China Merchants Port : CONNECTED TRANSACTION FORMATION OFJ OINT VENTURES IN CONNECTION WITH INVESTMENT IN THE DJIBOUTI INTERNATIONAL FREE TRADE ZONE

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(Incorporated in Hong Kong with limited liability under the Companies Ordinance)

(Stock Code: 00144) CONNECTED TRANSACTION FORMATION OF JOINT VENTURES IN CONNECTION WITH INVESTMENT IN THE DJIBOUTI INTERNATIONAL FREE TRADE ZONE SUMMARY

The Board is pleased to announce that on 16 January 2017, the Company entered into (i) the Asset Company Shareholders Agreement with, inter alia, CMID and Cheer Signal in relation to the Asset Joint Venture and (ii) the O&M Shareholders Agreement with, inter alia, CMID, Cheer Signal, PDA and IZP in relation to the O&M Joint Venture, in each case, in connection with the proposed investment in the Djibouti International Free Trade Zone.

Each of the Company, CMID and Cheer Signal shall have a 40%, 40% and 20% interest in the the Asset Joint Venture, respectively and each of the Company, CMID, Cheer Signal, PDA and IZP shall have a 26.7%, 26.7%, 13.3%, 25% and 8.3% interest in the O&M Joint Venture, respectively.

Each of CMID and Cheer Signal is an associate of CMG, the ultimate holding company of the Company, and therefore connected persons of the Company. Accordingly, the Asset Company Shareholders Agreement and the O&M Shareholders Agreement constitute connected transactions of the Company under the Listing Rules. Furthermore, as the Asset Company Shareholders Agreement and the O&M Shareholders Agreement are inter-related, the two agreements will be aggregated and treated as if they were one transaction.

Since the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of aggregate commitment by the Company under the Asset Company Shareholders Agreement and the O&M Shareholders Agreement exceed 0.1% but are below 5%, the transactions are therefore exempt from the circular (including independent financial advice) and shareholders' approval requirements under Chapter 14A of the Listing Rules.

BACKGROUND

The Board is pleased to announce that on 16 January 2017, the Company entered into the Asset Company Shareholders Agreement and the O&M Shareholders Agreement in relation to the Asset Joint Venture and O&M Joint Venture in connection with the proposed investment in the new Djibouti International Free Trade Zone.

1. THE ASSET COMPANY SHAREHOLDERS AGREEMENT

   The key terms of the Asset Company Shareholders Agreement are set out below: Date: 16 January 2017

   Parties: (1) The Company

2. CMID

3. Cheer Signal

4. Asset Joint Venture

   Purpose and scope of business:

   The Asset Joint Venture is a company incorporated in Hong Kong and is formed as a platform for the parties to co-invest into the Djibouti Asset Company.

   The Djibouti Asset Company shall be established for the purpose of investing in and financing the development rights to develop commercial and infrastructure projects within the Djibouti International Free Trade Zone. The Asset Joint Venture will have a 30% interest in the Djibouti Asset Company and Great Horn and PDA shall have a 60% and 10% interest in the Djibouti Asset Company, respectively.

   Shareholding: The share capital of the Asset Joint Venture shall

   initially comprise of 10,000 shares of which, each of the Company, CMID and Cheer Signal shall hold 4,000, 4,000 and 2,000 shares, respectively,

   representing 40%, 40% and 20% of the total number of issued shares of the Asset Joint Venture, respectively. The respective amounts to be paid by each of the Company, CMID and Cheer Signal for the subscription of the shares of the Asset Joint Venture are HKD4,000, HKD4,000 and HKD2,000,

   respectively.

   Initial investments in Djibouti Asset

   Company:

   The parties agreed that the initial investments to be made by the Asset Joint Venture to the Djibouti Asset Company shall be USD30,000,000 (equivalent to approximately HKD234,000,000) and shall be borne by the shareholders of the Asset Joint Venture in accordance with their respective shareholding in the Asset Joint Venture. Accordingly, each of the Company, CMID and Cheer Signal has agreed to contribute USD12,000,000 (equivalent to approximately HKD93,600,000), USD12,000,000 (equivalent to approximately HKD93,600,000) and USD6,000,000 (equivalent to approximately HKD46,800,000) towards such initial investment.

   Board of directors: The board of directors of the Asset Joint Venture will

   comprise four directors. Each of the Company, CMID and Cheer Signal is entitled to appoint one director and the remaining director shall be appointed jointly by the Company and CMID. The quorum for any board meeting shall be three directors and any resolutions to be passed by the board of directors of the Asset Joint Venture shall be passed by a majority of directors present.

   Shareholders voting and reserved matters:

   The following matters shall require the approval of all the directors and by shareholders holding at least 85% of the total number of issued shares of the Asset Joint Venture: (i) amendment to the business scope of the Asset Joint Venture; (ii) fundamental change to the business plan; (iii) winding up of the Asset Joint Venture; (iv) disposal of all or substantially all of the assets of the Asset Joint Venture; and (v) agreement or arrangement between the Asset Joint Venture on the one hand, and its shareholders, directors or managers on the other hand.

   Appointment of directors to the Djibouti Asset Company:

   For so long as the Asset Joint Venture is entitled to nominate three directors to the board of directors of the Djibouti Asset Company, the parties agreed that each of the Company and CMID shall be entitled to nominate one director, and the remaining director shall be appointed jointly by the Company and CMID.

   As at the date of this announcement, the Asset Joint Venture has not yet commenced any business operations.

5. THE O&M SHAREHOLDERS AGREEMENT

   The key terms of the O&M Shareholders Agreement are set out below: Date: 16 January 2017

   Parties: (1) The Company

6. CMID

7. Cheer Signal

8. PDA

9. IZP

10. O&M Joint Venture

11. Purpose and scope of business:

    The O&M Joint Venture is a company incorporated in Hong Kong and is formed as a platform for the parties to co-invest into the Djibouti O&M Company.

    The Djibouti O&M Company shall be established for the purpose of operating and managing the Djibouti International Free Trade Zone and certain commercial and infrastructure projects within the Djibouti International Free Trade Zone. The O&M Joint Venture will have a 60% interest in the Djibouti O&M Company and the remaining 40% interest shall be held by Great Horn.

    Shareholding: The share capital of the O&M Joint Venture shall

    initially comprise of 1,200,000 shares of which, each of the Company, CMID, Cheer Signal, PDA and IZP shall hold 320,400, 320,400, 159,600, 300,000 and

    99,600 shares, respectively, representing 26.7%,

    26.7%, 13.3%, 25% and 8.3% of the total number of issued shares of the O&M Joint Venture, respectively. The respective amounts that have been paid by each of the Company, CMID, Cheer Signal, PDA and IZP for the subscription of the shares in the O&M Joint Venture are USD320,400 (equivalent to approximately HKD2,499,120), USD320,400 (equivalent to approximately HKD2,499,120), USD159,600 (equivalent to approximately HKD1,244,880), USD300,000 (equivalent to approximately HKD2,340,000) and USD99,600, (equivalent to approximately HKD776,880) respectively.