DATANG INTERNATIONAL POWER GENERATION COMPANY LD: IFA's Advice on Franchising Contract Term 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. DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 00991) ANNOUNCEMENT INDEPENDENT FINANCIAL ADVISER'S ADVICE ON TERM OF THE FRANCHISING CONTRACT BACKGROUND Reference is made to the announcement of Datang International Power Generation Co., Ltd. (the "Company") dated 2 November 2012 (the "Announcement") in relation to, among others, the Franchising Contract. Capitalized terms used in this announcement shall have the same meanings as defined in the Announcement unless the context required otherwise. As set out in the Announcement, the franchise period under the Franchising Contract is the same as the operating period of the power generation facilities at which the franchise project is located. Since the Desulfurization Assets are the supporting and ancillary facilities of the coal-fired power generating units, the franchise period of the Desulfurization Assets are the same as the operating periods of their corresponding power generating facilities. The term of the Franchising Contract is therefore expected to exceed three years. Rule 14A.35(1) of the Listing Rules provides, in relation to non-exempt continuing connected transactions, that, inter alia, under special circumstances where the nature of the transaction requires the agreement to be of a duration longer than three years, an independent financial adviser to the Company will be required to explain why a longer period for the agreement is required and to confirm that it is normal business practice for agreements of such type to be of such duration. The Board, accordingly, has appointed Mizuho Securities Asia Limited ("Mizuho Securities") as the independent financial adviser to provide advice in relation to the franchise period of the Desulfurization Assets under the Franchising Contract. OPINION OF INDEPENDENT FINANCIAL ADVISER Mizuho Securities opines that on the basis that the Desulfurization Assets are the supporting and ancillary facilities of the coal-fired power generating units, the Desulfurization Assets will operate with the coal-fired power generating units to achieve flue gas desulfurization. As such, it is reasonable that the franchise period of the Desulfurization Assets is the same as the operating period of the corresponding power generation facilities under the Franchising Contract. Since the aforesaid coal-fired power generating units associated with the Desulfurization Assets are designed and built to operate for a relatively long period (typically for more than three years), Mizuho Securities has discussed with the management of the Company and concurs with its view that it is reasonable for the Company to have an expected franchise period to exceed three years. In addition, the Company has provided Mizuho Securities a franchising contract template which it has confirmed to be widely circulated in the industry for the purpose of the compilation of franchising contract in the power industry in the PRC. Mizuho Securities has reviewed such franchising contract template, and noted that the proposed franchising period of the desulfurization assets is the same as the operating period of the corresponding power generating facilities. Mizuho Securities has also reviewed an announcement of a PRC listed power generation company and noted that the power generation company has also entered into a franchising contract in respect of flue gas desulfurization with a connected party. The period of such franchising contract is also the same as the operating period of the power generating facilities under the franchising contract. Having considered the principal factors and reasons described above, Mizuho Securities considers that it is normal business practice for the Franchising Contract to be of the same duration of the operating period of the coal-fired power generating units for which it is associated with. By Order of the Board Zhou Gang Secretary to the Board Beijing, the PRC, 22 November 2012 As at the date of this announcement, the Directors of the Company are: Liu Shunda, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia, Guan Tiangang, Mi Dabin, Ye Yonghui, Li Gengsheng, Li Yanmeng*, Zhao Zunlian*, Li Hengyuan*, Zhao Jie*, Jiang Guohua* * Independent non-executive Directors END -0- Nov/22/2012 12:11 GMT
DATANG INTERNATIONAL POWER GENERATION COMPANY LD: IFA's Advice on Franchising Contract Term
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