Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CONNECTED TRANSACTION

FORMATION OF A JOINT VENTURE

The Board of the Company announces that, on 13 August 2020, Tianshenggang Power, a subsidiary of the Company, entered into an investment agreement (the

  • Investment Agreement") with Longyuan Environmental, Jin Tong Ling for the formation of a joint venture (the "Joint Venture"). Tianshenggang Power, a subsidiary of the Company, will contribute RMB51 million in cash to the Joint Venture, accounting for 51% of the total registered capital of the Joint Venture.

As at the date of this announcement, CHN Energy, being the controlling shareholder of the Company, directly and indirectly holds approximately 58.44% of the issued share capital of the Company and is a connected person of the Company under Rule 14A.07 of the Listing Rules. Longyuan Environmental is a wholly-owned subsidiary of Guodian Tech (a company listed on the Hong Kong Stock Exchange, stock code: 01296), which is in turn a subsidiary of CHN Energy. Longyuan Environmental is therefore a connected person of the Company under Chapter 14A of the Listing Rules and the formation of the Joint Venture constitutes a connected transaction of the Company.

As one or more of the applicable percentage ratio (as defined under the Listing Rules) is more than 0.1% but less than 5%, this transaction shall be subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

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INVESTMENT AGREEMENT IN RELATION TO THE FORMATION OF THE JOINT VENTURE

On 13 August 2020, Tianshenggang Power, a subsidiary of the Company, entered into the Investment Agreement with Longyuan Environmental, Jin Tong Ling for the formation of the Joint Venture. The summary of the major terms of the Investment Agreement is set out as follows:

PARTIES

Tianshenggang Power, Longyuan Environmental, Jin Tong Ling (hereinafter individually or collectively as the "Investor(s)")

BUSINESS SCOPE OF THE JOINT VENTURE

The Joint Venture will be principally engaged in: gas and liquid separation and manufacturing of purification equipment; gas and liquid separation and sale of purification equipment; heat production and supply; energy management contract; solar power generation technology services; solid waste treatment; water pollution control and treatment; energy management services; project management services; technical services, technology development, technical consultation, technical exchange, technology transfer, technology promotion, etc. (subject to the final review by and registration with the administration department for industry and commerce).

NAME OF THE JOINT VENTURE

Nantong Tianshenggang Smart Energy Company (subject to the final review by the administration department for industry and commerce)

Amount

of capital

Percentage of

contribution

shareholding

to the Joint

in the Joint

Parties

Venture

Venture

(RMB'0000)

(%)

Tianshenggang Power

5,100

51

Longyuan Environmental

2,600

26

Jin Tong Ling

2,300

23

Total

10,000

100

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The amount of capital contribution under the Investment Agreement was determined after arm's length negotiation between the Company and the other Investors of the Joint Venture.

SCHEDULE FOR THE CONTRIBUTION

The amount of the first payment of the capital contribution is RMB30 million, which will be made within two months after the approval by the shareholders of the Joint Venture at a general meeting following the incorporation of the Joint Venture. The amount of the second payment of the capital contribution is RMB30 million, which will be made before 30 December 2023. The amount of the third payment of the capital contribution is RMB40 million, which will be made before 30 December 2025.

The above three payments shall be made by the three parties according to their respective contribution percentage. The amount and specific time for the second and third payment of the capital contribution shall be determined according to the investment progress of the investment project and be implemented after the unanimous approval by the shareholders of the Joint Venture as a whole.

LIABILITIES ON DEFAULT

Any Investor who breaches the Investment Agreement for delinquency on payment or underpayment shall pay the other parties liquidated damages at an amount which equals to 0.5% of the underpayment for each overdue day. The other parties are entitled to jointly determine whether to terminate the qualification of any Investor who fails to make his payment after one month since its default as an Investor, or request it to perform its contribution obligation.

Any Investor who does not make the contribution as required which results in the failing of the establishment of the Joint Venture shall assume the liabilities for its default by paying to the other Investors or the Joint Venture an amount which equals to 2% of the unpaid capital contribution.

Any Investor who damages the interests of the other Investors or the Joint Venture deliberately or by material faults during the establishment of the Joint Venture shall assume the liabilities for its default by compensating the other Investors or the Joint Venture.

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GOVERNANCE STRUCTURE OF THE JOINT VENTURE

The board of directors of the Joint Venture shall consist of five directors, among which, two from Tianshenggang Power, one from each of Longyuan Environmental and Jin Tong Ling, and one from the employee directors. The board of directors of the Joint Venture will be chaired by one chairman whose candidate shall be recommended by Tianshenggang Power and appointed through selection procedure with more than half of the votes of all the directors. The chairman of the board of directors is the legal representative of the Joint Venture.

The Joint Venture shall have one general manager, who will be nominated by the chairman of the board of directors and appointed by the board of directors with Tianshenggang Power's recommendation after seeking for the opinions and the unanimous agreement of other shareholders. The candidate of the chief financial officer shall be recommended by Tianshenggang Power, nominated by the general manager and appointed by the board of directors. Each of Tianshenggang Power, Longyuan Environmental and Jin Tong Ling shall recommend a candidate for vice general manager who will be nominated by the general manager and appointed by the board of directors.

The Joint Venture shall set up a board of supervisors consisting of four supervisors. Two of them shall be nominated by each of Longyuan Environmental and Jin Tong Ling, respectively and another two of them shall be employee supervisors. The board of supervisors shall have a chairman to be nominated by Longyuan Environmental and elected and appointed through more than half of the votes of all the supervisors.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Joint Venture will build a centralized compressed air supply station powered by heating steam in plants of the Tianshenggang Power, and provide centralized steam supply to the outside through cogeneration of steam and heat. Tianshenggang Power can significantly increase the heating load and promote the operating time of the unit and utilization hours of power generation to create new profit growth points for the Company. The terms of the Investment Agreement were determined after arm's length negotiations between all parties. The directors (including independent non-executive directors) consider that the terms of the Investment Agreement are determined on normal commercial terms in the usual and ordinary business course of the Company, fair and reasonable and in the interests of the Company and its shareholders as a whole. The directors (including independent non-executive directors) believe that the formation of the Joint Venture will make full use of the superior resources of the partners to further expand the external market, accelerate the deployment of Tianshenggang Power in the fields of distributed energy, hydrogen energy, energy and information, environmental engineering, water environmental governance and solid waste treatment, and promote the development of Tianshenggang Power from the traditional coal power industry to comprehensive smart new energy industry.

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Mr. Liu Jinhuan, Mr. Yang Xiangbin and Mr. Zhang Xiaoliang, non-executive directors of the Company, are appointed by and hold positions in CHN Energy and have material interests in this transaction. They have abstained from voting on the resolution for the approval of the Investment Agreement and the transactions thereunder at the Board meeting. Save as disclosed above, there are no other directors of the Company who have any material interests in this transaction.

LISTING RULES IMPLICATIONS

As at the date of this announcement, CHN Energy, being the controlling shareholder of the Company, directly and indirectly holds approximately 58.44% of the issued share capital of the Company and is a connected person of the Company under Rule 14A.07 of the Listing Rules. Longyuan Environmental is a subsidiary of Guodian Tech (a company listed on the Hong Kong Stock Exchange, stock code: 01296), which is in turn a subsidiary of CHN Energy. Longyuan Environmental is therefore a connected person of the Company under Chapter 14A of the Listing Rules and the formation of the Joint Venture constitutes a connected transaction of the Company.

As one or more of the applicable percentage ratio (as defined under the Listing Rules) is more than 0.1% but less than 5%, this transaction shall be subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

GENERAL INFORMATION

Information on the Company and Tianshenggang Power

The Company is a leading wind power generation company in the PRC, primarily engaged in the design, development, construction, management and operation of wind farms. In addition to the wind power business, the Company also operates other power projects such as coal power, solar power, tidal, biomass and geothermal energy. Meanwhile, the Company also provides consultation, repair and maintenance, training and other professional services to wind farms, as well as manufactures and sells power equipment used in the power grids, wind farms and coal power plants. The ultimate beneficial owner of the Company is CHN Energy.

Tianshenggang Power is a subsidiary of the Company and mainly engaged in production and sales of electricity, heat and related products, port operations for cargo unloading and warehousing, and thermal power unit inspection and maintenance, etc. The ultimate beneficial owner of Tianshenggang Power is CHN Energy.

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Information on Longyuan Environmental

Longyuan Environmental is a wholly-owned subsidiary of Guodian Tech (a company listed on the Hong Kong Stock Exchange, stock code: 01296), a leading enterprise in the desulfurization and denitrification business of the domestic thermal power industry, which is mainly engaged in desulfurization and denitrification EPC, franchising, environmental protection equipment manufacturing, environmental engineering, water environment treatment and solid waste treatment, etc. As of the date of this announcement, CHN Energy directly and indirectly holds approximately 78.40% of the issued share capital of Guodian Tech and is the ultimate beneficial owner of Longyuan Environmental.

Information on Jin Tong Ling

Jin Tong Ling is a company listed on the Shenzhen Stock Exchange (stock code: 300091), whose main products and research and development fields involve high-efficiency centrifugal air compressor, distributed power supply, emergency power supply, cooling system, hydrogen energy, etc., which have capabilities in compressed air station integration, new energy system integration, renewable energy system integration, etc. The ultimate beneficial owner of Jin Tong Ling is the State-owned Assets Supervision and Administration Commission of Nantong Municipal People's Government. To the best of the directors' knowledge and belief, having made all reasonable enquiry, Jin Tong Ling and its ultimate beneficial owner are third parties independent of the Company and its connected persons.

Information on CHN Energy

As a state-owned enterprise established in accordance with the laws of the PRC, CHN Energy is the controlling shareholder of the Company and Longyuan Environmental, and operates eight business segments including coal, thermal power, new energy, hydropower, transportation, chemicals, environmental technology and finance. It is the world's largest producer of coal, thermal power, wind power, as well as coal-to-liquids and coal chemical products.

DEFINITIONS

"Board"

the board of directors of the Company

"CHN Energy"

China Energy Investment Corporation Limited ( 國 家

能 源 投 資 集 團 有 限 責 任 公 司), as at the date of

this announcement, CHN Energy in aggregate directly

and indirectly holds 4,696,360,000 domestic shares

(representing approximately 58.44% of the total issued

share capital of the Company) in the Company, and is

the controlling shareholder of the Company

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"Company"

China Longyuan Power Group Corporation Limited* (

源 電 力 集 團 股 份 有 限 公 司), a joint stock limited

company incorporated in the PRC, the H shares of

which are listed on the Hong Kong Stock Exchange

"connected person"

has the meaning ascribed to it under the Listing Rules

"controlling shareholder"

has the meaning ascribed to it under the Listing Rules

"Guodian Tech"

Guodian Technology & Environment Group Corporation

Limited (a company listed on the Hong Kong Stock

Exchange, stock code: 01296)

"Hong Kong Stock

The Stock Exchange of Hong Kong Limited

Exchange"

"Jin Tong Ling"

Jin Tong Ling Technology Group Co., Ltd.

"Listing Rules"

the Rules Governing the Listing of Securities on The

Stock Exchange of Hong Kong Limited

"Longyuan Environmental"

Beijing Guodian Longyuan Environmental Engineering

Co., Ltd.

"PRC"

The People's Republic of China

"RMB"

Renminbi, the lawful currency of the PRC

"Tianshenggang Power"

Nantong Tianshenggang Power Generation Co., Ltd.

By order of the Board

China Longyuan Power Group Corporation Limited*

Jia Nansong

Vice President, Board Secretary and Joint Company Secretary

Beijing, the PRC, 13 August 2020

As at the date of this announcement, the executive directors of the Company are Mr.Jia Yanbing and Mr. Sun Jinbiao; the non-executive directors are Mr. Liu Jinhuan, Mr.Yang Xiangbin and Mr. Zhang Xiaoliang; and the independent non-executive directors are Mr. Zhang Songyi, Mr. Meng Yan and Mr. Han Dechang.

  • For identification purpose only

- 7 -

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Disclaimer

China Longyuan Power Group Corporation Ltd. published this content on 13 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 August 2020 09:07:20 UTC