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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE
SECURITIES EXCHANGE ACT OF 1934)
SHANDONG HUANENG POWER DEVELOPMENT CO., LTD.
(Name of the Issuer)
HUANENG POWER INTERNATIONAL, INC.
SHANDONG HUANENG POWER DEVELOPMENT CO., LTD.
(Name of Person(s) Filing Statement)
AMERICAN DEPOSITARY SHARES, ORDINARY N SHARES
PAR VALUE RMB1.00 PER SHARE
(Title of Class of Securities)
819419102
(CUSIP Number of Class of Securities)
HUANENG POWER INTERNATIONAL, INC. SHANDONG HUANENG POWER DEVELOPMENT
Xiaosong Wang CO., LTD.
West Wing, Building C Dan Lu
Tianyin Mansion Room 1014, A23, Huaneng Building
Fuxingmennan Street Fuxing Road, Haidian District
Beijing, China Beijing, China
(86-10)6649-1069 (86-531)290-2806
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications on
Behalf of Person(s) Filing Statement)
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Copies to:
Gregory Miao, Esq. Edmund C. Duffy, Esq. Chun Wei, Esq.
Skadden, Arps, Slate, Skadden, Arps, Slate, Sullivan & Cromwell
Meagher & Flom LLP Meagher & Flom LLP 28th Floor
East Wing Office, Level 4 4 Times Square Nine Queen's Road Central
China World Trade Center 43rd Floor Hong Kong
No.1 Jian Guo Men Wai Avenue New York, NY 10036 (852) 2826-8688
Beijing 100004, China (212) 735-3950
(86-10) 6505-5511
This statement is filed in connection with (check the appropriate
box):
(a) [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or
Rule 13e-3(c) under the Securities Exchange Act of 1934.
(b) [ ] The filing of a registration statement under the Securities
Act of 1933.
(c) [ ] A tender offer.
(d) [X] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
Check the following box if the filing is a final amendment
reporting the results of the transaction: [ ]
INTRODUCTION
This Amendment No. 1 to the Rule 13e-3 Transaction Statement on
Schedule 13E-3 (the "Statement") is being filed with the Securities and
Exchange Commission (the "SEC") by (i) Huaneng Power International, Inc.
("Huaneng Power"), a company incorporated under the laws of the People's
Republic of China and (ii) Shandong Huaneng Power Development Co., Ltd.
("Shandong Huaneng"), pursuant to Section 13(e) of the Securities Exchange
Act of 1934, as amended, and Rule 13e-3 thereunder. This Statement relates
to a proposed merger (the "Merger") pursuant to an Agreement of Merger by
Absorption (the "Merger Agreement"), dated as of July 18, 2000 and amended
as of August 8, 2000, by and between Huaneng Power and Shandong Huaneng.
According to the Merger Agreement, Shandong Huaneng will be merged with and
into Huaneng Power and Huaneng Power will be the surviving company.
Shandong Huaneng will cease to exist and the holders of Shandong Huaneng's
ordinary shares will receive RMB 1.34 for each ordinary A share and
US$0.1618 for each ordinary N share.
A joint proxy statement, dated August 15, 2000, including all
exhibits and annexes thereunto (the "Joint Proxy Statement") has been
delivered to the shareholders of each of Huaneng Power and Shandong Huaneng
in connection with the solicitation of their votes to adopt and approve the
Merger and the Merger Agreement. The Joint Proxy Statement was attached
hereto under Exhibit (a)(5)(iii). The Joint Proxy Statement contains
certain information required to be included in response to the Items of
this Statement and is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3. The responses to each Item herein are
qualified in their entirety by reference to the information contained in
the Joint Proxy Statement.
The information contained in this Statement and/or the Joint Proxy
Statement concerning Huaneng Power and Huaneng International Power
Development Corporation ("HIPDC") was supplied by Huaneng Power only and
Shandong Huaneng cannot confirm the accuracy or completeness of such
information. Except as provided in the following sentence, the information
contained in this Statement and/or the Joint Proxy Statement concerning
Shandong Huaneng was supplied by Shandong Huaneng only and Huaneng Power
cannot confirm the accuracy or completeness of such information. The pro
forma financial information included in "Unaudited Pro Forma Combined
Financial Information" in the Joint Proxy Statement was supplied by Huaneng
Power only and Shandong Huaneng cannot confirm the accuracy or completeness
of such information. The information extracted from Shandong Huaneng's Form
20-F, dated April 11, 2000, included in "The Companies - Shandong Huaneng"
in the Joint Proxy Statement was extracted at the request of Huaneng Power.
ITEM 2 SUBJECT COMPANY INFORMATION
Item 2(c) of the Schedule 13E-3 is hereby amended and supplemented as
follows:
As of September 4, 2000, there were a total of 64 and 104 holders,
and an aggregate number of 18,504,100 and 23,374,000 outstanding ADSs for
Huaneng Power and Shandong Huaneng, respectively. Huaneng Power and
Shandong Huaneng do not have breakdown information regarding the number of
ADS holders who are U.S. persons or the number of the ADSs which are being
held in the U.S.
ITEM 3 IDENTITY AND BACKGROUND OF FILING PERSON
Item 3(b) of the Schedule 13E-3 is hereby amended and supplemented as
follows:
As of April 2000, Shandong Huaneng's Unit 1 and Unit 2 of the
Rizhao Plant has commenced commercial operation.
A number of agreements to which Shandong Huaneng is a party require
the consent of the other party in the event of a merger or reorganization
involving Shandong Huaneng. These agreements include land use rights lease
agreement, certain domestic financing agreements and certain operating
agreement such as on-grid agreements. Shandong Huaneng is in the process of
contacting the relevant third parties and currently intends to obtain all
the necessary third party consents prior to the completion of the merger.
ITEM 7 PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
Item 7(b) is amended and supplemented as follows:
Since the initial public offering of Shandong Huaneng in 1994, its
ADSs have been trading below, and more of the time, substantially below,
the initial public offering price and at a discount to the net book value
per ADS. The board of directors of Shandong Huaneng considered alternatives
to increase its shareholder value which focused primarily on business
expansion outside of Shandong Province. Due to the change of electricity
demand in China in recent years, Shandong Huaneng's expansion outside
Shandong Province has been difficult and the board of directors of Shandong
Huaneng gradually realized that a strategic combination involving Shandong
Huaneng might be the best way to increase its shareholder value.
ITEM 8 FAIRNESS OF THE TRANSACTION
Item 8 (a) of the Schedule 13E-3 is hereby amended to add the following
information::
The merger consideration of $8.09 per ADS is higher than, and
represents a 7.9% premium over, Shandong Huaneng's average market price
since its initial public offering, which is $7.49 per ADS.
Item 8 (b) of the Schedule 13E-3 is hereby amended and supplemented as
follows:
The following table shows the amount by which the merger
consideration is less than historical net book value per ADS.
NBV/ADS Merger consideration ($8.09) as Premium/Discount
to NBV
------------------------------------------------
Premium/discount (USD) (%)
------------------------------------------------
1996 9.89 Discount -1.80 -18.2%
1997 10.49 Discount -2.40 -22.8%
1998 10.93 Discount -2.84 -26.0%
1999 11.23 Discount -3.14 -28.0%
For year 1996, as calculated per ADS's daily closing prices, except
for the periods of March 4th, October 14th - 23th, December 4th - 5th,
December 10th and December 12nd - 13rd , Shandong Huaneng's ADS was trading
at a discount to its net book value ("NBV").
For year 1997, for the following periods, Shandong Huaneng's ADS
was trading at a discount to its NBV.
o January 2nd - January 3rd
o January 23rd - January 24th
o February 12th - February 14th
o February 19th - February 21th
o February 27th - March 4th
o April 2nd - April 8th
o April 14th - April 15th
o April 21st - April 23rd
o September 26th to year end.
Since January 1st, 1998 until July 17th , 2000, the last trading
day prior to the merger announcement, the Shandong Huaneng's ADS has been
trading at a discount to its NBV as of the year end of the corresponding
financial years. For year 2000, the NBV as of December 31st, 1999 was used
in comparing the ADS trading price with NBV.
The Shandong Huaneng board's belief that Shandong Huaneng's assets
would be more valuable when combined with the assets of Huaneng Power is
primarily based on the greater economies of scale and increased expansion
opportunities which result from an enlarged asset base and the scope of
business operations available to the merged company.
ITEM 9 REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
Item (b) (4) is hereby amended to add the following information:
Transactions in which CLSA were involved in providing investment
banking services to Huaneng Power International, Inc., are summarized
below.
o CLSA acted as one of the co-managers to Huaneng Power
International, Inc.'s convertible bond placement in May 1997. Through this
placement CLSA was remunerated in an amount of US$16,503.40 for the
underwriting fee.
o CLSA was appointed as the global co-ordinator, sole lead manager
and sole book-runner for the placement of shares in the form of H Shares or
American Depositary Shares of Huaneng Power International, Inc. in February
1998. The compensation that CLSA received in relation to the work performed
as outlined was in the form of underwriting discounts and commissions of
US$2,991,000.00.
o In March 1999, CLSA was mandated to act as financial advisor to
Huaneng Power International, Inc. in connection to the acquisition of the
Nanjing Power Plant. In association with this mandate, CLSA was compensated
with an advisory fee amount to US$104,971.00.
For each of the above transactions, CLSA was selected from a group
of investment banks through a customary "beauty contest" process. CLSA was
hired by Shandong Huaneng because of CLSA's expertise and reputation in
power industry banking.
Item (b) (6) is hereby amended to add the following information:
The table below presents the calculated range of premiums and the
simple means of the premiums for the comparable transactions that were
considered and defined in schedule 13E-3.
Offer price as premium of 1day 1wk 2wks 4wks
closing price as on before before before before
AD AD AD AD AD
Average Premium (exclude extreme value) 26.62% 25.36% 28.56% 27.74% 28.04%
Average Premium (include extreme value) 15.15% 13.03% 16.02% 15.36% 15.89%
Premium (exclude extreme value)
Minimum 6.32% 4.77% 6.50% 4.49% 2.39%
Maximum 74.90% 67.30% 71.27% 72.04% 86.19%
Premium (include extreme value)
Minimum -53.68% -60.94% -59.21% -58.95% -57.05%
Maximum 74.90% 67.30% 71.27% 72.04% 86.19%
Offer price as premium of the 1WK 2 WK 4 WK
average closing prices for the BEFORE AD BEFORE AD BEFORE AD
period of
Average Premium (exclude extreme value) 26.18% 26.79% 26.98%
Average Premium (include extreme value) 14.11% 14.61% 14.85%
Premium (exclude extreme value)
Minimum 4.80% 6.71% 3.68%
Maximum 70.68% 71.15% 74.02%
Premium (include extreme value)
Minimum -58.25% -58.45% -57.91%
Maximum 70.68% 71.15% 74.02%
Source: Thomason Financial and Bloomberg
Note: AD is defined as Announcement Date.
Presented in the following table is the relevant data used by CLSA
for the analysis of the offer prices for the comparable transactions as
multiples of certain target companies' financial criteria. The variables
used in calculating the multiples were taken based on data available for
the last full financial year prior to the merger announcement.
Acquirer Target Currency P/E P/BV EV/CF EV/EBIT EV/
EBITDA
Nisource Inc Columbia Energy Group US$ 23.96 2.95 10.00 13.49 9.84
RWE GR (Germany) VEW (Germany) DM 16.99 2.78 na 8.34 3.96
Consolidated Edison Northeast Utilities USD na 1.65 na 17.24 6.63
Inc (NY) (Connecticut)
National Power Plc Malakoff Bhd MYR 17.21 3.50 24.42 12.62 10.56
Northern State Power New Century Energies US$ 14.03 1.79 12.32 12.81 8.78
Inc
National Grid USA Eastern Utilities US$ 18.49 1.72 10.74 13.08 7.58
Associate
Sithe Pacific The Cogeneration THB 5.90 0.76 10.95 14.14 8.79
Company
Source: Thomason Financial and Bloomberg
ITEM 16 EXHIBITS
Item 16 is hereby amended and supplemented as follows:
Exhibit No. Description
(a)(5) Second Meeting Notice for Huaneng Power's Independent
Shareholder's Special General Meeting, dated August 29,
2000, issued by Huaneng Power.
(c) Reissued Opinion of Shandong Huaneng's Financial
Advisor, dated July 18, 2000.
SIGNATURES
After due inquiry and to the best of its knowledge and belief, each of
the undersigned certifies that the information set forth in this statement
is true, complete and correct.
HUANENG POWER INTERNATIONAL, INC.
By: /s/ XIAOSONG WANG
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Name: XIAOSONG WANG
Title: VICE-CHAIRMAN
SHANDONG HUANENG POWER DEVELOPMENT
CO., LTD.
By: /s/ XINYANG YU
-----------------------------
Name: XINYANG YU
Title: CHAIRMAN
Dated: September 11, 2000
INDEX TO EXHIBITS
Exhibit No. Description
(a)(5) Second Meeting Notice for Huaneng Power's Independent
Shareholder's Special General Meeting, dated August 29,
2000, issued by Huaneng Power.
(c) Reissued Opinion of Shandong Huaneng's Financial
Advisor, dated July 18, 2000.