MTR Corporation - Connected Transaction

Fri Dec 21, 2007 2:00am EST

* Reuters is not responsible for the content in this press release.

RNS Number:4596K
MTR Corporation Ltd
21 December 2007


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

                            MTR CORPORATION LIMITED                             
                                (the "Company")                                 
               (Incorporated in Hong Kong with limited liability)               
                                (Stock code: 66)
                                
             SITE E OF THE REMAINING PORTION OF TSEUNG KWAN O TOWN              
                               LOT NO.70, AREA 86                               
                    TSEUNG KWAN O, SAI KUNG, NEW TERRITORIES 
                   
                             CONNECTED TRANSACTION                              
 
+------------------------------------------------------------------------------+
|On 20th December, 2007, the Company accepted an offer from the Government to  |
|allow the Company to proceed with the proposed development on Site E subject  |
|to the Company's acceptance of the Government's assessment of the premium for |
|Site E (being HK$3,335,000,000.00), the payment of which will be funded by the|
|Developer and of the terms of the Modification Letter and ancillary terms and |
|conditions. The offer was made by the Government on 9th November, 2007.       |
|                                                                              |
|As the Government is a controlling shareholder of the Company and therefore a |
|connected person of the Company, the Transaction is a connected transaction   |
|for the Company under Rule 14A.13 of the Listing Rules. As disclosed in the   |
|announcement of the Company dated 13th January, 2005, the Stock Exchange has  |
|granted the Waiver to the Company from the requirements under Chapter 14A of  |
|the Listing Rules which would otherwise apply to connected transactions       |
|between the Company and the Government subject to the conditions described    |
|below under the heading "General". Had the Waiver not been granted, the       |
|Transaction would have been subject to the announcement, the reporting and the|
|independent shareholders' approval requirements under Chapter 14A of the      |
|Listing Rules.                                                                |
|                                                                              |
|This announcement is made in accordance with the conditions of the Waiver and |
|Rule 14A.47 of the Listing Rules. Details of the Transaction will be disclosed|
|in the next annual report of the Company in accordance with Rule 14A.45 of the|
|Listing Rules.                                                                |
+------------------------------------------------------------------------------+

Acceptance of Government's Offer and Modification Letter

On 20th December, 2007, the Company accepted an offer from the Government to
allow the Company to proceed with the proposed development on Site E subject to
(a) the Company's acceptance of the Government's assessment of the premium of
Site E (being HK$3,335,000,000.00), the payment of which will be funded by the
Developer and of the terms of the Modification Letter, and (b) ancillary terms
and conditions. The offer was made by the Government on 9th November, 2007.

Under the terms of the Government's offer, a binding contract between the
parties arises when Government receives the Company's acceptance. The Company
delivered the acceptance to Government on 20th December, 2007. The Modification
Letter is to be executed within three calendar months from that date. The
Modification Letter contains details relating to the arrangements for the
implementation of the proposed development on Site E and also on Tseung Kwan O
Town Lot No.70 generally. The Modification Letter amends the building covenant
period for Site E from "the later of on or before the 30th day of September,
2013 or 66 calendar months from the date of payment of the Site E premium" to
"78 calendar months from the date of payment of the Site E premium", defines the
development parameters and the site boundary of Site E, increases the allowable
building height for all Sites except that of Site F, Site AB and Site M, reduces
the number of school sites and kindergarten classrooms, increases the minimum
local open space and requires permitted works to be carried out within The
Remaining Portion of Tseung Kwan O Town Lot No.70. The total gross floor area of
the development on Site E will be approximately 128,544 square metres. Site E
will comprise residential accommodation, a kindergarten and parking spaces. The
premium has been assessed by the Government to be HK$3,335,000,000.00, by
reference to the full market value of Site E, ignoring the presence of the
railway. The Company is required to pay a deposit of the premium (being
HK$1,000,000.00) to the Government on acceptance of the Government's offer and
to pay the balance of the said premium (being HK$3,334,000,000.00) as demanded
by the Government within three calendar months from the date of acceptance. The
payment of the premium including the deposit will be funded by the Developer.

Reasons for accepting Government's offer

The Company has accepted Government's offer and proposes to execute the
Modification Letter in order to be allowed to proceed with the proposed
development on Site E. On the basis that the assessed premium is considered to
be in line with current market values, and having regard to all of the terms and
conditions of the Government's offer, the Directors (including the independent
non-executive Directors) believe that the terms of Government's offer and the
relevant documentation (including the Modification Letter) are fair and
reasonable and in the interests of the shareholders of the Company as a whole.

General

As the Government is a controlling shareholder of the Company and therefore a
connected person of the Company, the Transaction is a connected transaction for
the Company under Rule 14A.13 of the Listing Rules. As disclosed in the
announcement of the Company dated 13th January, 2005, the Stock Exchange has
granted the Waiver to the Company from the requirements under Chapter 14A of the
Listing Rules which would otherwise apply to connected transactions between the
Company and the Government involving land and land interests subject to certain
conditions. Under the Waiver, the Company is required to make an announcement of
the Transaction in accordance with Rule 14A.47 of the Listing Rules and to
disclose details of the Transaction in its next annual report in accordance with
Rule 14A.45 of the Listing Rules. The Company is also required under the Waiver
to make the Transaction subject to the approval of the Board, with the Directors
appointed by the Government under section 8 of the Mass Transit Railway
Ordinance (Cap. 556 of the Laws of Hong Kong) and any Director who holds a
position in the Government being required to abstain from voting. Accordingly,
Professor Chan Ka-keung, Ceajer (represented by his alternate director,
Mr. Leung Cheuk-man), the Secretary for Transport and Housing (represented by
her alternate director, the Permanent Secretary for Transport and Housing
(Transport)) and the Commissioner for Transport disclosed their interest in the
Transaction and they each abstained from voting on the relevant Board
resolutions. Had the Waiver not been granted, the Transaction would have been
subject to the announcement, the reporting and the independent shareholders'
approval requirements under Chapter 14A of the Listing Rules.

This announcement is made in accordance with the conditions of the Waiver and
Rule 14A.47 of the Listing Rules. Details of the Transaction will be disclosed
in the next annual report of the Company in accordance with Rule 14A.45 of the
Listing Rules.

Principal activities of the Company

The principal activities of the Company and its subsidiaries are (a) the
operation of mass transit, suburban, intercity and freight railway systems, (b)
property development at locations connected to the railway systems, (c) related
commercial activities, property management and leasing management of investment
properties, property agency and Octopus Card Building Access Services, (d) the
operation of the 7-year London Overground Concession, in which the Company has a
50% share, covering 60 route kilometres of commuter railway in London's outer
suburbs, (e) the design and construction of Tseung Kwan O South Station as an
extension of the Tseung Kwan O Line, (f) the planning and construction of future
extensions to the railway system and other related infrastructure projects, (g)
the operation of the Tung Chung to Ngong Ping Cable Car System and The Theme
Village in Ngong Ping, (h) consultancy services, (i) investment in Octopus
Holdings Limited, a subsidiary of the Company, which has business activities
both in Hong Kong and overseas including the operation of a smart card system by
its subsidiary, Octopus Cards Limited, for the collection of payments for both
transport and non-transport applications in Hong Kong, (j) equity investments
and long term operation and maintenance contracts outside of Hong Kong, (k)
property management, shopping centre investment and railway related property
development business in the Mainland of China, and (l) the investment in, and
construction of, Beijing Metro Line 4, in which the Company has a 49% equity
interest, for future operations under a 30 year concession agreement with the
Beijing Municipal Government.

Definitions
                                                                                
"Conditions of Grant"        means the particulars and conditions for the grant 
                             of an agreement for lease by private treaty of     
                             Tseung Kwan O Town Lot No.70 between the Government
                             and the Company dated 16th May 2002 as varied or   
                             modified by modification letters dated 19th April  
                             2005 and 13th April 2006 and as the same is        
                             affected by the Deed Poll;                         
                                                                                
"Board"                      means the board of Directors;                      
                                                                                
"Deed Poll"                  means the Deed Poll dated 16th November 2007 and   
                             registered at the Land Registry by Memorial No.    
                             07112002850019 partitioning the lot into Section A 
                             and The Remaining Portion;                         
                                                                                
"Developer"                  means Wealth Pine Investment Limited, which was the
                             successful tenderer in the tender to develop Site  
                             E;                                                 
                                                                                
"Directors"                  means members of the board of directors of the     
                             Company;                                           
                                                                                
"Government"                 means the Government of Hong Kong;                 
                                                                                
"HK$"                        means Hong Kong dollars, the lawful currency of    
                             Hong Kong;                                         
                                                                                
"Hong Kong"                  means the Hong Kong Special Administrative Region  
                             of the People's Republic of China;                 
                                                                                
"Modification Letter"        means the further modification letter to be entered
                             into between the Company and the Government in     
                             relation to the Conditions of Grant;               
                                                                                
"Listing Rules"              means the Rules Governing the Listing of Securities
                             on The Stock Exchange of Hong Kong Limited;        
                                                                                
"Site AB", "Site F",         have the same meanings as those used in the        
"Site M" and "Sites"         Conditions of Grant as the same is affected by the 
                             Deed Poll;                                         
                                                                                
"Site E"                     means Site E of The Remaining Portion of Tseung    
                             Kwan O Town Lot No.70, Area 86, Tseung Kwan O, Sai 
                             Kung, New Territories;                             
                                                                                
"Stock Exchange"             means The Stock Exchange of Hong Kong Limited;     
                                                                                
"Transaction"                means the Company's acceptance of an offer from the
                             Government to allow the Company to proceed with the
                             proposed development on Site E subject to the      
                             Company's acceptance of the Government's assessment
                             of the premium of Site E and of the terms of the   
                             Modification Letter and ancillary terms and        
                             conditions; and                                    
                                                                                
"Waiver"                     means the waiver granted by the Stock Exchange to  
                             the Company from the requirements under Chapter 14A
                             of the Listing Rules (subject to certain           
                             conditions).                                       

                                                                                
                                                           By Order of the Board           
                                                              Leonard Bryan Turk              
                                                                       Secretary             

Hong Kong, 20 December, 2007

Members of the Board: Dr. Raymond Ch'ien Kuo-fung (Chairman)**, Chow Chung-kong
(Chief Executive Officer), Professor Cheung Yau-kai*, David Gordon Eldon*,
Christine Fang Meng-sang*, Edward Ho Sing-tin*, Lo Chung-hing*, Ng Leung-sing*,
Abraham Shek Lai-him*, T. Brian Stevenson*, Professor Chan Ka-keung, Ceajer
(Secretary for Financial Services and the Treasury)**, Secretary for Transport
and Housing (Eva Cheng)** and Commissioner for Transport (Alan Wong Chi-kong)**

Members of the Executive Directorate: Chow Chung-kong, Russell John Black,
William Chan Fu-keung, Thomas Ho Hang-kwong, Lincoln Leong Kwok-kuen, Francois
Lung Ka-kui, Andrew McCusker and Leonard Bryan Turk


*   independent non-executive Directors                                         
 
**  non-executive Directors                                                     

This announcement is made in English and Chinese. In the case of any
inconsistency, the English version shall prevail.

                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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