCTION
The Board (the "Board") of Aluminum Corporation of China Limited (the "Company") hereby announces that, in order to sufficiently satisfy the capital demand of the Company arising from its usual production and operation and expand its sources of financing, on 6 June 2016, the Company entered into one Gold Leasing Operational Agreement, four Gold Leasing Agreements and one General Hedging Agreement with BOCOM, pursuant to which the Company will develop gold leasing business for working capital financing purpose.
GOLD LEASING AGREEMENTS AND GOLD LEASING OPERATIONAL AGREEMENT
Date
6 June 2016
Parties
-
The Company (as the Lessee); and
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BOCOM (as the Lessor).
Subject Matter
BOCOM agreed to provide the Company Standard Gold with a fineness of Au99.99. The market value calculated in accordance with the settlement price as agreed by both parties, amounted to RMB3 billion.
Term of Leasing
The term of leasing is 12 months as from the commencement dates of the leasing, i.e., 6 June and 7 June 2016 as the case may be.
Leasing Fees
The Company shall pay BOCOM leasing fees Note, three instalments of which are to be paid as soon as possible within the reasonable period upon the signing of the agreements and one of which is to be paid on the maturity date of the leasing.
Note: The annual fees shall include the leasing fee, the charges for futures contracts and other transaction expenses arising from this gold leasing and the hedging arrangement shall not in aggregate exceed the benchmark interest rate for one-year loan set by the People's Bank of China.
Delivery and Recovery of Standard Gold
Standard Gold can be legally delivered upon the satisfaction of the following conditions: (1) BOCOM has completed statutory procedures including relevant government permit(s), approval(s) and registration and other procedures as required for BOCOM, where the aforementioned permit(s), approval(s) or registration shall remain valid; (2) the guarantee contract (if any) under this agreement has become effective and the title of the underlying security have been established in respect of the guarantee contract system involving mortgage contract and/or pledge contract; (3) the operation and financial position of the Company have not been materially and adversely changed; and (4) the Company has not breached the terms and conditions of the agreements.
The Company and BOCOM shall separately file applications for gold leasing through the membership service system of the Shanghai Gold Exchange. The delivery of Standard Gold shall be transferred to the accounts of the Company with the amount subject to the BOCOM's Standard Gold by the Shanghai Gold Exchange.
Upon the expiry of the term of leasing, the Company shall complete the gold repayment application through the membership service system of the Shanghai Gold Exchange and return the Standard Gold with same quality as those under the Gold Lease Agreements or the gold with different fineness from those under the lease as agreed in the Gold Leasing Agreements to BOCOM, and shall be responsible for the settlement of relevant fees.
GENERAL HEDGING AGREEMENT
Date
6 June 2016
Parties
-
The Company; and
-
BOCOM.
Main Contents
As the Company is cooperating with BOCOM in gold leasing financing business, in order to hedge the risks arising from gold price fluctuations, the Company and BOCOM proposed to carry out RMB-denominated gold hedging business. Both parties agreed that BOCOM shall purchase the Au99.99 Standard Gold from the Company or sell Standard Gold to the Company at an agreed consideration on 6 June 2016 and 7 June 2016 and settle on 7 June and 8 June 2017 (being the settlement date) pursuant to the settlement methods as agreed by both parties.
Security Deposit Arrangement
In respect of the lease of Au99.99 Standard Gold by BOCOM to the Company, BOCOM shall, from 6 June 2016 to 5 June 2017, freeze the Company's working capital credit facility in an amount of RMB3.3 billion, as an alternative for the security deposit. During the aforementioned period, the Company shall not apply for withdrawal from the frozen working capital credit facility. Save for this arrangement, the Company has not separately provided any other security deposit, guarantee or pledges in favour of BOCOM.
REASONS AND BENEFITS OF THE TRANSACTION AND RISK CONTROL
According to the capital needs of the Company, in the financing plan for the year of 2016, the Company proposed to replenish its current capital through short-term gold leasing from the bank(s) in an amount not exceeding RMB3 billion. The term of financing shall be no more than one year and the financing cost will not exceed the benchmark interest rate of one-year loan set by the People's Bank of China. The gold leasing financing arrangement, which is agreed by the Company and the bank(s) and is subject to the preset financing cost, requires the Company to firstly take lease on gold from the bank(s) and immediately entrust the bank(s) to sell all the leased gold to acquire the financed funds. The Company and the bank(s) then enter into a forward transaction agreement which stipulates that the same price be adopted for purchasing the same quantity and the same type of gold after one year and that the quantity and amount of the gold to be repaid at maturity shall be fixed. Upon the completion of the leasing, the Company will return the same quantity and the same type of gold to the bank(s).
Financing costs incurred from this financing which include the gold leasing fees, the charges for futures contracts and other transaction expenses, shall not, on an annual basis, exceed the benchmark interest rate of one-year loan set by the People's Bank of China. The funds raised from the gold leased by the Company will be used as working capital for production and operation.