28 Jun 2007 09:03
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims 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) Discloseable Transaction Further Capital Injection into Zheshang Securities
The Board announces that on 6 June 2007, Shangsan Co, a subsidiary of the Company, entered into an agreement with Zheshang Securities pursuant to which Shangsan Co injected a further amount of capital of RMB704,615,400 (approximately HK$718,707,700) into Zheshang Securities. Together with an initial injection of RMB600 million (approximately HK$612 million) into the capital of Zheshang Securities, Shangsan Co has contributed a total of around RMB1,305 million (approximately HK$1,331 million) into the capital of Zheshang Securities.
The Further Capital Injection constitutes a discloseable transaction of the Company under the Listing Rules.
A circular setting out details of the Further Capital Injection will be despatched to the Shareholders as soon as practicable.
Background
On 6 June 2007, Shangsan Co, a subsidiary of the Company, entered into anagreement with Zheshang Securities pursuant to which Shangsan Co injected afurther amount of capital of RMB704,615,400 (approximately HK$718,707,700) intoZheshang Securities by cash. Together with an initial injection of RMB600million (approximately HK$612 million) into the capital of Zheshang Securities,Shangsan Co has contributed a total of around RMB1,305 million (approximatelyHK$1,331 million) into the capital of Zheshang Securities.In conjunctive 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. Immediately before the acceptance of the offers by ShanghaiTelecommunications, Shanghai Transportation and Zhejiang Real Estate, each ofthem transferred their remaining shareholding in Zheshang Securities to certainthird parties which are PRC incorporated companies, details of which are setout in the table below titled "Change in shareholding of Zheshang Securitiespursuant to the Further Capital Injection and Equity Interest Transfers". Thesesuccessors together with other shareholders of Zheshang Securities, namelyShangsan Co, Tonghe Investment and Taizhou State-Owned have taken up the offersand injected the relevant amounts of capital into Zheshang Securities.After the Further Capital Injection, the registered capital of ZheshangSecurities increased from RMB520 million to RMB1,520 million and Shangsan Coowned as to 70.4615% of the capital of Zheshang Securities. The remaining29.5385% of the capital of Zheshang Securities was 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.
Change in shareholding of Zheshang Securities pursuant to the Further Capital Injection and Equity Interest Transfers
Details of percentage shareholding of Zheshang Securities immediately beforeand after the Further Capital Injection and Equity Interest Transfers are asfollows: Percentage of Percentage of holding in the holding in the equity capital equity capital immediately prior to immediately after the Further Capital the Further Capital Injection and Injection and Equity Interest Equity InterestName of the equity holders Transfers Transfers Shangsan Co 70.4615% 70.4615%Tonghe Investment 4% 4%Taizhou State-Owned 4% 4%Shanghai Telecommunications 10% -Shanghai Transportation 7.6924% -Zhejiang Real Estate 3.8461% -Yiwu Yuzhong Investment - 4.8%Zhejiang Zhongyi - 2%Lishui Hexin Investment - 3.2%Xizi United - 3.8462%Lanzhou Xinxing - 3.8462%Zhejiang Yulong - 2.6923%Zhejiang Hexin - 1.1538% ¯¼¯¼¯¼¯¼¯¼¯¼¯¼ ¯¼¯¼¯¼¯¼¯¼¯¼¯¼ 100% 100% ============= =============Note:
(1) Shanghai Telecommunications, before taking up the offer by Zheshang
Securities, transferred its remaining 10% equity interest in Zheshang
Securities to Yiwu Yuzhong Investment (4.8%), Zhejiang Zhongyi (2%) and Lishui
Hexin Investment (3.2%) respectively.
(2) Shanghai Transportation, before taking up the offer by Zheshang Securities,
transferred its remaining 7.6924% equity interest in Zheshang Securities to
Xizi United and Lanzhou Xinxing respectively in equal share.
(3) Zhejiang Real Estate, before taking up the offer by Zheshang Securities,
transferred its remaining 3.8461% equity interest in Zheshang Securities to
Zhejiang Yulong (2.6923%) and Zhejiang Hexin (1.1538%) respectively.
Funding
The Further Capital Injection was partially funded by internal resources of Shangsan Co and internal financing arrangements of the Group. Details of arrangements of the internal financing arrangements of the Group were set out in an announcement of the Company dated 30 May 2007.
Effective Date of Further Capital Injection
The Further Capital Injection will be effective as and when approval thereof is obtained from the CSRC.
Impact of the Further Capital Injection to Shangsan Co
Pending approval of the Further Capital Injection, Shangsan Co has contributedan aggregate amount of around RMB1,305 million (approximately HK$1,331 million)into the capital of Zheshang Securities. This corresponds to 70.4615% of theequity interests in Zheshang Securities.
Based on audited accounts of Zheshang Securities, net assets of Zheshang Securities amount to approximately negative RMB188 million (approximately negative HK$191 million) and approximately RMB779 million (approximately HK$795 million) as at 31 December 2005 and 2006 respectively.
The audited profits after taxation and extraordinary items of Zheshang Securities amount to approximately RMB719 million (approximately HK$733 million) for the year ended 31 December 2005. The audited profits after taxation of Zheshang Securities amount to approximately RMB203 million (approximately HK$207 million) for the year ended 31 December 2006.
* the accounts for the year ended 31 December 2005 are prepared in accordance
with accounting standards commonly accepted in the PRC, whilst those for the
year ended 31 December 2006 are prepared in accordance with Hong Kong Financial
Reporting Standards issued by the Hong Kong Institute of Certified Public
Accountants.
Reasons of the Transaction
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, including but not limitedto the trading in share index futures.
By expanding the scope of business of Zheshang Securities, Zheshang Securities will become more competitive in the capital market of the PRC.
Discloseable Transaction
The Further Capital Injection constitutes a discloseable transaction of the Company under the Listing Rules.
As some of the applicable percentage ratios in respect of the Further CapitalInjection is more than 5% but less than 25%, such capital injection constitutesa discloseable transaction under the Listing Rules. A circular setting outdetails of the Further Capital Injection will be despatched to the Shareholdersas soon as practicable.
Zheshang Securities is engaged in securities trading business, underwriting of securities offering, investment advisory and other related activities as authorized by the CSRC from time to time.
Information of the Group and Shangsan Co
The Company was incorporated on 1 March 1997 in the PRC and is a joint stocklimited company with a registered share capital of RMB4,343,114,500(approximately HK$4,429,976,790) at present. The main business of the Group isinvestment in, development, operation, management, and collection of tolls, ofthe Shanghai-Hangzhou-Ningbo Expressway and the Shangsan Expressway, both inthe Zhejiang Province of the PRC, and businesses ancillary to the operation ofthe expressways, such as billboard advertising and operation of service areason the expressways.Apart from the 70.4615% shareholding interest in Zheshang Securities, ShangsanCo owns and operates the Group's business relating to collection of road tollsin respect of the Shangsan Expressway.
Definitions
In this announcement, the following expressions have the meanings set out below unless the context requires otherwise.
"associate" has the same meaning given to it under the Listing Rules; "Company" Zhejiang Expressway Co., Ltd.; "CSRC" China Securities Regulatory Commission ; "Directors" the directors of the Company; "Further Capital the contribution by, amongst others, Shangsan Co of Injection" an amount of RMB704,615,400 into the capital of Zheshang Securities; "Group" the Company and its subsidiaries; "HK$" Hong Kong dollars, the lawful currency of the Hong Kong Special Administrative Region; "Independent Third Independent third party/parties not connected with Party/Parties" the directors, supervisors, substantial shareholders of the Company or any of its subsidiaries or their respective associates; "Lanzhou Xinxing" Lanzhou Xinxing Heating Co., Ltd., a PRC incorporated limited liability company; "Lishui Hexin Lishui Hexin Investment Co., Ltd., a PRC Investment" incorporated limited liability company; "Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited; "percentage ratios" has the meaning as ascribed to it under the Listing Rules, as applicable to the transactions pursusnt to the aforementioned further capital injection and the Loan Agreement respectivley; "PRC" the People's Republic of China; "RMB" renminbi, the lawful currency of the PRC; "Shanghai Shanghai National Telecommunications Co., Ltd., a Telecommunications" PRC incorporated limited liability company; "Shanghai Shanghai Jiao Yun Co., Ltd., a PRC incorporated Transportation" limited liability company; "Shangsan Co" Zhejiang Shangsan Expressway Co., Ltd., a PRC-incorporated company; "Shareholders" the shareholders of the Company;
"Taizhou State-Owned" Taizhou State-owned Assets Operations Co., Ltd., a
company solely owned by the State of the PRC: "Tonghe Investment" Tonghe Investment Holdings Co., Ltd., a PRC incorporated limited liability company; "Xizi United" Xizi United Holding Co., Ltd., a PRC incorporated limited liability company; "Yiwu Yuzhong Yiwu Yuzhong Investment Co., Ltd., a PRC Investment" incorporated limited liability company; "Zhejiang Hexin" Zhejiang Hexin Investment Management Co., Ltd., a PRC incorporated limited liability company;
"Zhejiang Real Estate" Zhejiang Hexin Estate Co., Ltd., a PRC incorporated
limited liability company; "Zhejiang Yulong" Zhejiang Yulong Industrial Co., Ltd., a PRC incorporated limited liability company; "Zhejiang Zhongyi" Zhejiang Zhongyi Group Co., Ltd., a PRC incorporated limited liability company; and
"Zheshang Securities" Zheshang Securities Co., Ltd., a limited liability company incorporated in the PRC in May 2002. The exchange rate used for reference purpose in this announcement is HK$1.02 toRMB1.00. By Order of the Board Zhang Jingzhong Company Secretary
Hangzhou, the PRC, 27 June 2007
As at the date of this announcement, the executive Directors are: Messrs. GengXiaoping, Fang Yunti, Zhang Jingzhong and Jiang Wenyao; the non-executiveDirectors are: Messrs. Zhang Luyun and Zhang Yang; and the independentnon-executive Directors are: Messrs. Tung Chee Chen, Zhang Junsheng and ZhangLiping.
ZHEJIANG EXPRESSWAY CO LD