China Coal Energy : CONNECTED TRANSACTIONS-TRANSFER ...

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On 23 August 2017, China Coal and Coke, the subsidiary of the Company, entered into the Equity Transfer Agreements with Jinzhong Energy Chemical, the subsidiary of the Parent in order to transfer 100% equity interest in Shanxi Coal Transportation and Sales and 100% equity interest in Tianjin Coal held by the Group to the Parent Group. Pursuant to the Equity Transfer Agreements, China Coal and Coke transfers the Target Equity Interests to Jinzhong Energy Chemical at a total consideration of RMB13.4214 million.

The Transactions will be conducted between members of the Group and members of the Parent Group. The Parent is the controlling shareholder of the Company and a connected person of the Company. The relevant members of the Parent Group are all associates of the Parent and are therefore connected persons of the Company under the Hong Kong Listing Rules. As such, the Transactions under the Equity Transfer Agreements constitute connected transactions of the Company.

The Transactions constitute disposals under Chapter 14A of the Hong Kong Listing Rules, all of which are entered into between members of the Group and members of the Parent Group, which would be aggregated under Rules 14A.81 of the Hong Kong Listing Rules.

As the applicable percentage ratios (as defined under Rule 14A.06 of the Hong Kong Listing Rules and aggregated with the Previous Transaction as required by 14A.81 of the Hong Kong Listing Rules) exceed 0.1% but are less than 5%, the Transactions are subject to the reporting and announcement requirements, but are exempted from the independent shareholders' approval requirements under the Hong Kong Listing Rules.

Mr. Li Yanjiang, Mr. Peng Yi, Mr. Liu Zhiyong and Mr. Du Ji'an, also directors or senior management of the Parent, are deemed to have material interest in the Transactions, and thus have abstained from voting on the relevant resolutions at the Board meeting. Save as mentioned above, none of the other Directors has a material interest in the Transactions.

1. INTRODUCTION

   On 23 August 2017, China Coal and Coke, the subsidiary of the Company, entered into the Equity Transfer Agreements with Jinzhong Energy Chemical, the subsidiary of the Parent in order to transfer 100% equity interest in Shanxi Coal Transportation and Sales and 100% equity interest in Tianjin Coal held by the Group to the Parent Group. Pursuant to the Equity Transfer Agreements, China Coal and Coke transfers the Target Equity Interests to Jinzhong Energy Chemical at a total consideration of RMB13.4214 million.

2. EQUITY TRANSFER AGREEMENTS Date: 23 August 2017

   Parties: The parties to the Equity Transfer Agreement in respect of the transfer of 100% equity interest in Shanxi Coal Transportation and Sales are:

3. China Coal and Coke

4. Jinzhong Energy Chemical

The parties to the Equity Transfer Agreement in respect of the transfer of 100% equity interest in Tianjin Coal are:

1. China Coal and Coke

2. Jinzhong Energy Chemical

Subject matter and consideration:

Pursuant to the conditions and methods agreed in the Equity Transfer Agreements, (i) China Coal and Coke agrees to transfer 100% equity interest in Shanxi Coal Transportation and Sales to Jinzhong Energy Chemical; and (ii) China Coal and Coke agrees to transfer 100% equity interest in Tianjin Coal to Jinzhong Energy Chemical. Jinzhong Energy Chemical agrees to acquire the above Target Equity Interests from the China Coal and Coke and pay the consideration thereof to the China Coal and Coke according to the conditions and methods agreed in the Equity Transfer Agreements.

Pursuant to the Equity Transfer Agreements, unless the appraised value of the Target Assets is adjusted by the regulatory organs of state-owned assets, Jinzhong Energy Chemical will pay the total consideration of RMB13.4214 million to China Coal and Coke, among which, (i) RMB1.8931 million as the consideration of 100% equity interest in Shanxi Coal Transportation and Sales payable to China Coal and Coke by Jinzhong Energy Chemical; and (ii) RMB11.5283 million as the consideration of 100% equity interest in Tianjin Coal payable to China Coal and Coke by Jinzhong Energy Chemical.

The total amount of the consideration to be paid by Jinzhong Energy Chemical to China Coal and Coke was determined after arm's length negotiation among the parties with reference to the appraised value of 100% equity interest in Shanxi Coal Transportation and Sales, and 100% equity interest in Tianjin Coal, as at the Valuation Reference Date, being RMB1.8931 million, RMB11.5283 million respectively, as stated in the valuation reports issued by Beijing China Enterprise Appraisal Co.,

Ltd. (北京中企華資產評估有限公司) based on

asset based approach.

Effective Date: As agreed and confirmed by the contracting parties, each of the Equity Transfer Agreements shall take effect subject to the satisfaction of the following

conditions:

1. legal representatives or authorized representatives of the parties have signed and affixed their respective company seals on the Equity Transfer Agreements;

2. the internal approval procedures of the relevant contracting parties have been performed and the Transactions have been approved thereby;

3. the Company has approved the Transactions; and

4. the Parent has approved the Transactions.

Payment arrangement: Pursuant to the Equity Transfer Agreements, (i) in

terms of the transfer of 100% equity interest in Shanxi Coal Transportation and Sales, RMBRMB1.8931 million will be paid by Jinzhong Energy Chemical to the China Coal and Coke as a one-off payment within 15 business days since the Equity Transfer Agreement takes effect; (ii) in terms of the transfer of 100% equity interest in Tianjin Coal RMB11.5283 million will be paid by Jinzhong Energy Chemical to China Coal and Coke as a one-off payment within 15 business days since the Equity Transfer Agreement takes effect.

Defaultliabilities: Either party in breach of its obligations under the

Equity Transfer Agreements shall continue to perform the Equity Transfer Agreements, in addition to which the breaching party shall timely, effectively and fully compensate the other party for any economic or other losses incurred.

Transfer of rights and benefits:

Any or all of the rights and benefits of the Target Equity Interests shall be transferred to the Parent Group on the effective date of such Equity Transfer Agreements, including all the benefits and interests pursuant to the Equity Transfer Agreements and all rights in accordance with the law after the Valuation Reference Date.