COSCON and CSCL will restructure

China COSCO, COSCO Pacific, China Shipping Container Lines (CSCL), and China Shipping Development (CSD) have announced plans to restructure key assets, kicking off the SOE reforms in China's shipping industry. The restructuring and consolidation will create one of the world's four largest container lines companies, with a fleet of 288 container ships, of which 84 ships are larger than 8,000 TEUs, and total shipping capacity of approximately 1.6 million TEUs. This restructuring and consolidation will help us combine these quality resources, thus laying a solid foundation for us to enhance the core competitiveness.

COSCO Container Lines (COSCON), a subsidiary of COSCO, will rent CSCL's assets, including ships and container boxes, etc, and divest the bulk shipping business, meanwhile, COSCO Pacific will buy the port assets of China Shipping and CSCL in order for COSCO to consolidate the container shipping and port businesses. CSCL will achieve business transformation by leasing ships and container boxes; acquiring the leasing business held by COSCO and China Shipping; and injecting other ship financing business and assets.

As the leading companies in China's shipping industry, COSCON and CSCL have cooperated with each other for years. By the restructuring and consolidation, we will be able to combine quality resources and capture the synergies. Expanded shipping capacity and widened the scope of business enable us to optimize the route network and improve the fleet structure. The restructuring and consolidation will also enhance our ability to deliver quality services to our customers, create new opportunities to cooperate with our suppliers and alliance partners, and offer our employees a broader development platform.

The purpose of this restructuring and consolidation is to enhance our ability to deliver higher-quality customer services and build core competitiveness. We decide to cooperate with CSCL to further broaden our route coverage and expand our product portfolios. The restructuring and consolidation enable us to provide our valued customers with more comprehensive and reliable shipping services.

We are making well-thought plans on business integration, and expect to start the business integration process at the beginning of next year. During the transition period, we will make business continuity our top priority, and ensure our customers receive first-class service as always. Existing contracts will be delivered as usual, and we will maintain maximum stability on business representatives and operation system.