TIDMMTR
RNS Number : 7418H
MTR Corporation Ltd
26 February 2010
+------------------------------------------------------------+
| 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. |
+------------------------------------------------------------+
| |
| MTR CORPORATION LIMITED |
| ???????? |
| (the "Company") |
| (Incorporated in Hong Kong with limited liability) |
| (Stock code: 66) |
| CONTINUING CONNECTED TRANSACTION |
+------------------------------------------------------------+
| On 30 November 2007, KCRC entered into the Original |
| Contract with UGL, for the refurbishment of the Phase 1 |
| LRVs for a period of 45 months from 30 November 2007 to 31 |
| August 2011. On 2 December 2007, the rights and |
| obligations of KCRC under the Original Contract were |
| vested in the Company pursuant to section 52(B) of the |
| Mass Transit Railway Ordinance (Chapter 556 of the Laws of |
| the Hong Kong Special Administrative Region). |
| As stated in the announcement dated 1 September 2009, the |
| Company, UGL and JHL each agreed to subscribe for shares |
| in MTM with the effect that the Company controls 60% of |
| the voting power at any general meeting of MTM and each of |
| UGL and JHL controls 20% of the voting power at any |
| general meeting of MTM. Accordingly, UGL is treated as a |
| substantial shareholder of MTM (a subsidiary of the |
| Company) and therefore a "connected person" of the Company |
| within the meaning of Chapter 14A of the Listing Rules. |
| On 26 February 2010 the Company entered into the |
| Supplemental Agreement. The Supplemental Agreement is a |
| "continuing connected transaction" within the meaning of |
| Rule 14A.14 and, under Listing Rule 14A.34, the Company is |
| subject to the reporting and announcement requirements set |
| out in Listing Rules 14A.45 to 14A.47 (inclusive) and the |
| requirements of Listing Rules 14A.35(1) and 14A.35(2). |
| This announcement is made pursuant to Listing Rule 14A.47. |
+------------------------------------------------------------+
| THE ORIGINAL CONTRACT AND THE SUPPLEMENTAL AGREEMENT |
+------------------------------------------------------------+
| On 30 November 2007, KCRC entered into the Original |
| Contract with UGL. On 2 December 2007, the rights and |
| obligations of KCRC under the Original Contract were |
| vested in the Company pursuant to section 52(B) of the |
| Mass Transit Railway Ordinance (Chapter 556 of the Laws of |
| the Hong Kong Special Administrative Region). On 26 |
| February 2010, the Company entered into the Supplemental |
| Agreement for the extension of the Original Contract for a |
| further period of 16 months from 31 August 2011 until 31 |
| December 2012. The Original Contract (as amended and |
| supplemented by the Supplemental Agreement) is in |
| substantially the same form as KCRC's standard conditions |
| of contract for engineering works and contains (inter |
| alia) the following terms: |
+------------------------------------------------------------+
| Parties |
+------------------------------------------------------------+
| (1) KCRC until and including 1 December 2007 and |
| thereafter the Company (see paragraph above); and |
| (2) UGL. |
+------------------------------------------------------------+
| Obligations of UGLUnder the terms of the Original Contract |
| (as amended and supplemented by the Supplemental |
| Agreement), the principal obligations of UGL comprise the |
| following:(a) carrying out a carbody structure |
| review to assess the mechanical condition of the Phase 1 |
| LRVs; |
| (b) refurbishing the drivers' consoles, the |
| operators' seats and the passenger saloons of the Phase 1 |
| LRVs; |
| (c) conducting a brake software upgrade of the |
| Phase 1 LRVs; and |
| (d) carrying out further miscellaneous repairs to |
| the Phase 1 LRVs |
| (together the "Refurbishment Works").UGL shall indemnify |
| the Company against any loss or expense sustained by the |
| Company and against all losses and claims in respect of |
| death or injuries or damage to any person or equipment or |
| other property whatsoever which may arise out of or in |
| connection with the Refurbishment Works and against all |
| claims, proceedings, damages, costs, charges and expenses |
| in respect of or in relation thereto, subject to any |
| proportionate reduction in liability on account of any |
| related negligence by the Company, its employees or |
| agents, the Engineer or those appointed by the |
| Engineer.UGL shall indemnify the Company against all |
| damages and compensation and against all claims, demands, |
| proceedings, costs, charges and expenses whatsoever in |
| respect of any damages or compensation payable at law in |
| respect of or in consequence of any accident, injury or |
| illness to any workman or other person in the employment |
| of UGL arising out of and in the course of such |
| employment. |
| UGL shall effect and maintain insurance with a limit of |
| not less than HK$100,000,000 in relation to certain of its |
| liabilities for the period commencing on 30 November 2007 |
| until the date of the issue of the Substantial Completion |
| Certificate. |
| Pursuant to the terms of the Original Contract, a bank |
| guarantee issued by HSBC Bank Australia Limited has been |
| provided to the Company in respect of the obligations of |
| UGL under the Original Contract. |
| Limitations of liability of UGL |
| UGL's liability to indemnify the Company is reduced |
| proportionally to the extent that any act or omission of |
| the Company, its employees or agents, the Engineer or |
| those appointed by the Engineer, caused or contributed to |
| the relevant death, illness, injury, loss or damage. |
| The total liability of UGL shall not exceed 100% of the |
| total sum payable under the Original Contract, save and |
| except for UGL's liability for death, personal injury, |
| wilful misconduct, fraud and infringement of third party |
| intellectual property rights. |
| The total liability of UGL to the Company for liquidated |
| damages arising as a result of delay is limited to 10% of |
| the total sum payable under the Original Contract. |
| Subject to the provisions regarding liquidated damages, |
| UGL is not liable for any kind of economic, financial, |
| indirect or consequential loss or damage, including but |
| not limited to loss of profit, loss of use, loss of |
| production, loss of any contract and the like, suffered by |
| the Company. |
+------------------------------------------------------------+
| Obligations of the Company |
+------------------------------------------------------------+
| In consideration of UGL providing the Refurbishment Works |
| under the Original Contract, the Company is obliged to pay |
| UGL a total sum of approximately HK$48,260,000 (excluding |
| amounts for variations and additional works). The |
| Supplemental Agreement, inter alia, extended the scope of |
| the Refurbishment Works of the Original Contract and the |
| consideration payable by the Company to UGL for such |
| extension is HK$83,736,143 (the "Contract Sum"). The total |
| sum under the Original Contract plus the Contract Sum is |
| to be paid on a scheduled basis set out in the |
| Supplemental Agreement, subject to adjustments to take |
| account of variations made by the Engineer to the scope of |
| the Maintenance Services. The maximum aggregate amount |
| payable annually by the Company under the Original |
| Contract and the Supplemental Agreement is approximately |
| HK$72,390,000.Under the terms of the Original Contract (as |
| amended and supplemented by the Supplemental Agreement), |
| the Company is obliged to effect "Contractor's All Risks" |
| and "Third Party Liability" insurance with a third party |
| liability limit of not less than HK$30,000,000. |
| Termination |
| If UGL fails to complete the Refurbishment Works within |
| the contract period, the Engineer may terminate the |
| contract by notice in writing to UGL but without prejudice |
| to any claims by the Company for breach of contract. |
+------------------------------------------------------------+
| REASONS FOR, AND BENEFITS OF, THE ORIGINAL CONTRACT AS |
| AMENDED AND SUPPLEMENTED BY THE SUPPLEMENTAL AGREEMENT |
+------------------------------------------------------------+
| The terms of the Original Contract were agreed upon |
| subsequent to a tender process that invited submissions |
| from a number of contractors, including UGL. |
| The Company regularly outsources certain services to third |
| parties that specialise in the type of work outsourced, |
| thereby improving the efficiency of the Company's |
| operations and allowing the Company to concentrate its |
| resources on its core business areas. UGL is a specialist |
| in the provision of construction, refurbishment and |
| maintenance services to the railway industry. |
| UGL is part of an Australian-listed group of engineering |
| and property services companies and is one of the Asia |
| Pacific region's leading providers of end-to-end passenger |
| rail solutions. UGL is also one of Asia Pacific's largest |
| and most experienced providers of rolling-stock and |
| infrastructure solutions to the passenger and freight rail |
| sectors. |
+------------------------------------------------------------+
| GENERAL |
+------------------------------------------------------------+
| As UGL is entitled to exercise 20% of the voting power at |
| any general meeting of MTM, it is a "substantial |
| shareholder" of MTM under Listing Rule 1.01. Under Listing |
| Rule 14A.11, a "connected person" is defined to include a |
| substantial shareholder of the listed issuer. Under |
| Listing Rule 14A.10(7) and Listing Rule 14.04(6), the |
| definition of "listed issuer" includes, unless the context |
| otherwise requires, the subsidiaries of such listed |
| issuer. Following the Company's acquisition of 60% of the |
| voting power at any general meeting of MTM, MTM is deemed |
| to be a subsidiary of the Company. UGL is therefore |
| treated as a "connected person" of the Company. Listing |
| Rule 14A.34 requires listed issuers to comply with the |
| disclosure and reporting requirements of Chapter 14A in |
| respect of continuing connected transactions and with |
| Listing Rules 14A.35(1) and 14A.35(2). |
+------------------------------------------------------------+
| The Original Contract (as amended by the Supplemental |
| Agreement) is therefore a continuing connected transaction |
| of the Company requiring the following to be complied with |
| under Chapter 14A of the Listing Rules: |
+------------------------------------------------------------+
| (a) this announcement to be made in accordance with |
| Rule 14A.47 of the Listing Rules; |
| (b) the independent non-executive Directors to review |
| the transactions under the Original Contract (as |
| supplemented and amended by the Supplemental Agreement) |
| every year and confirm in the Company's annual report that |
| such transactions have been entered into: |
+------------------------------------------------------------+
| (1) in the ordinary and usual course of the |
| business of the Company; |
+------------------------------------------------------------+
| (2) either on normal commercial terms or, if there |
| are not sufficient comparable transactions to judge |
| whether they are on normal commercial terms, on terms no |
| less favourable to the Company than terms available to or |
| from independent third parties; and |
+------------------------------------------------------------+
| (3) in accordance with the Original Contract (as |
| amended and supplemented by the Supplemental Agreement) on |
| terms that are fair and reasonable and in the interests of |
| the shareholders of the Company as a whole; |
+------------------------------------------------------------+
| (c) the auditors of the Company to provide a letter |
| to the Board each year (with a copy to the Stock Exchange |
| at least ten business days prior to the bulk printing of |
| the Company's annual report), confirming that the |
| transactions under the Original Contract (as amended and |
| supplemented by the Supplemental Agreement): |
+------------------------------------------------------------+
| (1) have been approved by the Board; |
+------------------------------------------------------------+
| (2) have been entered into in accordance with the |
| Original Contract (as amended and supplemented by the |
| Supplemental Agreement); and |
+------------------------------------------------------------+
| (3) have not exceeded the cap, being the maximum |
| aggregate amount payable annually by the Company under the |
| Original Contract and the Supplemental Agreement (as |
| referred to in the section above entitled "Obligations of |
| the Company"). |
+------------------------------------------------------------+
| (d) the Company to allow and procure that the |
| counterparty to the transactions will allow, the auditors |
| of the Company sufficient access to their records for the |
| purposes of giving the confirmation in paragraph (c) |
| above; |
+------------------------------------------------------------+
| (e) the Company to state in its annual report |
| whether its auditors have given the confirmation in (c) |
| above; and |
+------------------------------------------------------------+
| (f) the Company to notify the Stock Exchange |
| promptly and publish an announcement if it knows or has |
| reason to believe the independent non-executive Directors |
| and/or the auditors of the Company will not be able to |
| give the confirmations in (b) and (c) above. |
+------------------------------------------------------------+
| The Directors (including the independent non-executive |
| Directors) believe that the terms of the Original Contract |
| (as amended and supplemented by the Supplemental |
| Agreement) are fair and reasonable and in the interests of |
| the shareholders of the Company as a whole. |
+------------------------------------------------------------+
| PRINCIPAL ACTIVITIES OF THE COMPANY |
+------------------------------------------------------------+
| The principal activities of the Company and its |
| subsidiaries are: |
| (a) the operation of a modern railway system with |
| lines from Central to Tsuen Wan (Tsuen Wan Line), from Yau |
| Ma Tei to Tiu Keng Leng (Kwun Tong Line), from Po Lam and |
| LOHAS Park to North Point (Tseung Kwan O Line), from Chai |
| Wan to Sheung Wan (Island Line), from Hong Kong to Tung |
| Chung (Tung Chung Line), from Hong Kong to the Hong Kong |
| International Airport and then AsiaWorld-Expo both at Chek |
| Lap Kok (Airport Express Line), from Sunny Bay to |
| Disneyland Resort (Disneyland Resort Line), from Hung Hom |
| to the boundary at Lo Wu and Lok Ma Chau (East Rail Line), |
| from Tai Wai to Wu Kai Sha (Ma On Shan Line), from Hung |
| Hom to Tuen Mun (West Rail Line), the North-west Railway |
| (commonly known as Light Rail) in the North-West New |
| Territories of Tuen Mun, Tin Shui Wai and Yuen Long and an |
| intercity railway system between Hong Kong and some major |
| cities in the Mainland of China; |
| (b) property development, either as owner or as an |
| agent for KCRC, at locations relating to the railway |
| system including the Tseung Kwan O Line, the Ma On Shan |
| Line, the East Rail Line, the Light Rail and the West Rail |
| Line; |
| (c) related commercial activities, including the |
| letting of advertising and retail space, bandwidth |
| services on the railway telecommunication system, property |
| management and leasing management of investment properties |
| (including shopping centres, offices and residential |
| units); |
| (d) the investment in a 50% equity share in the |
| operation of the seven-year London Overground Concession |
| in the United Kingdom, consisting of four London railway |
| lines with connections into the London Underground |
| network; |
| (e) the investment in the operation (including |
| rolling stock maintenance which is undertaken by a 50:50 |
| joint venture) of the eight-year Stockholm Metro |
| Concession in Sweden, consisting of three lines, linking |
| the Swedish capital's central areas with surrounding |
| suburbs; |
| (f) the investment in a 60% equity share in the |
| operation and maintenance of the Melbourne train system in |
| Australia, consisting of 15 lines, linking Melbourne's |
| central business district with surrounding suburbs, under |
| a franchise agreement with an initial period of eight |
| years; |
| (g) the design and construction of the West Island |
| Line as an extension of the Island Line; |
| (h) the further design, construction, procurement |
| of services and equipment, testing, commissioning and all |
| other matters associated with bringing the Express Rail |
| Link into service; |
| (i) the planning and construction of future |
| extensions to the railway system and other related |
| infrastructure projects including the South Island Line, |
| the Kwun Tong Line Extension and the Shatin to Central |
| Link, as the major projects for which the Government has |
| confirmed policy support; |
| (j) the operation of the Tung Chung to Ngong Ping |
| Cable Car System and the Theme Village in Ngong Ping, |
| Lantau Island, Hong Kong; |
| (k) worldwide consultancy services covering all |
| areas of expertise required in the project management, |
| planning, construction, operation, maintenance and |
| up-grading of railways plus fare collection, property |
| integration/development advice including other property |
| related services and advice on generation of non-fare |
| revenues; |
| (l) investment in Octopus Holdings Limited, a |
| subsidiary of the Company, which has business activities |
| both in Hong Kong and overseas including the operation of |
| a smart card system by its subsidiary Octopus Cards |
| Limited for the collection of payments for both transport |
| and non-transport applications in Hong Kong; |
| (m) equity investments and long term operation and |
| maintenance contracts outside of Hong Kong; |
| (n) property management, shopping centre investment |
| and railway related property development business in the |
| Mainland of China; |
| (o) the investment in a 49% equity interest in the |
| construction and operations of Beijing Metro Line 4 in the |
| Mainland of China, under a 30 years concession agreement |
| with the Beijing Municipal Government, and future |
| operations and maintenance of Beijing Metro Daxing Line, |
| an extension of the Beijing Metro Line 4, under a |
| concession agreement with the Beijing Municipal Government |
| with an initial period of 10 years; |
| (p) the investment in, design and construction of, |
| Phase 2 of Shenzhen Metro Line 4 together with future |
| operations of Phase 1 and Phase 2 in the Mainland of |
| China, a double-track urban railway running from Futian |
| Checkpoint at the boundary between Hong Kong and Shenzhen, |
| Mainland of China, to Longhua New Town in Shenzhen, under |
| a 30 years Build-Operate-Transfer concession agreement |
| with the Shenzhen Municipal Government; and |
| (q) the investment in a 49% equity interest in |
| future operations and maintenance of Shenyang Metro Line |
| 1 and Line 2 in the Mainland of China, for a franchise fee |
| with a concession period of 30 years with Shenyang |
| Municipal Government. |
+------------------------------------------------------------+
| DEFINITIONS |
+------------------------------------------------------------+
| In this announcement, the following expressions have the |
| meanings set out below unless the context otherwise |
| requires: |
+------------------------------------------------------------+
| "Board" means the board of directors of the Company. |
+------------------------------------------------------------+
| "Director" means a member of the Board. |
+------------------------------------------------------------+
| "Engineer" means the Company's Chief Electrical and |
| Mechanical Engineer. |
+------------------------------------------------------------+
| "Hong Kong" means the Hong Kong Special Administrative |
| Region of the People's Republic of China. |
+------------------------------------------------------------+
| "JHL" means John Holland Melbourne Rail Franchise Pty |
| Limited. |
+------------------------------------------------------------+
| "KCRC" means the Kowloon-Canton Railway Corporation. |
+------------------------------------------------------------+
| "Listing Rules" means the Rules Governing the Listing of |
| Securities on The Stock Exchange of Hong Kong Limited. |
+------------------------------------------------------------+
| "MTM" means Metro Trains Melbourne Pty Ltd, a joint |
| venture company incorporated in Australia. |
+------------------------------------------------------------+
| "Original Contract" means the contract entered into on 30 |
| November 2007 between KCRC and UGL for the refurbishment |
| of Phase 1 LRVs and known as Contract No. C2007-0015. |
+------------------------------------------------------------+
| "Phase 1 LRVs" means a fleet of 69 light rail vehicles |
| commissioned in 1988. |
+------------------------------------------------------------+
| "Stock Exchange" means The Stock Exchange of Hong Kong |
| Limited. |
+------------------------------------------------------------+
| "Substantial Completion Certificate" means a certificate |
| issued when the Refurbishment Works are substantially |
| complete, and the date of substantial completion shall be |
| the date identified in the certificate. |
+------------------------------------------------------------+
| "Supplemental Agreement" means the contract entered into |
| on 26 February 2010 between the Company and UGL for the |
| extension of the Original Contract for a further period of |
| 16 months from 31 August 2011 and known as Contract No. |
| C2007-0015 for the Mid-Life Refurbishment of Phase 1 Light |
| Rail Vehicles, Supplementary Agreement No. 1. |
+------------------------------------------------------------+
| "UGL" means United Group Rail Services Limited (formerly |
| known as A Goninan & Co. Ltd). |
+------------------------------------------------------------+
| By order of the Board |
| Leonard Bryan Turk |
| Company Secretary |
| MTR Corporation Limited |
+------------------------------------------------------------+
| Hong Kong, 26 February 2010 |
+------------------------------------------------------------+
| Members of the Board: Dr. Raymond Ch'ien Kuo-fung |
| (Chairman)**, Chow Chung-kong (Chief Executive Officer), |
| Vincent Cheng Hoi-chuen*, Christine Fang Meng-sang*, |
| Edward Ho Sing-tin*, Ng Leung-sing*, Abraham Shek |
| Lai-him*, T. Brian Stevenson*, Professor Chan Ka-keung, |
| Ceajer (Secretary for Financial Services and the |
| Treasury)**, Secretary for Transport and Housing (Eva |
| Cheng)** and Commissioner for Transport (Joseph Lai |
| Yee-tak)** |
+------------------------------------------------------------+
| Members of the Executive Directorate: Chow Chung-kong, |
| William Chan Fu-keung, Chew Tai Chong, Thomas Ho |
| Hang-kwong, Lincoln Leong Kwok-kuen, Andrew McCusker and |
| Leonard Bryan Turk |
+------------------------------------------------------------+
| * independent non-executive Directors |
| ** non-executive Directors |
+------------------------------------------------------------+
| This announcement is made in English and Chinese. In the |
| case of any inconsistency, the English version shall |
| prevail. |
+------------------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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