10 Mar 2016 15:18
ZHEJIANG EXPRESSWAY CO LD - Connected TransactionZHEJIANG EXPRESSWAY CO LD - Connected Transaction
PR Newswire
London, March 10
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
ZHEJIANG EXPRESSWAY CO., LTD(A joint stock limited company incorporated in the People's Republic of China with limited liability)(Stock code: 0576)
CONNECTED TRANSACTION
SHENGZHOU SERVICE STATION AGREEMENTOn 10 March 2016, Shangsan Co and Maintenance Co entered into the Shengzhou Service Station Agreement, pursuant to which Maintenance Co agreed to provide the Construction Services to Shangsan Co at the consideration of RMB19,756,666 (equivalent to approximately HK$23,556,297).
LISTING RULES IMPLICATIONSAs at the date of this announcement, Communications Group holds approximately 67% of the issued share capital of the Company. By virtue of this shareholding interest, Communications Group is a controlling shareholder of the Company. Therefore, Maintenance Co, as an indirect wholly - owned subsidiary of Communications Group, is a connected person of the Company and as a result, under the Chapter 14A of the Listing Rules, the entering into the Shengzhou Service Station Agreement constitutes a connected transaction for the Company.
As the relevant percentage ratio in respect of the fees payable by Shangsan Co pursuant to the Shengzhou Service Station Agreement is over 0.1% but less than 5%, the Shengzhou Service Station Agreement is subject to the reporting and announcement requirements but exempt from the independent Shareholders' approval requirement under Rule 14A.36 of the Listing Rules.
SHENGZHOU SERVICE STATION AGREEMENTOn 10 March 2016, Shangsan Co and Maintenance Co entered into the Shengzhou Service Station Agreement, the principal terms of which are set out below:
| Date: | 10 March 2016 |
| Parties: | (1) Shangsan Co; and |
| (2) Maintenance Co (a connected person of the Company). | |
| Subject matter: | Maintenance Co agreed to provide the Construction Services in respect of the expansion of the Shengzhou Service Station, including wall construction, roadbed construction, slope excavation and concrete slab construction. It is expected that the construction period may last for 210 calendar days. |
| Consideration and basis determining the consideration: | RMB 19, 756, 666 (equivalent to approximately of HK$23,556,297), which was determined as a result of a public tender (the "Shengzhou Tender") of the Construction Services by Shangsan Co, where Maintenance Co has succeeded in its bid pursuant to the terms of the Shengzhou Tender. On 3 November 2015, a tender notice in respect of the Shengzhou Tender was published on the Communications Group's website and www.chinabidding.com.cn. Eleven entities expressed their interest so each of them made the relevant payment to Shangsan Co to obtain the tender documents of the Shengzhou Tender. After their internal consideration, five tenderers (four of them are independent suppliers) eventually submitted their tender. Tender evaluation was conducted by a committee consisting of five experts in this industry. The committee took into account the following in evaluation before deciding to recommend accepting the tender submitted by Maintenance Co: (1) technical and financial capability of each of the tenderers; (2) each tenderer's previous experience on providing the similar services and (3) each tenderer's tendered price in respect of the Construction Services . Such recommendation was subsequently approved and accepted by the management of the Company. |
| Terms of payment: | Maintenance Co shall be entitled to request for payment from Shangsan Co upon incurring costs for t h e Construction Services which exceed RMB1,000,000, whereupon Shangsan Co shall pay the requested amount within 42 days after such request. |
| Price adjustment: | In the event that the actual construction work conducted by Maintenance Co exceeds the expected work as contemplated under the relevant tender documents, the above-mentioned consideration may be subject to a slight upward adjustment provided that such additional work and additional fee have been checked and approved by the management of the Company. |
REASONS FOR AND BENEFITS OF THE TRANSACTIONThe Construction Services are necessary for the expansion of the Shengzhou Service Station. Maintenance Co has the relevant qualifications and expertise to provide such services to the Group. In addition, the Group went through a tender process to select the service provider for the Construction Services. Maintenance Co won the tender so it has been awarded a contract to provide the Construction Services.
Given the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Shengzhou Service Station Agreement are on normal commercial terms, in the ordinary and usual course of business of the Company and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
LISTING RULES IMPLICATIONSAs at the date of this announcement, Communications Group holds approximately 67% of the issued share capital of the Company. By virtue of this shareholding interest, Communications Group is a controlling shareholder of the Company. Therefore, Maintenance Co, as an indirect wholly-owned subsidiary of Communications Group, is a connected person of the Company and as a result, the entering into the Shengzhou Service Station Agreement constitutes a connected transaction for the Company pursuant to the Listing Rules.
As the relevant percentage ratio in respect of the fees payable by Shangsan Co pursuant to the Shengzhou Service Station Agreement is over 0.1% but less than 5%, the Shengzhou Service Station Agreement is subject to the reporting and announcement requirements but exempt from the independent Shareholders' approval requirement under Rule 14A.36 of the Listing Rules.
Each of Mr. Zhan Xiaozhang, Mr. Wang Dongjie, Mr. Dai Benmeng and Mr. Zhou Jianping holds certain senior position in Communications Group, so they have abstained from voting on the board resolution with respect to the approval of the Shengzhou Service Station Agreement. Save for Mr. Zhan Xiaozhang, Mr. Wang Dongjie, Mr. Dai Benmeng and Mr. Zhou Jianping, none of the Directors has any material interest in the Shengzhou Service Station Agreement or is required to abstain from voting on the relevant Board resolutions to approve the same.
INFORMATION ON THE PARTIESThe Company is a joint stock company established under the laws of the PRC with limited liability on 1 March 1997, the H Shares of which are listed on the Main Board of the Stock Exchange. It is principally engaged in investing in, developing and operating high-grade roads in the PRC. The Group also carries on certain other businesses such as operation of gas stations, restaurants and shops in service areas, advertising at expressway interchanges and external road maintenance, as well as securities related business.
Maintenance Co is an indirect wholly-owned subsidiary of Communication Group which is incorporated under the laws of the PRC on 28 January 2014. Maintenance Co is principally engaged in construction of transportation projects and maintenance of toll road.
DEFINITIONSIn this announcement, unless the context specifies otherwise, the following defined expressions have the following meanings:
| "Board" | the board of Directors |
| "Communications Group" | Zhejiang Communications Investment Group Co., Ltd.*, a wholly State-owned enterprise established in the PRC, and the controlling shareholder of the Company |
| "Company" | Zhejiang Expressway Co., Ltd., a joint stock limited company incorporated in the PRC with limited liability |
| "connected person" | has the meaning ascribed to it under the Listing Rules |
| "Construction Services" | construction services to be carried out at the Shengzhou Service Station, including wall construction, roadbed construction, slope excavation and concrete slab construction |
| "controlling shareholder" | has the meaning ascribed to it under the Listing Rules |
| "Director(s)" | the directors of the Company |
| "Group" | the Company and its subsidiaries |
| "H Shares" | overseas listed foreign shares in the share capital of the Company with a nominal value of RMB1 per share, which are listed on the Main Board of the Stock Exchange |
| "Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
| "HK$" | Hong Kong dollars, the lawful currency of Hong Kong |
| "Listing Rules" | Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited |
| "Maintenance Co" | Zhejiang Expressway Maintenance Co., Ltd.*, a company incorporated in the PRC and an indirect wholly-owned subsidiary of Communications Group |
| "percentage ratio" | has the meaning ascribed to it under Rule 14.04(9) of the Listing Rules |
| "PRC" | the People's Republic of China (for the purpose of this announcement, excludes Hong Kong, Macau and Taiwan) |
| "RMB" | Renminbi, the lawful currency of the PRC |
| "Shangsan Co" | Zhejiang Shangsan Expressway Co., Ltd., a company incorporated in thePRC and a 73.625% owned subsidiary of the Company |
| "Shareholder(s)" | holder(s) of the share(s) of the Company |
| "Shengzhou Service Station" | the service station owned by the Company in the service area in Shengzhou along the Shangsan Expressway |
| "Shengzhou Service Station Agreement" | the agreement dated 10 March 2016 entered into between Shangsan Co and Maintenance Co pursuant to which Maintenance Co agreed to provide certain construction services in connection with the expansion of the Shengzhou Service Station |
| "Stock Exchange" | The Stock Exchange of Hong Kong Limited |
| "subsidiary(ies)" | has the meaning ascribed to it under the Listing Rules |
| "%" | per cent. |
| * English names for reference only. | |
On behalf of the Board ZHEJIANG EXPRESSWAY CO., LTD.ZHAN Xiaozhang Chairman
Hangzhou, PRC, 10 March 2016
As of the date of this announcement, the executive directors of the Company are: Mr. ZHAN Xiaozhang, Mr. CHENG Tao and Ms. LUO Jianhu; the non-executive directors of the Company are: Mr. WANG Dongjie, Mr. DAI Benmeng and Mr. ZHOU Jianping; and the independent non-executive directors of the Company are: Mr. ZHOU Jun, Mr. PEI Ker-Wei and Ms. LEE Wai Tsang Rosa.