China COSCO Plans Global Logistics Conglomerate

China COSCO Holdings Company Limited plans to acquire major dry bulk shipping assets for a total consideration of RMB34.6 billion from COSCO Group in an attempt to become a global leader in integrated shipping and to reinforce its market leadership.

The company plans to pay the consideration with the proceeds from a private placement of A shares, possibly supplemented by internal funds and loans from financial institutions.

According to the signed agreement, China COSCO proposes to acquire 100% equity in COSCO Bulk Carrier Co., Ltd, Qingdao Ocean Shipping Co., Ltd, Golden View Investment Limited and Shenzhen Ocean Shipping Co., Ltd.

As at June 30, 2007, the target subsidiaries together operated the world's largest dry bulk fleet, with 412 dry bulk vessels, 202 of which were owned vessels, and a total shipping capacity of 32.0 million DWT, or 8.4% of the world's total. The gross tonnage of cargo shipped by the target subsidiaries grew at the CAGR of 15.9% from 2004 to 2006, while market share increased from 6.6% to 8.1% during the same period. The target subsidiaries have industry-leading operating and management capabilities and long-term strategic partnership with many clienteles.

After the closing of the acquisition, China COSCO will broaden the scope of business and grow further in scale. It will extend further along the shipping value chain and become an integrated shipping company engaged in container shipping, dry bulk shipping, logistics, port terminal operation and container leasing. The company aims at providing quality, diversified shipping and logistics services to clients around the world.

Upon the closing of the acquisitions, the company's fleet size will increase considerably. Based on the number of vessels operated by the company and the target subsidiaries as at June 30, 2007, the size of the company's fleet will increase from 144 vessels prior to the acquisitions to 556 vessels after, with capacity growing from 5.68 million DWTs to 37.70 million DWTs. The company's competitive position and market clout in the global shipping industry will improve substantially.