CSSC Hong Kong Shipping : DISCLOSEABLE TRANSACTIONS IN RELATION TO THE SALE AND LEASEBACK OF TWO VESSELS

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CSSC (Hong Kong) Shipping Company Limited

中國船舶（香港）航運租賃有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code: 3877)

DISCLOSEABLE TRANSACTIONS

IN RELATION TO

THE SALE AND LEASEBACK OF TWO VESSELS

The Board is pleased to announce that, on 27 April 2021, Fortune Kun and Fortune Zhen, being the Company's wholly-owned SPVs, have entered into the Memorandums of Agreement and the Bareboat Charters with the Charterers, pursuant to which Fortune Kun and Fortune Zhen have agreed to (i) purchase the Vessels from the Charterers at the Consideration; and (ii) lease back the Vessels to the Charterers at a total estimated charterhire to be payable by the Charterers of approximately US$68,431,000 (including estimated lease interest of approximately US$10,170,000).

Pursuant to Chapter 14 of the Listing Rules, as the highest applicable percentage ratio of the transactions contemplated under the Memorandums of Agreement and the Bareboat Charters is more than 5% but less than 25%, the transactions contemplated under the Memorandums of Agreement and the Bareboat Charters constitute discloseable transactions of the Company and are subject to the notification and announcement requirements under Chapter 14 of the Listing Rules but are exempt from the shareholders' approval requirement.

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1. INTRODUCTION

The Board is pleased to announce that, on 27 April 2021, Fortune Kun and Fortune Zhen, being the Company's wholly-owned SPVs, have entered into the Memorandums of Agreement and the Bareboat Charters with the Charterers, pursuant to which Fortune Kun and Fortune Zhen have agreed to (i) purchase the Vessels from the Charterers at the Consideration; and (ii) lease back the Vessels to the Charterers at a total estimated charterhire to be payable by the Charterers of approximately US$68,431,000 (including estimated lease interest of approximately US$10,170,000).

2. DETAILS OF THE MEMORANDUMS OF AGREEMENT AND THE BAREBOAT CHARTERS

Date

27 April 2021

Parties

Buyers/Owners Fortune Kun and Fortune Zhen, being the Company's wholly- owned SPVs

Sellers/Charterers STI Grace and STI Jermyn, which are companies incorporated under the laws of the Republic of the Marshall Islands and are directly and wholly owned by Scorpio Tankers, the shares of which are listed on the New York Stock Exchange (NYSE: STNG)

To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, the Charterers and their ultimate controller(s) are Independent Third Parties.

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Subject Matter

The Charterers have agreed to sell the Vessels to Fortune Kun and Fortune Zhen at the Consideration, which is expected to be settled with the internal funds of Fortune Kun and Fortune Zhen as well as bank borrowings. At the same time, Fortune Kun and Fortune Zhen have agreed to lease back the Vessels to the Charterers at a total estimated charterhire to be payable by the Charterers of approximately US$68,431,000 (including estimated lease interest of approximately US$10,170,000). Upon expiration of the Charter Period, the Charterers are obliged to purchase the Vessels from Fortune Kun and Fortune Zhen at a consideration as agreed by the parties under the Bareboat Charters.

Vessels

The Vessels are two 109,999-MT product/crude oil tankers and are of an aggregate value of US$82,000,000, which is based on the average market value of the Vessels in the valuation reports prepared by the qualified valuers appointed by Fortune Kun, Fortune Zhen and the Charterers.

The Vessels are expected to be delivered by May 2021.

Charter Period

The Charter Period shall be a period of 72 months commencing from the Delivery Dates.

Charterhire and Interest

Pursuant to the Bareboat Charters, Fortune Kun and Fortune Zhen have agreed to lease back the Vessels to the Charterers at a total estimated charterhire to be payable by the Charterers of approximately US$68,431,000 (including estimated lease interest of approximately US$10,170,000), which shall be payable by the Charterers in 72 payments.

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The terms of the Memorandums of Agreement and the Bareboat Charters (including the purchase price of the Vessels, the charterhire, the charterhire interest and other expenses thereunder) were determined after arm's length negotiation between the Charterers and Fortune Kun and Fortune Zhen, with reference to the prevailing market price of comparable financial leasing services in the industry.

Guarantee and Other Security

In connection with the transactions contemplated under the Memorandums of Agreement and the Bareboat Charters, the following guarantee and security documents are intended to be entered into:

1. two deeds of assignment to be entered into between the Charterers as assignors and Fortune Kun and Fortune Zhen as assignees, pursuant to which the Charterers will, among others, assign to Fortune Kun and Fortune Zhen absolutely all their rights, title and interest in and to the earnings and insurances of the Vessels and all their benefits and interests present and future therein; and
2. two deeds of guarantee to be entered into by Scorpio Tankers as guarantor in favor of each of Fortune Kun and Fortune Zhen, pursuant to which Scorpio Tankers will irrevocably and unconditionally guarantee, among others, the due and punctual performance by the Charterers of all their obligations, duties and liabilities under or in connection with the Bareboat Charters and payment on the due date of all sums payable now or in the future by the Charterers thereunder or in connection therewith.

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3. REASONS FOR AND BENEFITS OF ENTERING INTO THE MEMORANDUMS OF AGREEMENT AND THE BAREBOAT CHARTERS

The Memorandums of Agreement and the Bareboat Charters were entered into by Fortune Kun and Fortune Zhen during their ordinary course of business. The Directors believe that entering into the Memorandums of Agreement and the Bareboat Charters will strengthen the Group's leasing business and is consistent with the Group's overall business development strategies.

The Directors are of the view that the terms of the Memorandums of Agreement and the Bareboat Charters are fair and reasonable and are in the interests of the Company and its shareholders as a whole.

4. INFORMATION OF PARTIES

Information of the Company

The Company is a shipyard-affiliated leasing company and is principally engaged in the provision of leasing services.

Information of Fortune Kun and Fortune Zhen

Fortune Kun and Fortune Zhen, which were incorporated under the laws of the Republic of the Marshall Islands, are wholly-owned SPVs of the Company and are principally engaged in ship leasing business.

Information of the Charterers

STI Grace and STI Jermyn, which were incorporated under the laws of the Republic of the Marshall Islands, are directly and wholly owned by Scorpio Tankers, the shares of which are listed on the New York Stock Exchange (NYSE: STNG). STI Grace and STI Jermyn are principally engaged in shipping business.

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5. LISTING RULES IMPLICATIONS

Pursuant to Chapter 14 of the Listing Rules, as the highest applicable percentage ratio of the transactions under the Memorandums of Agreement and the Bareboat Charters is more than 5% but less than 25%, the transactions contemplated under the Memorandums of Agreement and the Bareboat Charters constitute discloseable transactions of the Company and are subject to the notification and announcement requirements under Chapter 14 of the Listing Rules but are exempt from the shareholders' approval requirement.

6. DEFINITIONS

In this announcement, unless the context requires otherwise, the following expressions shall have the following meanings:

"Bareboat Charters" the bareboat charters entered into between each of Fortune Kun and Fortune Zhen and the Charterers on 27 April 2021 with respect to the Vessels

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"Scorpio Tankers" Scorpio Tankers Inc., a company incorporated under the laws of the Republic of the Marshall Islands with limited liability, the shares of which are listed on the New York Stock Exchange (NYSE: STNG)

"STI Jermyn" STI Jermyn Shipping Company Limited, a company incorporated under the laws of the Republic of the Marshall Islands with limited liability

As at the date of this announcement, the Board comprises Mr. Zhong Jian and Mr. Hu Kai as executive Directors, Mr. Li Wei and Mr. Zou Yuanjing as non-executive Directors, and Mdm. Shing Mo Han Yvonne, Mr. Li Hongji and Mr. Wang Dennis as independent non-executive Directors.

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