SMIC Announces Placing of New Shares Under General Mandate, Proposed Issue of US$65 million Perpetual Subordinated Convertible Securities, and Pre-emptive Right of Datang, China IC Fund and Country Hill

SHANGHAI, Nov. 28, 2017 /PRNewswire/ -- Semiconductor Manufacturing International Corporation (NYSE: SMI; SEHK: 981) ("SMIC," the "Company," or "our"), one of the leading semiconductor foundries in the world, announces

(1) PLACING OF NEW SHARES UNDER GENERAL MANDATE

(2) PROPOSED ISSUE OF US$65 MILLION PERPETUAL SUBORDINATED CONVERTIBLE SECURITIES

(3) PRE-EMPTIVE RIGHT OF DATANG

(4 PRE-EMPTIVE RIGHT OF CHINA IC FUND AND

(5) PRE-EMPTIVE RIGHT OF COUNTRY HILL

PLACING OF NEW SHARES UNDER GENERAL MANDATE

The Board is pleased to announce that on 29 November 2017, the Company entered into the Placing Agreement with the Joint Placing Agents whereby the Company conditionally agreed to place, through the Placing Agents, 241,418,625 Placing Shares to not less than six independent Placees at a price of HK$10.65 per Placing Share. The Placing Shares will be allotted and issued pursuant to the General Mandate and will rank pari passu in all respects with the Shares. The issue of the Placing Shares is not subject to the approval of the Shareholders.

Assuming 241,418,625 Placing Shares are successfully placed, the Placing Shares represent (i) approximately 5.17% of the existing issued share capital of the Company as at the date of this announcement; and (ii) approximately 4.92% of the issued share capital of the Company as enlarged by the issue of the Placing Shares (assuming that there will be no change in the issued share capital of the Company between the date of this announcement and completion of the Placing save for the issue of such Placing Shares).

The Placing Price represents (i) a discount of approximately 4.91% to the Closing Price of HK$11.20 per Share as quoted on the Stock Exchange on 28 November 2017, being the last full Trading Day immediately before the execution of the Placing Agreement; (ii) a discount of approximately 9.59% to the average Closing Prices of approximately HK$11.78 per Share as quoted on the Stock Exchange for the last five consecutive Trading Days up to and including 28 November 2017; and (iii) a discount of approximately 8.74% to the average Closing Prices of approximately HK$11.67 per Share as quoted on the  Stock Exchange for the last ten consecutive Trading Days up to and including 28 November 2017.

The gross proceeds of the Placing will be approximately HK$2.57 billion and the net  proceeds of the Placing (after deduction of fees, commissions and expenses) will amount to approximately HK$2.55 billion. The net proceeds raised upon completion of the Placing will be approximately HK$10.56 per Placing Share. The aggregate nominal value of the Placing Shares will be HK$7,535,544.

An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

Completion of the Placing is subject to the satisfaction or waiver of the conditions precedent in the Placing Agreement. Please refer to the section headed ''The Placing Agreement'' below for further information.

PROPOSED ISSUE OF US$65 MILLION PERPETUAL SUBORDINATED CONVERTIBLE SECURITIES

On 29 November 2017, the Company and the Joint Managers entered into the Placed PSCS Subscription Agreement, pursuant to which each of the Joint Managers has agreed to subscribe and pay for, or to procure subscribers to subscribe and pay for the Placed PSCS to be issued by the Company in an aggregate principal amount of US$65 million.

Based on the initial Conversion Price of HK$12.78 and assuming full conversion of the Placed PSCS at the initial Conversion Price, the Placed PSCS will be convertible into approximately 39,688,654 Placed Conversion Shares, representing (i) approximately 0.85% of the issued share capital of the Company on the Last Trading  Day (ii)  approximately 0.81% of the issued share capital of the Company as enlarged by the Placing Shares (assuming that there is no change in the issued share capital of the Company, save for the issue of the Placing Shares); and (iii) approximately 0.80% of the issued share capital of the Company as enlarged by the Placing Shares and assuming the full conversion of the Placed PSCS at the initial Conversion Price (assuming that there is no change in the issued share capital of the Company, save for the issue of the Placing Shares and Placed Conversion Shares).

The Placed Conversion Shares will be allotted and issued pursuant to the General Mandate and will rank pari passu in all respects with the Shares then in issue on the relevant conversion date. The issue of the Placed PSCS is not subject to the approval of the Shareholders.

An application will be made to the Stock Exchange for the listing of, and permission to deal in, the Placed Conversion Shares. An application will be made to the Singapore Exchange for the listing and quotation of the Placed PSCS.

Completion of the Placed PSCS Subscription Agreement is subject to the satisfaction or waiver of the conditions precedent in the Placed PSCS  Subscription Agreement. In addition, the Placed PSCS Subscription Agreement may be terminated in certain circumstances. Please refer to the section headed ''The Placed PSCS Subscription Agreement'' below for further information.

PRE-EMPTIVE RIGHT OF DATANG

Reference is made to the Company's announcement dated 10 November 2008 in relation to the Datang Purchase Agreement.

Pursuant to the Datang Purchase Agreement, in case of any issue of new Shares or securities convertible into Shares, subject to certain exceptions, Datang has a pre-emptive right to subscribe for (i) a pro rata portion of such new securities being issued equivalent to the percentage of the issued share capital of the Company then owned by Datang immediately prior to the issue of such securities; or (ii) should such issue of new Shares or securities convertible into Shares result in a single investor or investor group acting in concert beneficially owning more Shares than Datang and its wholly-owned subsidiary, one Share more than the number of Shares proposed to be beneficially owned by such prospective largest shareholder of the Company. Datang's pre-emptive right is applicable to the issue of the Placing Shares and the Placed PSCS, the China IC Fund Pre-emptive Subscription, the China IC Fund Further Subscription and any Country Hill Pre-emptive Subscription. Pursuant to the Datang Purchase Agreement and the Listing Rules, completion of any such issue of the Datang Subscription Securities to, and subscription of the Datang Subscription Securities by, Datang upon exercise of its pre-emptive right will be further subject to the receipt of any required regulatory approvals and the approval of the independent Shareholders.

Any exercise by Datang of its pre-emptive right to subscribe for the Datang Pre-emptive Securities in connection with the issue of the Placing Shares and the Placed PSCS, the China IC Fund Pre-emptive Subscription and any Country Hill Pre-emptive Subscription will be at a price equivalent to the Placing Price (in the case of the Datang Pre-emptive Shares) and/or the issue price of the Placed PSCS (in the case of the Datang Pre-emptive PSCS).

The Company has notified Datang in accordance with the terms of the Datang Purchase Agreement in respect of the issue of the Placing Shares and the Placed PSCS, the China IC Fund Pre-emptive Subscription, the China IC  Fund Further Subscription and the Country Hill Pre-emptive Subscription. Pursuant to the Datang Purchase Agreement, Datang is deemed to have elected not to exercise its pre-emptive right if it does not respond to  the notice within ten (10) business days following the date of the notice.

As at the date of this announcement, the Company has been informed by Datang in a non-legally binding letter of intent that it intends to  exercise its pre-emptive right in relation to the issue of the Placing Shares and the Placed PSCS, the China IC Fund Pre-emptive Subscription, the China IC Fund Further Subscription and any Country Hill Pre-emptive Subscription, up to the amount it is entitled to under the Datang Purchase Agreement based on terms and conditions that are substantially the same as the Placing and the issue of the Placed PSCS. The Company will make such further announcement as is necessary under the Listing Rules in relation thereto.

Datang has also indicated to the Company that it intends to subscribe for the Datang Further PSCS, in addition to the Datang Pre-emptive PSCS, based on terms and conditions that are substantially the same as the issue of the Placed PSCS, for a principal amount (for the Datang Further PSCS only) of approximately US$100 million (subject to adjustment).

The Company will make such further announcement as is  necessary under the Listing Rules in relation thereto.

PRE-EMPTIVE RIGHT OF CHINA IC FUND

Reference is made to the Company's announcement dated 12 February 2015 in relation to the China IC Fund Purchase Agreement.

Pursuant to the China IC Fund Purchase Agreement, in case of any issue of new Shares or securities convertible into Shares, subject to certain exceptions, China IC Fund has a pre-emptive right to subscribe for a pro rata portion of such new securities being issued equivalent to the percentage of the issued share capital of  the Company then owned by China IC Fund immediately prior to the issue of such securities. China IC Fund's pre-emptive right is applicable to the issue of the Placing Shares and the Placed PSCS, the Datang Pre-emptive Subscription, the Datang Further Subscription and any Country Hill Pre-emptive Subscription. Pursuant to the China IC Fund Purchase Agreement and the Listing Rules, completion of any such issue of the China IC Fund Subscription Securities to, and subscription of the China IC Fund Subscription Securities by, China IC Fund upon exercise of its pre-emptive right will be further subject to the receipt of any required regulatory approvals and the approval of the independent Shareholders.

Any exercise by China IC Fund of its pre-emptive right to subscribe for the China IC Fund Pre-emptive Securities in connection with the issue of the Placing Shares and the Placed PSCS, the Datang Pre-emptive Subscription and any Country Hill Pre-emptive Subscription will be at a price equivalent to the Placing Price (in the case of the China IC Fund Pre- emptive Shares) and/or the issue price of the Placed PSCS (in the case of the China IC Fund Pre-emptive PSCS).

The Company has notified China IC Fund in accordance with the terms of the China IC Fund Purchase Agreement in respect of the issue of the Placing Shares and the Placed PSCS, the Datang Pre-emptive Subscription, the Datang Further Subscription and the Country Hill Pre-emptive Subscription. Pursuant to the China IC Fund Purchase Agreement, China IC Fund is deemed to have elected not to exercise its pre-emptive right if it does not respond to the notice within ten (10) business days following the date of the notice.

As at the date of this announcement, the Company has been informed by China IC Fund in a non-legally binding letter of intent that it intends to exercise its pre-emptive right in relation to the issue of the Placing Shares and the Placed PSCS, the Datang Pre-emptive Subscription, the Datang Further Subscription and any Country Hill Pre-emptive Subscription, up to the amount it is entitled to under the China IC Fund Purchase Agreement based on terms and conditions that are substantially the same as the Placing and the issue of the Placed PSCS.

China IC Fund has also indicated to the Company that it intends to subscribe for the China IC Fund Further PSCS, in addition to the China IC Fund Pre-emptive PSCS, based on terms and conditions that are substantially the same as the issue of the Placed PSCS, for an aggregate principal amount (for the China IC Fund Further PSCS and China IC Fund Pre- emptive PSCS) amounting up to an aggregate of approximately US$300 million.

The Company will make such further announcement as is necessary under the Listing Rules in relation thereto.

PRE-EMPTIVE RIGHT OF COUNTRY HILL

Reference is made to the Company's announcement dated 18 April 2011 in relation to the Country Hill Subscription Agreement.

Pursuant to the Country Hill Subscription Agreement, in case of any issue of new Shares or securities convertible into Shares, subject to certain exceptions, Country Hill has a preemptive right to subscribe for a pro rata portion of such new securities being issued equivalent to the percentage of the issued share capital of the Company then owned by Country Hill immediately prior to the issue of such securities. Country Hill's pre-emptive right is applicable to the issue of the Placing Shares and the Placed PSCS, the Datang Pre- emptive Subscription, the Datang Further Subscription, the China IC Fund Pre-emptive Subscription and the China IC Fund Further Subscription. Pursuant to the Country Hill Subscription Agreement, completion of any such issue of the Country Hill Pre-emptive Securities to, and subscription of the Country Hill Pre-emptive Securities by, Country Hill upon exercise of its pre-emptive right will be further subject to the receipt of any required regulatory approvals.

Any exercise by Country Hill of its pre-emptive right to subscribe for the Country Hill Pre-emptive Securities in connection with the issue of the Placing Shares and the Placed PSCS, the Datang Pre-emptive Subscription and the China IC Fund Pre-emptive Subscription will be at a price equivalent to the Placing Price (in the case of the Country Hill Pre-emptive Shares) and/or the issue price of the Placed PSCS (in the case of the Country Hill Pre- emptive PSCS).

The Company has notified Country Hill in accordance with the terms of the Country Hill Subscription Agreement in respect of the issue of the Placing Shares and the Placed PSCS, the Datang Pre-emptive Subscription, the Datang Further Subscription, the China IC Fund Pre-emptive Subscription and the China IC Fund Further Subscription. Pursuant to the Country Hill Subscription Agreement, Country Hill is deemed to have elected not to exercise its pre-emptive right with respect to the Country Hill Pre-emptive Securities if it does not respond to the notice within ten (10) business days following the date of the notice.

As at the date of this announcement, the Company has not been notified by Country Hill whether it intends to exercise its pre-emptive right in relation to the issue of the Placing Shares and the Placed PSCS, the Datang Pre-emptive Subscription, the Datang Further Subscription, the China IC Fund Pre-emptive Subscription and the China IC Fund Further Subscription. The Company will make such further announcement as is necessary under the Listing Rules in relation thereto.

SHAREHOLDER LOCK-UP UNDERTAKINGS BY DATANG HK AND XINXIN HK

Reference is made to the information of the Shareholder lock-up undertakings by Datang HK and Xinxin HK as set out in the Company's announcement dated 28 November 2017 in relation to, among other things, the potential exercise of pre-emptive rights by Datang and China IC Fund.

Each of Datang HK and Xinxin HK has given a lock-up undertaking in relation to the Shares held by it directly (or through nominees) for a period of 90 days to facilitate an orderly marketing, distribution and trading of the Placing Shares and the Placed PSCS.

Each of Datang HK and Xinxin HK has also given a lock-up undertaking in relation to the Shares to be issued to it (or its nominees) upon exercise of pre-emptive right by each of Datang (in the case of Datang HK) and China IC Fund (in the case of Xinxin HK) in connection with the Placing for a period of 90 days in order to further facilitate an orderly marketing, distribution and trading of the Placing Shares.

USE OF PROCEEDS

The gross proceeds from the issue of the Placing Shares and the Placed PSCS will be approximately US$394 million.

The net proceeds (net of fees, commissions and expenses) from the issue of the Placing Shares and the Placed PSCS will be approximately US$391 million.

It is estimated that, assuming Datang and China IC Fund each exercise their respective preemptive right, in accordance with their respective letters of intent, the net proceeds (net of fees, commissions and expenses) from the issue of the Placing Shares, the Placed PSCS, the Datang Subscription Securities and the China IC Fund Subscription Securities would be approximately US$969 million.

The Company intends to use the net proceeds (net of fees, commissions and expenses) from the issue of the Placing Shares, the Placed PSCS, the Datang Subscription Securities and the China IC Fund Subscription Securities for the Company's capital expenditure for capacity expansion and other general corporate purposes.

LISTING RULES IMPLICATIONS

As each of  Datang and China IC  Fund is a  substantial shareholder of the Company and thus a connected person of the Company, the Datang Pre-emptive Subscription, the China IC Fund Pre-emptive Subscription, the Datang Further Subscription or the China IC Fund Further Subscription (including any issue of Shares on conversion of the Datang Pre-emptive PSCS, the China IC Fund Pre-emptive PSCS, the Datang Further PSCS and the China IC Fund Further PSCS) will constitute a connected transaction of the Company and will be subject to independent Shareholders' approval under the Listing Rules. As at the date of this announcement, the Company has been informed by each of Datang and China IC Fund in a non-legally binding letter of intent that it intends to fully exercise its pre-emptive right it is  entitled to under the Datang Purchase Agreement (in the case of Datang) or the China IC Fund Purchase Agreement (in the case of China IC Fund) and to subscribe for the Datang Subscription Securities and the China IC Fund Subscription Securities respectively, based on terms and conditions that are substantially the same as the issue of the Placing Shares and/or the Placed PSCS. The Company will make such further announcement as is necessary if any agreement(s) is/are entered into by the Company with Datang or China IC Fund regarding the above matters.

Shareholders and potential investors should note that the completion of the Placing and the completion of the issue of the Placed PSCS are subject to the fulfilment of the conditions under the Placing Agreement and the Placed PSCS Subscription Agreement, respectively. As the Placing, the issue of the Placed PSCS, the Datang Pre-emptive Subscription, the China IC Fund Pre-emptive Subscription, the Datang Further Subscription, the China IC Fund Further Subscription and the Country Hill Pre-emptive Subscription may or may not proceed, Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

For the rest of this announcement please see the full announcement: http://www.smics.com/eng/investors/ir_filings.php   

About SMIC

Semiconductor Manufacturing International Corporation ("SMIC"; NYSE: SMI; SEHK: 981) is one of the leading semiconductor foundries in the world and the largest and most advanced foundry in mainland China. SMIC provides integrated circuit (IC) foundry and technology services on process nodes from 0.35 micron to 28 nanometer. Headquartered in Shanghai, China, SMIC has an international manufacturing and service base. In China, SMIC has a 300mm wafer fabrication facility (fab) and a 200mm fab in Shanghai; a 300mm fab and a majority-owned 300mm fab for advanced nodes in Beijing; 200mm fabs in Tianjin and Shenzhen; and a majority-owned joint-venture 300mm bumping facility in Jiangyin; additionally, in Italy SMIC has a majority-owned 200mm fab. SMIC also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan, and a representative office in Hong Kong.

For more information, please visit www.smics.com.

Safe Harbor Statements

(Under the Private Securities Litigation Reform Act of 1995)

This document contains, in addition to historical information, "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project," "target," and similar expressions to identify forward looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of SMIC's senior management and involve significant risks, both known and unknown, uncertainties and other factors that may cause SMIC's actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements including, among others, risks associated with cyclicality and market conditions in the semiconductor industry, intense competition in the semiconductor industry, SMIC's reliance on a small number of customers, timely wafer acceptance by SMIC's customers, timely introduction of new technologies, SMIC's ability to ramp new products into volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, availability of manufacturing capacity, financial stability in end markets, orders or judgments from pending litigation, intensive intellectual property litigation in semiconductor industry, general economic conditions and fluctuations in currency exchange rates.

In addition to the information contained in this document, you should also consider the information contained in our other filings with the SEC, including our annual report on Form 20-F filed with the SEC on April 27, 2017, especially in the "Risk Factors" section and such other documents that we may file with the SEC or The Hong Kong Stock Exchange Limited ("SEHK") from time to time, including current reports on Form 6-K. Other unknown or unpredictable factors also could have material adverse effects on our future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this document may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated or, if no date is stated, as of the date of this document. Except as may be required by law, SMIC undertakes no obligation and does not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise.

CONTACT:
Investor Relations
+86-21-2081-2804
[email protected]

SOURCE Semiconductor Manufacturing International Corporation

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