09:26 SHANGRI-LA ASIA<00069> & KERRY PPT<00683> - Joint Ann. (2) Parties: (a) Creditor: the Bank the Bank the Bank (b) Guarantor: KPL SA Bei Ao The Guarantees: guaranteeing the repayment of 71.25% of the monies (up to US$12,112,500 (approximately HK$94,477,500)) owed by Beijing Jia Ao to the Bank in respect of the Facility under the Loan Agreement, and the related interests and expenses guaranteeing the repayment of 23.75% of the monies (up to US$4,037,500 (approximately HK$31,492,500)) owed by Beijing Jia Ao to the Bank in respect of the Facility under the Loan Agreement, and the related interests and expenses guaranteeing the repayment of 5% of the monies (up to US$850,000 (approximately HK$6,630,000)) owed by Beijing Jia Ao to the Bank in respect of the Facility under the Loan Agreement, and the related interests and expenses REASONS FOR GRANTING THE KPL GUARANTEE AND THE SA GUARANTEE KPL and SA are required to give the KPL Guarantee and the SA Guarantee respectively as one of the conditions of the availability of the Facility to Beijing Jia Ao under the terms of the Loan Agreement. The directors of KPL consider that the granting of the KPL Guarantee by KPL is in the commercial interest of KPL because the monies made available to Beijing Jia Ao will be applied to repay the shareholders' loans advanced to Beijing Jia Ao and the provision of proportionate several guarantee by KPL is in the corporate benefit of KPL in that Beijing Jia Ao can obtain its own banking facilities. The directors of SA consider that the granting of the SA Guarantee by SA is in the commercial interest of SA because the monies made available to Beijing Jia Ao will be applied to repay the shareholders' loans advanced to Beijing Jia Ao and the provision of proportionate several guarantee by SA is in the corporate benefit of SA in that Beijing Jia Ao can obtain its own banking facilities. INFORMATION ON THE KPL GROUP, THE SA GROUP AND BEIJING JIA AO The KPL Group is principally engaged in (1) property development and investment in Hong Kong, the PRC and the Asia Pacific region; (2) logistics, freight, warehouse ownership and operations; (3) infrastructure-related investment in Hong Kong and the PRC; and (4) hotel ownership in the PRC. The SA Group is principally engaged in the ownership and operation of hotels and associated properties and the provision of hotel management and related services. SA's subsidiaries are also the registered proprietors of various trademarks and service marks in various countries, including the brand names "Shangri-La", "Traders", "Rasa", "Summer Palace" and "Shang Palace" and related devices and logos. Beijing Jia Ao is principally engaged in its property investment project, the "Beijing Kerry Centre", which is situated at 1 Guang Hua Road, Chaoyang District, Beijing in the PRC. CONNECTION BETWEEN THE PARTIES Beijing Jia Ao is owned as to 95% by KBGH (which is in turn owned indirectly as to 75% by KPL and 25% by SA) and 5% by Bei Ao which is a state-owned limited liability company established in the PRC and is independent of and not connected with KPL and SA and their respective connected persons. As at the date of this announcement, KHL is interested in 750,842,646 KPL Shares as disclosed under the SFO, representing approximately 61.98% of the issued KPL Shares of 1,211,410,686 and is a substantial shareholder of KPL. SA, as an associated company of KHL, is an associate of KHL under the Listing Rules and is therefore a connected person of KPL. As Beijing Jia Ao is a non wholly-owned subsidiary of KPL where SA is entitled to exercise 23.75% of the voting power at any general meeting of Beijing Jia Ao, Beijing Jia Ao is a connected person of KPL under rule 14A.11(5) of the Listing Rules. Accordingly, the granting of the KPL Guarantee by KPL for the benefit of Beijing Jia Ao constitutes a connected transaction for KPL pursuant to rule 14A.13(3) of the Listing Rules. As at the date of this announcement, KHL is interested in 1,078,887,701