8 Sep 2016 17:03
ZHEJIANG EXPRESSWAY CO LD - Disposal of Maintenance EquipmentZHEJIANG EXPRESSWAY CO LD - Disposal of Maintenance Equipment
PR Newswire
London, September 8
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 DISPOSAL OFMAINTENANCE EQUIPMENT
THE DISPOSAL AGREEMENTSOn 8 September 2016, the Company and the relevant subsidiaries of the Company entered into the Disposal Agreements with Maintenance Co, pursuant to which the Company and the relevant subsidiaries of the Company agreed to dispose of the Maintenance Equipment to Maintenance Co.
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 a controlling subsidiary of Communications Group, is a connected person of the Company and as a result, the transactions under the Disposal Agreements constitute connected transactions for the Company under Chapter 14A of the Listing Rules.
As the applicable percentage ratios in respect of the transactions contemplated under the Disposal Agreements, on an aggregated basis, are more than 0.1% but less than 5%, the Disposal Agreements are subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.
THE DISPOSAL AGREEMENTSPrincipal terms of the Disposal Agreements are set out below:
| Date: | 8 September 2016 |
| Parties: | (1) the Company and the relevant subsidiaries of the Company (namely Shangsan Co and Jiaxing Co); and |
| (2) Maintenance Co | |
| Subject matter: | Maintenance Co agreed to acquire the Maintenance Equipment, which include pavers, roller, loader, air compressor and caution vehicles |
| Consideration and basis of theconsideration: | the aggregate consideration payable by Maintenance Co of the for the Maintenance Equipment is RMB35,532,756, which was determined based on the valuation of the Maintenance Equipment as at 31 March 2016 conducted by a valuer engaged by the Company using replacement cost method. The consideration is equivalent to the valuation of the Maintenance Equipment conducted by the valuer. |
| Terms of payment: | the consideration for the Maintenance Equipment shall be payable by Maintenance Co as follows: |
| (i) 30% of the consideration to be payable on or before 31 December 2016; | |
| (ii) 30% of the consideration to be payable on or before 31 December 2017; and | |
| (iii) 40% of the consideration to be payable on or before 31 December 2018. | |
| Conditions precedent: | The effectiveness of the Disposal Agreements shall be conditional upon satisfaction of the following conditions precedent: |
| (i) the Disposal Agreements and the transactions contemplated thereunder having been approved by the Board of the Company; and | |
| (ii) the Disposal Agreements and the transactions contemplated thereunder having been approved by the board of directors of Maintenance Co. | |
| Completion: | Completion of the Disposal will take place within 10 business days after the Disposal Agreements becoming effective. The completion of one Disposal Agreement is not inter-conditional upon completion of the other Disposal Agreements. |
REASONS FOR AND BENEFITS OF THE TRANSACTIONMaintenance Co was established in 2014 as a subsidiary of the Company until the disposal of its entire equity interest by the Company to Communications Group in September 2015. Prior to the establishment of Maintenance Co the Company had acquired the Maintenance Equipment for the purpose of carrying out road maintenance work. After the disposal of Maintenance Co the Company no longer has the technical capability or personnel to carry out road maintenance work by itself and the Company mainly engages qualified service provider to carry out such work through public tender. The Maintenance Equipment has therefore become redundant for the Company and the Board considers that it would be appropriate to dispose of the same in return for cash.
Given the above, the Directors (including the independent non-executive Directors) are of the view that the terms of the Disposal Agreements 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.
The Company expects to record a profit of approximately RMB5,304,000 on disposal of the Maintenance Equipment calculated on the basis of the book value of the Maintenance Equipment in the aggregate sum of approximately RMB29,069,000 as at the date of valuation. The net proceeds from the Disposal (after deduction of relevant transaction costs and expenses) is expected to be approximately RMB34,374,000, which will be used by the Group as working capital.
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 a controlling subsidiary of Communications Group, is a connected person of the Company and as a result, the transactions under the Disposal Agreements constitute connected transactions for the Company under Chapter 14A of the Listing Rules.
As the applicable percentage ratios in respect of the transactions contemplated under the Disposal Agreements, on an aggregated basis, are more than 0.1% but less than 5%, the Disposal Agreements are subject to the reporting, announcement and annual review requirements but exempt from the independent Shareholders' approval requirement under Chapter 14A 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 Disposal Agreements. 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 Disposal Agreements 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 a controlling subsidiary of Communications 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 |
| "controlling shareholder" | has the meaning ascribed to it under the Listing Rules |
| "Director(s)" | the directors of the Company |
| "Disposal" | the disposal of the Maintenance Equipment to Maintenance Co in accordance with the terms of the Disposal Agreements |
| "Disposal Agreements" | four agreements entered into between the Company and the relevant subsidiaries of the Company on one hand and Maintenance Co on the other hand dated 8 September 2016 in respect of the Disposal |
| "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 |
| "Jiaxing Co" | (Zhejiang Jiaxing Expressway Co., Ltd.*), a 99.9995% owned subsidiary of the Company |
| "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 a controlling subsidiary of Communications Group |
| "Maintenance Equipment" | Road maintenance equipment including pavers, roller, loader, air compressor and caution vehicles |
| "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 73.625% owned subsidiary of the Company |
| "Shareholder(s)" | holder(s) of the share(s) of the Company |
| "Stock Exchange" | The Stock Exchange of Hong Kong Limited |
| "subsidiary(ies)" | has the meaning ascribed to it under the Listing Rules |
| * English names for reference only | |
On behalf of the BoardZHEJIANG EXPRESSWAY CO., LTD.ZHAN XiaozhangChairman
Hangzhou, PRC, 8 September 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.