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. CGN NEW ENERGY HOLDINGS CO., LTD. (incorporated in Bermuda with limited liability) (Stock code: 1811) Inside Information Memorandum of Understanding in Relation to a Possible Acquisition This announcement is made by CGN New Energy Holdings Co., Ltd. (the Company, together with its subsidiaries, the Group ) pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ) and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). MEMORANDUM OF UNDERSTANDING The board (the Board ) of directors (the Directors ) of the Company is pleased to announce that on 21 March 2018, the Company entered into a memorandum of understanding (the MOU ) with China General Nuclear Power Corporation, the controlling shareholder of the Company ( CGN or the Vendor ). Pursuant to the MOU, the Company intends to acquire through its subsidiary, and the Vendor intends to dispose of 51% of the registered capital (the Sale Interests ) in CGN Wind Power Co., Ltd. (the Target Company ), a company incorporated in the People s Republic of China (the PRC ) which engages in the business of developing, constructing and operating wind power projects in the PRC (the Possible Acquisition ). As at the date of the MOU, the Vendor directly held 51% of the registered capital of the Target Company and the Sale Interests represents all of the direct shareholding of the Target Company owned by the Vendor. 1
Principal Terms of the MOU Date: 21 March 2018 (after trading hours) Parties: CGN, as prospective vendor; and (ii) the Company, as prospective purchaser. Assets to be acquired Pursuant to the MOU, the Company is considering to acquire through its subsidiary the Sale Interests from the Vendor. Consideration The amount of the consideration for the Sale Interests to be paid by the Company s subsidiary will be determined after arm s length negotiation between the Vendor and the Company with reference to the results of the valuation of the Target Company as at a benchmark date conducted by an independent third party valuer. It is intended that the payment of the consideration will be made in cash by instalments. Non-legally binding effect Save for the provisions relating to disclosure, assignment, nature of the MOU, confidentiality, termination and governing law, the MOU shall not be legally-binding on the parties to the MOU. Formal agreement The Company and the Vendor shall use their best endeavours to negotiate and enter into a legally binding formal agreement in relation to the Possible Acquisition (the Formal Agreement ). 2
Termination The MOU will be terminated upon the earlier of: the date of execution of the Formal Agreement; (ii) in the case where one party decides to terminate the MOU unilaterally or due to default of the other party, the date of receipt of a termination notice by the latter party; or (iii) the date when both parties mutually agree to terminate the MOU. INFORMATION ABOUT THE TARGET GROUP The Target Company is a company incorporated in the PRC and is an investment holding company which, through its subsidiaries, is engaged in the business of developing, constructing and operating wind power projects in the PRC. As at the date of the MOU, the Vendor directly held 51% of the registered capital of the Target Company. The remaining 49% of the registered capital of the Target Company was held by Shenzhen CGN Wind and Solar Investment Company Limited, a subsidiary of CGN. Since the establishment of the Target Company and its subsidiaries (the Target Group ), the Target Group has developed and managed certain wind power projects in 27 provinces and regions in the PRC. As of 31 December 2017, the total installed capacity of the Target Group was approximately 10 GW. REASONS FOR AND BENEFITS OF THE POSSIBLE ACQUISITION At the time of listing of the Company on the Main Board of The Stock Exchange of Hong Kong Limited in 2014, the Group is a diversified independent power producer in terms of fuel type, with a portfolio mainly consisting of gas-fired, coal-fired, hydro and cogen power generation projects. Following the Company s development in recent years and upon the successful injection of the first batch of assets (the injection of an aggregate 1.4 GW wind power and solar power assets) in 2015, the ratio of the Company s non-nuclear clean energy assets in the PRC has significantly increased. The Company has been and will continue to focus on development and operation of nonnuclear clean and renewable power generation projects in the PRC. 3
The Company considers that the Possible Acquisition, if materialized, will enhance the Company s focus on clean and renewable power projects in the PRC. The Possible Acquisition is in line with the Company s intention and commitment to selectively acquire clean and renewable power generation projects with an aggregate installed capacity of 3.0 GW to 5.0 GW within the next four years from the listing of the Company and dedication to development and operation of non-nuclear clean and renewable power generation projects. If the Possible Acquisition is materialized, the installed capacity of clean energy (including wind power, solar power, hydropower and gas power) of the Group is expected to account for more than 80% of the total installed capacity of the Group and the geographical presence of the Company in the PRC is further diversified. In addition, the installed capacity and operation scale of the Company is expected to significantly increase and expand, which will further strengthen the competitiveness of the Company in the new energy sector, especially regarding the development, construction, production, operation and maintenance of wind power projects in the PRC. It is also expected that the financial status and the overall profitability of the Company will be enhanced if the Possible Acquisition is materialized. The Directors believe that the Possible Acquisition is in line with the development plan of the Company, which is expected to be beneficial to the Company and the shareholders of the Company as a whole. SOURCE OF FUNDING Currently, the Company plans to fund the Possible Acquisition by a combination of the following means taking into account certain factors such as capital structure, financing costs and return to the shareholders of the Company after completion of the Possible Acquisition: internal resources of the Group; (ii) loans or other financing arrangement(s) with banks or other institutions; (iii) equity and/or debt capital fund-raising activities; (iv) possible disposal of the Company s assets in South Korea (the Possible Disposal ) as announced by the Company on 21 March 2018; and (v) other fund-raising and/or financing activities or means as the Board may deem appropriate. For details of the Possible Disposal, please refer to the announcement of the Company dated 21 March 2018 regarding the memorandum of understanding in relation to a possible disposal. 4
GENERAL The Board wishes to emphasize that the Possible Acquisition is subject to, among other things, due diligence and the execution of a legally binding definitive agreement, the terms and conditions of which are yet to be negotiated and agreed upon. The Possible Acquisition, if materialised, will be a connected transaction and may constitute a very substantial acquisition for the Company under the Listing Rules. Further announcement(s) will be made by the Company as and when appropriate in compliance with the Listing Rules. Shareholders and potential investors of the Company should note that the MOU is not legally binding, the Possible Acquisition may or may not proceed or materialise and the final structure and terms of the Possible Acquisition, which are still subject to further negotiations among the parties, have yet to be finalised. Shareholders and potential investors of the Company should exercise caution when dealing in the shares or other securities of the Company. Hong Kong, 21 March 2018 By Order of the Board CGN New Energy Holdings Co., Ltd. Li Yilun President and Executive Director As at the date of this announcement, the Board comprises eleven Directors, namely: Chairman and non-executive Director : Mr. Chen Sui President and executive Director : Mr. Li Yilun Non-executive Directors : Mr. Zhang Chengbai, Mr. Yao Wei, Mr. Wang Hongxin, Mr. Dai Honggang and Mr. Xing Ping Independent non-executive Directors : Mr. Leung Chi Ching Frederick, Mr. Fan Ren Da Anthony, Mr. Wang Susheng and Mr. Zhang Dongxiao 5