21st Oct 2010 17:58
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong KongLimited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim anyliability whatsoever for any loss howsoever arising from or in reliance uponthe whole or any part of the contents of this announcement. (A joint stock limited company incorporated in the People´s Republic of China with limited liability) (Stock code: 0576) (1) DISCLOSEABLE TRANSACTION ACQUISITION OF THE REMAINING 44.225% EQUITY INTEREST ZHEJIANG EXPRESSWAY INVESTMENT DEVELOPMENT CO., LTD AND (2) FURTHER CAPITAL INJECTION INTO ZHESHANG SECURITIES CO., LTD.
(1) ACQUISITION OF THE REMAINING 44.225% EQUITY INTEREST IN DEVELOPMENT CO
Reference is made to the First Announcement on 23 August 2010 in relation to the acquisition of 4.775% equity interest in Development Co.
The Board announces that the Company has entered into Further Acquisition Agreements with the Remaining Vendors of Development Co to acquire the remaining 44.225% equity interest in Development Co. Upon completion of the Further Acquisitions, Development Co will become a wholly-owned subsidiary of the Company. Listing Rules implications
As one of the applicable percentage ratios (as defined in Rule 14.07 of the
Listing Rules) is more than 5% but less than 25%, the transactions contemplated under the Further Acquisition Agreements together constitute a discloseable
transaction under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirements as set out in Rule 14.33 of the
Listing Rules.
As the Further Acquisitions are subject to the approval of the State Asset Management Bureau of the Zhejiang Provincial Government, the Further Acquisitions may or may not proceed. Shareholders of the Company and potential investors should therefore exercise caution when dealing in the shares of the Company.
(2) FURTHER CAPITAL INJECTION INTO ZHESHANG SECURITIES The Board announces that on 20 October 2010, Shangsan Co, a subsidiary of the Company, entered into an agreement with Zheshang Securities pursuant to which Shangsan Co agreed to inject a further amount of capital of RMB871 million
(approximately HK$1,013 million) into Zheshang Securities as a pro rata further contribution to the equity capital of Zheshang Securities. Together with an
initial injection of RMB1,174 million (approximately HK$1,365 million) into thecapital of Zheshang Securities, Shangsan Co has contributed a total of RMB2,045million (approximately HK$2,377 million) into the capital of Zheshang Securities.
ACQUISITION OF THE REMAINING 44.225% EQUITY INTEREST IN DEVELOPMENT CO
Reference is made to the First Announcement on 23 August 2010. Unless otherwise defined, capitalised terms used in this announcement shall have the same meanings as those defined in the First Announcement.
FURTHER ACQUISITION AGREEMENTS
Dates
20 agreements entered into between 13 August 2010 and 14 October 2010@#
Parties
The Remaining Vendors respectively@#
The Company
Assets to be acquired
The remaining 44.225% equity interest in Development Co not already owned by the Company
Consideration
The aggregate consideration for the Further Acquisitions is RMB88 million (equivalent to approximately HK$102 million) and the consideration will be satisfied by the Company in cash.
The consideration for the Further Acquisitions was determined after arm´s length negotiation between the parties based on normal commercial terms and with reference to the audited net asset value of Development Co for the year ended 31 December 2009.
Condition precedent
The Further Acquisition Agreements are conditional on obtaining the approval of the State Asset Management Bureau of the Zhejiang Provincial Government.
Completion
The Further Acquisition Agreements shall take effect on the date on which thecondition precedent has been satisified. Completion of the Further AcquisitionAgreements shall take place when the consideration for the Further Acquisitionis settled in full and the Remaining Vendors execute the relevant transferdocuments pertaining to the Further Acquisitions. Upon completion, DevelopmentCo will become a wholly-owned subsidiary of the Company.
INFORMATION ON THE GROUP
The Company is a joint stock company established under the laws of the PRC withlimited liability on 1 March 1997, the H Shares of which are listed on the MainBoard of the Stock Exchange. The main business of the Group is the investmentin, operation and management of, and collection of tolls on the Expressways.The Group also carry out certain ancillary businesses such as automobileservicing, operation of gas stations and billboard advertising along theExpressways, as well as securities business.
INFORMATION ON DEVELOPMENT CO
Development Co is a limited liability company incorporated in the PRC on 28 May2003. The registered capital of Development Co is RMB120 million (equivalent toapproximately HK$140 million). Immediately after the Completion of the FurtherAcquisitions, Development Co will be a wholly-owned subsidiary of the Company.Development Co is principally engaged in the operation of the Services Areaalong the 247.6km Shanghai-Hangzhou-Ningbo Expressway and the 142km ShangshanExpressway in the Zhejiang Province owned by the Company and Shangsan Corespectively, and through its subsidiaries, billboard advertising as well asvehicle servicing operations along the two expressways.
The net asset attributable to owners of Development Co based on its audited financial statements for the financial year ended 31 December 2009 is RMB199 million (equivalent to approximately HK$231 million).
The net profit/(loss) before and after tax and extraordinary items of Development Co based on its audited financial statements for the financial years ended 31 December 2008 and 2009 are as follows:
For the For the period ended period ended 31 December 31 December 2008 2009 RMB´000 RMB´000 net profit/(loss) before tax and extraordinary 100,718 68,032items net profit/(loss) after tax and extraordinary 84,405
46,709
items
REASONS FOR AND BENEFITS OF THE FURTHER ACQUISITIONS
As set out in the First Announcement, pursuant to the Opinion, save incircumstances set out in the Opinion, employees of state-owned enterprise maynot directly or indirectly hold shares in the affiliates and subsidiaries ofstate-owned enterprise. Senior and middle management staff of the state-ownedenterprise holding such shares are required to transfer such shares or toresign from their office. The Remaining Vendors have agreed to sell their44.225% equity interest in Development Co to the Company in accordance with theOpinion.
To the best of the Directors´ knowledge, information and belief having made all reasonable enquiry, the Key Employees are Independent Third Parties.
The Directors (including all of the independent non-executive Directors) believe that the terms of the transaction are fair and reasonable and in the interests of the shareholders as a whole.
GENERAL
Upon completion of the Further Acquisitions, Development Co will become a wholly-owned subsidiary of the Company.
FURTHER CAPITAL INJECTION INTO ZHESHANG SECURITIES
BACKGROUND
On 20 October 2010, Shangsan Co, a subsidiary of the Company, entered into anagreement with Zheshang Securities pursuant to which Shangsan Co agreed toinject a further amount of capital of RMB871 million (approximately HK$1,013million) into Zheshang Securities by cash.In conjunction with the offer by Zheshang Securities to Shangsan Co to injectadditional capital into Zheshang Securities, Zheshang Securities also invitedother of its then shareholders to inject additional capital into ZheshangSecurities in proportion to their respective then equity interests in ZheshangSecurities. The amount of RMB871 million (approximately HK$1,013 million)includes the contribution by Shangsan Co in proportion to its then equityinterests in Zheshang Securities and the equity interests not taken up bycertain other shareholders in Zheshang Securities.Together with an initial injection of RMB1,174 million (approximately HK$1,365million) into the capital of Zheshang Securities, Shangsan Co has contributed atotal of around RMB2,045 million (approximately HK$2,377 million) into thecapital of Zheshang Securities.After the Further Capital Injection, the registered capital of ZheshangSecurities increased from RMB2,120 million to RMB2,915 million and Shangsan Coowned as to 71.0398% of the capital of Zheshang Securities. The remaining28.9602% of the capital of Zheshang Securities is owned by other shareholders,which, to the best of the Directors' knowledge, information and belief andafter having made all reasonable enquiry, are all Independent Third Parties.
FUNDING
The Further Capital Injection was funded by internal resources of Shangsan Co.
EFFECTIVE DATE OF FURTHER CAPITAL INJECTION
The Further Capital Injection will be effective as and when approval thereof is obtained from the CSRC.
REASONS OF THE FURTHER CAPITAL INJECTION
The Further Capital Injection will increase the net capital of ZheshangSecurities and, the Directors believe will set out a more solid foundation forits involvement in more advanced trading activities, and allow ZheshangSecurities to apply to the CSRC in respect of the licence to conduct margintrading. By expanding the scope of business of Zheshang Securities, ZheshangSecurities will become more competitive in the capital market of the PRC.
INFORMATION OF SHANGSAN CO
Apart from the 71.0398% shareholding interest in Zheshang Securities, ShangsanCo owns and operates the Group's business relating to collection of road tollsin respect of the Shangsan Expressway.DEFINITIONS"Ancillary Businesses" ancillary businesses of the Group involving billboard advertising, operation of the Service Areas and the business of provision of towing and repair of vehicles and emergency services to users on the Expressways; "associate" has the same meaning given to it under the Listing Rules; "Board" the board of directors of the Company; "Company" Zhejiang Expressway Co., Ltd.; "CSRC" China Securities Regulatory Commission
(ä¸åœ‹è¨¼åˆ¸ç›£ç£ç®¡ç†å§"å"¡
会); "Development Co" Zhejiang Expressway Investment Development Co., Ltd., a 55.775% owned subsidiary of the Company; "Directors" the directors of the Company; "Expressways" Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway "First Announcement" the announcement made on 23 August 2010; "Further Acquisitions" the acquisition by the Company from the Remaining Vendors of the 44.225% equity interest in Development Co pursuant to the terms and conditions of the Further Acquisition Agreements; "Further Acquisition the conditional sale and purchase agreements Agreements" entered into between 13 August 2010 to 14 October 2010 between the Remaining Vendors and the Company relating to the Further Acquisitions; "Further Capital Injection" the contribution by, amongst others, Shangsan Co of an amount of RMB871 million into the capital of Zheshang Securities; "Group" the Company and its subsidiaries; "HK$" Hong Kong dollars, the lawful currency of Hong Kong; "Hong Kong" the Hong Kong Special Administrative Region of the PRC; "Independent Third Parties" independent third party/parties not connected with the directors, supervisors, substantial shareholders of the Company or any of its subsidiaries or their respective associates; "Key Employees" 133 key employees of the Group who are mainly managers and technical staff involved in the operation of the Ancillary Businesses, and who own in aggregate 44.225% of the equity interest in the registered share capital of Development Co; "Listing Rules" The Rules Governing the Listing of Securities on the Stock Exchange; "PRC" The People´s Republic of China; "Remaining Vendors" 10 individual acting as nominees of the Key Employees; and "RMB" Renminbi, the lawful currency of the PRC; "Service Areas" service areas along the Expressways which provide food catering, petrol filing, parking and vehicle repair services for users of the Expressways; "Shanghai-Hangzhou- Ningbo the 247.5km Shanghai-Hangzhou-Ningbo Expressway in Expressway" the Zhejiang Province owned by the Group "Shangsan Co" Zhejiang Shangsan Expressway Co., Ltd
(浙江上三高速å...¬è·¯æœ‰é™å...¬
å¸), a 73.625% owned subsidiary of the Company in the PRC; "Shangsan Expressway" the 142km Shangsan Expressway in Zhejiang Province owned by Shangsan Co "Stock Exchange" The Stock Exchange of Hong Kong Limited; and
"Zheshang Securities" Zheshang Securities Co., Ltd. (浙商è‰åˆ¸æœ‰é™è²¬ä»»å...¬å¸ï¼‰, a
limited liability company incorporated in the PRC in May 2002.
In this announcement, the translation of RMB into HK$ is based on the exchange of rate of HK$1 to RMB0.86. Such conversion shall not be construed as a representation that amounts in RMB were or may have been converted into HK$ using such exchange rate or any other exchange rate or at all.
By Order of the Board Zhejiang Expressway Co., Ltd Zhang Jingzhong Company Secretary
Hangzhou, PRC, 21 October 2010
As at the date of this announcement, the executive directors of the Companyare: Messrs. Chen Jisong, Zhan Xiaozhang, Jiang Wenyao and Zhang Jingzhong andDing Huikang; the non-executive directors are: Mrs. Zhang Luyun; and theindependent non-executive directors are: Messrs. Tung Chee Chen, Zhang Junshengand Zhang Liping.
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