COSCO SHIPPING Development to Acquire Four Container Manufacturers from COSCO SHIPPING Investment

Hong Kong – Paul Hastings, a leading global law firm, announced today that it has advised COSCO SHIPPING Development Co., Ltd. (Stock Code: 2866.HK and 601866.SH) (“COSCO SHIPPING Development”) on its acquisition of 100% equity interests from COSCO SHIPPING Investment Holdings Co., Ltd. (“COSCO SHIPPING Investment”) in its four wholly-owned subsidiaries principally engaged in, among other things, the manufacturing of dry freight, specialized and refrigerated containers, and the provision of technical and development services of container manufacturing. The unaudited aggregate net asset value of the aforementioned target companies as at 31 December 2020 was approximately RMB3.1 billion (approximately US$480 million). The final consideration for the acquisition will be determined with reference to the appraised value of the target assets and will be settled by the allotment and issuance of new A shares by the Company to COSCO SHIPPING Investment.

In connection with the acquisition, COSCO SHIPPING Development also proposes to conduct a non-public issuance of A shares to not more than 35 specific target subscribers to raise ancillary funds, including the proposed issuance to China Shipping Group Company Limited (“China Shipping”) for RMB600 million (approximately US$93 million). China Shipping is the controlling shareholder of COSCO SHIPPING Development and is principally engaged in coastal and ocean cargo transportation, container transportation, import and export business and international freight agency business.

The transaction involves several complex legal issues under the Takeovers Code. Upon completion of the allotment and issuance of new A shares to COSCO SHIPPING Investment, an indirect wholly-owned subsidiary of China COSCO SHIPPING Corporation Limited (“COSCO SHIPPING”), under the acquisition, COSCO SHIPPING will be required to make a mandatory general offer under Rule 26.1 of the Takeovers Code, unless a whitewash waiver is obtained. In addition, as the proposed non-public issuance of A shares is not capable of being extended to all shareholders, it constitutes a special deal under Rule 25 of the Takeovers Code.

The Hong Kong and Shanghai-listed COSCO SHIPPING Development is principally engaged in shipping and industry-related leasing businesses, manufacturing of containers and provision of investment and financial services.

As a long-term legal partner of COSCO SHIPPING Development, Paul Hastings has represented the company in various transactions. This year, we have advised the client on its sale of interests in COSCO SHIPPING Leasing for RMB1.8 billion and acquisition of 16 bulk carriers under construction for US$327 million. We also represented the company in its lease of 74 vessels for US$4.62 billion, sale of A shares and H shares of CIMC for RMB6.34 billion and acquisition of ten multi-purpose vessels for US$180 million in 2020.

The Paul Hastings team was led by Raymond Li, global partner and chair of Greater China, and corporate partner Bonnie Kong, with support from associate Andy Tam and trainee solicitor Beatrice Wun.

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