On 3 November 2018, the People's Government of Liaoning Province and China Merchants Group successfully signed the capital increase agreement in respect of Liaoning Port Cooperation Project in Beijing, pursuant to which China Merchants Group will acquire 49.9% equity of Liaoning Northeast Asia Ports & Shipping Development Co., Ltd. ("LPSD"). Mr. Xiao Yaqing, Chairman of the State-owned Assets Supervision and Administration Commission of the State Council, Mr. He Jianzhong, Vice Minister of Ministry of Transport of the People's Republic of China, Mr. Liu Liange, President of Bank of China, Mr. Lv Jiajin, President of Postal Savings Bank of China, Mr. Zhang Guangzhi, member of the CPC Leadership Group of General Administration of Customs, People's Republic of China and head of the National Office of Port Administration, Mr. Tang Yijun, Governor of Liaoning province, Mr. Li Jianhong, Chairman of China Merchants Group and relevant person in charge from National Development and Reform Commission, the People's Bank of China, China Securities Regulatory Commission, Industrial and Commercial Bank of China, China Construction Bank, Agriculture Bank of China and Bank of Communications attended the signing ceremony. The ceremony was presided over by Mr. Li Jinke, Vice Governor and secretary general of Liaoning province. Mr. Wang Dawei, Vice Governor of Liaoning province and Mr. Fu Gangfeng, general manager of China Merchants Group signed the Memorandum of Liaoning Ports Cooperation on behalf of the People's Government of Liaoning Province and China Merchants Group, respectively. Representatives from Liaoning province, Dalian city, Yingkou city, China Merchants Group, Gang Hang Development signed the capital increase agreement in respect of Liaoning province's ports cooperation. This transaction marks substantial progress in the integration operation of port resources in Liaoning province.
LPSD is a platform for the integration of Liaoning ports which holds Dalian Port Group Company (controlling Dalian Port (PDA) Company Limited (601880: Shanghai and 2880: Hong Kong), and holding Jinzhou Port Co., Ltd. (600190: Shanghai)) and Yingkou Port Group Company (controlling Yingkou Port (600317: Shanghai)), and hundreds of subsidiaries including domestic and overseas listed companies. Dalian port is the largest container hub port, oil and liquid chemicals storage and distribution base, and maritime passenger port in Northeast China, the key ore distribution center, bulk cargo transshipment center, the most competitive grain transshipment center, and the automobile shipping port with the highest growth potential in Northeast China. Yingkou port is the largest container hub port of domestic trade in Northeast China and an important marine-railway combined logistics transportation hub of "The Belt and Road" between China and Europe. LPSD will become one of the largest port groups in China in terms of assets and throughput upon the completion of the integration project. LPSD will serve as a firm foundation for building an international shipping center in Northeast Asia and significantly improve the international competitiveness of the region.
As the legal counsel of the project team of the People's Government of Liaoning Province and LPSD, KWM advised on the deal structure, participated in the coordination with relevant government departments, drafted and negotiated transaction documents, advised on the legal matters relating to the integration platform and the two port groups, facilitated the communications among various government entities, project teams of both port groups and China Merchants Group project team, prepared the application for the concentration of undertakings review and related listed company announcements, etc. . KWM team's efficient, high-quality and professional services have been highly recognized by the client and won the trust from both sides of the transaction.
Mr. Zhang Yi, Chairman of KWM China Management Committee, commented, "This project is a milestone of industrial integration between central state-owned enterprise and local government. In this project, KWM pulls together all resources of the firm to support the boost of the real economy and the revitalization of Northeast China, and contributes to the revitalization of Liaoning in the new era."
Mr. Gong Mulong, managing partner of KWM finance and capital department, noted, "This project is of great significance to the industrial integration of Liaoning. Project team members from PE, capital market and banking work closely together, fully reflecting the remarkable advantages of KWM's one-stop comprehensive service capacity when dealing with complex project structure and heavy work in a tight schedule like this."
Ms. Tang Yiyun, partner leading this project, said: "It is a great honor for KWM to participate in this significant industrial M&A and integration project. We'd like to express our sincere gratitude to the leaders of Liaoning government for their outstanding and wise guidance throughout the project, as well as their trust and support for KWM team. As the project involves both the market-oriented strategic M&A by central state-owned enterprise and the government-led industrial integration, we have carried out multi-dimensional communications and taken into account multi-level interests with great care and dedication to this transaction which involves government departments of various levels, central state-owned enterprise, the two port groups and listed companies. Only in this way, can we live up to the trust."
