REG - Air China Ld - CIRCULAR FOR THE EXTRAORDINARY GENERAL MEETING
01/12/2025 13:15
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RNS Number : 7231J Air China Ld 01 December 2025
If you are in any doubt as to any aspect of this circular, you should consult
a stockbroker or other registered dealer in securities, bank manager,
solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares of Air China Limited, you
should at once hand this circular and the form of proxy to the purchaser or
transferee or to the bank, stockbroker or other agent through whom the sale
was effected for transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this circular, 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 circular.
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
(1) CONNECTED TRANSACTION PROPOSED ISSUANCE OF A SHARES TO SPECIFIC INVESTORS
AND
(2) NOTICE OF EXTRAORDINARY GENERAL MEETING
Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders
BAOQIAO PARTNERS CAPITAL LIMITED
A letter from the Board is set out on pages 4 to 30 of this circular.
A letter from the Independent Board Committee, containing its advice to the
Independent Shareholders of the Company, is set out on pages 31 to 32 of this
circular.
A letter from the Independent Financial Adviser, containing its advice to the
Independent Board Committee and the Independent Shareholders of the Company,
is set out pages 33 to 52 of this circular.
A notice convening the EGM to be held at 11:00 a.m. on Tuesday, 16 December
2025 at The Conference Room C713, No. 30, Tianzhu Road, Shunyi District,
Beijing, the PRC, is set out on pages EGM-1 to EGM-3 of this circular. Whether
or not you are able to attend the EGM, you are requested to complete and
return the accompanying form of proxy in accordance with the instructions
printed thereon as soon as possible but in any event not less than 24 hours
before the time appointed for convening the EGM or any adjournment thereof.
Completion and return of the form of proxy will not preclude you from
attending and voting in person at the EGM or any adjournment thereof should
you so wish.
28 November 2025
Page
DEFINITIONS 1
LETTER FROM THE BOARD 4
I. Introduction 4
II. Proposed Issuance of A Shares to Specific Investors 5
III. EGM 28
IV. Recommendation of the Board 29
V. Additional Information 30
LETTER FROM THE INDEPENDENT BOARD COMMITTEE 31
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER 33
APPENDIX I - FEASIBILITY ANALYSIS REPORT ON THE USE OF PROCEEDS FROM THE
ISSUANCE OF A SHARES TO SPECIFIC INVESTORS IN 2025
I-1
APPENDIX II - REPORT ON USE OF PROCEEDS FROM PREVIOUS FUND-RAISING
ACTIVITIES
II-1
APPENDIX III - DILUTION OF THE COMPANY'S CURRENT RETURN BY THE ISSUANCE OF
SHARES TO SPECIFIC INVESTORS IN 2025, THE REMEDIAL MEASURES AND THE
UNDERTAKINGS MADE BY THE RELEVANT ENTITIES IN RESPECT OF SUCH
MEASURES
III-1
APPENDIX IV - FUTURE PLAN FOR DIVIDEND RETURN TO
THE SHAREHOLDERS FOR THE
COMING THREE YEARS (2025-2027) IV-1
APPENDIX V - GENERAL INFORMATION V-1
NOTICE OF EXTRAORDINARY GENERAL MEETING EGM-1
In this circular, unless the context otherwise requires, the following
expressions have the following meanings:
"Administrative Measures" the Administrative Measures for the Issuance and Registration of Securities by
Listed Companies 《( 上市公司證券發行註冊管理辦法》) issued by
CSRC (the China Securities Regulatory Commission Decree, No. 206)
"Articles of Association" the articles of association of the Company
"A Share(s)" the ordinary shares issued by the Company with a par value of RMB1.00 each,
which are listed on the Shanghai Stock Exchange
"A Shareholders" holders of the A Shares
"associate(s)" has the meaning ascribed to it under the Hong Kong Listing Rules
"Board" the board of Directors of the Company
"Cathay Pacific" Cathay Pacific Airways Limited
"CNACG" China National Aviation Corporation (Group) Limited, a company incorporated
under the laws of Hong Kong and a wholly-owned subsidiary of CNAHC and a
substantial shareholder of the Company, which directly holds approximately
11.18% of the Company's issued share capital as at the Latest Practicable Date
"CNAC Holding" China National Aviation Capital Holding Co., Ltd., a wholly-owned subsidiary
of CNAHC
"CNAHC" China National Aviation Holding Corporation Limited, a PRC state-owned
enterprise and the controlling shareholder of the Company, directly and
through its wholly-owned subsidiary CNACG, holding approximately 53.71% of the
issued share capital of the Company in aggregate as at the Latest Practicable
Date
"Company" or "Air China" Air China Limited, a company incorporated in the PRC, whose H Shares are
listed on the Hong Kong Stock Exchange as its primary listing venue and on the
Official List of the UK Listing Authority as its secondary listing venue, and
whose A Shares are listed on the Shanghai Stock Exchange. The Company is
principally engaged in providing air passenger, air cargo and related services
"connected person(s)" has the meaning ascribed to it under the Hong Kong Listing Rules
"CSRC" China Securities Regulatory Commission
"Director(s)" the director(s) of the Company
"EGM" the extraordinary shareholders' meeting of the Company to be convened at 11:00
a.m. on Tuesday, 16 December 2025 at The Conference Room C713, No. 30, Tianzhu
Road, Shunyi District, Beijing, the PRC for the Shareholders to consider and,
if thought fit, approve the resolutions in respect of, among other things, the
Issuance
"Group" the Company and its subsidiaries from time to time
"H Share(s) ordinary share(s) in the share capital of the Company, with a nominal value of
RMB1.00 each, which are listed on the Hong Kong Stock Exchange as primary
listing venue and have been admitted into the Official List of the UK Listing
Authority as secondary listing venue
"H Shareholders" holders of the H Shares
"HK$" Hong Kong dollar, the lawful currency of Hong Kong
"Hong Kong" Hong Kong Special Administrative Region of the PRC
"Hong Kong Listing Rules" The Rules Governing the Listing of Securities on the Hong Kong Stock Exchange
"Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited
"Independent Board Committee" a board committee comprising Mr. Xu Niansha, Mr. He Yun, Ms. Winnie Tam
Wan-chi and Mr. Gao Chunlei, all being the independent non-executive Directors
"Independent Financial Adviser" or "BaoQiao Partners" BaoQiao Partners Capital Limited, a corporation licensed to carry out Type 6
(advising on corporate finance) regulated activity under the SFO, being the
independent financial adviser to the Independent Board Committee and the
Independent Shareholders to advise on the Issuance of A Shares to Specific
Investors
"Independent Shareholders" the shareholders of the Company, other than CNAHC and its associates
"Issuance of A Shares to Specific Investors", "Issuance of Shares the Company's issuance of A Shares to CNAHC and CNAC Holding by way of
issuance of shares to specific investors
to Specific Investors", "Issuance of A Shares" or "Issuance"
"Issue Price" the issue price of the Issuance, being RMB6.57 per Share
"Latest Practicable Date" 25 November 2025, being the latest practicable date prior to the printing of
this circular for ascertaining certain information contained herein
"RMB" Renminbi, the lawful currency of the PRC
"SASAC of the State Council" the State Asset Supervision and Administration Commission of the State Council
of the PRC
"SFO" the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
"Shanghai Listing Rules" the Rules Governing the Listing of Stocks on Shanghai Stock Exchange
"Shanghai Stock Exchange" or "SSE" the Shanghai Stock Exchange
"Share(s)" shares of the Company
"Shareholder(s)" holder(s) of the shares of the Company
"Subscription Agreement" the conditional A share subscription agreement dated 30 October 2025 entered
into among the Company, CNAHC and CNAC Holding in respect of the Issuance of A
Shares to Specific Investors, pursuant to which, the Company agreed to issue,
and CNAHC and CNAC Holding agreed to subscribe for new A Shares in the amount
of not more than RMB20.00 billion at the Issue Price
"substantial shareholder(s)" has the meaning ascribed thereto under the Hong Kong Listing Rules
"Trading Day" a day on which the Shanghai Stock Exchange is open for dealing or trading in
securities
"%" per cent
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
Directors: Registered Address:
Executive Directors: 1st Floor-9th Floor 101 Building 1
Mr. Liu Tiexiang (Chairman) 30 Tianzhu Road Shunyi District Beijing, the PRC
Mr. Wang Mingyuan
Principal Place of Business in Hong Kong:
Non-Executive Directors: 5th Floor, CNAC House 12 Tung Fai Road
Mr. Cui Xiaofeng Mr. Patrick Healy Hong Kong International Airport Hong Kong
Employee Representative Director:
Mr. Xiao Peng
Independent Non-Executive Directors:
Mr. Xu Niansha Mr. He Yun
Ms. Winnie Tam Wan-chi
Mr. Gao Chunlei
28 November 2025
To the Shareholders
Dear Sir or Madam,
(1) CONNECTED TRANSACTION
PROPOSED ISSUANCE OF A SHARES TO SPECIFIC INVESTORS AND
(2) NOTICE OF EXTRAORDINARY GENERAL MEETING
I. INTRODUCTION
Reference is made to the announcement of the Company dated 30 October 2025 in
relation to, among others, the Issuance of A Shares to Specific Investors.
On 30 October 2025, the Board approved the Issuance of A Shares to Specific
Investors, pursuant to which the Company has entered into the Subscription
Agreement with CNAHC and CNAC Holding for the issuance of not more than
3,044,140,030 new A Shares (inclusive) to CNAHC and CNAC Holding aggregately
at the Issue Price (i.e. RMB6.57 per Share) with expected gross proceeds
(before deducting relevant issuance expenses) of not more than RMB20.00
billion (inclusive). Among which, CNAHC agreed to subscribe for no less than
761,035,008 new A Shares (inclusive), corresponding to a subscription amount
of no less than RMB5.00 billion (inclusive), and CNAC Holding agreed to
subscribe for no more than 2,283,105,022 new A Shares (inclusive),
corresponding to a subscription amount of no more than RMB15.00 billion
(inclusive).
The EGM will be convened by the Company for the Shareholders to consider and
approve the Issuance of A Shares to Specific Investors. In this regard,
resolutions to be proposed at the EGM consist (1) the resolution in relation
to the satisfaction of the Company of the conditions for the Issuance of A
Shares to Specific Investors; (2) the resolution in relation to the proposal
of the Issuance of A Shares to Specific Investors by the Company in 2025; (3)
the resolution in relation to the preliminary proposal of the Issuance of A
Shares to Specific Investors by the Company in 2025; (4) the resolution in
relation to the discussion and analysis report on the proposal of the Issuance
of A Shares to Specific Investors by the Company in 2025; (5) the resolution
in relation to the feasibility analysis report on the use of proceeds from the
Issuance of A Shares to Specific Investors by the Company in 2025; (6) the
resolution in relation to the related (connected) transaction concerning the
entering into of the conditional A share subscription agreement with specific
investors by the Company; (7) the resolution in relation to the report on the
use of proceeds from previous fund-raising activities of the Company; (8) the
resolution in relation to the dilution of the Company's current return by the
Issuance of Shares to Specific Investors in 2025, the remedial measures and
the undertakings made by the relevant entities in respect of such measures;
(9) the resolution in relation to future plan for dividend returns to the
Shareholders for the coming three years (2025-2027); and (10) the resolution
in relation to the authorization by the Shareholders' meeting to the Board and
its authorized person(s) to proceed with relevant matters in respect of the
Issuance of Shares to Specific Investors by the Company in their sole
discretion. The above resolutions No. 1, No. 7, No. 8 and No. 9 are ordinary
resolutions; the remaining resolutions are special resolutions.
The purpose of this circular is to provide you with further information on the
Issuance of A Shares to Specific Investors so that you may make an informed
decision on voting in respect of the relevant resolutions at the EGM.
II. PROPOSED ISSUANCE OF A SHARES TO SPECIFIC INVESTORS
(I) Details of Issuance of A Shares to Specific Investors
Pursuant to the proposal of the Issuance of A Shares to Specific Investors,
the Company has entered into the Subscription Agreement with CNAHC and CNAC
Holding for the issuance of not more than 3,044,140,030 new A Shares
(inclusive) to CNAHC and CNAC Holding aggregately at the Issue Price (i.e.
RMB6.57 per Share) with expected gross proceeds (before deducting relevant
issuance expenses) of not more than RMB20.00 billion (inclusive).
1. Proposal of the Issuance of A Shares to Specific Investors
Summary of the proposal of the Issuance of A Shares to Specific Investors is
set out as follows:
(1) Type and par value of Shares issued: The type of shares to be issued to specific investors is domestically listed
Renminbi ordinary shares (A Shares), with a nominal value of RMB1.00 per
Share.
The new A Shares to be issued pursuant to the Issuance of A Shares to Specific
Investors will rank pari passu with the existing A Shares in all respects.
(2) Method and time of issue: The Issuance of A Shares will be undertaken by way of issuance to specific
investors at an appropriate timing within the valid term after the review and
approval of the Shanghai Stock Exchange and upon obtaining the consent of
the CSRC for registration.
The consent of the CSRC for registration is valid for one year from the date
on which it is issued. The Company will submit the application for the
Issuance to the SSE as soon as practicable following the approval at the
shareholders' meeting, and will make further announcement(s) regarding the
relevant subsequent review progress.
(3) Subscribers and method of subscription: The subscribers under the Issuance of A Shares to Specific Investors are CNAHC
and CNAC Holding. CNAHC and CNAC Holding intend to subscribe in cash for all
the A Shares to be issued by the Company under the Issuance. Among which,
CNAHC intends to subscribe for no less than RMB5 billion and CNAC Holding
intends to subscribe for no more than RMB15 billion.
As at the Latest Practicable Date, since CNAHC is the controlling shareholder
of the Company and CNAC Holding is a wholly owned subsidiary of CNAHC, CNAHC
and CNAC Holding are connected persons of the Company and the Issuance of A
Shares to Specific Investors will constitute a connected transaction of the
Company under Chapter 14A of the Hong Kong Listing Rules. The Company shall
comply with relevant regulatory rules, as well as the respective transaction
approval and disclosure procedures.
(4) Issue Price method: and pricing The pricing benchmark date (the "Pricing Benchmark Date") for the Issuance of
A Shares to Specific Investors shall be the date on which the resolution(s) of
the ninth meeting of the seventh session of the Board was
announced, being 31 October 2025.
The price for the Issuance of A Shares to Specific Investors is RMB6.57 per
Share, which is not lower than the higher of 80% of the average trading price
of A Shares over the
20 Trading Days prior to the Pricing Benchmark Date (Note 1) and the Company's
audited net assets per share attributable to ordinary shareholders of the
parent company (Note 2) as at the end of the most recent period (calculation
is rounded to two decimal places
according to the "round up method").
Notes:
1. The average trading price of A Shares over the
20 Trading Days prior to the Pricing Benchmark Date = the total trading value
of A Shares over the 20 Trading Days prior to the Pricing Benchmark Date ÷
the total trading volume of A Shares over the 20 Trading Days prior to the
Pricing Benchmark Date.
2. The net assets per share attributable to ordinary shareholders of
the parent company
= total equity attributable to the shareholders of the parent company ÷
number of total issued ordinary shares of the Company.
The above pricing principle of the Issue Price was determined mainly based on
the requirements of the Administrative Measures.
For illustrative purpose, the Issue Price (i.e. RMB6.57 per Share) represents:
(i) a discount of approximately 18.49% to the closing price of A
Shares at the Latest Practicable Date (i.e. RMB8.06 per A Share);
(ii) a discount of approximately 23.16% to the closing price of A Shares
(i.e. RMB8.55 per A Share) as at the date of Board meeting (i.e. 30 October
2025);
(iii) a discount of approximately 19.93% compared to the average trading
price of A Shares over the 20 Trading Days immediately prior to the Pricing
Benchmark Date (i.e. approximately RMB8.20 per A Share);
(iv) a premium of approximately 153.92% over the audited net assets per
share attributable to ordinary shareholders of the parent company as at 31
December 2024 (i.e. approximately RMB2.59 as prepared in accordance with the
PRC Accounting Standards for Business Enterprises); and
(v) a premium of approximately 147.32% over the unaudited net assets per
share attributable to ordinary shareholders of the parent company as at 30
September 2025 (i.e. approximately RMB2.66 which was prepared in accordance
with the PRC Accounting Standards for Business Enterprises).
Considering that (i) the Issue Price is determined under the pricing principle
in compliance with relevant regulatory requirements of the CSRC; (ii) the
discount of the Issue Price to the average trading price of A Shares over the
20 Trading Days immediately prior to the Pricing Benchmark Date is less than
20%; (iii) the Issue Price represents a premium over the net asset value per
share as at the end of the most recent period; (iv) the theoretical dilution
effect (as defined under Rule 7.27B of the Hong Kong Listing Rules) of the
Issuance is approximately -2.22%, and the cumulative theoretical dilution
effect of the Issuance and the 2024 Issuance of A Shares is approximately
-1.90%; and (v) the recent trading prices of the A Shares, the Board is of the
view that the Issue Price is fair and reasonable.
The net price to be received by the Company for each new A Share to be issued
will be determined and disclosed in accordance with the requirements of the
Hong Kong Listing Rules upon completion of the Issuance of A Shares to
Specific Investors and after the relevant expenses incurred or to be incurred
in relation to the Issuance of A Shares to Specific Investors have been
ascertained.
In the event that the Company distributes dividend, issues bonus shares,
converts capital reserve into share capital or carries out any other ex-right
or ex-dividend activities between the announcement date of the Board
resolution for the Issuance and the issuance date, the Issue Price will be
adjusted accordingly. The adjustment formula is as follows:
1. when only cash dividend is paid: P(1)=P(0)-D
2. when only bonus shares are issued or capital reserve is converted
into share capital:
P(1)=P(0)/(1+N)
3. when the above two items are carried out simultaneously:
P(1)=(P(0)-D)/(1+N)
whereas P(0) represents the Issue Price before adjustment, N represents the
number of bonus shares or capital reserve conversion per share, D represents
dividend per share and P(1) represents the adjusted Issue Price.
As at the Latest Practicable Date, the Company has no plan to distribute
dividend, issue bonus shares, convert capital reserve into share capital or
carry out any other ex-right or ex-dividend activities between the
announcement date of the Board resolution for the Issuance and the issuance
date.
(5) Number of issuance: The number of Shares to be issued under the Issuance of A Shares to Specific
Investors shall be no more than 3,044,140,030 (inclusive), which shall not
exceed 30% of the total share capital of the Company prior to the Issuance.
In the event that the Company distributes dividend, issues bonus shares,
converts capital reserve into share capital or carries out any other ex-right
or ex-dividend activities leading to changes in the Issue Price between the
announcement date of the Board resolution for the Issuance of A Shares and the
issuance date, the number of Shares to be issued under the Issuance of A
Shares to Specific Investors will be adjusted accordingly. The number of A
Shares to be issued to the specific investors shall be subject to the final
consent of the CSRC for registration.
If the proposed amount of proceeds or the number of shares to be issued under
the Issuance is adjusted due to changes in regulatory policies or due to
requirements of the issuance review or registration documents, the number of
shares to be issued under the Issuance shall be adjusted accordingly. In such
cases, the Board is authorized by the Shareholders' meeting to determine the
final number of shares to be issued in consultation with the sponsor (the lead
underwriter) based
on the actual circumstances.
The Company will announce such adjustment to the number of new A Shares to be
issued under the Issuance of A Shares to Specific Investors in a timely
manner, and will continue to strictly maintain the minimum public float in
compliance with the Hong Kong Listing Rules and the consent granted by the
Hong Kong Stock Exchange (being 24.20%).
(6) Lock-up arrangement: Upon the completion of the Issuance of Shares to Specific Investors, the
shares acquired by the subscribers, CNAHC and CNAC Holding, through the
Issuance shall not be transferred for a period of 18 months from the date of
completion of the Issuance of Shares to Specific Investors. Any shares derived
by the subscribers from the Issuance of Shares to Specific Investors through
stock dividends distributed by the Company, capitalization of capital reserves
or similar circumstances shall also be subject to the aforementioned lock-up
arrangement. If the regulatory authorities governing the Issuance of Shares to
Specific Investors impose additional requirements regarding the lock-up period
for shares subscribed by the subscribers or the transfer of shares upon
expiration of the lock-up period, the aforementioned lock-up period shall be
adjusted accordingly in accordance with the policies of the securities
regulatory authorities.
Upon the expiration of the lock-up period, the subscribers shall comply with
the relevant provisions of laws, regulations, rules, normative documents
including the Company Law, the Securities Law, the Shanghai Listing Rules, and
the Articles of Association when reducing their holdings of Shares obtained
through the Issuance of Shares to Specific
Investors.
(7) Listing venue: The A Shares to be issued to the specific investors will be listed and traded
on the main board of the SSE upon expiration of the lock-up period.
(8) Arrangement relating to t h e a c c u m u l a t e d undistributed The accumulated undistributed profits of the Company prior to the Issuance of
profits prior to the Issuance: A Shares to Specific Investors shall be shared by both new and existing
shareholders on a pro-rata basis according to their respective shareholdings
upon completion of the Issuance of A Shares to Specific Investors.
(9) Amount and use of proceeds: Gross proceeds to be raised from the Issuance of A Shares to Specific
Investors will be not more than RMB20.00 billion (inclusive), all the net
proceeds of which are used for debt repayment and working capital
replenishment after deducting the relevant issuance expenses.
The specific amount of the net proceeds from the Issuance will be determined
and disclosed in accordance with the Hong Kong Listing Rules upon completion
of the Issuance, after the number of shares issued, the amount of total
proceeds and the related expenses incurred in connection with the Issuance are
finalized.
The net proceeds from the Issuance are intended to be used in full for debt
repayment and working capital replenishment, which is an integral arrangement
aimed at enhancing the Company's financial stability. As of 30 September 2025,
based on the PRC Accounting Standards, the Group's interest-bearing debts
exceeded RMB230 billion, with short-term borrowings and non-current
liabilities due within one year totaling over RMB52 billion. The Company will
utilize the net proceeds in accordance with their intended use as soon as
practicable after receipt and will disclose the subsequent use of the net
proceeds in periodic reports in compliance with the Hong Kong Listing Rules.
(10) Validity period of the resolution on the Issuance: The resolution on the Issuance of A Shares to Specific Investors shall remain
in full force and effect for a period of 12 months from the date on which the
issuance proposal for the Issuance of Shares to Specific Investors is approved
at the shareholders' meeting of the Company. If the national laws,
administrative regulations, departmental rules or normative documents provide
new requirements on the issuance of shares to specific investors, the Company
will adjust accordingly in accordance with the new requirements.
The Company will complete the issuance within the validity period of such
resolution.
2. The Subscription Agreement
Principal terms of the Subscription Agreement are set out as below:
(1) Parties: (i) The Company (as the issuer); and
(ii) CNAHC (as the subscriber); and
(iii) CNAC Holding (as the subscriber).
(2) Date: 30 October 2025
(3) Subscription Price: CNAHC and CNAC Holding shall subscribe for new A Shares at the Issue Price
(i.e. RMB6.57 per Share).
In the event that the Company distributes dividend, issues bonus shares,
converts capital reserve into share capital or carries out any other ex-right
or ex-dividend activities between the announcement date of the Board
resolution(s) of the Company for the Issuance and the issuance date, the Issue
Price will be adjusted accordingly. The adjustment formula
is as follows:
1. when only cash dividend is paid, adjusted according to the
following formula:
P(1)=P(0)-D
2. when only bonus shares are issued or capital reserve is
converted into share capital, adjusted according to the following formula:
P(1)=P(0)/(1+N)
3. when the above two items are carried out simultaneously,
adjusted according to the following formula:
P(1)=(P(0)-D)/(1+N)
whereas P(0) represents the Issue Price before adjustment, N represents the
number of bonus shares or capital reserve conversion per share, D represents
dividend per share and P(1) represents the adjusted Issue Price.
(4) Subscription number and amount: The number of A Shares to be issued under the Issuance is not more than
3,044,140,030 shares (inclusive), which shall not exceed 30% of the total
share capital of the Company prior to the Issuance. In the event that the
Company distributes dividend, issues bonus shares, converts capital reserve
into share capital or carries out any other ex-right or ex-dividend activities
leading to changes in the Issue Price between the announcement date of the
Board resolution(s) for the Issuance and the issuance date, the number of A
Shares to be issued under the Issuance will be adjusted accordingly. The
number of A Shares to be issued under the Issuance is subject to the final
consent of the CSRC for registration.
If the proposed amount of proceeds or the number of shares to be issued under
the Issuance is adjusted due to changes in regulatory policies or due to
requirements of the issuance review or registration documents, the number of
shares to be issued under the Issuance shall be adjusted accordingly. In such
cases, the Board is authorized by the Shareholders' meeting to determine the
final number of shares to be issued in consultation with the sponsor (the lead
underwriter) based
on the actual circumstances.
CNAHC and CNAC Holding will subscribe for all A Shares to be issued by the
Company under the Issuance, with a subscription amount equal to the gross
proceeds of the Issuance, which shall not be more than RMB20.00 billion
(inclusive). Among which, CNAHC subscribes for no less than 761,035,008 A
Shares (inclusive) under the Issuance, corresponding to a subscription amount
of no less than RMB5.00 billion (inclusive), and CNAC Holding subscribes for
no more than 2,283,105,022 A Shares (inclusive) under the Issuance,
corresponding to a subscription amount of no more than RMB15.00 billion
(inclusive). The final number of A Shares under the Issuance of the Company to
be subscribed by each of CNAHC and CNAC Holding and the corresponding
subscription amounts will be determined separately through consultations
between the parties and the sponsor (the lead underwriter) of the
Issuance.
(5) Payment method and a r r a n g e m e n t s f o r accumulated undistributed (i) Upon satisfaction of all conditions precedent under the Subscription Agreement
profits: and following receipt of the Company's payment notice, CNAHC and CNAC Holding
shall, in accordance with the requirements specified in the payment notice
(including the payment deadline and other matters), remit the full
subscription amount in a single cash payment to the bank account specifically
established by the sponsor (the lead underwriter) for the Issuance of A Shares
to Specific Investors. Such payment shall be made within five (5) business
days upon receipt of the payment notice. Upon completion of capital
verification and deduction of related expenses, the proceeds shall be
transferred to the Company's designated deposit account for proceeds of the
Issuance.
(ii) The accumulated undistributed profits of the Company prior to the Issuance
shall be shared by both new and existing shareholders on a pro-rata basis
according to their respective shareholdings upon completion of the Issuance.
(6) Registration for issuing the subscribed shares and lock-up: (i) Within 15 business days from the date the Company receives the subscription
amount for the Issuance of A Shares from CNAHC and CNAC Holding, the Company
shall engage an accounting firm with securities-related practice
qualifications to conduct a capital verification, and promptly complete the
registration procedures for the relevant industrial and commercial changes as
well as the share registration procedures with China Securities Depository and
Clearing Corporation Limited, thereby enabling CNAHC and CNAC Holding to
become the legal holders of the subscribed shares.
(ii) From the date of registration of the subscribed shares, CNAHC and CNAC Holding
shall legally own the subscribed shares and enjoy the corresponding
shareholder's rights.
(iii) CNAHC and CNAC Holding undertake that, Shares obtained by CNAHC and CNAC
Holding through the Issuance will not be transferred in any manner within 18
months from the completion date of the Issuance (the " Lock-up Period"). If
the CSRC and the exchange(s) on which Shares of the Company are listed have
differing provisions, CNAHC and CNAC Holding agree to make adjustments based
on the Company's actual circumstances, provided such adjustments comply with
the relevant regulations.
Any additional Shares of the Company subscribed by CNAHC and CNAC Holding
resulting from the Company's issuance of bonus shares or conversion of capital
reserve into share capital after completion of the Issuance shall a l s o b e
s u b j e c t t o t h e aforementioned Lock-up Period arrangements. Following
the expiration of the Lock-up Period, the relevant Shares shall remain subject
to rules of regulatory authorities including the CSRC and the Shanghai Stock
Exchange.
(7) Conditions precedent for t h e S u b s c r i p t i o n Agreement: The parties agreed and confirmed that, unless all parties otherwise consent in
writing to a waiver, and if such waiver is permitted under applicable laws and
regulations, the Subscription Agreement will be established upon signing and
affixing of seals by the legal representative or authorized representative of
the parties and take effect when all the following conditions are satisfied:
(i) matters relating to the Issuance having been approved by
the Board and the shareholders' meeting of the Company;
(ii) matters relating to subscribing the shares to be issued
under the Issuance having been approved by the internal decision-making
body(ies) of CNAHC and CNAC Holding;
(iii) matters relating to the Issuance having been approved by the
body performing the duty of supervision and administration of state-owned
assets;
(iv) matters relating to the Issuance having been considered and
approved by the Shanghai Stock Exchange; and
(v) the registration of the Issuance having been consented to by
the CSRC.
The effective date of the Subscription Agreement shall be the date on which
all the above conditions precedent are satisfied or waived.
As at the Latest Practicable Date, the Issuance of A Shares to Specific
Investors has been considered and approved by the Board and the respective
internal decision-making body(ies) of CNAHC and CNAC Holding, and has been
approved by the body performing the duty of supervision and administration of
state-owned assets. None of the other conditions under the
Subscription Agreement has been fulfilled.
In the event that the Issuance of A Shares to Specific Investors fails to
obtain the necessary consent, approval or registration from the Board and the
shareholders' meeting of the Company, the regulatory department for
state-owned assets or its authorized body, the Shanghai Stock Exchange and the
CSRC according to the laws, the Subscription Agreement shall be automatically
terminated and both parties shall not be liable to each other for breach of
contract.
As at the Latest Practicable Date, matters relating to the Issuance of A
Shares to Specific Investors are still subject to the consideration and
approval at the Shareholders' meeting of the Company, the review and approval
by the Shanghai Stock Exchange and the registration with the CSRC, and may be
implemented after obtaining the consent of the CSRC for registration.
Following the receipt of the CSRC's consent for registration, the Company will
apply to the Shanghai Stock Exchange and Shanghai Branch of China Securities
Depository and Clearing Corporation Limited for handling the share issuance,
registration and listing in accordance with the laws.
3. Dilutive Effects of the Issuance of A Shares to Specific Investors on the Shareholding Structure of the Company
As at the Latest Practicable Date, the Company has a total of 17,488,421,000
issued Shares, comprising 4,955,610,672 H Shares and 12,492,810,328 A Shares.
For illustration purpose only, set out below is the dilutive effects of the
Issuance of A Shares to Specific Investors on the shareholding structure of
the Company, assuming that (i) the size of proceeds raised from the Issuance
of A Shares to Specific Investors is no more than RMB20.00 billion based on
the issuance of 3,044,140,030 new A Shares at the Issue Price (i.e.
RMB6.57 per Share, among which, 761,035,008 shares will be subscribed for by
CNAHC and 2,283,105,022 shares will be subscribed for by CNAC Holding; and
(ii) no additional Shares will be issued by the Company after the Latest
Practicable Date until the completion of the Issuance of A Shares to Specific
Investors:
The above 3,044,140,030 new A Shares represent: (i) 24.37% and 17.45% of the
Company's existing issued A Shares and total issued Shares as at the Latest
Practicable Date, respectively; and (ii) 19.59% and 14.85% of the Company's
enlarged issued A Shares and enlarged total issued Shares upon completion of
the Issuance of A Shares to Specific Investors as above, respectively.
Immediately upon completion of the Issuance of A Shares to Specific Investors
As at the Latest Practicable Date
Approximate percentage of the total number of Approximate percentage of the total number of
Total number of Shares Shares in issue Total number of Shares Shares in issue
Shareholders held held
1. CNAHC and its associates: 9,370,724,929 53.71% 12,414,864,959 60.58%
(i) CNAHC 7,421,462,701 42.53% 8,182,497,709 39.93%
(A Shares)
(ii) CNACG 1,949,262,228 11.18% 1,949,262,228 9.51%
(i) 1,332,482,920 7.64% (i) 1,332,482,920 6.50%
(A Shares) (A Shares)
(ii) 616,779,308 3.54% (ii) 616,779,308 3.01%
(H Shares) (H Shares)
(iii) CNAC Holding -- -- 2,283,105,022 11.14%
(A Shares)
2. Cathay Pacific 2,633,725,455 15.09% 2,633,725,455 12.85%
(H Shares) (H Shares)
3. Public Shareholders: 5,443,970,616 31.20% 5,443,970,616 26.57%
(i) Public A Shareholders 3,738,864,707 21.43% 3,738,864,707 18.24%
(ii) Public H 1,705,105,909 9.77% 1,705,105,909 8.32%
Shareholders
Sub-total (H Shares): 4,955,610,672 28.40% 4,955,610,672 24.18%
Sub-total (A Shares): 12,492,810,328 71.60% 15,536,950,358 75.82%
Total: 17,448,421,000 100.00% 20,492,561,030 100.00%
Notes:
1. The percentages shown are rounded to the nearest two
decimal places. The percentage figures listed in the table above may not add
up to 100% due to rounding.
2. Upon completion of the Issuance of A Shares to Specific
Investors, the Company continues to comply with the minimum public float as
required by the Hong Kong Listing Rules and agreed by the Hong Kong Stock
Exchange (being 24.20%).
4. Proposed Amendments to the Articles of Association
Upon completion of the Issuance of A Shares to Specific Investors, there will
be changes in, among others, the registered capital and total number of shares
of the Company, and accordingly, the provisions of the Articles of Association
relating to the registered capital, total number of shares, etc. of the
Company will be amended to reflect such changes. The Board proposed to the
Shareholders to authorize the Board and its authorized person(s) to make
corresponding amendments to the relevant provisions in the Articles of
Association in accordance with the results of the Issuance of A Shares to
Specific Investors at the EGM.
5. Hong Kong Listing Rules Implications
The new A Shares under the Issuance of A Shares to Specific Investors will be
issued pursuant to the specific mandate to be sought from the Shareholders at
the EGM. The Issuance of A Shares to Specific Investors is conditional upon,
among others, the approval of the relevant resolutions at the EGM.
Since CNAHC is the controlling shareholder of the Company and CNAC Holding is
a wholly owned subsidiary of CNAHC, CNAHC and CNAC Holding are connected
persons of the Company, and the Issuance of A Shares to Specific Investors
constitutes a connected transaction of the Company under Chapter 14A of the
Hong Kong Listing Rules and is subject to the announcement, reporting and
independent shareholders' approval requirements.
An Independent Board Committee comprising all the independent non-executive
Directors has been formed to advise the Independent Shareholders on the
Issuance of A Shares to Specific Investors. BaoQiao Partners has been
appointed as the Independent Financial Adviser to advise the Independent Board
Committee and the Independent Shareholders on the same.
Mr. Liu Tiexiang, Mr. Wang Mingyuan, Mr. Cui Xiaofeng and Mr. Xiao Peng, being
the Directors of the Company also holding directorship in CNAHC, are
considered to have a material interest in the Issuance of A Shares to Specific
Investors and therefore have abstained from voting on the following Board
resolutions: (1) the resolution in relation to the proposal of the Issuance of
A Shares to Specific Investors by the Company in 2025; (2) the resolution in
relation to the preliminary proposal of the Issuance of A Shares to Specific
Investors by the Company in 2025; (3) the resolution in relation to the
discussion and analysis report on the proposal of the Issuance of A Shares to
Specific Investors by the Company in 2025; (4) the resolution in relation to
the feasibility analysis report on the use of proceeds from the Issuance of A
Shares to Specific Investors by the Company in 2025; (5) the resolution in
relation to the related (connected) transaction concerning the entering into
of the conditional A share subscription agreement with specific investors by
the Company; and (6) the resolution in relation to the authorization by the
Shareholders' meeting to the Board and its authorized person(s) to proceed
with relevant matters in respect of the Issuance of Shares to Specific
Investors by the Company in their sole discretion.
Save as mentioned above, none of the other Directors has a material interest
in the Issuance of A Shares to Specific Investors and was required to abstain
from voting on the relevant Board resolutions.
6. Reasons for and Benefit of the Issuance of A Shares to Specific Investors
After taking into consideration of the following factors, the Board considers
that it is fair and reasonable and in the interests of the Company and
Shareholders as a whole to raise funds by the Issuance of A Shares to Specific
Investors.
(I) Enhancing Air Transportation Service Capabilities to
Support the National Development Strategy
As a core central state-owned enterprise, the Company undertakes the mission
of building a national flagship carrier, supporting the implementation of
major decisions of the Central Committee of the Communist Party of China, and
facilitating key national strategies. Strengthening the Company's overall
capabilities is of strategic importance for the Company to seize industry
development opportunities, better serve national strategies, and actively
adapt to the rapidly changing market environment. As of 30 June 2025, the
Company operated a total fleet of 934 aircraft, with continuous optimization
of its fleet structure. The Company maintains an extensive and balanced global
and domestic route network, a high-value customer base and strong brand
influence. The Issuance will significantly improve the Company's
asset-liability structure, further enhance overall fleet operational
efficiency and safety, optimize the route network layout, strengthen coverage
supporting major national regional development strategies and markets along
the Belt and Road initiative, and consolidate the Company's core competitive
advantages in the air transport sector.
(II) Optimizing Asset-Liability Structure to Enhance Development
Quality
The aviation industry is notably capital-intensive, and maintaining a sound
capital structure is essential for the Company's long-term and stable
development. In recent years, the Company's capital structure has been under
significant pressure. At the end of 2022, 2023, 2024 and September 2025, the
Company's gearing ratios were 92.69%, 89.48%, 88.16% and 87.88%,
respectively, remaining at relatively high levels. The proceeds from the
Issuance will be used for debt repayment and working capital replenishment,
which will help the Company in controlling interest-bearing debt levels,
optimizing its asset-liability structure and enhancing financial stability. At
the same time, it will strengthen the Company's capital base, secure funding
for business development needs, enhance profitability and risk resilience, and
provide strong support for the Company's high-quality development.
(III) Full Subscription by Controlling Shareholder and its Associate
Demonstrates Development Confidence
As a core central state-owned enterprise in the aviation sector, the Company
places great importance on high-quality development and strives to enhance
operational efficiency and profitability, promoting the continuous growth in
investment value of the Company.
The Issuance will be fully subscribed by the controlling shareholder, CNAHC,
and its controlled subsidiary, CNAC Holding, as the subscribers. This will
further increase shareholdings of the controlling shareholder in the Company,
support the Company's high-quality development, demonstrate their firm
confidence in the Company's future prospects, and convey recognition of the
Company's value, and help boost market confidence while safeguarding the
interests of the Company's minority Shareholders.
The Directors (including the independent non-executive Directors) are of the
opinion that although the Issuance of A Shares to Specific Investors is not in
the ordinary and usual course of business of the Group, the terms of the
Subscription Agreement entered into by the Company pursuant to the proposal of
the Issuance of A Shares to Specific Investors are fair and reasonable and the
transaction contemplated thereunder is conducted on normal commercial terms or
better and in the interests of the Company and Shareholders as a whole.
Before deciding to conduct the Issuance of A Shares to Specific Investors, the
Company has considered the feasibility of alternative fund-raising methods
including debt financing and other forms of equity financing such as public
issuance of shares, placing of convertible bonds, rights issue and open offer.
However, considering (i) that public issuance of shares, placing of
convertible bonds, rights issue and open offer may incur higher transaction
costs and/or require longer time; (ii) that equity financing by way of H
Shares such as placing of new shares and convertible bonds, rights issue or
open offer may involve an issuance price at a relatively large discount to the
prevailing market price for A Shares; (iii) compared to debt financing, equity
financing is more conducive to optimizing the Company's capital structure,
reducing future debt repayment pressure and cash outflow, and facilitating the
implementation of the Company's long-term development strategy. Bank loans and
other forms of debt financing offer relatively limited amounts and come with
relatively higher financing costs. If the proceeds to be raised in the
Issuance were raised entirely through bank loans or other debt financing, it
would lead to a further increase in the Company's debt-to-asset ratio,
adversely affecting its financial stability and increasing financial risks.
Furthermore, the relatively high financial costs would erode the Company's
overall profit level, which is not conducive to the Company's steady
operation. Accordingly, the Company considers the Issuance of A Shares to
Specific Investors to be an appropriate fundraising method for the Group.
7. Fund-Raising Activities in the Past Twelve Months
On 10 December 2024, the Company issued 854,700,854 A Shares to CNAHC at the
issue price of RMB7.02 per share (the "2024 Issuance of A Shares"), raising
gross proceeds of RMB5,999,999,995.08 and the net proceeds of
RMB5,995,841,631.45. The aforementioned proceeds were intended to be used for
the introduction of 17 aircraft and replenishing working capital of the
Company. As at 30 September 2025, RMB5,973,146,757.25 has been utilized in
accordance with the prescribed purposes, with a remaining balance of RMB
29,910,724.79 in the fundraising account. The Company will continue to utilize
the remaining proceeds in accordance with the prescribed purposes. For
details, please refer to the announcements of the Company dated 22 December
2023, 26 January 2024, 21 October 2024, 12 November 2024 and 12 December 2025
and the circular of the Company dated 9 January 2024.
Save as disclosed above, the Company has not conducted any equity fund-raising
activities during the twelve months immediately before the Latest Practicable
Date.
8. General Information of the Parties
The Company
The Company is principally engaged in providing air passenger, air cargo and
related services.
CNAHC
As at the Latest Practicable Date, CNAHC directly holds 42.53% of the
Company's shares and holds 11.18% of the Company's shares through its
wholly-owned subsidiary CNACG, and is the controlling shareholder of the
Company. As at the Latest Practicable Date, the State-owned Assets Supervision
and Administration Commission of the State Council is the controlling
shareholder and de facto controller of CNAHC. CNAHC primarily operates all the
state-owned assets and state-owned equity interests invested by the State in
CNAHC and its invested entities, aircraft leasing and aviation equipment and
facilities maintenance businesses.
CNAC Holding
As at the Latest Practicable Date, CNAC Holding is a wholly owned subsidiary
of CNAHC. CNAC Holding is a limited liability company established in the PRC
whose principal businesses include financing and capital raising, asset and
investment management, centralized treasury management and value-added
financial services.
(II) Resolutions to be Proposed at the EGM
The resolutions with regard to the Issuance of A Shares to Specific Investors
to be proposed at the EGM are set out below:
1. esolution in Relation to the Satisfaction of the Company of the Requirements for the Issuance of A Shares to Specific Investors
The Board, in accordance with the requirements of the Company Law, the
Securities Law of the PRC, the Administrative Measures, the "Opinions on the
Application of Article 9, Article 10, Article 11, Article 13, Article 40,
Article 57 and Article 60 of the 'Administrative Measures for the Registration
of Securities Offerings by Listed Companies' - Securities and Futures Legal
Application Opinions No. 18" and other relevant laws, regulations and
normative documents, has conducted a line-by-line review of the Company's
actual circumstances and related matters, and confirmed that the Company meets
the conditions for the Issuance of A Shares to Specific Investors and has
approved the Company's application to proceed with the Issuance of A Shares to
Specific Investors.
The above resolution will be submitted, by way of ordinary resolution, for the
Shareholders' consideration and approval at the EGM.
2. Resolution in Relation to the Proposal of the Issuance of A Shares to Specific Investors by the Company in 2025
For details of the proposal of the Issuance of A Shares to Specific Investors,
please refer to the section headed " (I) Details of Issuance of A Shares to
Specific Investors - 1. Proposal of the Issuance of A Shares to Specific
Investors" as set out above.
The above resolution will be submitted, by way of special resolution, for the
Independent Shareholders' consideration and approval at the EGM.
3. Resolution in Relation to the Preliminary Proposal of the Issuance of A Shares to Specific Investors by the Company in 2025
For details of the preliminary proposal of the Issuance of A Shares to
Specific Investors, please refer to the overseas regulatory announcement of
the Company dated 30 October 2025.
The above resolution will be submitted, by way of special resolution, for the
Independent Shareholders' consideration and approval at the EGM.
4. Resolution in Relation to the Discussion and Analysis Report on the Proposal of the Issuance of A Shares to Specific Investors by the Company in 2025
For the discussion and analysis report of the Issuance of A Shares to Specific
Investors, please refer to the overseas regulatory announcement of the Company
dated 30 October 2025.
The above resolution will be submitted, by way of special resolution, for the
Independent Shareholders' consideration and approval at the EGM.
5. Resolution in Relation to the Feasibility Analysis Report on the Use of Proceeds from the Issuance of A Shares to Specific Investors by the Company in 2025
For the Feasibility Analysis Report on the Use of Proceeds of Issuance of A
Shares to Specific Investors in 2025 by the Company, please refer to the
"Feasibility Analysis Report on the Use of Proceeds from the Issuance of A
Shares to Specific Investors in 2025" contained in Appendix I to this
circular.
The above resolution will be submitted, by way of special resolution, for the
Shareholders' consideration and approval at the EGM.
6. Resolution in Relation to the Related (Connected) Transaction Concerning the Entering into of the Conditional A Share Subscription Agreement with Specific Investors by the Company
For the details of the resolution, please refer to the section headed " (I).
Details of Issuance of A Shares to Specific Investors - 2. The Subscription
Agreement" as set out above.
The above resolution will be submitted, by way of special resolution, for the
Independent Shareholders' consideration and approval at the EGM.
7. Resolution in Relation to the Report on Use of Proceeds from Previous Fund-raising Activities of the Company
For the Report on Use of Proceeds from Previous Fund-raising Activities of the
Company, please refer to Appendix II to this circular.
The above resolution will be submitted, by way of ordinary resolution, for the
Shareholders' consideration and approval at the EGM.
8. Resolution in Relation to the Dilution of the Company's Current Return by the Issuance of Shares to Specific Investors in 2025, the Remedial Measures and the Undertakings Made by the Relevant Entities in Respect of Such Measures
For the details in relation to the dilution of the Company's current return by
the Issuance of Shares to Specific Investors in 2025, the remedial measures
and the undertakings made by the relevant entities in respect of such
measures, please refer to Appendix III to this circular.
The above resolution will be submitted, by way of ordinary resolution, for the
Shareholders' consideration and approval at the EGM.
9. Resolution in relation to the Company's future plan for dividend returns to the Shareholders for the coming three years (2025 - 2027)
For the Company's future plan for dividend returns to the Shareholders for the
coming three years (2025 - 2027), please refer to Appendix IV to this
circular.
The above resolution will be submitted, by way of ordinary resolution, for the
Shareholders' consideration and approval at the EGM.
10. Resolution in Relation to the Authorization by the Shareholders' Meeting to the Board and its Authorized Person(s) to Proceed with Relevant Matters in Respect of the Issuance of Shares to Specific Investors by the Company in Their Sole Discretion
For the smooth implementation of the Issuance of A Shares to Specific
Investors, it is proposed to the EGM to authorize the Board and its authorized
persons to, in their sole discretion, proceed with the matters related to the
Issuance of A Shares to Specific Investors:
(i) to authorize the Board to handle all matters within the
scope of the resolution of the Shareholders' meeting and the consent of the
CSRC for registration relating to the proposal of the Issuance, including but
not limited to, the specific decision on the size of issuance, the timing of
issuance, start and end dates of the issuance, number of issuance, termination
of the issuance, the specific subscription method and subscription portions of
the Issuance of A Shares to Specific Investors, etc.;
(ii) to authorize the Board to handle all matters in relation to
the application for the approval of and registration with relevant authorities
for the Issuance, formulate, prepare, amend, improve and execute all
documentary materials relating to the Issuance, approve and handle the
information disclosure relating to the Issuance (including but not limited to
issue shareholders' circular and other related announcements and disclosure
documents);
(iii) to authorize the Board to adjust the specific arrangements
for the projects to be funded with the raised proceeds within the scope of the
approval of the shareholders' meeting;
(iv) in case of any new requirements of issuance to specific
investors by the laws, regulations and securities regulatory departments and
any changes of market conditions, to authorize the Board to adjust the
proposal of the Issuance and the application of the raised proceeds and
continue to handle the Issuance in accordance with the national regulations
and the requirements of governmental departments and securities regulatory
departments (including the review feedbacks to the application of the
Issuance), the market conditions and the actual operation conditions of the
Company, except for those subject to reconsideration of the shareholders'
meeting in accordance with the relevant laws and regulations and the Articles
of Association;
(v) to authorize the Board to open a special deposit account for
the raised proceeds and proceed with the capital verification procedures
related to the Issuance;
(vi) to authorize the Board to execute, submit, report and perform
the material contracts during the Issuance and the implementation of the
investment projects funded by the raised proceeds, including but not limited
to the subscription agreement, supplemental agreements to the subscription
agreement and other documents to be executed for the completion of the
transactions thereunder, the sponsor agreement, the underwriting agreement,
the proceed supervision agreement and the intermediaries' engagement
agreement, etc.;
(vii) to authorize the Board to handle matters on the share
registration, lock-up and listing and submission of relevant documents upon
the completion of the Issuance;
(viii) to authorize the Board to amend the relevant articles in
relation to registered capital, total share capital and others in the Articles
of Association upon the completion and the results of the Issuance, and carry
out relevant registration and filing procedures of the change of registered
capital and Articles of Association of the Company, including but not limited
the registration and filing of change in registered industrial and commercial
item, without the need to convene a shareholders' meeting;
(ix) to authorize the Board to handle all other matters in
relation to the Issuance.
To agree that the Board, after obtaining the aforesaid authorizations from the
shareholders' meeting, directly delegates the authority to the chairman or
vice-chairman of the Board of the Company and his authorized person(s) to
proceed with the aforesaid matters, i.e. the chairman or vice-chairman of the
Board of the Company will be granted the aforesaid authority from the Board
immediately upon the consideration and approval of this resolution at the
shareholders' meeting without convening a separate board meeting; and the
chairman or vice-chairman of the Board may delegate the authority to others
separately.
The above authorization shall remain valid for twelve (12) months from the
date on which this resolution is approved by the Shareholders at the EGM.
The above resolution will be submitted, by way of special resolution, for the
Independent Shareholders' consideration and approval at the EGM.
III. THE EGM
The Company will convene the EGM at 11:00 a.m. on Tuesday, 16 December 2025 at
The Conference Room C713, No. 30, Tianzhu Road, Shunyi District, Beijing, the
PRC to consider and, if thought fit, approve the resolutions in respect of,
among other things, the Issuance of A Shares to Specific Investors. Votes o
the resolutions to be considered at the EGM shall be taken by way of poll. A
form of proxy is also enclosed herein, and published on the websites of the
Hong Kong Stock Exchange (www.hkexnews.hk) (http://www.hkexnews.hk/) and the
Company (www.airchina.com.cn). (http://www.airchina.com.cn/) The notice of EGM
is reproduced in this circular.
CNAHC and CNACG have material interests in the Issuance of A Shares to
Specific Investors. As at the Latest Practicable Date, CNACG is a wholly-owned
subsidiary of CNAHC. As at the Latest Practicable Date, CNAHC and CNACG, in
aggregate, held 9,370,724,929 shares of the Company, representing
approximately 53.71% of the issued share capital of the Company, controlled or
were entitled to control over the voting right in respect of the shares held
by them in the Company. CNAHC and its associates (including CNACG) shall
therefore abstain from voting on the following resolutions approving the
Issuance of A Shares to Specific Investors at the EGM: (1) the resolution in
relation to the proposal of the Issuance of A Shares to Specific Investors by
the Company in 2025; (2) the resolution in relation to the preliminary
proposal of the Issuance of A Shares to Specific Investors by the Company in
2025; (3) the resolution in relation to the discussion and analysis report on
the proposal of the Issuance of A Shares to Specific Investors by the Company
in 2025; (4) the resolution in relation to the feasibility analysis report on
the use of proceeds from the Issuance of A Shares to Specific Investors by the
Company in 2025; (5) the resolution in relation to the related (connected)
transaction concerning the entering into of the conditional A share
subscription agreement with specific investors by the Company; and (6) the
resolution in relation to the authorization by the Shareholders' meeting to
the Board and its authorized person(s) to proceed with relevant matters in
respect of the Issuance of Shares to Specific Investors by the Company in
their sole discretion. To the best knowledge, information and belief of the
Directors, having made all reasonable enquiries, save as disclosed above, no
Shareholder has a material interest in the resolutions on matters relating to
the Issuance of A Shares to Specific Investors or should be required to
abstain from voting on the relevant resolutions at the EGM.
The register of members of H shares will be closed from Thursday, 11 December
2025 to Tuesday, 16 December 2025 (both days inclusive), during which no
transfer of H shares will be effected in order to determine the list of
holders of H shares of the Company who will be entitled to attend and vote at
the EGM. H Shareholders of the Company whose names appear on the H share
register of members of the Company at the close of business on Wednesday, 10
December 2025 are entitled to attend the EGM after completing the registration
procedures. In order to qualify for attendance at the EGM, all the transfer
documents must be lodged with the Company's H Share registrar, Computershare
Hong Kong Investor Services Limited, by 4:30 p.m. on Wednesday, 10 December
2025.
Whether or not you intend to attend the EGM, you are requested to complete and
return the form of proxy in accordance with the instruction printed thereon as
soon as practicable but in any event not less than 24 hours before the time
appointed for convening the EGM or any adjournment thereof. Completion and
return of the form of proxy will not preclude you from attending and voting in
person at the EGM or at any adjourned meeting thereof should you so wish.
IV. RECOMMENDATION OF THE BOARD
The Board considers that the matters to be proposed to the Shareholders for
voting at the EGM are in the interests of the Company and the Shareholders as
a whole. Accordingly, the Board recommends the Shareholders to vote in favour
of all the resolutions at the EGM.
V. ADDITIONAL INFORMATION
Your attention is drawn to the letter from the Independent Board Committee as
set out in this circular which contains its recommendation to the Independent
Shareholders as to the voting at the EGM regarding the Issuance of A Shares to
Specific Investors.
Your attention is also drawn on the letter from the Independent Financial
Adviser as set out in this circular, which contains, among others, its advice
to the Independent Board Committee and the Independent Shareholders in
relation to the Issuance of A Shares to Specific Investors as well as the
principal factors and reasons considered by it in concluding its advice.
Your attention is also drawn to the additional information set out in
Appendices to this circular.
The Company advises its Shareholders and potential investors to note that the Issuance of A Shares to Specific Investors is subject to certain conditions being satisfied, and therefore the Issuance of A Shares to Specific Investors may or may not proceed. Accordingly, they are advised to exercise caution when dealing in the securities of the Company.
By order of the Board
Air China Limited
Liu Tiexiang
Chairman
Beijing, the PRC
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
Independent Board Committee:
Mr. Xu Niansha Mr. He Yun
Ms. Winnie Tam Wan-chi Mr. Gao Chunlei
28 November 2025
To the Independent Shareholders of the Company
Dear Sir or Madam,
CONNECTED TRANSACTION
PROPOSED ISSUANCE OF A SHARES TO SPECIFIC INVESTORS
We refer to the circular dated 28 November 2025 published by the Company (the
"Circular") of which this letter forms a part. Terms defined in the Circular
shall have the same meanings in this letter unless the context otherwise
requires.
On 30 October 2025, the Board approved the Issuance of A Shares to Specific
Investors, pursuant to which the Company has entered into the Subscription
Agreement with CNAHC and CNAC Holding for the issuance of not more than
3,044,140,030 new A Shares (inclusive) to CNAHC and CNAC Holding aggregately
at the Issue Price (i.e. RMB6.57 per Share) with expected gross proceeds
(before deducting relevant issuance expenses) of not more than RMB20.00
billion (inclusive).
As disclosed in the Circular, since CNAHC is the controlling shareholder of
the Company and CNAC Holding is a wholly owned subsidiary of CNAHC, CNAHC and
CNAC Holding are connected persons of the Company and the Issuance of A Shares
to Specific Investors constitutes a connected transaction of the Company under
Chapter 14A of the Hong Kong Listing Rules and is subject to the announcement,
reporting and independent shareholders' approval requirements.
The terms and the reasons for the Issuance of A Shares to Specific Investors
are summarized in the Letter from the Board of the Circular.
We have been appointed to form the Independent Board Committee to make a
recommendation to the Independent Shareholders on whether the terms of the
Subscription Agreement are fair and reasonable for the Independent
Shareholders, whether the Issuance of A Shares to Specific Investors are in
the interests of the Company and its Shareholders as a whole, and how the
Independent Shareholders should vote in respect of the resolution(s) to
approve the Subscription Agreement and the transactions contemplated
thereunder at the EGM. BaoQiao Partners Capital Limited has been appointed as
the independent financial adviser to advise the Independent Board Committee
and the Independent Shareholders in this regard.
As your Independent Board Committee, we have discussed with the management of
the Company the reasons for the Issuance of A Shares to Specific Investors,
the terms of the Subscription Agreements and the basis for determining such
terms. We have also considered the key factors taken into account by the
Independent Financial Adviser in arriving at its opinion regarding the
Issuance of A Shares to Specific Investors as set out in the Letter from the
Independent Financial Adviser in the Circular, which we urge you to read
carefully.
The Independent Board Committee, after taking into account, among other
things, the advice of the Independent Financial Adviser, considers that
although the Issuance of A Shares to Specific Investors are not entered into
in the ordinary and usual course of business of the Group, the terms and
conditions of the Subscription Agreement are fair and reasonable, and the
connected transaction contemplated thereunder is on normal commercial terms or
better and is in the interests of the Company and the Shareholders (including
the Independent Shareholders) as a whole. Accordingly, the Independent Board
Committee recommends the Independent Shareholders to vote in favor of the
relevant resolutions as set out in the notice of the EGM respectively.
Yours faithfully
Independent Board Committee
Mr. Xu Niansha Mr. He Yun Ms. Winnie Tam Wan-chi Mr. Gao Chunlei
Independent Independent Independent Independent
non-executive Director non-executive Director non-executive Director non-executive Director
The following is the full text of a letter of advice from BaoQiao Partners
Capital Limited, the independent financial adviser to the Independent Board
Committee and the Independent Shareholders in respect of the proposed Issuance
of A Shares to Specific Investors which has been prepared for the purpose of
inclusion in this circular.
BAOQIAO PARTNERS CAPITAL LIMITED
Room C01, 26/F, United Centre,
95 Queensway, Admiralty, Hong Kong
28 November 2025
To the Independent Board Committee and the Independent Shareholders of Air
China Limited
Dear Sir or Madam,
CONNECTED TRANSACTION
PROPOSED ISSUANCE OF A SHARES TO SPECIFIC INVESTORS
INTRODUCTION
We refer to our engagement as the Independent Financial Adviser to advise the
Independent Board Committee and the Independent Shareholders in respect of the
proposed Issuance of A Shares to Specific Investors, details of which are set
out in the letter from the Board (the "Letter from the Board") contained in
the circular dated 28 November 2025 issued by the Company to the Shareholders
(the "Circular"), of which this letter forms part. Terms used in this letter
shall have the same meanings as defined in the Circular unless the context
requires otherwise.
On 30 October 2025, the Board approved the Issuance of A Shares to Specific
Investors, pursuant to which the Company has entered into the Subscription
Agreement with CNAHC and CNAC Holding for the issuance of not more than
3,044,140,030 new A Shares (inclusive) to CNAHC and CNAC Holding aggregately
at the Issue Price (i.e. RMB6.57 per A Share) with expected gross proceeds
(before deducting relevant issuance expenses) of no more than RMB20.00 billion
(inclusive). Among which, CNAHC agreed to subscribe for no less than
761,035,008 new A Shares (inclusive), corresponding to a subscription amount
of no less than RMB5.00 billion (inclusive), and CNAC Holding agreed to
subscribe for no more than 2,283,105,022 new A Shares (inclusive),
corresponding to a subscription amount of no more than RMB15.00 billion
(inclusive).
With reference to the Letter from the Board, since CNAHC is the controlling
Shareholder of the Company and CNAC Holding is the wholly-owned subsidiary of
CNAHC, both CNAHC and CNAC Holding are connected persons of the Company and
the Issuance of A Shares to Specific Investors constitutes a connected
transaction of the Company under Chapter 14A of the Hong Kong Listing Rules
and is subject to the announcement, reporting and the Independent
Shareholders' approval requirements.
The Independent Board Committee comprising Mr. Xu Niansha, Mr. He Yun, Ms.
Winnie Tam Wan-chi and Mr. Gao Chunlei has been established to advise the
Independent Shareholders on whether the terms of the Subscription Agreement
are fair and reasonable for the Independent Shareholders, whether the Issuance
of A Shares to Specific Investors is in the interests of the Company and its
Shareholders as a whole, and how the Independent Shareholders should vote in
respect of the resolution(s) to approve the Subscription Agreement and the
transactions contemplated thereunder at the EGM. We, BaoQiao Partners Capital
Limited, have been appointed as the Independent Financial Adviser to advise
the Independent Board Committee and the Independent Shareholders in this
respect.
OUR INDEPENDENCE
In the last two years, prior to the Latest Practicable Date, BaoQiao Partners
was appointed as the independent financial adviser by the Company (i) to
advise the independent board committee and the independent shareholders of the
Company in respect of the connected transaction involving the proposed
issuance of A Shares and H Shares to specific investors, as set out in the
circular of the Company dated 9 January 2024; (ii) to advise of the Board in
respect of the opinion pursuant to Rule 14A.52 of the Hong Kong Listing Rules,
as set out in the announcement and circular of the Company dated 30 October
2024 and
18 November 2024 respectively; (iii) to advise the independent board committee
and independent shareholders of the Company in respect of the continuing
connected transactions of the Group's passenger aircraft cargo businesses, as
set out in the circular of the Company dated 18 November 2024; and (iv) to
advise the independent board committee and independent shareholders of the
Company in respect of certain continuing connected transactions with CNACG, as
set out in the circular of the Company dated 4 June 2025.
As at the Latest Practicable Date, we do not have any relationship with, or
have any interest in the Company, CNAHC, CNACG, CNAC Holding and their
respective associates that could reasonably be regarded as relevant to our
independence. Apart from the normal professional fees payable to us in
connection with this appointment as the Independent Financial Adviser, no
other arrangement exists whereby we had received or will receive any fees or
benefits from the Company or any other parties that could reasonably be
regarded as relevant to our independence as defined under Rule 13.84 of the
Hong Kong Listing Rules.
BASIS OF OUR OPINION
In formulating our opinion to the Independent Board Committee and the
Independent Shareholders, we have relied on the statements, information,
opinions and representations contained or referred to in the Circular and the
information and representations as provided to us by the Directors and/or the
Company's management (the "Management"). We have reviewed, among others, the
announcement of the Company dated 30 October 2025 in relation the proposed
Issuance of A Shares to Specific Investors (the "Announcement"), the interim
report of the Company for the six months ended 30 June 2025 (the "2025 Interim
Report"), the annual report of the Company for the year ended 31 December 2024
(the "2024 Annual Report") and the information set out in the Circular.
We have assumed that all information and representations that have been
provided by the Directors and/or the Management, for which they are solely and
wholly responsible, are true and accurate at the time when they were made and
continue to be so as at the Latest Practicable Date. We have also assumed that
all statements of belief, opinion, expectation and intention made by the
Directors and/or the Management in the Circular were reasonably made after due
enquiry and careful consideration. We have no reason to suspect that any
material facts or information have been withheld or to doubt the truth,
accuracy and completeness of the information and facts contained in the
Circular, or the reasonableness of the opinions expressed by the Company, its
advisers and/or the Directors/the Management, which have been provided to us.
All Directors collectively and individually accept full responsibility,
includes particulars given in compliance with the Hong Kong Listing Rules for
the purpose of giving information with regard to the Group. The Directors,
having made all reasonable enquiries, confirm that to the best of their
knowledge and belief, the information contained in the Circular is accurate
and complete in all material respects and not misleading or deceptive, and
there are no other matters the omission of which would make any statement in
the Circular misleading.
We consider that we have been provided with sufficient information to reach an
informed view and to provide a reasonable basis for our opinion in compliance
with Rule 13.80 of the Hong Kong Listing Rules. We have not, however,
conducted any independent in-depth investigation into the business and affairs
of the Company, CNAHC, CNACG, CNAC Holding, and each of their respective
subsidiaries or associates, nor have we considered the taxation implication on
the Group or the Shareholders as a result of the Issuance of A Shares to
Specific Investors. Our opinion is necessarily based on financial, economic,
market and other conditions in effect, and the facts, information,
representations and opinions made available to us, at the Latest Practicable
Date. In addition, nothing contained in this letter should be construed as a
recommendation to hold, sell or buy any A Shares or H Shares or any other
securities of the Company.
This letter is issued for the information for the Independent Board Committee
and the Independent Shareholders solely in connection with their consideration
of approving the Subscription Agreement and the transactions contemplated
thereunder, and this letter, except for its inclusion in the Circular and for
publication on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk)
(http://www.hkexnews.hk/) and the Company (www.airchina.com.cn)
(http://www.airchina.com.cn/) as required under the Hong Kong Listing Rules,
is not to be quoted or referred to, in whole or in part, nor shall this letter
be used for any other purposes, without our prior written consent.
PRINCIPAL FACTORS AND REASONS CONSIDERED
In arriving at our opinion and recommendation on the terms of the Subscription
Agreement, we have taken into consideration the following principal factors
and reasons:
1. Background information on the Company, CNAHC and CNAC Holding
Information on the Company
The Company is principally engaged in providing air passenger, air cargo and
related services.
Set out below is a summary of the audited consolidated financial information
of the Group prepared in accordance with International Financial Reporting
Standards ("IFRS") for the years ended
31 December 2024 ("FY2024") and 31 December 2023 ("FY2023") as extracted from the 2024 Annual Report and the unaudited consolidated financial information of the Group for the six months ended 30 June 2025 ("HY2025") and 30 June 2024 ("HY2024") as extracted from the 2025 Interim Report:
FY2024 FY2023 HY2025 HY2024
RMB'million RMB'million RMB'million RMB'million
(Audited) (Audited) (Unaudited) (Unaudited)
Revenue
Airline Operations
- Passenger 151,789 130,517 73,196 73,137
- Cargo and mail 7,414 4,165 3,577 3,328
- Others 2,184 2,082 1,097 973
161,387 136,764 77,870 77,438
Other Operations 5,312 4,336 2,887 2,082
166,699 141,100 80,757 79,520
Loss before taxation (1,599) (1,650) (2,788) (3,286)
Loss attributable to equity shareholders of the Company
(233) (1,038) (1,805) (2,779)
As at 31 December As at 30
June
2024 2025
RMB'million RMB'million
(Audited) (Unaudited)
Total assets 345,750 347,539
Total liabilities 304,824 309,309
Net assets attributable to equity shareholders of the Company
45,128 42,624
Financial performance of the Group
FY2024 vs FY2023
According to the 2024 Annual Report, the Group reported a revenue of
approximately RMB166,699 million, representing a year-on-year increase of
approximately 18.14% or RMB25,599 million which was mainly attributable to the
increase in both the Group's air passenger revenue and air cargo and mail
revenue for FY2024 by around 16.30% or RMB21,272 million and 78.01% or
RMB3,249 million respectively as compared with that for FY2023. For FY2024, in
line with the increase in revenue, the Group's overall operating expenses
increased by approximately 17.98% or RMB26,188 million to approximately
RMB171,801 million for FY2024, which was attributable to the increase in the
number of take-off and landings, flying hours, the number of passengers and
the consumption of jet fuel in 2024.
As a result of the above, the Group reported loss before taxation of
approximately RMB1,599 million for FY2024 as compared to approximately
RMB1,650 million for FY2023 and loss for the year attributable to equity
shareholders of the Company decreased from approximately RMB1,038 million for
FY2023 to loss of approximately RMB233 million for FY2024. As disclosed in the
2024 Annual Report, losses allocated to non-controlling interests of the
Company (primarily attributable to the Group's non-wholly owned subsidiaries,
Shenzhen Airlines and Shandong Aviation) increased for FY2024.
HY2025 vs HY2024
According to the 2025 Interim Report, the Group recorded slight increase in
revenue of approximately 1.56% or RMB1,237 million from approximately
RMB79,520 million for HY2024 to approximately RMB80,757 million for HY2025.
Air traffic revenue (which comprised air passenger revenue and air cargo and
mail revenue) remained as the principal source of income of the Group for
HY2025 and the Group recorded air traffic revenue of approximately RMB76,773
and approximately RMB76,465 million for HY2025 and HY2024 respectively. For
HY2025, the Group's overall operating expenses increased by approximately
1.45% or RMB1,217 million to approximately RMB85,070 million for HY2025, as a
result of the combined effect of the decrease in jet fuel costs due to the
decrease in jet fuel prices and the increase in the number of take-off and
landings, flying hours, the number of passengers, etc. as a result of the
increase in revenue.
As a result of the above, the Group reported loss before taxation of
approximately RMB2,788 million for HY2025 as compared to approximately
RMB3,286 million for HY2024 and loss for the year attributable to equity
shareholders of the Company of approximately RMB1,805 million for HY2025 as
compared to approximately RMB2,779 million for HY2024.
Financial position of the Group
As at 30 June 2025 and 31 December 2024, the major assets of the Group include
(i) property, plant and equipment primarily consisting of self-owned aircrafts
and flight equipment, buildings and construction in progress of the Group
which amounted to approximately RMB124,153 million and RMB122,181 million
respectively; (ii) right-of-use assets primarily consisting of, among others
aircrafts and engines under finance leases and operating leases of the Group
which amounted to approximately RMB112,988 million and RMB118,832 million
respectively; (iii) cash and cash equivalents amounted to approximately
RMB25,331 million and RMB21,039 million respectively; and (iv) advance
payments for aircraft and flight equipment amounted to approximately RMB23,335
million and RMB24,690 million respectively. The carrying value of property,
plant and equipment, right-of-use assets, cash and cash equivalents and
advance payments for aircraft and flight equipment together accounted for
approximately 82.24% and 82.93% of the total assets of the Group as at 30 June
2025 and 31 December 2024 respectively.
As at 30 June 2025 and 31 December 2024, the Group recorded net current
liabilities of approximately RMB78,459 million and RMB96,923 million with
current ratio of 0.38 times and 0.30 times respectively. As at 30 June 2025,
the gearing ratio, calculated as total liabilities divided by total assets of
the Group was 89.00%, representing an increase of 0.84 percentage points from
that of 88.16% as at 31 December 2024. As at 30 June 2025, the Group's
interest-bearing borrowings amounted to approximately RMB165,752 million, of
which approximately RMB60,029 million were current liabilities, which mainly
included secured and unsecured borrowings of approximately RMB47,300 million
and unsecured corporate bond and short-term commercial papers of approximately
RMB12,730 million due within one year.
The net asset value (NAV) attributable to equity shareholders of the Company
prepared in accordance with IFRS and China Accounting Standards for Business
Enterprises ("CAS") was approximately RMB45,128 million and RMB45,147 million
as at 31 December 2024 and approximately RMB42,624 million and RMB42,642
million respectively as at 30 June 2025. The NAV per Share (including the A
Shares and the H Shares) under IFRS (the "IFRS NAV per Share") was
approximately RMB2.44 as at 31 December 2024 and RMB2.59 as at 30 June 2025
and CAS (the "CAS NAV per Share") was approximately RMB2.44 as at 31 December
2024 and RMB2.59 as at 30 June 2025.
Information on CNAHC and CNAC Holding
With reference to the Letter from the Board, as at the Latest Practicable
Date, CNAHC directly holds 42.53% of the Company's shares and holds 11.18% of
the Company's shares through its wholly-owned subsidiary CNACG, and is the
controlling shareholder of the Company. As at the Latest Practicable Date, the
State-owned Assets Supervision and Administration Commission of the State
Council is the controlling shareholder and de facto controller of CNAHC. CNAHC
primarily operates all the state-owned assets and state-owned equity interests
invested by the State in CNAHC and its invested entities, aircraft leasing and
aviation equipment and facilities maintenance businesses.
As at the Latest Practicable Date, CNAC Holding is a wholly-owned subsidiary
of CNAHC. CNAC Holding is a limited liability company established in the PRC
whose principal businesses include financing and capital raising, asset and
investment management, centralized treasury management and value-added
financial services.
2. Reasons for and benefits of the Issuance of A Shares to Specific Investors and Use of Proceeds
As set out in the Letter from the Board, as a core central state-owned
enterprise, the Company undertakes the mission of building a national flagship
carrier, supporting the implementation of major decisions of the Central
Committee of the Communist Party of China, and facilitating key national
strategies. As of 30 June 2025, the Company operated a total fleet of 934
aircraft, with continuous optimization of its fleet structure. The Issuance
will significantly improve the Company's asset-liability structure, further
enhance overall fleet operational efficiency and safety, optimize the route
network layout, strengthen coverage supporting major national regional
development strategies and markets along the Belt and Road initiative, and
consolidate the Company's core competitive advantages in the air transport
sector.
In addition, the aviation industry is notably capital-intensive, and
maintaining a sound capital structure is essential for the Company's long-term
and stable development. In recent years, the Company's capital structure has
been under significant pressure. At the end of 2022, 2023, 2024, and September
2025, the Company's gearing ratios were 92.69%, 89.48%, 88.16% and 87.88%,
respectively, remaining at relatively high levels. The net proceeds from the
Issuance will be used for debt repayment and working capital replenishment,
which will help the Company in controlling interest-bearing debt levels,
optimizing its asset-liability structure and enhancing financial stability. At
the same time, it will strengthen the Company's capital base, secure funding
for business development needs, enhance profitability and risk resilience, and
provide strong support for the Company's high-quality development.
The full subscription by the controlling shareholder, CNAHC, and its
controlled subsidiary, CNAC Holding demonstrate their firm confidence in the
Company's future prospects and help boost market confidence while safeguarding
the interests of the Company's minority Shareholders.
Details of the reasons for and benefits of the Issuance of A Shares to
Specific Investors are set out under section headed "6. Reasons for and
benefits of the Issuance of A Shares to Specific Investors" in the Letter from
the Board.
Use of proceeds
As set out in the Letter from the Board, the maximum amount of gross proceeds
to be raised from the Issuance of A Shares to Specific Investors will be no
more than RMB20.00 billion (inclusive), which will be used in full for debt
repayment and working capital replenishment after deducting issuance expenses,
which is an integral arrangement aimed at enhancing the Company's financial
stability. The Company will utilize the net proceeds in accordance with their
intended use as soon as practicable after receipt of funds and will disclose
the subsequent use of the net proceeds in periodic reports in compliance with
the Hong Kong Listing Rules.
Debt Repayment and Replenishing Working Capital
The net proceeds from the Issuance of A Shares to Specific Investors will be
used for debt repayment and working capital replenishment.
As we note from the 2025 Interim Report, as at 30 June 2025, the Group
reported, among the current liabilities, interest-bearing liabilities
(short-term borrowings, bonds and commercial papers due and payable within one
year) amounted to approximately RMB60,029 million with net current liabilities
of approximately RMB78,459 million. The proceeds from the Issuance of A Share
to Specific Investors can replenish the working capital of the Group thereby
improving its financial and liquidity position while it can also enable the
Company to flexibly and prudently arrange funds for fulfilling its debt
commitment and repayment for interest bearing loans, this could reduce the
financing costs and the gearing level of the Group. Thus, we consider the
Issuance can strengthen the Company's capital base and improve its ability to
withstand financial risk, herby supporting the business development of the
Group and promoting the sustained growth of the Company's principal business.
Having considered the above, we concur with the Company's view that the
Company is in need to recapitalise its equity and improve its financial and
liquidity position and we are of the view that there is a reasonable
commercial rationale for the proposed Issuance of A Shares to Specific
Investors and therefore the proposed Issuance of A Shares to Specific
Investors is in the interests of the Company and Shareholders as a whole.
Other fund-raising methods available to the Company
As set out in the Letter from the Board, other than the Issuance of A Shares
to Specific Investors, the Company has considered the feasibility of
alternative fund-raising methods including debt financing and other forms of
equity financing such as public issuance of shares, placing of convertible
bonds, rights issue and open offer.
As set out in the Letter from the Board, (i) public issuance of share, placing
of convertible bonds, rights issue and open offer may incur higher transaction
costs and/or require longer time; (ii) equity financing by way of H Shares
such as placing of new shares and convertible bonds, rights issue or open
offer may involve an issuance price at a relatively large discount to the
prevailing market price of A Shares; and (iii) compared to debt financing,
equity financing is more conducive to optimizing the Company's capital
structure, reducing future debt repayment pressure and cash outflow, and
facilitating the implementation of the Company's long-term development
strategy. Bank loans and other forms of debt financing offer relatively
limited amounts and come with relatively higher financing costs. If the
proceeds to be raised in the Issuance were raised entirely through bank loans
or other debt financing, it would lead to a further increase in the Company's
debt-to-asset ratio, adversely affecting its financial stability and
increasing financial risks. Furthermore, the relatively high financial costs
would erode the Company's overall profit level, which is not conducive to the
Company's steady operation.
Having considered the above, the Company considered that the Issuance of A
Shares to Specific Investors is an appropriate fundraising method for the
Group. Based on the foregoing, after considering (i) the existing gearing
ratio and borrowings of the Group; and (ii) debt financing and other forms of
equity financing are less favourable fundraising alternatives as compared to
the Issuance of A Shares to Specific Investors, we concur with the Company
that the Issuance of A Shares to Specific Investors is a more desirable
fundraising approach for the Group to improve its financial and liquidity
position and also avoid incurring interest expenses.
3. Issuance of A Share to Specific Investors
Pursuant to the proposal of the Issuance of A Shares to Specific Investors,
the Company has entered into the Subscription Agreement with CNAHC and CNAC
Holding for the issuance of not more than 3,044,140,030 new A Shares
(inclusive) to CNAHC and CNAC Holding aggregately at the Issue Price (i.e.
RMB6.57 per A Share) with expected gross proceeds (before deducting relevant
issuance expenses) of no more than RMB20.00 billion (inclusive).
(a) Principal terms of the Subscription Agreement
The principal terms and conditions of the Subscription Agreement are
summarised below.
Please refer to the "Letter from the Board" set out in the Circular for
further details.
Date
30 October 2025
Parties
(i) The Company (as the issuer);
(ii) CNAHC (as the subscriber); and
(iii) CNAC Holding (as the subscriber).
Number of A Shares to be subscribed for
The number of new A Shares to be issued under the Issuance is not more than
3,044,140,030 shares (inclusive), which shall not exceed 30% of the total
share capital of the Company prior to the Issuance. In the event that the
Company distributes dividend, issues bonus shares, converts capital reserve
into share capital or carries out any other ex-right or ex-dividend activities
leading to changes in the Issue Price between the announcement date of the
Board resolution(s) for the Issuance and the issuance date, the number of A
Shares to be issued under the Issuance will be adjusted accordingly. The
number of A Shares to be issued under the Issuance is subject to the final
consent of the CSRC for registration.
CNAHC and CNAC Holding will subscribe for all A Shares to be issued by the
Company under the Issuance, with a subscription amount equal to the gross
proceeds of the Issuance, which shall not be more than RMB20.00 billion
(inclusive). Among which, CNAHC subscribes for no less than 761,035,008 A
Shares (inclusive) under the Issuance, corresponding to a subscription amount
of no less than RMB5.00 billion (inclusive), and CNAC Holding subscribes for
no more than 2,283,105,022 A Shares (inclusive) under the Issuance,
corresponding to a subscription amount of no more than RMB15.00 billion
(inclusive). The final number of A Shares under the Issuance of the Company to
be subscribed by each of
CNAHC and CHAC Holding and the corresponding subscription amounts will be
determined separately through consultations between the parties and the
sponsor (the lead underwriter) of the Issuance.
As disclosed in the Letter from the Board, the maximum new A Shares to be
issued (i.e. 3,044,140,030 new A Shares), represents (1) 24.37% and 17.45% of
the Company's (a) existing issued A Shares; and (b) total issued Shares as at
the Latest Practicable Date, respectively; and (2) the 19.59% and 14.85% of
the Company's (a) enlarged issued A Shares; and (b) enlarged total issued
Shares upon completion of the Issuance of A Shares to Specific Investors,
respectively.
Issue Price and basis of determination
The Issue Price is RMB6.57 per A Share, which is determined after taking into
consideration of the following factors:
The Pricing Benchmark Date for the Issuance of A Shares to Specific Investors
shall be the date on which the resolution(s) of the ninth meeting of the
seventh session of the Board was announced, being 31 October 2025.
The Issue Price of the Issuance of A Shares to Specific Investors is RMB6.57
per A Share, which is not lower than the higher of 80% of the average trading
price of A Shares over the 20 Trading Days prior to the Pricing Benchmark Date
((Note) (1)) and the Company's audited net assets per share attributable to
ordinary shareholders of the parent company ((Note) (2)) as at the end of the
most recent period (i.e. 31 December 2024) (calculation is rounded to two
decimal places according to the "round up method").
Notes:
1. The average trading price of A Shares over the 20 Trading
Days prior to the Pricing Benchmark Date = the total trading value of A Shares
over the 20 Trading Days prior to the Pricing Benchmark Date ÷ the total
trading volume of A Shares over the 20 Trading Days prior to the Pricing
Benchmark Date.
2. The net assets per share attributable to ordinary
shareholders of the parent company = total equity attributable to the
shareholders of the parent company ÷ number of total issued ordinary shares
of the Company.
The above pricing principle of the Issue Price was determined mainly based on
the requirements of the Administrative Measures.
The net price to be received by the Company for each new A Share to be issued
will be determined and disclosed in accordance with the requirements of the
Hong Kong Listing Rules upon completion of the Issuance of A Shares to
Specific Investors and after the relevant expenses incurred or to be incurred
in relation to the Issuance of A Shares to Specific Investors have been
ascertained.
In the event that the Company distributes dividends, issues bonus shares,
converts capital reserve into share capital or carries out any other ex-right
or ex-dividend activities between the announcement date of the Board
resolution(s) of the Company for the Issuance and the issuance date, the Issue
Price will be adjusted accordingly. The adjustment formula is as follows:
1. when only cash dividend is paid: P(1)=P(0)-D
2. when only bonus shares are issued or capital reserve is
converted into share capital: P(1)=P(0)/(1+N)
3. when the above two items are carried out simultaneously:
P(1)=(P(0)-D)/(1+N) whereas P(0) represents the Issue Price before adjustment,
N represents the number of
bonus shares or capital reserve conversion per share, D represents dividend
per share and P(1) represents the adjusted Issue Price.
Conditions precedent to the Subscription Agreement
The parties agreed and confirmed that, unless all parties otherwise consent in
writing to a waiver, and if such waiver is permitted under applicable laws and
regulations, the Subscription Agreement will be established upon signing and
affixing of seals by the legal representative or authorized representative of
the parties and take effect when all the following conditions are satisfied:
(i) matters relating to the Issuance having been approved by
Board and the shareholders' meeting of the Company;
(ii) matters relating to the subscribing the shares to be issued
under the Issuance having been approved by the internal decision-making
body(ies) of CNAHC and CNAC Holding;
(iii) matters relating to the Issuance having been approved by the
body performing the duty of supervision and administration of state-owned
assets;
(iv) matters relating to the Issuance having been considered and
approved by the Shanghai Stock Exchange; and
(v) the registration of the Issuance having been consented by
the CSRC.
The effective date of the Subscription Agreement shall be the date on which
all the above conditions are satisfied or waived.
As disclosed in the Letter from the Board, as at the Latest Practicable Date,
the Issuance of A Shares to Specific Investors has been considered and
approved by the Board and the respective internal decision-making body(ies) of
CNAHC and CNAC Holding, and has been approved by the body performing the duty
of supervision and administration of state-owned assets. None of the other
conditions under the Subscription Agreement has been fulfilled.
In the event that the Issuance of A Shares to Specific Investors fails to
obtain the necessary consent, approval or registration from the Board and the
shareholders' meeting of the Company, the regulatory department for
state-owned assets or its authorized body, the Shanghai Stock Exchange and the
CSRC according to the laws, the Subscription Agreement shall be automatically
terminated and both parties shall not be liable to each other for breach of
contract.
Lock-up Arrangement
Upon the completion of the Issuance of A Shares to Specific Investors, the
shares acquired by the subscribers, CNAHC and CNAC Holding, through the
Issuance shall not be transferred for a period of eighteen (18) months from
the date of completion of the Issuance of A Shares to Specific Investors
("Lock-up Period"). Any shares derived by the subscribers from the Issuance of
A Shares to Specific Investors through stock dividends distributed by the
Company, capitalization of capital reserves, or similar circumstances shall
also be subject to the aforementioned lock-up arrangement. If the regulatory
authorities governing the Issuance of A Shares to Specific Investors impose
additional requirements regarding the lock-up period for shares subscribed by
the subscribers or the transfer of shares upon expiration of the lock-up
period, the aforementioned Lock-up Period shall be adjusted accordingly in
accordance with the policies of the securities regulatory authorities.
Upon the expiration of the Lock-up Period, the subscribers shall comply with
the relevant provisions of laws, regulations, rules, normative documents,
including the Company Law, the Securities Law, the Shanghai Listing Rules and
the Articles of Association when reducing their holdings of Shares obtained
through the Issuance of A Shares to Specific Investors.
(b) Analysis of the principal terms of the Subscription Agreement
In order to assess the fairness and reasonableness of the principal terms of
the Subscription Agreement, we have performed the following analysis:
Review of historical A Share closing prices
We have analysed the historical closing price of the A Shares during the
period commencing from 31 October 2024 up to the Latest Practicable Date (the
"Historical Price Period"), being a period covering one year prior to the
Pricing Benchmark Date up to and including the Latest Practicable Date which
we consider a reasonable and sufficient period to provide a general and fair
overview of the recent trend of the closing price of the A Shares of the
Company free from the influence of, if any, short term market volatility when
assessing the Issue Price.
The following share price chart of the Company illustrates the daily closing
price of the A Shares as quoted on the Shanghai Stock Exchange including a
comparison with the Shanghai Stock Exchange Composite Index (the "SSE
Composite Index") during the Historical Price Period against the Issue Price:
Source: Bloomberg
Date Key Events
18 January 2025 (Saturday, a (A) Publication of pre-loss announcement results of annual for
FY2024 ("2024 Pre-Loss Announcement")
non-Trading Day)
28 March 2025 (B) Publication of annual report of 2024
15 July 2025 (C) Publication of pre-loss announcement of interim results for
HY2025
29 August 2025 (D) Publication of interim report of 2025
30 October 2025 (E) Date of Board Meeting
31 October 2025 (F) Pricing Benchmark Date
25 November 2025 (G) Latest Practicable Date
The A Shares were traded within a range between RMB6.85 per A Share and
RMB8.89 per A Share during the Historical Price Period with an average closing
price of approximately RMB7.70 per A Share. The lowest closing price of the A
Shares was RMB6.85 per A Share, recorded on 19 February 2025 and the highest
closing price of the A Shares of RMB8.89 per A Share, recorded on 10 December
2024.
The closing price of the A Shares generally showed an upward trend from 31
October 2024 to mid-December 2024, rising from RMB6.90 per A Share to a peak
of RMB8.89 per A Share on 10 December 2024. This was followed by a downward
trajectory and following the publication of the 2024 Pre-Loss Announcement on
18 January 2025, the closing prices of A Shares continued to decline, reaching
the lowest at RMB6.85 per A Share on 19 February 2025. The closing prices of A
Shares subsequently fluctuated between RMB6.86 per A Share and RMB8.12 per A
Share during the period after publication the 2024 Pre-Loss Announcement until
the early September 2025. Since then the closing prices of A Shares showed a
renewed upward trend broadly tracking the performance of the SSE Composite
Index during the same period. The A Shares were traded within a range between
RMB7.86 and RMB8.85 per A Share from the date of Board Meeting up to the
Latest Practicable Date.
Under the pricing mechanism of the Issuance of A Shares to Specific Investors
(the "Pricing Mechanism"), the Pricing Benchmark Date of the Issuance of A
Shares to Specific Investor shall be the announcement date of the
resolution(s) of the ninth meeting of the seventh session of the Board, being
31 October 2025. For the purpose of our analysis, the issue price would be at
least RMB6.56 per A Share (the "Floor Issue Price"), being the 80% of the
average trading price of the A Shares in the 20 trading days prior to the
Pricing Benchmark Date and the Issue Price of RMB6.57 per A Share represents a
premium of 0.15% over the Floor Issue Price.
The Issue Price of RMB6.57 per A Share represents:
(i) a discount of approximately 18.49% to the closing price A
Shares as at the Latest Practicable Date (i.e. RMB8.06 per A Share);
(ii) a discount of approximately 23.16% to the closing price of
A Shares (i.e. RMB8.55 per A Share) as at the date of the Board meeting (i.e.
30 October 2025);
(iii) a discount of approximately 19.93% compared to the average
trading price of A Shares in the 20 Trading Days immediately prior to the
Pricing Benchmark Date (i.e. approximately RMB8.20 per A Share);
(iv) a premium of approximately 153.92% over the audited net
assets per share attributable to ordinary shareholders of the parent company
as at 31 December 2024 (i.e. approximately RMB2.59 as prepared in accordance
with the CAS); and
(v) a premium of approximately 147.32% over the unaudited net
assets per share attributable to ordinary shareholders of the parent company
as at 30 September 2025 (i.e. approximately RMB2.66 as prepared in accordance
with the CAS).
Having considered that (i) the Pricing Mechanism were determined in compliance
with the regulatory requirements in relation to changes in state-owned shares
of listed companies set forth by the CSRC; (ii) the Issue Price is higher than
the Floor Issue Price; and (iii) the Issue Price represents a premium over the
net assets value per Share, we consider the Pricing Mechanism are acceptable.
Investors should also consider our analysis below to assess the fairness and
reasonableness of the Issue Price.
Comparison with comparable issuance
Pursuant to the Measures for Administration and Registration of the Issue of
Securities by Listed Companies
（《上市公司證券發行註冊管理辦法》） (the "Administrative
Measures") issued by CSRC on 17 February 2023, in which, among others, (i) the
issue price of A shares under issuance of A shares to Specific Investor shall
be not less than 80% of the average trading price of the company's shares
during the 20 trading days preceding the Pricing Benchmark Date; and (ii) the
pricing benchmark date shall be the Pricing Benchmark Date (the "Pricing
Criteria").
As disclosed in the Letter from the Board, the Issue Price shall be not less
than the higher of (i) 80% of the average trading price of the A Shares as
quoted on the Shanghai Stock Exchange in the 20 trading days immediately prior
to the Pricing Benchmark Date; and (ii) the Company's audited net assets per
share attributable to ordinary shareholders of the parent company as at the
end of the most recent period (i.e. 31 December 2024) and the Lock-up Period
for the Specific Investors is 18 months. Accordingly, we consider that such
basis of determination of the Issue Price and such lock-up period is in
compliance with the Administrative Measures.
To further assess the fairness and reasonableness of the principal terms of
the Subscription Agreement, we have compared the terms of the Issuance of A
Shares to Specific Investors against those of similar issuance of A shares to
specific targets (the "Transaction Comparable(s)") proposed by companies
listed on both (i) the Hong Kong Stock Exchange and (ii) either the Shenzhen
Stock Exchange or Shanghai Stock Exchange from 1 October 2024 up to the Latest
Practicable Date. We consider comparison of the terms of the Transaction
Comparables and that of the Subscription Agreement (in particular the Pricing
Mechanism and the Lock-up Period) to be fair and representative. To the best
of our knowledge, we have identified seven (7) Transaction Comparables, which
represent an exhaustive list under the above selection criteria and we
consider the sample size is sufficient to reflect the recent market practices.
Summarised below are our relevant findings:
Premium/ (discount) to the latest audited net asset value per share
attributable to the ordinary shareholders of the listed company as at the most
recent period prior to
Premium/ (discount) to the closing price as at the last trading day the issuance
immediately prior to the pricing benchmark
date
Additional basis for A Shares issue price (other than the
Basis for the Pricing Criteria)
Company Name (Stock code) Announce-ment Date determination of issue price Lock-up period
No. Issue Price Subscriber
1 China Longyuan Power Group Corporation Limited (916.HK) (001289.SZ) 30 October Not Specified N/A N/A Not less than 80% of the 20-day average trading price of the A-shares Not lower than the company's latest audited net asset value per share no more than 35 specific investors 6 months
immediately preceding the price benchmark date (i.e. the first day of the attributable to the ordinary shareholders of the listed company as at the most
2025 (Note 1) (Note 1) (Note 1) issuance period) recent
period prior to the issuance
2 Jiangsu Lopal Tech. Group Co., Ltd. 20 August Not Specified N/A N/A Not less than 80% of the 20-day average trading price of the A-shares N/A no more than 35 specific investors 6 months
immediately preceding the price benchmark date (i.e. the first day of the
(2465.HK) (603906.SH) 2025 (Note 1) (Note 1) (Note 1)
issuance period)
3 Bank of Communica-tions Co., Ltd. (3328.HK) (601328.SH) 30 March 2025 RMB8.71 18.34% (43.13%) Not less than 80% of the 20-day average trading price of the A-shares N/A the Ministry of Finance of PRC ("the MOF"), China National Tobacco Corporation 5 years
immediately preceding the price benchmark date (i.e. the first day of the and China Doublewin Investment Co., Ltd.
issuance period)
4 China 30 March 2025 RMB9.27 8.80% (30.07%) Not less than 80% of the 20-day average trading price of the A-shares N/A the MOF 5 years
immediately preceding the price benchmark date (i.e. the first day of the
Construction Bank Corporation (939.HK) (601939.SH)
issuance period)
Premium/ (discount) to the latest audited net asset value per share
attributable to the ordinary shareholders of the listed company as at the
most
recent period prior to
Premium/ (discount) to the closing price as at the last trading day
immediately prior to the pricing benchmark the issuance
date
Additional basis for A Shares issue price (other than the
Basis for the determination of issue price Pricing Criteria)
Company Name (Stock code) Announce-ment Date Lock-up period
No. Issue Price Subscriber
5 Postal Savings Bank of China Co., Ltd. (1658.HK) (601658.SH) 30 March 2025 RMB6.32 21.54% (39.14%) Not less than 80% of the 20-day average trading price of the A-shares N/A the MOF, China Mobile Communications Group Co., Ltd. and China State 5 years
immediately preceding the price benchmark date (i.e. the first day of the Shipbuilding Corporation Limited
issuance period)
6 Bank of China Limited (3988.HK) (601988.SH) 30 March 2025 RMB6.05 10.00% (36.50%) Not less than 80% of the 20-day average trading price of the A-shares N/A the MOF 5 years
immediately preceding the price benchmark date (i.e. the first day of the
issuance period)
7 COSCO SHIPPING 24 January RMB11.52 (9.79%) 53.23% Not less than 80% of the 20-day average trading price of the A-shares Not lower than the company's latest audited net asset value per share not more than 35 (inclusive of 35) specific investors, including COSCO 18 months for COSCO and 6 months for other target subscribers
immediately preceding the price benchmark date (i.e. the first day of the attributable to the ordinary shareholders of the listed company as at the SHIPPING, the
Energy Transportation Co., Ltd. 2025 issuance period) most
recent period prior to the indirect controlling Shareholder of the company.
(1138.HK) (600026.SH)
issuance
The Company 30 October RMB6.57 (23.16%) 153.92% Not less than 80% of the 20-day average trading price of the A-shares Not lower than the company's latest audited net asset value per share CNAHC, CNAC 18 months
immediately preceding the price benchmark date (i.e. the first day of the attributable to the ordinary shareholders of the listed company as at the
2025 issuance period) most Holding
recent period prior to the
issuance
Source: Website of the Stock Exchange (http://www.hkex.com.hk/)
(http://www.hkex.com.hk/)) Note:
1. Based on our review of the relevant circulars of the
Transaction Comparables, the issue price of the issuance shall be determined
through bidding. As the offer period had not commenced as at the Latest
Practicable Date, no issue price had yet been determined.
Based on our review, we noted that the basis for issue price for the
Transaction Comparables follows the Administrative Measures, which requires
that the issue price to be not less than 80% of the average trading price of
the A shares during the 20 trading days preceding the pricing benchmark date.
Further, the pricing mechanism of 2 out of 7 Transaction Comparables included
additional pricing basis, being the latest audited net asset value per share
attributable to shareholders of the company, representing the minimum issue
price in the event that the market price of A shares trades below their net
asset value per share. As such, we considered the Pricing Mechanism (i.e. the
Issue Price shall not be lower than the higher of 80% of the average trading
price of A Shares in the 20 Trading Days prior to the Pricing Benchmark Date
and the Company's audited net assets per share attributable to ordinary
shareholders of the parent company as at the end of the most recent period) is
no less favourable to the Company than those of the Transaction Comparables.
We note that there are 5 Transaction Comparables with determined issue prices,
4 of them ("Four Premium Comparables") were set at a premium to the respective
closing prices on the last trading day immediately preceding their pricing
benchmark dates while one ("One Discount Comparable") was set at a discount to
its corresponding closing price. It is important to recognise that different
companies may adopt varying approaches and considerations in determining their
issue prices, depending on factors such as market conditions, investor
sentiment, capital needs, and strategic objectives. As shown in the above
table, unlike the Company and the One Discount Comparable, which include an
additional pricing basis requiring that the issue price not fall below the
audited net asset value per share attributable to ordinary shareholders as at
the most recent period prior to issuance, the Four Premium Comparables do not
impose such a requirement. Based on our review of their latest annual reports,
the issue prices of these Four Premium Comparables represented a discount to
the audited net asset value per share attributable to ordinary shareholders as
at the most recent period prior to issuance.
In view of the above, we consider that the Issue Price, despite being set as a
discount to its corresponding closing price, represented a premium to its net
asset value per Share, is consistent with the established Pricing Mechanism
and complied with the requirement of the Administrative Measures, to be fair
and reasonable.
In respect of the lock-up period of the Transaction Comparables, 1 out of 7
Transaction Comparables involved subscription by connected person(s) and the
relevant lock up periods were 18 months, and we note that 6 months to 5 years
lock up period was applied for independent subscribers.
The A Shares to be subscribed by Specific Investors under the Issuance of A
Share to Specific Investors shall be subject to Lock-up Period of 18 months
from the date of completion of the issuance of the A Shares. The Lock-up
Period is comparable with the Transaction Comparables and also fulfilled the
lock-up period regulatory requirement of the 18-month lock-up period for
connected subscribers. Therefore, we are of the view the Lock-up Period is no
less favourable to the Company than those of the Transaction Comparables which
involve subscriptions by connected person(s). In addition, it represents
Specific Investors' faith in the future development of the Group and its
long-term commitment in the Group.
Based on the above, we consider that the terms of the Subscription Agreement
are on normal commercial terms or better and fair and reasonable so far as the
Independent Shareholders are concerned.
4. Dilution effect on the shareholding interests of the existing public Shareholders
As illustrated by the table under the sub-section headed "3. Dilutive Effects
of the Issuance of A Shares to Specific Investors on the Shareholding
Structure of the Company" of the Letter from the Board, the shareholding
interests of the existing public Shareholders (including all of the public A
Shareholders and H Shareholders) in the Company was approximately 31.20% as at
the Latest Practicable Date.
Assuming there are no other changes to the total issued share capital of the
Company other than the Issuance of A Shares to Specific Investors from the
Latest Practicable Date to the date of the Completion and the maximum number
of A Shares under the Issuance of A Shares to Specific Investor are issued in
full, upon Completion, the shareholding of the existing public shareholders of
the A Shares will decrease from approximately 21.43% to approximately 18.24%
and the shareholdings of the existing public shareholders of A Shares and H
Shares in aggregate will decrease from approximately 31.20% to approximately
26.57%.
Nonetheless, in view of (a) the availability of the raised funds from the
Issuance of A Shares to Specific Investors will be used for debt repayment and
funding the working capital requirements of the Group to improve its financial
and liquidity position; and (b) with the increase in equity capital of the
maximum of approximately RMB20.00 billion upon Completion, the IFRS/CAS NAV
per Share will increase to approximately RMB3.06 as at 30 June 2025 per Share,
we are of the view that the above merits outweigh the dilution impact to the
shareholding of the existing public Shareholders and thus, we consider the
Issuance of A Shares to Specific Investors is fair and reasonable and in the
interest of the public Shareholders.
5. Financial effects of the Issuance of A Shares to Specific Investors
(i) Cashflow
According to the 2025 Interim Report, the Group held cash and bank balances of
approximately RMB25,331 million as of 30 June 2025. Upon completion of the
Issuance of A Shares to Specific Investors (the "Completion"), and excluding
expenses related to the issuance, the Group's cash position will be
strengthened.
(ii) Net Asset Value
Upon Completion and save for the expenses in relation to the Issuance of A
Shares to Specific Investors, the total assets of the Company will increase.
Accordingly, there will be a positive impact on the net asset value of the
Group. Furthermore, as the Issue Price will not be lower than the net assets
per share attributable to ordinary shareholders of the parent company, net
assets per share attributable to ordinary shareholders of the parent company
will also be enhanced.
(iii) Gearing
According to the 2025 Interim Report, the gearing ratio of the Group as at 30
June 2025, as derived by total liabilities over the total assets of the Group
as at 30 June 2025, was approximately 89.00%. Upon Completion, the total
assets of the Group will increase, while the total liabilities of the Group
remain unchanged. Thus, the gearing level of the Group will decrease upon
Completion.
Based on the above, the Issuance of A Shares to Specific Investors would have
an overall positive effect on the financial position of the Group in terms of
cashflow, net asset value, and gearing upon Completion. On such basis, we are
of the view that the Issuance of A Shares to Specific Investors is in the
interests of the Company and the Shareholders as a whole.
It should be noted that the above analyses are for illustrative purpose only
and do not purport to represent how the financial position of the Group will
be upon Completion.
RECOMMENDATION
Having considered the above principal factors and reasons, we consider that
the Issuance of A Shares to Specific Investors, though not in the ordinary and
usual course of business of the Group, is in the interests of the Company and
the Shareholders as a whole and the terms of the Subscription Agreement and
the transactions contemplated thereunder is on normal commercial terms and
fair and reasonable so far as the Independent Shareholders are concerned.
Accordingly, we recommend the Independent Board Committee to advise the
Independent Shareholders to vote in favour of the resolution(s) to be proposed
at the EGM to approve the Subscription Agreement and the transactions
contemplated thereunder and we recommend the Independent Shareholders to vote
in favour of the relevant resolution(s) in this regard.
Yours faithfully,
For and on behalf of
BaoQiao Partners Capital Limited
Irene Poon
Executive Director
Ms. Irene Poon is a responsible officer registered under the SFO to carry out
Type 6 (advising on corporate finance) regulated activity for BaoQiao Partners
Capital Limited and has over 20 years of experience in the accounting and
corporate financial services industry.
The Feasibility Analysis Report on the Use of Proceeds from the Issuance of A
Shares to Specific Investors in 2025 is written in Chinese, with no official
English translation. The English translation is provided for reference only.
In case of any discrepancy between the Chinese and English versions, the
Chinese version shall prevail. The full version of the Feasibility Analysis
Report on the Use of Proceeds from the Issuance of A Shares to Specific
Investors in 2025 is as follows:
I. PLAN OF THE USE OF PROCEEDS FROM THE ISSUANCE OF A SHARES TO SPECIFIC INVESTORS
The gross proceeds to be raised from the Issuance of A Shares to Specific
Investors of the Company will not be more than RMB20.00 billion (inclusive).
After deducting the relevant issuance expenses, the net proceeds are intended
to be fully used for debt repayment and working capital replenishment.
II. NECESSITY AND FEASIBILITY ANALYSIS OF THE USE OF PROCEEDS FROM THE ISSUANCE OF A SHARES TO SPECIFIC INVESTORS
(I) Basic information
After deducting the relevant issuance expenses, the net proceeds from the
Issuance of A Shares to Specific Investors are intended to be fully used for
debt repayment and working capital replenishment, with an aim to reduce the
gearing ratio, optimize the capital structure and enhance the capital
strengths of the Company, thereby further improving the Company's resilience
against risks.
(II) Necessity and feasibility analysis of the project
The aviation industry is highly capital-intensive, and maintaining a sound
capital structure is essential for the Company's long-term and stable
development. In recent years, the Company's capital structure has been under
considerable strain pressure. At the end of 2022, 2023, 2024 and September
2025, the Company's gearing ratios were 92.69%, 89.48%, 88.16% and 87.88%,
respectively, remaining at relatively high levels. The high operating
leverage, to some extent, reduces the Company's risk resilience and financial
stability.
Since 2023, China's civil aviation industry has maintained a steady momentum
of recovery, with air passenger transportation demand continuing to grow. The
Company will correspondingly increase its capacity deployment and operation
scale, which will in turn drive higher overall liquidity requirements. As a
core central state-owned enterprise, the Company undertakes the mission of
building a national flagship carrier, supporting the implementation of major
decisions of the Central Committee of the Communist Party of China, and
facilitating key national strategies. Strengthening the Company's overall
capabilities is of strategic importance for the Company to seize industry
development opportunities, better serve national strategies, and actively
adapt to the rapidly changing market environment. With a brand positioning
centered on "professional reliability, international standards, Chinese
elegance", the Company consistently treats safety assurance as its foremost
political responsibility and highest priority, firmly upholding safety red
lines and fundamental principles, while continuously strengthening process
controls and key risk management in safety operations. Adequate funding
provides essential support for the Company to expand its business scale,
ensure aviation safety and improve service quality.
The proceeds from the Issuance are intended to be fully used for debt
repayment and working capital replenishment, which will help the Company
control the scale of interest-bearing liabilities, optimize its
asset-liability structure, enhance financial stability and strengthen its risk
resistance capability to address changes in the external environment.
Meanwhile, the proceeds from the Issuance will enhance the capital strength of
the Company, meet the capital needs of its business development, further
enhance overall fleet operational efficiency and security standards, refine
route network layout, strengthen route coverage for key national regional
development strategies and markets along the "Belt and Road" initiative,
consolidate its core competitive advantages in air transportation, and enhance
profitability and risk resistance capability, thus providing robust support
for the Company's high-quality development.
In conclusion, the Company intends to use the proceeds from the Issuance of A
Shares to Specific Investors for debt repayment and working capital
replenishment so as to improve its capital strength and financial stability,
continue to consolidate the foundation of safety work and strengthen its
competitive edge in the industry.
In strict compliance with the relevant requirements such as the Rules on the
Supervision of Proceeds of Listed Companies (CSRC Announcement 2025 No. 10)
《( 上市公司募集資金監管規則》（證監會公告 2025 10號）)
and the Shanghai Stock Exchange Self-Regulatory Guidelines for Listed
Companies No. 1 - Standardised Operation (Shangzhengfa 2025 No. 68) 《(
上海證券交易所上市公司自律監管指引第1號－規範運作》（上證發 2025 68號）)
and the Policy on Use and Management of Proceeds of the Company, the
Company will reasonably arrange the allocation amount and deployment schedule
of the proceeds, so as to ensure the safe and efficient use of proceeds and
safeguard the use of proceeds against risks.
III. IMPACT OF THE ISSUANCE OF A SHARES TO SPECIFIC INVESTORS ON THE OPERATION MANAGEMENT AND FINANCIAL POSITION OF THE COMPANY
(I) Impact on the operation management of the Company
Sufficient capital supply is a strong safeguard for the Company to expand its
business scale, ensure aviation safety and improve service quality. After
deducting issuance expenses, the proceeds from the Issuance are intended to be
fully used for debt repayment and working capital replenishment, which will
help the Company control the scale of interest-bearing liabilities, optimize
its asset-liability structure, enhance financial stability, and strengthen its
risk resilience to cope with the changes in the external environment.
Meanwhile, the proceeds from the Issuance will enhance the capital strength of
the Company, meet the capital needs of its business development, further
enhance overall fleet operational efficiency and security standards, refine
route network layout, strengthen route coverage in key national regional
development strategies and markets along the "Belt and Road" initiative. These
measures will consolidate the Company's core competitive advantages in the air
transportation sector, and enhance profitability and risk resilience, thus
providing solid support for the Company's high-quality development.
(II) Impact on the financial position of the Company
Upon completion of the Issuance of A Shares to Specific Investors, the
Company's total assets and net assets will increase accordingly, its working
capital will be strengthened, and the gearing ratio will decrease accordingly,
which will contribute to optimizing the Company's capital structure, improving
its financial stability, enhancing its profitability and strengthening its
resilience against financial risks.
IV. CONCLUSION ON THE FEASIBILITY ANALYSIS OF PROJECTS TO BE INVESTED WITH THE PROCEEDS FROM THE ISSUANCE OF A SHARES TO SPECIFIC INVESTORS
After prudent analysis and deliberation, the Board of the Company has
concluded that the plan of the use of proceeds from the Issuance of A Shares
to Specific Investors complies with relevant policies, laws and regulations.
The use of proceeds is expected to meet the Company's capital requirements for
business development, enhance its core competitiveness, optimize its capital
structure, improve its financial position, and increase profitability and
sustainable development capability, which aligns with the interests of the
Company and all Shareholders.
Air China Limited
30 October 2025
The Report on Use of Proceeds from Previous Fund-Raising Activities is written
in Chinese, with no official English translation. The English translation is
provided for reference only. In case of any discrepancy between the Chinese
and English versions, the Chinese version shall prevail. The full version of
the Report on Use of Proceeds from Previous Fund-Raising Activities is as
follows:
I. BASIS OF PREPARATION
The Report on Use of Proceeds from Previous Fund-Raising Activities has been
prepared in accordance with the Applicable Guidelines under Regulatory Rules -
Issuance Category No. 7(《監管規則適用指引－發行類第7號》)
issued by the CSRC and other relevant laws and regulations.
II. AMOUNT, CREDITING DATE AND DEPOSIT OF PROCEEDS FROM PREVIOUS FUND-RAISING ACTIVITIES
(I) Proceeds from the Non-public Issuance of A Shares
According to the Approval Reply regarding the Non-public Issuance of Shares by
Air China Limited (Zheng Jian Xu Ke 2022 No. 3050) issued by the CSRC, Air
China Limited (hereinafter referred to as the "Company") conducted a
non-public issuance of 1,675,977,653 A Shares at an issue price of RMB8.95 per
share on 3 January 2023 on the Shanghai Stock Exchange. The gross proceeds
amounted to RMB14,999,999,994.35. After deducting underwriting and sponsorship
fees of RMB949,999.99 (VAT inclusive), the proceeds amounted to
RMB14,999,049,994.36; after deducting all issuance expenses (underwriting and
sponsorship fees inclusive) of RMB6,983,407.03 (VAT exclusive), the actual net
proceeds amounted to RMB14,993,016,587.32.
All the aforesaid proceeds of RMB14,999,049,994.36 were credited to a
designated account on 3 January 2023, which was verified by Deloitte Touche
Tohmatsu Certified Public Accountants LLP, with a capital verification report
(De Shi Bao (Yan) Zi (23) No. 00005) issued in this regard.
As of 30 September 2025, the aforesaid proceeds of the Company have been fully
utilized in accordance with the intended purposes, and the cumulative amount
of proceeds utilized was RMB14,993,016,587.32. The interest income generated
from the proceeds was RMB120,559,610.35, all of which was used for
replenishment of working capital of the Company, and the special account for
depositing the proceeds has been cancelled.
(II) Proceeds from the Issuance of H Shares to Specific Investor
The Company has been approved by The Stock Exchange of Hong Kong Limited to
issue overseas listed foreign shares (H Shares) to specific investor, and
issued 392,927,308 ordinary H Shares to China National Aviation Corporation
(Group) Limited at an issue price of HK$5.09 per share. As of 7 February 2024,
the gross proceeds of HK$1,999,999,997.72 have been remitted to the account
for the proceeds raised in the issuance of H Shares, equivalent to
RMB1,816,859,997.93 based on the central parity rate for Hong Kong dollars to
Renminbi as at the date when the actual funds were transferred to such
account. After deducting the issuance expenses of HK$1,230,193.93 (VAT
exclusive, equivalent to RMB1,117,545.07), the actual net
proceeds were HK$1,998,769,803.79 (equivalent to RMB1,815,742,452.86). The
aforesaid proceeds have been filed with the CSRC, which was verified by
Deloitte Touche Tohmatsu Certified Public Accountants LLP, with a Capital
Verification Report (De Shi Bao (Yan) Zi (24) No. 00030) issued in this
regard.
As of 30 September 2025, the aforesaid proceeds of the Company have been fully
utilized in accordance with the intended purposes, and the cumulative amount
of proceeds utilized was HK$1,998,769,803.79. The special account for
depositing the proceeds has been cancelled, all of the interest income
generated from the proceeds has been used for replenishment of the Company's
working capital.
(III) Proceeds from the Issuance of A Shares to Specific Investor
Upon review and approval by the Shanghai Stock Exchange in the Notice on the
Review Opinions Regarding the Issuance of Shares by Air China Limited to
Specific Investor 《(
關於中國國際航空股份有限公司向特定對象發行股票審核意見的通知》),
and approval by the CSRC in the Approval Regarding Registration of the
Issuance of Shares to Specific Investor by Air China Limited《(
關於同意中國國際航空股份有限公司向特定對象發行股票註冊的批覆》)
(Zheng Jian Xu Ke 2024 No. 1562), Air China Limited (hereinafter
referred to as the "Company") issued 854,700,854 A Shares to specific investor
at an issue price of RMB7.02 per share with par value of RMB1 each. China
National Aviation Corporation (Group) Limited (hereinafter referred to as
"CNACG") subscribed for all A Shares issued by the Company in cash. The gross
proceeds amounted to RMB5,999,999,995.08. After deducting underwriting and
sponsorship fees of RMB1,000,000.00 (VAT inclusive), the Company actually
received proceeds of RMB5,998,999,995.08. After deducting all issuance
expenses (underwriting and sponsorship fees inclusive) of RMB4,158,363.63 (VAT
exclusive), the actual net proceeds amounted to RMB5,995,841,631.45. All the
aforesaid proceeds were credited to a designated account on 20 November 2024,
which was verified by Deloitte Touche Tohmatsu Certified Public Accountants
LLP, with a Capital Verification Report (De Shi Bao (Yan) Zi (24) No. 00225)
issued in this regard.
As of 30 September 2025, the Company has cumulatively utilized
RMB5,973,146,757.25 of the aforesaid proceeds for their intended purposes. The
balance of the proceeds amounted to RMB29,910,724.79, details of which are as
follows:
Currency Unit: RMB Yuan
Initial Deposit Balance as of 30 September 2025
Amount
Opening Bank Account Number
Beijing Capital International Airport Branch of China Construction Bank
Corporation
11050160510009888888 5,998,999,995.08 29,892,765.81
Beijing Wangjing Branch of the Industrial and Commercial Bank of China Ltd.
0200006029200089362 - 17,958.98
III. THE USE OF THE PREVIOUS PROCEEDS
(I) Statement of the Use of the Previous Proceeds
For details of the use of the aforesaid proceeds as of 30 September 2025,
please refer to Schedule I for the Statement of the Use of the Proceeds from
the Non-public Issuance of A Shares, Schedule II for the Statement of the Use
of the Proceeds from the Issuance of H Shares to Specific Investor and
Schedule III for the Statement of the Use of the Proceeds from the Issuance of
A Shares to Specific Investor.
(II) Explanation on Initial Investment and Replacement in respect of the Investment Projects Funded by the Previous Proceeds
1. Proceeds from the Non-public Issuance of A Shares
The Resolution on the Replacement of Self-raised Funds with Proceeds from the
Non-public Issuance 《(
關於使用非公開發行募集資金置換自籌資金的議案》) was
considered and approved at the tenth meeting of the sixth session of the
Supervisory Committee convened on 29 March 2023 and the eighteenth meeting of
the sixth session of the Board of the Company convened on 30 March 2023,
respectively, under which the Company was permitted to replace the self-raised
funds previously invested in proceeds committed investment projects and used
to settle issuance expenses with proceeds amounting to RMB2,593,320,020.31,
which included the actual investment amount of RMB2,591,693,257.54 for the
project of introducing 22 aircraft previously funded by self-raised funds in
advance and the partial issuance expenses of RMB1,626,762.77 (VAT exclusive)
paid previously.
Regarding the aforesaid, the independent directors of the Company have
expressed their concurring independent opinions and the sponsor, CITIC
Securities Company Limited, has issued the Verification Opinion on the
Replacement of Initial Investment with Proceeds by Air China Limited 《(
關於中國國際航空股份有限公司使用募集資金置換先期投入的核查意見》). Deloitte
Touche Tohmatsu Certified Public Accountants LLP has audited the special
statement in relation to the aforesaid replacement of self-raised funds
invested in advance in proceeds committed investment projects with proceeds
and the issuance expenses paid by the Company, and issued the Audit Report on
the Special Statement in relation to the Replacement of Self-raised Funds
Invested in Advance in Proceeds Committed Investment Projects with Proceeds
and the Issuance Expenses Paid by Air China Limited (De Shi Bao (He) Zi (23)
No.
E00008) 《(關於中國國際航空股份有限公司以募集資金置換自籌資金預先投入募集資金承諾投資項目和已支付發行費用專項說明的審核報告》).
As of 30 September 2025, the Company had completed the aforesaid replacement
of self-raised funds invested in advance with proceeds.
2. Proceeds from the Issuance of H Shares to Specific Investor
As of 30 September 2025, the proceeds of the Company have been fully utilized
in accordance with the intended purposes, and the cumulative amount of
proceeds utilized was HK$1,998,769,803.79, and the special account for
depositing the proceeds has been cancelled. All of interest income generated
from the proceeds was used for replenishment of working capital of the
Company.
3. Proceeds from the Issuance of A Shares to Specific Investor
The Resolution on the Replacement of Self-raised Funds with Proceeds from the
Issuance to Specific Investor
(《關於使用向特定對象發行募集資金置換自籌資金的議案》)
was considered and approved at the thirtieth meeting of the sixth session of
the Board and the twentieth meeting of the sixth session of the Supervisory
Committee of the Company convened on 7 January 2025, under which the Company
was permitted to replace the self-raised funds previously invested in targeted
investment projects, including the actual investment amount of
RMB2,136,478,307.64 for the project of introducing 17 aircraft previously
funded by self-raised funds in advance, with the proceeds from the Issuance of
A Shares to Specific Investors in 2023.
Regarding the aforesaid, the independent directors of the Company have
expressed their concurring independent opinions and the sponsor, CITIC
Securities Company Limited, has issued the Verification Opinion on the
Replacement of Self-raised Funds Invested in Advance
in Projects to be Invested with Proceeds by Air China Limited 《(
關於中國國際航空股份有限
公司使用募集資金置換預先投入募投項目的自籌資金的核查意見》).
Deloitte Touche
Tohmatsu Certified Public Accountants LLP has audited the special statement of
the Company in relation to the aforesaid replacement of self-raised funds
invested in advance in proceeds committed investment projects and the issuance
expenses paid with proceeds and the paid issuance expenses, and issued the
Audit Report on the Special Statement in relation to the Replacement of
Self-raised Funds Invested in Advance in Proceeds Committed Investment
Projects with Proceeds (De Shi Bao (He) Zi (25) No. E00319)
《(關於以募集資金置換自籌資金預先投入募集資金承諾投資項目專項說明的審核報告》).
As of 30 September 2025, the Company had completed the aforesaid replacement
of self-raised funds invested in advance with proceeds.
IV. RECOGNITION OF REVENUE FROM INVESTMENT PROJECTS WITH THE PREVIOUS PROCEEDS
(I) Proceeds from the Non-public Issuance of A Shares
Following the receipt of the previous proceeds from A Shares, the proceeds
have been used for introducing 22 aircraft and the replenishment of working
capital of the Company. As the revenue of the Company is generated from the
overall fleet operation, the specific revenue derived from the said project
cannot be independently quantified.
(II) Proceeds from the Issuance of H Shares to Specific Investor
Following the receipt of the previous proceeds from H Shares, the proceeds
have been used to replenish the working capital of the Company, the revenue
derived from the said projects cannot be independently quantified.
(III) Proceeds from the Issuance of A Shares to Specific Investor
Following the receipt of the previous proceeds have been used for introducing
17 aircraft and the replenishment of working capital of the Company. As the
revenue of the Company is generated from the overall fleet operation, the
specific revenue derived from the said projects cannot be independently
quantified.
V. UNUTILIZED PROCEEDS
(I) Proceeds from the Non-public Issuance of A Shares
Nil.
(II) Proceeds from the Issuance of H Shares to Specific Investor
Nil.
(III) Proceeds from the Issuance of A Shares to Specific Investor
As of 30 September 2025, the Company had unutilized proceeds of
RMB22,694,874.20.
Subsequently, the Company will utilize the Previous Proceeds as planned.
Board of Air China Limited
30 October 2025
SCHEDULE I:
STATEMENT OF THE USE OF THE PROCEEDS FROM THE NON-PUBLIC ISSUANCE OF A SHARES
Currency Unit: RMB0'000
Total proceeds: 1,499,301.66
Total cumulative utilized proceeds: 1,499,301.66
Total proceeds with change in purposes: Not applicable Not applicable
Proportion of total proceeds with change in purposes:
Investment projects Total investment amount of proceeds Cumulative investment amount of proceeds as of 30 September 2025
Date on which the project is ready for its intended use (or project progress
as at the closing date)
Difference between actual investment amount and committed investment amount
after the
fund raising
Committed investment amount prior to the fund raising Committed investment amount after the fund raising Committed investment amount prior to the fund raising Committed investment amount after the fund raising
Actual investment amount Actual investment amount
Committed investment project Actual investment project
No.
1 The project of introducing 22 aircraft The project of introducing 22 aircraft 1,079,301.66 1,079,301.66 1,079,301.66 1,079,301.66 1,079,301.66 1,079,301.66 - Not applicable
2 Replenishing working capital Replenishing working capital 420,000.00 420,000.00 420,000.00 420,000.00 420,000.00 420,000.00 - Not applicable
Total 1,499,301.66 1,499,301.66 1,499,301.66 1,499,301.66 1,499,301.66 1,499,301.66 - -
SCHEDULE II:
STATEMENT OF THE USE OF THE PROCEEDS
FROM THE ISSUANCE OF H SHARES TO SPECIFIC INVESTOR
Currency Unit: HK$0'000
Total proceeds: 199,876.98
Total cumulative utilized proceeds: 199,876.98
Total proceeds with change in purposes: Not applicable Not applicable
Proportion of total proceeds with change in purposes:
Investment projects Total investment amount of proceeds Cumulative investment amount of proceeds as of 30 September 2025
Date on which the project is ready for its intended use (or project progress
as at the closing date)
Difference between actual investment amount and committed investment amount
after the
fund raising
Committed investment amount prior to the fund raising Committed investment amount after the fund raising Committed investment amount prior to the fund raising Committed investment amount after the fund raising
Actual investment amount Actual investment amount
Committed investment project Actual investment project
No.
1 Replenishing working capital Replenishing working capital 199,876.98 199,876.98 199,876.98 199,876.98 199,876.98 199,876.98 - Not applicable
SCHEDULE III:
STATEMENT OF THE USE OF THE PROCEEDS FROM THE ISSUANCE OF A SHARES TO SPECIFIC
INVESTOR
Currency Unit: RMB0'000
Total proceeds: 599,584.16
Total cumulative Total proceeds ut utilized proceeds: ilized for the year: 597,314.68
337,354.56
Total proceeds with change in purposes: Not applicable Not applicable
Proportion of total proceeds with change in purposes:
Investment projects Total investment amount of proceeds Cumulative investment amount of proceeds as of 30 September 2025
Date on which the project is ready for its intended use (or project progress
as at the closing date)
Difference between actual investment amount and committed investment amount
after the
fund raising
Committed investment amount prior to the fund raising Committed investment amount after the fund raising Committed investment amount prior to the fund raising Committed investment amount after the fund raising
Actual investment amount Actual investment amount
Committed investment project Actual investment project
No.
1 The project of introducing 17 aircraft The project of introducing 17 aircraft 419,584.16 419,584.16 417,314.68 419,584.16 419,584.16 417,314.68 (2,269.48) Not applicable
2 Replenishing working capital Replenishing working capital 180,000.00 180,000.00 180,000.00 180,000.00 180,000.00 180,000.00 - Not applicable
Total 599,584.16 599,584.16 597,314.68 599,584.16 599,584.16 597,314.68 (2,269.48) -
The dilution of the Company's Current Return by the Issuance of Shares to
Specific Investors in 2025, the Remedial Measures and the Undertakings Made by
the Relevant Entities in respect of Such Measures is written in Chinese, with
no official English translation. The English translation is provided for
reference only. In case of any discrepancy between the Chinese and English
versions, the Chinese version shall prevail. The full version of the Dilution
of the Company's Current Return by the Issuance of Shares to Specific
Investors in 2025, the Remedial Measures and the Undertakings Made by the
Relevant Entities in respect of Such Measures is as follows:
Important Note: the following analysis and description of the core financial
indicators of Air China Limited following the Issuance of Shares to Specific
Investors are prepared in accordance with the relevant laws and regulations of
the CSRC. They do not constitute the Company's profit forecasts under the
relevant laws and regulations of the CSRC. Investors should not rely solely on
such analysis and description for their investment decisions. The Company
shall not be held liable for any losses incurred by investors resulting from
investment decisions made based thereon. The Company reminds investors that
the formulation of return remedial measures does not guarantee the Company's
future profits.
Pursuant to the relevant requirements of laws, regulations and normative
documents, including the Opinions of the General Office of the State Council
on Further Strengthening the Work of Protection of the Legitimate Rights and
Interests of Small and Medium Investors in the Capital Markets (Guo Ban Fa
2013 No. 110) 《(
國務院辦公廳關於進一步加強資本市場中小投資者合法權益保護工作的意見》),
Several Opinions on Strengthening Supervision, Preventing Risks and Promoting
High-Quality Development of the Capital Market (Guo Fa 2024 No. 10) 《(
關於加強監管防範風險推動資本市場高質量發展的若干意見》)
and the Guidelines on Matters concerning the Dilution of Current Return of the
Initial Offering, Refinancing and Major Asset Restructuring (China Securities
Regulatory Commission Notice 2015 No. 31)《(
關於首發及再融資、重大資產重組攤薄即期回報有關事項的指導意見》),
in order to protect the interests of minority investors, the Company carefully
analyzed the dilution effect of matters relating to the Issuance of Shares to
Specific Investors on current return, and proposed specific return remedial
measures for the dilution of current return based on the actual situation.
Meanwhile, the controlling shareholder of the Company and all the Directors
and senior management of the Company make undertakings for the effective
implementation of the remedial measures for the dilution of current return by
the issuance of Shares to specific investors. The impacts of the dilution of
current return by the issuance of Shares to specific investors on key
financial indicators of the Company and the remedial measures taken by the
Company are announced as follows:
I. IMPACTS OF DILUTION OF CURRENT RETURN BY THE ISSUANCE OF SHARES TO SPECIFIC INVESTORS ON THE KEY FINANCIAL INDICATORS OF THE COMPANY
(I) Assumed conditions for the projected calculations of diluted current return
1. It is assumed that there are no significant adverse changes
in the macro-economic environment, market conditions, industry policies, as
well as production and operation of the Company and its subsidiaries.
2. It is assumed that the Issuance of A Shares to Specific
Investors will be completed in June 2026, which, being an assumption and
estimation, will only be used to calculate the impacts of the dilution of
current return by the issuance of Shares to specific investors on key
financial indicators, and does not constitute a commitment to the actual
completion date, which is subject to the approval of the competent regulatory
authority for the issuance.
3. Excluding the issuance expenses, it is assumed that the
size of the Issuance of A Shares to Specific Investors is RMB20.00 billion.
4. The estimation of the total share capital of the Company is
based on 17,448,421,000 shares in the total share capital as at the date of
the announcement of the issuance plan, of which 789,854,000 shares are to be
offset due to cross-shareholdings with Cathay Pacific and shall be deducted
from the weighted average number of the outstanding ordinary shares of the
Company in calculating the earnings per share. It is assumed that
3,044,140,030 A Shares will be issued. Except for the effect of the Issuance
of A Shares to Specific Investors, no other factors, such as bonus shares and
conversion of capital reserve into share capital, are taken into account for
changes in share capital. This assumption is solely used for calculating the
impact of the issuance on the earnings per share of the Company, and does not
represent the Company's judgement on the number of Shares to be issued, which
is subject to the actual number of Shares to be issued.
5. According to the unaudited financial data, the net profit
attributable to owners of the parent company for the period from January to
September 2025 was RMB1,869.84 million, and the net profit attributable to
owners of the parent company after deducting non-recurring profits and losses
was RMB1,644.02 million. If no significant operation risks will arise and
without considering seasonal variations, it is assumed that the net profit
attributable to owners of the parent company both before and after deducting
non-recurring profits and losses in the Company's annual consolidated
financial statements for 2025 will be calculated based on the annualized data
for the period from January to September 2025. The above estimation does not
represent the Company's profit forecast for 2025 and shall not be relied upon
by investors in making investment decisions. The Company assumes no
responsibility for any losses incurred by investors as a result of relying on
such estimation in making investment decisions.
It is assumed that the net profit attributable to Shareholders of the listed
Company and the net profit attributable to Shareholders of the listed Company
after deducting non-recurring profits and losses in 2026 will be estimated
based on three scenarios, namely decrease by 30%, remaining unchanged and
increase by 30% on the basis of the annual forecast data in 2025,
respectively. Such assumption and analysis is solely used for estimating the
impact of the dilution of current return by the Issuance on the key financial
indicators of the Company and does not constitute a profit forecast of the
Company, and shall not be relied upon by investors in making investment
decisions. The Company assumes no responsibility for any losses incurred by
investors as a result of relying on such estimation in making investment
decisions.
6. No consideration is given to the impacts on the production
and operation, financial conditions (such as finance costs, investment
income), etc., of the Company upon the receipt of proceeds from the issuance
of Shares to specific investors. This estimation takes in no consideration of
the impacts of the cash dividends of the Company.
(II) Impacts on the key indicators of the Company
Under the premise of the above assumptions, the estimated impacts of the
issuance of Shares to specific investors on the key financial indicators of
the Company are as follows:
31 December 2026/year 2026 (E)
31 December 2025/
Items year 2025 (E)
Before the Issuance of A After the Issuance of A
Shares to Specific Investors Shares to Specific Investors
Scenario 1: Net profit attributable to owners of the parent company and net
profit attributable to owners of the parent company after deducting
non-recurring profits and losses in 2026 decrease by 30% as compared to the
previous year
Total share capital (10,000 shares) (Note 1) 1,665,857 1,665,857 2,049,256
Net profit attributable to Shareholders of the listed Company (RMB10,000)
249,311 174,518 174,518
Net profit attributable to Shareholders of the listed Company after deducting
non-recurring profits and losses (RMB10,000)
219,203 153,442 153,442
Basic earnings per share (RMB/share) 0.15 0.10 0.10
Basic earnings per share (after deducting non-recurring profits and losses)
(RMB/share)
0.13 0.09 0.08
Diluted earnings per share (RMB/share) 0.15 0.10 0.10
Diluted earnings per share (after deducting non-recurring profits and losses)
(RMB/share)
0.13 0.09 0.08
Scenario 2: Net profit attributable to owners of the parent company and net
profit attributable to owners of the parent company after deducting
non-recurring profits and losses in 2026 remaining unchanged as that of the
previous year
Total share capital (10,000 shares) (Note 1) 1,665,857 1,665,857 2,049,256
Net profit attributable to Shareholders of the listed Company (RMB10,000)
249,311 249,311 249,311
Net profit attributable to Shareholders of the listed Company after deducting
non-recurring profits and losses (RMB10,000)
219,203 219,203 219,203
31 December 2026/year 2026 (E)
31 December 2025/
Items year 2025 (E)
Before the Issuance of A After the Issuance of A
Shares to Specific Investors Shares to Specific Investors
Basic earnings per share (RMB/share) 0.15 0.15 0.14
Basic earnings per share (after deducting non-recurring profits and losses)
(RMB/share)
0.13 0.13 0.12
Diluted earnings per share (RMB/share) 0.15 0.15 0.14
Diluted earnings per share (after deducting non-recurring profits and losses)
(RMB/share)
0.13 0.13 0.12
Scenario 3: Net profit attributable to owners of the parent company and net
profit attributable to owners of the parent company after deducting
non-recurring profits and losses in 2026 increase by 30% as compared to the
previous year
Total share capital (10,000 shares) (Note 1) 1,665,857 1,665,857 2,049,256
Net profit attributable to Shareholders of the listed Company (RMB10,000)
249,311 324,105 324,105
Net profit attributable to Shareholders of the listed Company after deducting
non-recurring profits and losses (RMB10,000)
219,203 284,964 284,964
Basic earnings per share (RMB/share) 0.15 0.19 0.18
Basic earnings per share (after deducting non-recurring profits and losses)
(RMB/share)
0.13 0.17 0.16
Diluted earnings per share (RMB/share) 0.15 0.19 0.18
Diluted earnings per share (after deducting non-recurring profits and losses)
(RMB/share)
0.13 0.17 0.16
Note 1: As of the date of the announcement of the preliminary proposal, the
total share capital of the Company was 17,448,421,000 shares, of which
789,854,000 shares are offset due to cross shareholdings with Cathay Pacific
and shall be deducted from the weighted average number of the outstanding
ordinary shares of the Company in calculating the earnings per share.
Note 2: Basic earnings per share and diluted earnings per share are calculated
in accordance with the "Compilation Rules for Information Disclosure of
Companies Offering Securities to the Public No. 9 - Calculation and Disclosure
of Return on Net Assets and Earnings per Share".
II. SPECIAL RISK WARNING ON DILUTION OF CURRENT RETURN BY THE ISSUANCE OF SHARES TO SPECIFIC INVESTORS
After the completion of the issuance of Shares to specific investors, the
total share capital and net assets of the Company will increase, which will
help to enhance the Company's risk resistance capability and thus achieve its
strategic goals, however, the use of proceeds and the realization of the
relevant benefits will take a certain period of time. Where both the total
share capital and net assets of the Company increase, there may still be a
risk that the issuance may dilute the Company's current return for the year of
its completion if its profit does not record a corresponding growth. In
addition, once there is any significant change in the assumed conditions of
the above analysis or the operation of the Company, we cannot rule out the
possibility that the issuance may result in changes in the dilution of current
return.
The Company hereby reminds investors to invest rationally and pay attention to
the risks that the issuance may dilute the current return. In the medium to
long-run, with the full utilization of the raised proceeds and further
development of the principal business, the Company's ability to sustain its
profitability and core competence will be further enhanced, which will in turn
boost the Company's indicators including earnings per share and return on net
assets.
III. RELATIONSHIP BETWEEN THE PROCEEDS-FUNDED INVESTMENT PROJECTS AND THE EXISTING BUSINESSES OF THE COMPANY AND THE COMPANY'S RESERVE STATUS OF, AMONG OTHERS, PERSONNEL, TECHNOLOGIES AND MARKETS INVOLVED IN THESE PROJECTS
(I) Investment projects funded by proceeds from the Issuance of A Shares to Specific Investors
The gross proceeds from the Issuance of A Shares to Specific Investors by the
Company shall be not more than RMB20.00 billion (inclusive). It is intended
that the net proceeds after deducting the relevant issuance expenses shall be
used for debt repayment and working capital replenishment in full.
(II) Relationship between the proceeds-funded investment projects and the existing businesses of the Company, and reserve status of, among others, personnel, technologies and markets of the Company involved in proceeds-funded investment projects
It is intended that the proceeds from the Issuance after deducting the
relevant issuance expenses shall be used for debt repayment and working
capital replenishment in full. The proceeds, upon receipt, will enable the
Company to further improve its capital strength and financial resilience,
control the scale of its interest-bearing liabilities, improve the listed
company's balance sheet, optimize the Company's capital structure and enhance
the Company's risk resistance capability. These proceeds-funded investment
projects do not involve specific investment projects and the Company's reserve
in terms of personnel, technologies or markets for the relevant projects.
IV. SPECIFIC REMEDIAL MEASURES FOR DILUTION OF CURRENT RETURN BY THE ISSUANCE OF SHARES TO SPECIFIC INVESTORS
In order to protect the interests of general investors and reduce the impact
of the possible dilution of current return by the issuance of Shares to
specific investors, the Company intends to adopt various measures to prevent
the risk of dilution of current return and achieve sustainable business
development of the Company, so as to maximize future earnings. The specific
measures the Company intends to take are as follows:
(I) Enhance operation management and internal control to improve operation efficiency and profitability
Centering on its development objective to "accelerate the building of a
world-class aviation transportation group with global competitiveness", the
Company will adhere to the four strategic directions of "hub network, balanced
development of cargo and passenger services, leadership in costs and brand
strategy", and focus on such key areas including safety management
enhancement, market layout optimization, resource structure adjustment,
product service upgrade, digital innovation development, green and low-carbon
development, and promote work implementation. The Company will consider the
following as the key priorities of its future operation: firmly root the
concept of safe development; accelerate the upgrade of the quality and
efficiency of core business operations, and continuously enhance
profitability; continuously strengthen strategic support capabilities; fully
enhance the passenger service experience, striving to build brand advantages;
and comprehensively strengthen the Party's leadership and Party building.
(II) Enhance the management and usage of the proceeds to prevent the risks in connection with the use of proceeds
Upon the completion of the issuance of Shares to specific investors, pursuant
to the Regulatory Rules for Proceeds of Listed Companies (CSRC Announcement
2025 No.10) 《( 上市公司募集資金
監管規則》（證監會公告 2025 10號）), the Self-discipline
Regulatory Guidelines for Companies Listed on the Shanghai Stock Exchange No.
1 - Standard Operation) (Shang Zheng Fa 2025 No. 68) 《(
上海證券交易所上市公司自律監管指引第1號－規範運作》（上證發 2025 68號）),
the Use of Proceeds and Management System 《(
募集資金使用與管理制度》) of the Company, as well as resolutions
of the Board of the Company, the Company will open a special-purpose account
for the proceeds from the Issuance of Shares to Specific Investors. The
Company, the account-opening bank and the sponsor will enter into a tripartite
supervision agreement for proceeds, pursuant to which, the sponsor, the
account-opening bank and the Company shall jointly manage the proceeds, and
regularly examine the circumstances related to the deposit and use of proceeds
to ensure the reasonable and compliant use of proceeds.
(III) Continuously improve corporate governance to provide an institutional safeguard for the development of the Company
The Company will strictly comply with the requirements of the Company Law, the
Securities Law, the Rules Governing the Listing of Stocks and other relevant
laws, regulations and normative documents, continuously improve the corporate
governance structure, and ensure that Shareholders can fully exercise their
rights, that the Board can exercise its functions and powers in accordance
with the provisions of laws, regulations and the Articles of Association, make
scientific, prompt and prudent decisions, and ensure that independent
Directors can earnestly perform their duties. The Company will safeguard its
overall interests, especially the legitimate rights and interests of minority
Shareholders, and ensure that the Audit and Risk Management Committee (the
Supervision Committee) can independently and effectively exercise the right to
supervise and inspect the Directors, managers and other senior managers and
the Company's finance, so as to provide an institutional safeguard for the
development of the Company.
(IV) Improve the profit distribution system to ensure the continuity and stability of the mechanism of return to investors
The Company will strictly comply with the requirements of the Company Law, the
Securities Law as well as other relevant laws, regulations and normative
documents to give full consideration to its return to the Shareholders, while
balancing the Company's development in the long run, the interests of all
Shareholders as a whole and the Company's sustainable development, with a view
to maintaining the continuity and stability of its profit distribution policy
and persisting to creating long-term value for the Shareholders.
The Company notes to the investors that the formulation of the return remedial
measures does not constitute a guarantee of the Company's future profits. The
Company will continue to disclose the completion status of the current return
remedial measures and the performance of the undertakings by the relevant
undertaking entities in the subsequent regular reports.
Given the above, upon completion of the issuance of Shares to specific
investors, the Company will strengthen the internal management, consolidate
its main business, rationally regulate the use of the raised proceeds, improve
the fund utilization efficiency, take various measures to continuously improve
operating performance. When the conditions for profit distribution are met,
the Company will actively promote the profit distribution to shareholders to
ensure the continuity and stability of the Company's profit distribution
policy, so as to improve the Company's ability to provide returns to its
investors, and effectively reduce the risks faced by the Shareholders in
connection with the dilution of current return.
V. UNDERTAKINGS TO ENSURE THE EFFECTIVE IMPLEMENTATION OF CURRENT RETURN REMEDIAL MEASURES FOR THE ISSUANCE OF SHARES TO SPECIFIC INVESTORS BY THE COMPANY
(I) Undertakings made by the Directors and the senior management of the Company
To secure the effective implementation of the remedial measures for the
dilution of current return upon completion of the issuance of the Company, the
Directors and the senior management of the Company make the following
undertakings:
1. I hereby undertake to discharge my duties faithfully and
diligently, and protect the legitimate interests of the Company and all
Shareholders;
2. I hereby undertake not to transfer any benefits to other
entities or individuals unconditionally or unfairly nor otherwise take any
actions that damage the interests of the Company;
3. I hereby undertake that my own expenditures during my
performance of duties shall be restrained;
4. I hereby undertake not to use any assets of the Company for
any investment or expenditure which is unrelated to the performance of my
duties;
5. I hereby undertake to, within the scope of my duties and
authority, promote the remuneration policy formulated by the Board or the
remuneration committee to be in conjunction with the implementation of the
return remedial measures of the Company;
6. I hereby undertake to, within the scope of my duties and
authority, promote the conditions of the proposed share incentive plan of the
Company to be in conjunction with the implementation of the return remedial
measures of the Company if the Company intends to implement any share
incentive plan in the future;
7. I hereby undertake to make any supplemental undertakings in
accordance with the latest requirements of the CSRC if the above undertakings
are not able to meet other new regulatory requirements of the CSRC issued in
respect of the return remedial measures and related undertakings after the
date of making these undertakings and prior to the completion of the Issuance
of Shares to Specific Investors by the Company;
8. I hereby undertake to earnestly implement the relevant return
remedial measures formulated by the Company and to perform my undertakings
made in respect of such. If I violate the above undertakings and cause losses
to the Company or investors, I willingly undertake to assume the corresponding
legal liabilities."
(II) Undertakings made by the controlling shareholder of the Company
To secure the effective implementation of the remedial measures for the
dilution of current return upon completion of the issuance of the Company,
CNAHC, being the controlling shareholder of the Company, makes the following
undertakings pursuant to relevant requirements of the CSRC:
1. We will strictly comply with laws and regulations and relevant regulatory
rules of the CSRC and the Shanghai Stock Exchange, will not exceed its
authority to intervene in the operation and management activities of the
listed company and will not infringe the interests of the listed company;
2. We undertake to make supplemental undertakings in due time
and in accordance with the latest requirements of the CSRC if the above
undertakings are not able to fulfill other new regulatory requirements of the
CSRC issued in respect of the return remedial measures and related
undertakings after the date of making these undertakings and prior to the
completion of the Issuance of Shares to Specific Investors;
3. We undertake to earnestly implement the relevant return
remedial measures formulated by the listed company and to perform any
undertakings made by us in respect of the relevant return remedial measures.
If we violate such undertakings and cause losses to the listed company or
investors, we willingly undertake to indemnify the Company or investors in
respect of any losses incurred in accordance with the laws;
4. As one of the relevant responsible entities of the return
remedial measures, if we violate the above undertakings or refuses to perform
such undertakings, we accept that relevant securities regulatory authorities
such as the CSRC and the Shanghai Stock Exchange may impose relevant
punishments or adopt relevant regulatory measures against it pursuant to
relevant requirements and rules formulated or issued by such authorities."
VI. PROCEDURES OF CONSIDERATION FOR THE REMEDIAL MEASURES FOR DILUTION OF CURRENT RETURN BY THE ISSUANCE OF SHARES TO SPECIFIC INVESTORS AND THE UNDERTAKINGS THEREFOR
The analysis of the dilution of current return by the issuance of Shares to
specific investors by the Company, the current return remedial measures and
the undertakings by the relevant undertaking entities, among other matters,
have been considered and approved at the ninth meeting of the seventh session
of the Board of the Company, and are subject to consideration and deliberation
at the shareholders' meeting of the Company. Prior to the submission to the
Board of the Company for its consideration, the above matters have been
considered and approved at the seventh meeting of the Audit and Risk
Management Committee (the Supervision Committee) of the seventh session of the
Board of the Company, as well as at the fourth special meeting of independent
directors of the seventh session of the Board of the Company.
The Company will continue to disclose the implementation circumstances of the
undertakings by the relevant undertaking entities in the periodic reports.
The Board of Directors of Air China Limited
Beijing, the PRC, 30 October 2025
The Future Plan for Dividend Return to the Shareholders for the Coming Three
Years (2025-2027) of Air China Limited is written in Chinese, with no official
English translation. The English translation is provided solely for reference
only. In case of any discrepancy between the Chinese and English versions, the
Chinese version shall prevail. The full version of the Future Plan for
Dividend Return to the Shareholders for the Coming Three Years (2025-2027) of
Air China Limited is as follows:
In order to improve and enhance the shareholder return and dividend
distribution systems of Air China Limited (hereinafter referred to as the
"Company"), establish a scientific, sustainable and stable decision-making and
monitoring mechanism for dividend distribution, as well as guiding investors
in pursuing long-term investment and reasonable investment principles, the
Board of the Company has, taking into account the actual situation of the
Company, formulated the Future Plan for Dividend Return to the Shareholders
for the Coming Three Years (2025-2027) of Air China Limited 《(
中國國際航空股份有限公司未來三年（2025-2027年）股東分紅回報規劃》)
(hereinafter referred to as the "Plan") according to the requirements of the
relevant documents such as Regulatory Guidelines on Listed Companies No. 3 -
Cash Dividends of Listed Companies 《(
上市公司監管指引3號--上市公司現金分紅》), and the Articles
of Association of Air China Limited (hereinafter referred to as the "Articles
of Association"). Details of the Plan are as follows:
I. FACTORS CONSIDERED BY THE COMPANY IN THE FORMULATION OF THE PLAN
In order to achieve long-term and sustainable development, the Company
considers various factors, such as the actual circumstances and development
goals of the Company, wishes and desires of the shareholders, external
financing costs, financing environment, together with the profit scale, cash
flows, stage of development and current capital requirements, so as to achieve
a balance between the short-term benefits and long-term returns of the
shareholders. It has also established a sustainable, stable and scientific
return plan and mechanism for investors and set up distinct systematic
arrangements for profit distribution of the Company in order to ensure the
continuity and stability of its profit distribution policy.
II. PRINCIPLES IN THE FORMULATION OF THE PLAN
The Plan was formulated in accordance with laws, regulations and normative
documents, including the Company Law of the People's Republic of China, and
the Articles of Association. The Company implements a sustainable and stable
profit distribution policy, while taking full account of the opinions of the
shareholders, especially the minority shareholders and independent directors.
As for profit distribution, the Company places emphasis on reasonable
investment returns for investors, while taking into account its sustainable
development. Provided that the requirements of the Company's production
operations and sustainable development for funds are satisfied, priority shall
be given to the distribution of cash dividends. The Company's comprehensive
cash dividend system maintains the consistency, rationality and stability of
the cash dividend policy. Meanwhile, based on the current situation of the
Company's operation and business development goals, the Company shall give due
consideration to the use of retained earnings after distributing cash
dividends and its own funds so as to ensure further stable growth of operation
and long-term investment returns for shareholders in the future.
III. DETAILS OF THE FUTURE PLAN FOR DIVIDEND RETURN TO THE SHAREHOLDERS FOR THE COMING THREE YEARS (2025-2027)
(1) Profit distribution method of the Company
The Company shall distribute dividends by way of cash, shares or a combination
of cash and shares, or in other forms as permitted by laws, administrative
regulations, departmental rules and regulatory rules of the places where the
Company is listed. The Company shall give priority to dividend distribution by
way of cash dividends according to the actual circumstances.
The Company may, when operating well, propose the dividend distribution plan
by way of shares if the conditions for cash dividend distribution are
satisfied, with the Board of Directors considering that the Company's share
price is not compatible with the share capital scale of the Company and that
the distribution of share dividends is in the interest of all shareholders of
the Company as a whole. Having taken full account of the return to investors,
the Company may distribute dividends to the shareholders on an annual basis in
a fixed proportion out of the distributable profit realised for that year as
shown in the financial statements of the parent company. The Company may
distribute interim profit where the relevant conditions are satisfied.
(2) Profit distribution conditions and proportion
1. Specific conditions, proportion and time interval for distribution of cash dividends
Except for special circumstances, if the distributable profit (meaning the
profits after covering losses, appropriating reserves and deducting other
items from the after-tax profits as approved by the relevant state departments
in accordance with the Articles of Association) achieved for the year as shown
in the financial statements of the parent company prepared in accordance with
applicable domestic and foreign accounting standards and regulations is
positive, the Company shall adopt the cash dividend distribution method and
distribute not less than 15% of the applicable distributable profit in cash
each year.
The applicable distributable profits represent the distributable profits in
the financial statement of the parent company prepared in accordance with
applicable domestic and overseas accounting standards and rules, whichever is
lower.
Special circumstances refer to occasions where the Board of Directors opines
that the ongoing operation and long-term development of the Company would be
affected by the cash dividends distribution.
Provided the abovementioned conditions for the distribution of cash dividends
are satisfied, the Company shall generally distribute cash dividends once a
year. The Board of Directors of the Company can propose the annual
shareholders' meeting to consider and approve the conditions of the
distribution of interim cash dividend, the proportional limits, and the cap
amount, etc. for the subsequent year according to the Company's status in
terms of profitability and capital needs, and the board of directors shall
formulate a specific interim
dividend plan based on the resolution of the annual shareholders' meeting, and
distribute interim cash dividend, provided that the conditions for profit
distribution are met. The maximum amount of interim dividend distribution of
the Company shall not exceed the net profit attributable to shareholders of
the Company for the corresponding period.
2. Conditions for distribution of stock dividends
The Company may propose a stock dividend distribution plan when the aforesaid
conditions for cash dividend distribution are satisfied and as the Company is
operating well, the Board of Directors considers that the Company's stock
price is not compatible with the equity scale of the Company and that the
distribution of stock dividends is in the interest of all shareholders of the
Company as a whole.
3. Differentiated cash dividend policy
For the next three years, with the following circumstances identified, the
Board of Directors of the Company shall propose a differentiated cash dividend
policy after making an overall consideration of various factors, such as the
characteristics of the industry in which the Company operates, the stage of
development, its business model, profitability, solvency, whether significant
capital expenditure arrangements exist and return to investors, in accordance
with the procedures stipulated in the Articles of Association:
(1) where the Company is in a mature stage of development
without significant capital expenditure arrangements, when distributing
profits, cash dividends shall account for a minimum of 80% of the profits to
be distributed;
(2) where the Company is in a mature stage of development with
significant capital expenditure arrangements, when distributing profits, cash
dividends shall account for a minimum of 40% of the profits to be distributed;
(3) where the Company is in a growth stage of development with
significant capital expenditure arrangements, when distributing profits, cash
dividends shall account for a minimum of 20% of the profits to be distributed;
if it is not easy to identify the Company's stage of development but
significant capital expenditure arrangements exist, profit distribution may be
made in accordance with the preceding paragraph (3).
The stage in which the Company is situated at the time of actual distribution
of dividends shall be determined by the Board of Directors of the Company
according to the specific circumstances.
(3) Profit distribution plan review procedures
The Company's dividend distribution proposal prepared by the Company's
management shall be submitted to the Audit and Risk Management Committee (the
Supervision Committee) and the Board of Directors for consideration. The Board
of Directors shall discuss fully the rationality of the profit distribution
proposal and shall, after making a special resolution, submit the proposal to
the shareholders' meeting for consideration.
When formulating the specific proposal for cash dividends, the Board of
Directors shall carefully examine and deliberate various matters, such as the
timing, conditions, minimum proportion, conditions for adjustment and
requirements of its decision-making process in respect of the Company's
distribution of cash dividends.
Should independent directors believe that the specific plan for distribution
of cash dividends may prejudice the interests of the Company or minority
shareholders, they have the right to express an independent opinion. If the
Board does not adopt or only partially adopts the opinions of independent
directors, the independent directors' opinions and the specific reasons for
not adopting them shall be included in the Board resolution and be disclosed.
Where the Company deems it necessary to adjust or amend the cash dividends
policy as determined in the Articles of Association under the special
circumstances as prescribed in Article 174 of the Articles of Association, the
Board of Directors shall conduct a detailed verification of the specific
reasons for such adjustment or amendment, the exact purpose for the retained
profit of the Company and the projected investment return. The Board of
Directors shall then follow the corresponding decision-making procedures, and
the adjustment or amendment shall be approved by at least two-thirds of the
voting rights held by the shareholders attending the shareholders' meeting.
Before the specific plan for distribution of cash dividends is considered at
the shareholders' meeting, the Company shall proactively engage with the
shareholders, particularly the minority shareholders, through various
channels. It shall fully consider the opinions and requests of the minority
shareholders and timely address their questions of concern.
IV. FORMULATION OF AND ADJUSTMENTS TO THE SHAREHOLDER RETURN PLAN
(1) The Company shall formulate and adjust the shareholder
return plan in accordance with the requirements of laws, regulations,
normative documents and regulatory authorities, as well as the actual
circumstances of the Company and the opinions of the shareholders (especially
small and medium shareholders).
(2) Having taken full account of the profit scale, cash flow,
stage of development and current capital requirements of the Company, as well
as the opinions of the shareholders (especially small and medium
shareholders), the Company shall formulate the shareholder return plan, while
the Board of Directors shall review and deliberate matters relating to
shareholder returns, and the plan will be submitted to the shareholders'
meeting for consideration and approval.
(3) If it is really necessary for the Company to adjust its
established shareholder return plan due to the external business environment
or the Company's business needs, the Board of Directors shall discuss in
detail the reasons for such adjustment, and compile a discussion report, which
shall be submitted to the shareholders' general meeting for approval by way of
special resolution. In considering any changes to the dividend distribution
policy, the Company may take the initiative in communicating and exchanging
opinions with the shareholders, especially small and medium shareholders,
through various channels (e.g. online voting and inviting small and medium
shareholders to meetings) to fully listen to their views and appeals, and give
a timely reply to their questions of concern.
V. OTHER MATTERS IN RELATION TO THE PLAN
(1) The Plan shall be effective from the date of consideration
and approval at a shareholders' general meeting of the Company, and these
provisions shall apply likewise to any revisions to the Plan.
(2) Any matters not covered herein shall be handled in
accordance with the requirements of relevant laws and regulations as well as
normative documents and the Articles of Association.
(3) The Plan shall be construed by the Board of Directors of the
Company.
Air China Limited
30 October 2025
1. RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept
full responsibility, includes particulars given in compliance with the Hong
Kong Listing Rules for the purpose of giving information with regard to the
Group. The Directors, having made all reasonable enquiries, confirm that to
the best of their knowledge and belief, the information contained in this
circular is accurate and complete in all material respects and not misleading
or deceptive, and there are no other matters the omission of which would make
any statement herein or this circular misleading.
2. DISCLOSURE OF INTERESTS OF DIRECTORS
As at the Latest Practicable Date, none of the Directors or chief executive of
the Company had interests or short positions in the shares, underlying shares
and/or debentures (as the case may be) of the Company or its associated
corporations (within the meaning of Part XV of the SFO) which were notifiable
to the Company and the Hong Kong Stock Exchange pursuant to the SFO, or were
recorded in the register maintained by the Company pursuant to section 352 of
the SFO, or which were notifiable to the Company and the Hong Kong Stock
Exchange pursuant to the Model Code for Securities Transactions by Directors
of Listed Issuers.
As at the Latest Practicable Date, none of the Directors of the Company had
any direct or indirect interest in any assets which have been, since 31
December 2024 (being the date to which the latest published audited financial
statements of the Group were made up), acquired or disposed of by or leased to
any member of the Group or are proposed to be acquired or disposed of by or
leased to any member of the Group.
As at the Latest Practicable Date, none of the Directors of the Company was
materially interested in any contract or arrangement which is significant in
relation to the business of the Group and subsisting as at the Latest
Practicable Date.
Mr. Patrick Healy, a non-executive Director, is concurrently the chairman and
an executive director of Cathay Pacific. Cathay Pacific is a substantial
shareholder of the Company, holding 2,633,725,455 H Shares of the Company
(representing approximately 15.09% of the total issued shares of the Company)
as at the Latest Practicable Date. Mr. Wang Mingyuan, an executive Director,
is concurrently non-executive director of Cathay Pacific. Cathay Pacific
competes or is likely to compete either directly or indirectly with some
aspects of the business of the Company as it operates airline services to
certain destinations, which are also served by the Company.
Save as disclosed above, as at the Latest Practicable Date, none of the
Directors of the Company and their respective close associates (as defined in
the Hong Kong Listing Rules) had any competing interests which would be
required to be disclosed under Rule 8.10 of the Hong Kong Listing Rules.
3. DISCLOSURE OF INTERESTS OF SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as the Directors were aware, the
following persons (not being a Director or chief executive of the Company or
their associate) had an interest or short position (if any) in the Shares or
the underlying Shares which would fall to be disclosed to the Company under
Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the
register of the Company required to be kept under section 336 of the SFO:
Approximate percentage of the total number of Shares in issue Percentage of the Percentage of the
total issued A Shares of the total issued H Shares of the
Type and number of shares held Company Company
Name Type of interests
CNAHC Beneficial owner 7,421,462,701 (L) 42.53% 59.41% -
A Shares
CNAHC((1)) Equity attributable 1,332,482,920 (L) 7.64% 10.67% -
A Shares
CNAHC((1)) Equity attributable 616,779,308 (L) 3.54% - 12.45%
H Shares
CNACG Beneficial owner 1,332,482,920 (L) 7.64% 10.67% -
A Shares
CNACG Beneficial owner 616,779,308 (L) 3.54% - 12.45%
H Shares
Cathay Pacific Beneficial owner 2,633,725,455 (L) 15.09% - 53.15%
H Shares
Swire Pacific Limited((2)) Equity attributable 2,633,725,455 (L) 15.09% - 53.15%
H Shares
John Swire & Sons (H.K.) Limited((2)) Equity attributable 2,633,725,455 (L) 15.09% - 53.15%
H Shares
John Swire & Sons Limited((2)) Equity attributable 2,633,725,455 (L) 15.09% - 53.15%
H Shares
Notes:
(1) By virtue of CNAHC's 100% interest in CNACG, CNAHC was
deemed to be interested in the 1,332,482,920 A Shares and 616,779,308 H Shares
directly held by CNACG.
(2) By virtue of John Swire & Sons Limited's 100% interest
in John Swire & Sons (H.K.) Limited and their approximately 64.45% equity
interest and 70.97% voting rights in Swire Pacific Limited, and Swire Pacific
Limited's approximately 43.11% interest in Cathay Pacific as at the Latest
Practicable Date, John Swire & Sons Limited, John Swire & Sons (H.K.)
Limited and Swire Pacific Limited were deemed to be interested in the
2,633,725,455 H Shares of the Company directly held by Cathay Pacific.
(3) The letter "L" denotes a long position in the Shares.
Save as disclosed above, as at the Latest Practicable Date, no other persons
(not being a Director or chief executive of the Company or their associate)
had any interest or short position (if any) in the Shares or the underlying
Shares which would fall to be disclosed to the Company under Divisions 2 and 3
of Part XV of the SFO, or which were recorded in the register of the Company
required to be kept under section 336 of the SFO.
4. SERVICE CONTRACTS OF DIRECTORS
As at the Latest Practicable Date, none of the Directors had any existing or
proposed service contract with any member of the Group which is not expiring
or terminable by the Group within one year without payment of compensation
(other than statutory compensation).
5. DIRECTORS' EMPLOYMENT WITH SUBSTANTIAL SHAREHOLDERS
The followings are the particulars of Directors' employment with substantial
Shareholders (holding interests or short positions in the shares and
underlying shares of the Company required to be disclosed to the Company
pursuant to Divisions 2 and 3 of Part XV of the SFO) as at the Latest
Practicable Date:
Mr. Liu Tiexiang, an executive Director, the chairman of the Board and the
member of the Party Committee, member of the Standing Committee and the
secretary of the Party Committee of the Company, serves as the chairman and
secretary of the Party Leadership Group of CNAHC.
Mr. Wang Mingyuan, an executive Director, the vice chairman of the Board, the
president and the deputy secretary of the Party Committee of the Company,
serves as a director, the general manager, a member of the Party Leadership
Group and the deputy secretary of the Party Leadership Group of CNAHC. He is
also a non-executive director of Cathay Pacific.
Mr. Cui Xiaofeng, a non-executive Director of the Company, is a director, a
member of the Party Leadership Group and the deputy secretary of the Party
Leadership Group of CNAHC.
Mr. Patrick Healy, a non-executive Director of the Company, is the chairman of
the board of directors and an executive director of Cathay Pacific, a director
of Swire Pacific Limited, and a director of John Swire & Sons (H.K.)
Limited.
Mr. Xiao Peng, the employee representative Director of the Company, serves as
the employee representative director of CNAHC.
6. NO MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, there has been no material adverse change
in the Group's financial or trading position since 31 December 2024, being the
date to which the latest published audited financial statements of the Group
have been made up.
7. LITIGATION
As at the Latest Practical Date, the Company was not involved in any
significant litigation or arbitration and to the knowledge of the Company,
there were no litigation or claims of material importance pending or
threatened against any member of the Group.
8. EXPERT
The following is the qualification of the expert who has given its opinions or
advices, which are contained in this circular:
Name Qualification
BaoQiao Partners a corporation licensed to carry out Type 6 (advising on corporate finance)
regulated activity under the SFO
a. As at the Latest Practicable Date, BaoQiao Partners did not
have any direct or indirect interests in any assets which have been acquired
or disposed of by or leased to any member of the Group, or are proposed to be
acquired or disposed of by or leased to any member of the Group since 31
December 2024 (being the date to which the latest published audited financial
statements of the Group were made up);
b. As at the Latest Practicable Date, BaoQiao Partners was not
beneficially interested in the share capital of any member of the Group and
had no right, whether legally enforceable or not, to subscribe for or to
nominate persons to subscribe for securities in any member of the Group; and
c. BaoQiao Partners has given and has not withdrawn its
written consent to the issue of this circular with inclusion of its opinion
and the references to its name, logo and qualification included herein in the
form and context in which they respectively appear. The letter and
recommendation from BaoQiao Partners are given as of the date of this circular
for incorporation herein.
9. MISCELLANEOUS
a. The company secretary of the Company is Mr. Xiao Feng.
b. The registered address of the Company is at 1st Floor - 9th
Floor 101, Building 1, 30 Tianzhu Road, Shunyi District, Beijing, the PRC. The
head office of the Company is at No. 30 Tianzhu Road, Shunyi District,
Beijing, the PRC.
c. The H Share registrar and transfer office of the Company
is Computershare Hong Kong Investor Services Limited, the address of which is
Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong
Kong.
10. DOCUMENTS ON DISPLAY
Copies of the following documents will be published on the websites of the
Hong Kong Stock Exchange (www.hkexnews.hk) (http://www.hkexnews.hk/) and the
Company (www.airchina.com.cn) (http://www.airchina.com.cn/) for a period of 14
days from the date of this circular:
a. the Subscription Agreement; and
b. this circular.
中國國際航空股份有限公司
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 00753)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the "EGM") of
Air China Limited (the "Company") will be held at 11:00 a.m. on Tuesday, 16
December 2025 at The Conference Room C713, No. 30 Tianzhu Road, Shunyi
District, Beijing, the PRC to consider and, if thought fit, to pass the
following resolutions. Unless otherwise indicated, capitalised terms used
herein shall have the same meaning as those defined in the circular of the
Company dated 28 November 2025.
1. To consider and approve the resolution in relation to the
satisfaction of the Company of the conditions for the Issuance of A Shares to
Specific Investors.
2. To consider and approve the resolution in relation to the
proposal of the Issuance of A Shares to Specific Investors by the Company in
2025.
2.1 type and par value of Shares issued
2.2 method and time of issuance
2.3 subscribers and method of subscription
2.4 issue price and pricing method
2.5 number of issuance
2.6 lock-up arrangement
2.7 listing venue
2.8 arrangement relating to the accumulated undistributed profits
prior to the Issuance
2.9 amount and use of proceeds
2.10 validity period of the resolution on the Issuance
3. To consider and approve the resolution in relation to the
preliminary proposal of the Issuance of A Shares to Specific Investors by the
Company in 2025.
4. To consider and approve the resolution in relation to the
discussion and analysis report on the proposal of the Issuance of A Shares to
Specific Investors by the Company in 2025.
5. To consider and approve the resolution in relation to the
feasibility analysis report on the use of proceeds from the Issuance of A
Shares to Specific Investors by the Company in 2025.
6. To consider and approve the resolution in relation to the
related (connected) transaction concerning the entering into of the
conditional A share subscription agreement with specific investors by the
Company.
7. To consider and approve the resolution in relation to the
report on use of proceeds from previous fund-raising activities of the
Company.
8. To consider and approve the resolution in relation to the
dilution of the Company's current return by the Issuance of Shares to Specific
Investors in 2025, the remedial measures and the undertakings made by the
relevant entities in respect of such measures.
9. To consider and approve the resolution in relation to the
future plan of the Company for dividend returns to the Shareholders for the
coming three years (2025 - 2027).
10. To consider and approve the resolution in relation to the
authorization by the Shareholders' meeting to the Board and its authorized
person(s) to proceed with relevant matters in respect of the Issuance of
Shares to Specific Investors by the Company in their sole discretion.
The above resolutions No. 1, No. 7, No. 8 and No. 9 are ordinary resolutions; the remaining resolutions are special resolutions.
By Order of the Board
Air China Limited
Xiao Feng
Company Secretary
Beijing, the PRC, 28 November 2025
As at the date of this notice, the directors of the Company are Mr. Liu
Tiexiang, Mr. Wang Mingyuan, Mr. Cui Xiaofeng, Mr. Patrick Healy, Mr. Xiao
Peng, Mr. Xu Niansha*, Mr. He Yun*, Ms. Winnie Tam Wan-chi* and Mr. Gao
Chunlei*.
* Independent non-executive director of the Company
Notes:
1. Closure of register of members and eligibility for
attending and voting at the EGM
The register of members of H shares of the Company will be closed from
Thursday, 11 December 2025 to Tuesday, 16 December 2025 (both days inclusive),
during which time no transfer of H shares of the Company will be effected and
registered. In order to qualify for attendance and voting at the EGM, H
Shareholders must lodge the instruments of transfer accompanied by share
certificates and other appropriate documents with the Company's H share
registrar, Computershare Hong Kong Investor Services Limited, at Shops
1712-16, 17/F, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, by
4:30 p.m. on Wednesday, 10 December 2025.
H Shareholders whose names appear on the register of members of H shares of
the Company at the close of business on Wednesday, 10 December 2025 are
entitled to attend and vote at the EGM.
2. Proxy
Every Shareholder who has the right to attend and vote at the EGM is entitled
to appoint one or more proxies, whether or not they are members of the
Company, to attend and vote on his/her behalf at the EGM.
A proxy shall be appointed by an instrument in writing. Such instrument shall
be signed by the appointor or his attorney duly authorized in writing. If the
appointor is a legal person, then the instrument shall be signed under a legal
person's seal or signed by its director or an attorney duly authorized in
writing. The instrument appointing the proxy for holders of H Shares shall be
deposited at the Company's H share registrar not less than 24 hours before the
time specified for the holding of the EGM (or any adjournment thereof). If the
instrument appointing the proxy is signed by a person authorized by the
appointor, the power of attorney or other document of authority under which
the instrument is signed shall be notarized. The notarized power of attorney
or other document of authority shall be deposited together and at the same
time with the instrument appointing the proxy at the Company's H share
registrar.
3. Other businesses
(i) The EGM is expected to last for no more than a half of a
business day. Shareholders and proxies attending the meeting shall be
responsible for their own traveling and accommodation expenses.
(ii) The address of Computershare Hong Kong Investor Services
Limited is: 17M Floor
Hopewell Centre
183 Queen's Road East Wan Chai
Hong Kong
Tel No.: (852) 2862 8628
Fax No.: (852) 2865 0990
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