CHINA SUNTIEN GREEN ENERGY CORPORATION LIMITED *

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1 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. CHINA SUNTIEN GREEN ENERGY CORPORATION LIMITED * (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock Code: 00956) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS RENEWED NOTES POOL SERVICE AGREEMENT Reference is made to the announcements of the Company dated 23 June 2015 and 25 June 2015 in relation to the Existing Notes Pool Service Agreement entered into between Hebei Natural Gas, a subsidiary of the Company, and the Group Finance Company on 23 June The Existing Notes Pool Service Agreement will expire on 31 December On 17 December 2015, Hebei Natural Gas, a subsidiary of the Company, and the Group Finance Company entered into the Renewed Notes Pool Service Agreement, pursuant to which Hebei Natural Gas and its subsidiaries will deposit part of their undue Notes received in the ordinary course of business into the notes pool account opened by the Group Finance Company with a commercial bank which is independent from both parties, and the Group Finance Company will grant the Credit Line to Hebei Natural Gas and its subsidiaries based on the total amount of Notes deposited by Hebei Natural Gas and its subsidiaries at a ratio of 1:0.9 (total amount of Notes: Credit Line). The Credit Line is a revolving line of credit with a maximum credit limit of RMB150 million in aggregate. The Group Finance Company will provide the Credit Financing Services to Hebei Natural Gas and its subsidiaries under such Credit Line (including the provision of RMB/foreign currency loans, acceptance of commercial drafts and issuance of letters of guarantee) and will charge handling fees in respect of certain notes pool services. HECIC is the controlling shareholder of the Company, directly holding approximately 50.5% shares of the Company, and is therefore a connected person of the Company. The Group Finance Company is a subsidiary of HECIC and is also a connected person of the Company. Entering into the Renewed Notes Pool Service Agreement, the deposit of Notes into the notes pool of the Group Finance Company and the execution of the transactions contemplated under the Renewed Notes Pool Service Agreement constitute financial assistance under Rule 14A.24(4) of the Listing Rules, and therefore constitute a continuing connected transaction of the Company under Chapter 14A of Listing Rules. 1

2 With respect to the Credit Financing Services, as the highest applicable percentage ratio (other than the profits ratio) in respect of the maximum credit limit granted to Hebei Natural Gas and its subsidiaries by the Group Finance Company on an annual basis and the total annual interests payable by Hebei Natural Gas and its subsidiaries to the Group Finance Company exceeds 0.1% but are less than 5%, the Credit Financing Services are subject to the reporting, announcement and annual review requirements, but are exempt from the shareholders approval requirements under Chapter 14A of the Listing Rules. With respect to the arrangements concerning the handling fees to be charged on acceptance of commercial drafts and issuance of letters of guarantee, as the highest applicable percentage ratio (other than the profits ratio) in respect of the total handling fees on an annual basis exceeds 0.1% but is less than 5%, such services are subject to the reporting, announcement and annual review requirements, but are exempt from the shareholders approval requirements under Chapter 14A of the Listing Rules. Reference is made to the announcements of the Company dated 23 June 2015 and 25 June 2015 in relation to the Existing Notes Pool Service Agreement entered into between Hebei Natural Gas, a subsidiary of the Company, and the Group Finance Company on 23 June The Existing Notes Pool Service Agreement will expire on 31 December On 17 December 2015, Hebei Natural Gas, a subsidiary of the Company, and the Group Finance Company entered into the Renewed Notes Pool Service Agreement, pursuant to which Hebei Natural Gas and its subsidiaries will deposit part of their undue Notes received in the ordinary course of business into the notes pool account opened by the Group Finance Company with a commercial bank which is independent from both parties, and the Group Finance Company will grant the Credit Line to Hebei Natural Gas and its subsidiaries based on the total amount of Notes deposited by Hebei Natural Gas and its subsidiaries at a ratio of 1:0.9 (total amount of Notes: Credit Line). The Credit Line is a revolving line of credit with a maximum credit limit of RMB150 million in aggregate. The Group Finance Company will provide the Credit Financing Services to Hebei Natural Gas and its subsidiaries under such Credit Line (including the provision of RMB/foreign currency loans, acceptance of commercial drafts and issuance of letters of guarantee) and will charge handling fees in respect of certain notes pool services. RENEWED NOTES POOL SERVICE AGREEMENT Date of signing 17 December 2015 Valid term 1 January 2016 to 31 December

3 Parties (1) Hebei Natural Gas; and (2) the Group Finance Company Major terms (1) Scope of the notes pool services and the Credit Line According to the Renewed Notes Pool Service Agreement, Hebei Natural Gas and its subsidiaries will deposit part of their undue Notes received in the ordinary course of business into the notes pool account opened by the Group Finance Company with a commercial bank which is independent from both parties, and the Group Finance Company will grant the Credit Line to Hebei Natural Gas and its subsidiaries based on the total amount of Notes deposited at a ratio of 1:0.9 (total amount of Notes: Credit Line). Under such Credit Line, the Group Finance Company will provide Hebei Natural Gas and its subsidiaries with the Credit Financing Services (including the provision of RMB/foreign currency loans, acceptance of commercial drafts and issuance of letters of guarantee) and will charge handling fees in respect of acceptance of commercial drafts and issuance of letters of guarantee. The Credit Line is a revolving line of credit with a maximum credit limit of RMB150 million in aggregate. Hebei Natural Gas must ensure that the Credit Line is not lower than the cumulative financing balance (namely, the balance of outstanding loans granted under the Credit Line) of Hebei Natural Gas and its subsidiaries at any time. (2) Notes management Hebei Natural Gas shall notify the Group Finance Company at least two working days in advance for collection at maturity or transfer of the Notes and the rights attached thereto by way of discount or pledge, and the Group Finance Company will assist Hebei Natural Gas in completing the relevant procedures at the commercial bank. Where the Credit Line falls below the cumulative financing balance due to collection at maturity of the Notes deposited by Hebei Natural Gas and its subsidiaries at the notes pool, the Group Finance Company shall have the right to freeze the deposit of Hebei Natural Gas and its subsidiaries at the Group Finance Company at an amount equivalent to the difference between the Credit Line and the cumulative financing balances until the deposit of additional Notes to compensate for the difference in the notes pool. In the event that there is insufficient balance in the settlement account of Hebei Natural Gas and its subsidiaries at the Group Finance Company, the Group Finance Company shall have the right to collect the loans at an earlier date or freeze the funds of Hebei Natural Gas or its subsidiaries, etc. 3

4 (3) Repayment arrangements The parties shall negotiate in good faith about the date of repayment and related matters within 7 days prior to the maturity of relevant loans; if no agreement is reached after negotiation or it is anticipated that the Debtor will be unable to repay its debt when due, the Debtor shall, with the assistance of the Group Finance Company, sell its Notes in the notes pool with the corresponding amount to a designated bank to repay its debts with the proceeds. Pricing Policy According to the Renewed Notes Pool Service Agreement the fees and charges payable by Hebei Natural Gas to the Group Finance Company in respect of the financial services under are determined on the following basis: (1) the operation management of the notes pool is free of charge. (2) the rate of loan financing charges shall be the benchmark interest rate for loans as published by the PBOC from time to time, and shall not be higher than the interest rates offered by the Group Finance Company to other members of HECIC for the same category of loans, nor the interest rates offered to the Group by commercial banks for the same category of loans. (3) acceptance of commercial drafts and issuance of letters of guarantee: the Group Finance Company will collect handling fees, and the applicable rate standards for such fees will be determined by reference to and shall not be higher than the standards adopted by state-owned commercial banks in the PRC. Meanwhile, the rate so charged shall not be higher than the rates offered to the Debtor by other domestic financial institutions for the same category of services, nor the rates offered to other members of the Group by the Group Finance Company for the same category of services. Historical information and amount From the effective date of the Existing Notes Pool Service Agreement to 30 November 2015, given that Hebei Natural Gas and its subsidiaries did not enter into any related transactions with the Group Finance Company after considering its actual business demand, the historical amounts of the transactions under the Existing Notes Pool Service Agreement are nil. 4

5 ANNUAL CAPS AND BASIS OF DETERMINATION Annual caps The Company estimates that the cap of each transaction within the notes pool under the Renewed Notes Pool Service Agreement for the year ending 31 December 2016 is as follows: Period Total amount of handling fees charged in respect of acceptance of Total amount of Notes Maximum Credit Line Total amount of annual interests of the notes pool financing commercial drafts and letters of guarantee RMB (in million) RMB (in million) RMB (in million) RMB (in million) For the year ending 31 December Basis of determination The annual caps on the Credit Line and the total amount of interests were determined by the Directors based on the following: (i) the total amount of undue Notes received from third parties by Hebei Natural Gas and its subsidiaries in the ordinary course of business in 2015; (ii) the estimate volume of natural gas transactions of Hebei Natural Gas involving payment through Notes in 2016; (iii) the financing rates during the term of the Renewed Notes Pool Service Agreement; and (iv) the agreed result after arm s length negotiation between both parties to the Renewed Notes Pool Service Agreement. The handling fees for acceptance of commercial drafts and issuance of letters of guarantee charged by the Group Finance Company were determined by the Directors based on the following: (i) the total amount of handling fees paid by Hebei Natural Gas and its subsidiaries to financial institutions for their services of issuance of commercial drafts and letters of guarantee in the ordinary course of business in 2015; (ii) the estimate transaction volume of Hebei Natural Gas involving payment through commercial drafts or letters of guarantee in 2016; and (iii) the agreed result after arm s length negotiation between both parties to the Renewed Notes Pool Service Agreement. 5

6 REASONS FOR AND BENEFITS OF ENTERING INTO THE RENEWED NOTES POOL SERVICE AGREEMENT The main consideration for the Company to enter into the Renewed Notes Pool Service Agreement with the Group Finance Company is to utilize resources with more flexibility in order to meet the capital requirement for the development of the natural gas business by using the undue Notes collected by Hebei Natural Gas and its subsidiaries in the ordinary course of business for financing. The Group Finance Company is familiar with the Group s operation and it can provide services in a quicker and more efficient way than commercial banks in the PRC. Meanwhile, the financing rates and the handling fees concerning the relevant services offered by the Group Finance Company will be the same as or more favorable than those interest rates or handling fees offered by a third party financial institution. The Directors believe that the risks for the Group to use the relevant notes pool services provided by the Group Finance Company will not be greater than those for the Group to use such services provided by independent commercial banks in the PRC, for the following reasons: (i) Hebei Natural Gas and its subsidiaries use relevant notes pool services provided by the Group Finance Company on a voluntary and non-binding basis, and has no obligation to engage the Group Finance Company with respect to any specific service; (ii) the ownership of the Notes deposited into the notes pool of the Group Finance Company still belongs to Hebei Natural Gas or its subsidiaries, and neither the Group Finance Company nor its creditors can directly exercise any right over all such Notes; and (iii) as a financial institution regulated by the PBOC and the CBRC, the Group Finance Company has strictly complied with the rules and operational requirements of the relevant regulatory authorities, implemented stringent internal control and risk management measures and, to the knowledge of the Company, has not defaulted on any of its credit obligations or breached any rules or operational requirements of such regulatory authorities. INTERNAL CONTROL PROCEDURES AND CORPORATE GOVERNANCE MEASURES To protect shareholders interests, the Company will apply the following internal control procedures and corporate governance measures for utilizing the notes pool services provided by the Group Finance Company: before Hebei Natural Gas or any of its subsidiaries use the services provided by the Group Finance Company, the Company will obtain at least three price quotes from independent financial institutions for the same category of services. The Company will compare such price quotes with the offer from the Group Finance Company and decide whether to use the Group Finance Company s services. all borrowings from the Group Finance Company will be used in accordance with the terms approved by the president of the Company or the Board (as the case may be) and on a case-by-case basis. 6

7 where there are any changes in the fees for the services provided by the Group Finance Company, or where transactions take place between Hebei Natural Gas and its subsidiaries and the Group Finance Company, the Group Finance Company will notify Hebei Natural Gas by about the information concerning the price it offers to other member companies of HECIC with respect to similar services, and the relevant audit departments will verify or examine the updated information on such price. the financial department of the Company will closely monitor the transactions under the Renewed Notes Pool Service Agreement, and review the regulatory report, monthly financial statements and monthly balance statements provided by the Group Finance Company immediately after receiving the same. Any problems identified will be immediately reported to the management of the Company (including the manager of the financial department, chief accountant, vice president and president) and the Board. the financial department of the Company will, on a quarterly basis, report to the independent nonexecutive Directors the following items: (i) the relevant transactions under the Renewed Notes Pool Service Agreement of each quarter, together with information on the comparable price quotes obtained from independent commercial banks; and (ii) any changes in the credit ratings of the Group Finance Company in each quarter. the audit and regulatory department of the Company will review the appropriateness of the system of internal controls for operation and report the results of the review to the management on an annual basis. in the event of any changes in the credit ratings of the Group Finance Company during the term of the Renewed Notes Pool Service Agreement, the Group Finance Company shall forthwith report such change to the Company. the Group Finance Company undertakes that it will operate in strict compliance with the risk monitoring indicators for finance companies issued by the CBRC, and the major monitoring indicators such as gearing ratio, interbank borrowing ratio and liquidity ratio will also be in line with the requirements of the CBRC. GENERAL Information of the Company and the Group The Company is one of the leading clean energy companies in Northern China. Its scope of business includes investment in exploration and utilization projects of natural gas, liquefied natural gas, compressed natural gas, coalbed methane and coal-made natural gas, etc.; investment in the development of new energy projects such as wind power, solar power, and nuclear power, etc.; development of new energy technology and technical services. 7

8 Information of the Group Finance Company The Group Finance Company is a non-banking financial institution regulated by the PBOC and the CBRC. Its scope of business includes: (i) arrangement of financial and financing advisory, credit authentication and relevant consulting and agency services for member companies of HECIC; (ii) assistance in collection and payment of transaction money for member companies of HECIC; (iii) commencement of approved insurance agency business; (iv) provision of guarantees for member companies of HECIC; (v) handling entrusted loan among member companies of HECIC; (vi) bills discounting and acceptance for member companies of HECIC; (vii) handling intra-group money transfer and settlement and planning of relevant settlement and clearance structure among member companies of HECIC; (viii) acceptance of money deposit from member companies of HECIC; (ix) arrangement of loans and finance leases for member companies of HECIC; (x) interbank market transactions; (xi) handling entrusted investment between intra-group company members; (xii) underwriting corporate bonds of intra-group company members; and (xiii) investment in marketable securities. IMPLICATIONS UNDER THE LISTING RULES HECIC is the controlling shareholder of the Company, directly holding approximately 50.5% equity interest in the Company, and is therefore a connected person of the Company. The Group Finance Company is a subsidiary of HECIC, and is also a connected person of the Company. Entering into the Renewed Notes Pool Service Agreement, the deposit of Notes into the notes pool of the Group Finance Company and the execution of the transactions contemplated under the Renewed Notes Pool Service Agreement constitute financial assistance under Rule 14A.24(4) of the Listing Rules, and therefore constitute a continuing connected transaction of the Company under Chapter 14A of Listing Rules. With respect to the Credit Financing Services, as the respective highest applicable percentage ratio (other than the profits ratio) in respect of the maximum credit limit granted to Hebei Natural Gas and its subsidiaries by the Group Finance Company on an annual basis and the total annual interests payable by Hebei Natural Gas and its subsidiaries to the Group Finance Company exceeds 0.1% but are less than 5%, the Credit Financing Services are subject to the reporting, announcement and annual review requirements, but are exempt from the shareholders approval requirements under Chapter 14A of the Listing Rules. With respect to the arrangements concerning the handling fees to be charged on acceptance of commercial drafts and issuance of letters of guarantee, as the highest applicable percentage ratio (other than the profits ratio) in respect of the total handling fees on an annual basis exceeds 0.1% but is less than 5%, such services are subject to the reporting, announcement and annual review requirements, but are exempt from the shareholders approval requirements under Chapter 14A of the Listing Rules. As four Directors, namely, Dr. Cao Xin, Mr. Qin Gang, Ms. Sun Min and Mr. Wu Huijiang, hold positions in HECIC, they have abstained from voting on the resolutions of the Board approving the signing of the Renewed Notes Pool Service Agreement and the transactions contemplated thereunder in accordance with the articles of association of the Company. Also, given that Dr. Liu Zheng, a nonexecutive Director, is nominated by HECIC, he has abstained from voting on the resolution of the Board approving the signing of the Renewed Notes Pool Service Agreement and the transactions contemplated 8

9 thereunder. Save for the above, none of the Directors has any material interest in the transactions contemplated under the Renewed Notes Pool Service Agreement. Therefore, no other Director is required to abstain from voting on the relevant resolutions of the Board. The Directors (including all independent non-executive Directors) are of the view that the Renewed Notes Pool Service Agreement was entered into after arm s length negotiation and on normal commercial terms in the ordinary and usual course of business, that the terms of the transactions and the proposed caps of each kind of services under the Renewed Notes Pool Service Agreement are fair and reasonable and in the interest of the Company and its shareholders as a whole. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms shall have the meanings set out below: Board CBRC Credit Line Credit Financing Services Company connected person(s) controlling shareholder the board of Directors of the Company; China Banking Regulatory Commission ( ); the revolving line of credit granted by the Group Finance Company to Hebei Natural Gas that is calculated dynamically at a conversion rate of 1:0.9 on the total amount of Notes deposited by Hebei Natural Gas and its subsidiaries into the notes pool account opened by the Group Finance Company with a commercial bank which is independent from both parties; the businesses, such as the provision of RMB/foreign currency loans, acceptance of commercial drafts and issuance of letters of guarantee, conducted by the Group Finance Company (or any commercial banks entrusted by it) under the Renewed Notes Pool Service Agreement for Hebei Natural Gas and its subsidiaries according to the instruction of Hebei Natural Gas under the Credit Line; China Suntien Green Energy Corporation Limited ( ), a joint stock company incorporated in the PRC with limited liability on 9 February 2010, H shares of which are listed on the Main Board of the Stock Exchange; has the meaning ascribed thereto under the Listing Rules; has the meaning ascribed thereto under the Listing Rules; 9

10 Debtor Director(s) Existing Notes Pool Service Agreement Group Group Finance Company HECIC Hebei Natural Gas Hong Kong Listing Rules Notes PBOC PRC RMB Hebei Natural Gas and its subsidiaries which use the Credit Financing Services provided by the Group Finance Company under the Renewed Notes Pool Service Agreement; the director(s) of the Company; the notes pool service agreement dated 23 June 2015 entered into between Hebei Natural Gas and the Group Finance Company; the Company and its subsidiaries; HECIC Group Finance Company Limited ( ), a limited liability company incorporated in the PRC, a non-banking financial institution under the supervision of the PBOC and the CBRC, and a subsidiary of HECIC; Hebei Construction & Investment Group Co., Ltd. ( ), a state-owned enterprise established in the PRC, and one of the promoters and the controlling shareholder of the Company, which is primarily engaged in the investment in and development of foundation industries, infrastructures and pillar industries of Hebei Province, including energy, transportation, water supply and commercial real estate, etc; Hebei Natural Gas Co., Ltd. ( ), a sinoforeign equity joint venture established in the PRC on 27 April 2001, and a subsidiary of the Company with its 55% and 45% equity interests being held by the Company and The Hong Kong and China Gas Company (Hebei) Limited, respectively; the Hong Kong Special Administrative Region of the PRC; the Rules Governing the Listing of Securities on the Stock Exchange; undue bank drafts received by Hebei Natural Gas and its subsidiaries in the ordinary course of business; the People s Bank of China ( ), the central bank of the PRC; the People s Republic of China, excluding, for the purpose of this announcement, Hong Kong, the Macau Special Administrative Region and Taiwan; Renminbi, the lawful currency of the PRC; 10

11 Renewed Notes Pool Service Agreement Stock Exchange subsidiary(ies) the notes pool service agreement dated 17 December 2015 entered into between Hebei Natural Gas and the Group Finance Company; The Stock Exchange of Hong Kong Limited; and has the meaning ascribed thereto under the Listing Rules. By order of the Board of China Suntien Green Energy Corporation Limited Gao Qing Yu Executive Director and President Shijiazhuang City, Hebei Province, the PRC 17 December 2015 As at the date of this announcement, the non-executive Directors of the Company are Dr. Cao Xin, Dr. Liu Zheng, Mr. Qin Gang, Ms. Sun Min and Mr. Wu Huijiang; the executive Directors of the Company are Mr. Gao Qing Yu and Mr. Wang Hong Jun; and the independent non-executive Directors of the Company are Mr. Qin Hai Yan, Mr. Ding Jun, Mr. Wang Xiang Jun and Mr. Yue Man Yiu Matthew. * For identification purposes only 11