FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 2005
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
----- -----
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934. )
Yes No
----- -----
(If "Yes" is marked, indicate below the file number assigned to registrant
in connection with Rule 12g3-2(b): 82-__________. )
N/A
China Netcom Group Corporation (Hong Kong) Limited
Building C, No. 156, Fuxingmennei Avenue
Xicheng District
Beijing, 100031 PRC
This Form 6-K consists of:
The announcement on entering into a Strategic Alliance Agreement with Telefonica
Internacional S.A, made by China Netcom Group Corporation (Hong Kong) Limited
(the "Registrant") in English on November 14, 2005.
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
content of this announcement.
CNC
CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
(incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock Code: 906)
ANNOUNCEMENT
STRATEGIC ALLIANCE AGREEMENT WITH TELEFONICA INTERNACIONAL S.A.
--------------------------------------------------------------------------------
The Company has entered into a Strategic Alliance Agreement with Telefonica
Internacional S.A. on 14 November 2005, pursuant to which the Company and
Telefonica agreed to use reasonable efforts to negotiate in good faith a
strategic relationship for co-operation in a broad range of areas and agreed,
subject to compliance with applicable laws, to enter into separate definitive
agreements within six months (or such longer period as may be mutually agreed
by the parties) in certain areas of co-operation to supplement the terms of
the Strategic Alliance Agreement.
Except for those provisions which are expressly stated to come into effect
after the signing of the Strategic Alliance Agreement, the Strategic Alliance
Agreement shall only become effective upon the completion of acquisition of
the Additional Portion by Telefonica, which may be purchased principally from
one or more existing non-public minority domestic PRC beneficial shareholders
of the Company, the obtaining of all necessary PRC governmental, regulatory or
similar consents and board approvals required by each of the Company and
Telefonica to perform its obligations under the Strategic Alliance Agreement,
and none of the undertakings, representations and warranties thereto being
found to be untrue or incorrect in any material respect.
The Strategic Alliance Agreement may or may not become effective. Investors
are advised to exercise caution in dealing in the securities of the Company.
--------------------------------------------------------------------------------
Strategic Alliance Agreement
The Company is pleased to announce that the Company has entered into a SAA
with Telefonica on 14 November 2005. Pursuant to the terms of the SAA, the
Company and Telefonica shall build on the memorandum of understanding signed
between them on 21 July 2005 to negotiate in good faith a strategic
relationship for co-operation in a broad range of areas.
Areas of strategic co-operation
Subject to Telefonica becoming the beneficial owner of not less than the
Threshold Percentage and compliance with applicable laws, the Company and
Telefonica will, for a period of 6 months from the date of this Agreement, use
reasonable efforts to negotiate in good faith a strategic relationship for
cooperation in the following areas.
The possible areas of co-operation between the parties include: (a)
international business area (including voice and IP Peering and IP MPLS); (b)
the existing overseas business of the Company and its parent company subject
to due diligence, agreeing on valuation and obtaining necessary approvals; (c)
subject to due diligence, agreeing on valuation and obtaining necessary
approvals, the provision of telecommunication businesses and services in the
southern provinces in the PRC; (d) call center business (including worldwide
call center services for Beijing Olympics 2008 and joint call center for
outsourcing services); (e) management exchange involving senior managers from
each of Telefonica and the Company for every six months during the term of the
SAA; (f) co-operation and sharing in the areas of business development,
network operations, customer acquisition and management, technology
implementation, sales, marketing and branding in the PRC; (g) co-operation in
the purchasing of technology, end-user equipment, infrastructure, distribution
or usage rights and other components required to provide both fixed-line,
broadband and wireless communications services; (h) technological assistance
and knowledge transfer provided by Telefonica in the areas of value-added
services, business solutions for small-and-medium-sized enterprises, IPTV
solutions, mobile content services and other related areas; (i) the provision
of mobile service, including, but not limited to, infrastructure, distribution
or usage rights and other components required within the PRC when any mobile
service licence has been issued in favour of the Company or its parent
company; and (j) other forms of co-operation as may be mutually agreed by
Telefonica and the Company (other than the areas set out in (a) to (i) above).
Sole Partner Status
Telefonica shall ensure that the Company will be selected as its sole partner
within the PRC for any form of co-operation in the telecommunications
business. Without prejudice to the foregoing obligation of Telefonica, in the
event that the Company wishes to engage an international telecommunications
operator in the areas referred to in:
o (a) to (i) above, but the Company decides not to co-operate with
Telefonica, the Company and Telefonica shall enter into good faith
discussions to explore the possibility of Telefonica co-operating with
another third party in the relevant telecommunications business within
the PRC in such an event; and
o (j) above, but the Company decides not to cooperate with Telefonica, the
Company shall inform Telefonica of its intention to engage or cooperate
with another international telecommunications operator but is not bound
to enter into any good faith discussions with Telefonica.
Telefonica also acknowledges and agrees that the provisions of the SAA shall
not affect, directly or indirectly, any existing agreements, arrangements or
memoranda of understandings currently under discussion between the Company,
its parent company any of their respective Affiliates with any third parties,
including but not limited to PCCW Limited.
Exclusivity
The Company has undertaken to Telefonica that, for a period of 6 months from
the date of the SAA, it will not and its Affiliates will not enter into any
advanced discussion, negotiation or enter into any agreement or arrangement
with any person other than Telefonica relating to possible cooperation in the
existing overseas business of the Company and its parent company, and the
possible provision of telecommunication businesses and services in the
southern provinces in the PRC.
Board representation
Telefonica shall be entitled to nominate a representative to the Board when it
holds 5% of the equity interest of the Company, and being the beneficial owner
of not less than the Threshold Percentage, Telefonica is entitled to nominate
a second director to the Board. The number of representatives that Telefonica
is entitled to appoint to the Board shall be increased if its shareholding
interest in the Company increases. In addition, subject to Board approval,
directors nominated by Telefonica shall be entitled to sit on the strategic
planning committee or other committees of the Company. The nomination and the
appointment of the directors nominated by Telefonica shall be in compliance
with the articles of association of the Company, and shall be subject to
compliance with qualification requirements under the Listing Rules and
applicable laws.
Lock-up of Shares
Subject to certain exceptions, Telefonica has agreed that it shall not, and
shall procure that none of its Affiliates shall, transfer any portion or all
of the Additional Portion to any third party during the Lock-up Period. After
expiry of the Lock-up Period, Telefonica has agreed that it shall not, and
shall procure that none of its Affiliates shall (a) transfer more than 25% of
its Shares or such number of Shares comprising more than 2.5% of the total
issued and outstanding Shares, whichever is the greater, in any calendar
quarter; or (b) effect any transfer which might result in a disorderly market
in respect of the price or trading volume of the Shares.
Non-Competition
At any time during the term of the SAA, or for as long as the Company
continues to be the sole partner of Telefonica pursuant thereto, whichever is
the longer period, Telefonica shall not, and shall procure that its Affiliates
shall not, without the prior written consent of the Company (except through
the strategic alliance with the Company) either alone or jointly with any
person, through or on behalf of itself or any person, directly or indirectly
in the PRC carry on or be interested in any business in competition with the
business of the Company.
Anti-dilution
Subject to Telefonica being the beneficial owner of not less than 9.9% of the
entire issued share capital of the Company outstanding from time to time,
compliance with applicable laws and certain exceptions described in the SAA,
in the event that the Board resolves to issue any new Shares, or any
securities convertible into or exchangeable into Shares or any warrants or
other rights to subscribe for Shares ("Securities Issuance"), the Company
shall treat Telefonica equally with the other public shareholders of the
Company and will give Telefonica an equal opportunity as other public
shareholders to subscribe for such number of new Shares or any securities
convertible into or exchangeable into Shares or any warrants or other rights
to subscribe for Shares on the same terms and conditions as such Securities
Issuance are issued to the other public shareholders so as to maintain
Telefonica's proportionate interest in the Company immediately prior to the
Securities Issuance. Such Securities Issuance will be made in compliance with
the requirements under the Listing Rules.
Effectiveness of the SAA
Except for those provisions which are expressly stated to come into effect
after the signing of the SAA, the SAA will only become effective upon the
satisfaction of the following conditions precedent:
(a) the completion of acquisition of the Additional Portion by Telefonica;
(b) all necessary PRC governmental, regulatory or similar consents and board
approvals required by each party to perform its obligations under the SAA
having been obtained;
(c) none of the undertakings, representations and warranties being found to
be, or no event occurring or matter arising which renders any of the
undertakings, representations and warranties, untrue or incorrect in any
material respect.
Termination of SAA
Unless agreed otherwise between the parties, the SAA will terminate with
immediate effect upon the occurrence of (a) a change of Control of the
Company; or (b) if the Company or its parent company acquires or is acquired
by or merged with a Chinese telecommunications operator or a restructuring of
the PRC telecommunications industry occurs; or (c) if any international
telecommunications operator (other than Telefonica) makes an equity investment
in 5 per cent. or more of the outstanding issued Shares or if any
representative of any international telecommunications operator (other than
Telefonica) is appointed as a director of the Company without the prior
written agreement between the Company and Telefonica; or (d) if Telefonica's
or the Company's rights under the SAA do not prevail following a material
breach thereof by the other party. The SAA may be terminated by the
non-defaulting party by giving not less than 60 days' notice to the other
party.
Public float
Telefonica agrees that without the prior written consent of the Company, it
will not subscribe or purchase, whether directly or indirectly through any
associate (as defined in the Listing Rules), any additional Shares or any
securities convertible or exchangeable into Shares or any rights to subscribe
for Shares of the Company which would result in the Company not being able to
maintain its minimum public float.
Information on the Company
The Company is incorporated in, and its shares are listed on the Stock
Exchange and its ADSs are listed on the New York Stock Exchange. The Company
is a leading fixed-line telecommunications operator in China and a leading
international data communications operator in the Asia-Pacific region.
Information on Telefonica
Telefonica is an independent third party not connected with the Directors,
chief executive or substantial shareholders of the Company or any of its
subsidiaries or any of their respective associates. Telefonica is one of the
largest telecommunications operators in the world with a strong track record
of developing and operating across 18 countries in Europe, Latin America and
Africa. Telefonica currently manages approximately 140 million customers in
its operations worldwide.
General
The Company will negotiate in good faith with Telefonica as to the form and
the terms of co-operation to be set out in separate definitive agreements and
such agreements may or may not ultimately be entered into. No further
indication can be given by the Company of the timing and details of the
co-operation at this stage. Further announcements will be made by the Company
when the terms of the separate definitive agreements are finalised and a
director nominated by Telefonica is appointed to the Board.
The SAA may or may not become effective. In the meantime, investors are advised
to exercise caution in dealing in the securities of the Company.
Definitions
In this announcement, the following capitalised terms have the meanings as
ascribed to them:
"Additional Portion" any additional Shares to be acquired by
Telefonica after the date of this Agreement,
which may be purchased principally from one
or more existing non-public minority domestic
PRC beneficial shareholders of the Company,
representing the difference between the
existing stake of 5 per cent. of the
outstanding issued Shares held by Telefonica
and 9.9% of the entire issued share capital
of the Company outstanding from time to time
"Affiliate" with respect to any person, any third party
that directly or indirectly through one or
more intermediaries, Controls or is
Controlled by such person or is under direct
or indirect common Control with such person
"Board" the board of directors of the Company
"Company" China Netcom Group Corporation (Hong Kong)
Limited, a company incorporated in Hong Kong
with limited liability and whose shares are
listed on the Stock Exchange and whose ADSs
are listed on the New York Stock Exchange
"Control" directly or indirectly entitled to exercise or
control the exercise of 30 per cent of the
voting power of a company at general meetings,
or the possession of the power to control the
composition of a majority of the board of
directors of a company and "Controlled" and
"Controls" shall be construed accordingly
"IP MPLS" Internet Protocol Multi Protocol Label
Switching
"IP Peering" the act of one national Internet backbone
provider accepting and passing traffic from
another national provider
"Listing Rules" The Rules Governing the Listing of Securities
on the Stock Exchange
"Lock-up Period" the period from the date which Telefonica
first acquired any Additional Portion after
the date of this Agreement and until the
third anniversary thereof
"PRC" the People's Republic of China, but for the
purposes of the SAA excludes Taiwan and the
special administrative regions of Hong Kong
and Macau
"SAA" the Strategic Alliance Agreement dated 14
November, 2005 entered into between the
Company and Telefonica
"Shares" ordinary shares of US dollar 0.04 each in the
share capital of the Company
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"Telefonica" Telefonica Internacional S.A., a company
incorporated in Spain
"Threshold Percentage" means a minimum threshold ownership of 9.9
per cent. in the entire issued share capital
of the Company outstanding from time to time
For and on behalf of
CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
Zhang Chunjiang
Chairman
Hong Kong, 14 November 2005
On the date of this announcement, the Board comprises Mr. Zhang Chunjiang, Dr.
Tian Suning, Mr. Zhang Xiaotie and Mr. Miao Jianhua as executive Directors,
Mr. Jiang Weiping, Ms. Li Liming, Mr. Jose Maria Alvarez-Pallete, Mr. Yan
Yixun as non-executive Directors, and Mr. John Lawson Thornton, Mr. Victor Cha
Mou Zing, Dr. Qian Yingyi, Mr. Hou Ziqiang and Mr. Timpson Chung Shui Ming as
independent non-executive Directors.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
under-signed, thereunto duly authorized.
CHINA NETCOM GROUP CORPORATION (HONG KONG) LIMITED
By /s/ Zhang Xiaotie
-----------------
By /s/ Mok Kam Wan
-----------------
Name: Zhang Xiaotie and Mok Kam Wan
Title: Joint Company Secretaries
Date: November 14, 2005