Zhejiang Expressway Connected Transaction

 
TIDMZHEH 
 
Hong Kong Stock 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 
             ESTABLISHMENT OF A JOINT VENTURE FOR THE PPP PROJECT 
 
The Board is pleased to announce that on 8 February, 2018, the Company and 
Zhejiang Hongtu have received the notification of award regarding a tender by 
Deqing County Department of Transportation to engage in the construction of 
bridges, tunnels and public service station in the PPP Project. 
 
JOINT VENTURE AGREEMENT 
 
The Company and Zhejiang Hongtu entered into the Joint Venture Agreement 
pursuant to which the Company and Zhejiang Hongtu will establish the Joint 
Venture for purposes of investing into the PPP Project. The Joint Venture 
Agreement takes effect as of the date of this announcement, and sets out, among 
other things, the manner of formation of the Joint Venture, the management of 
the Joint Venture and certain rights and obligations of the shareholders of the 
Joint Venture and their financial commitments to the Joint Venture. 
 
LISTING RULES IMPLICATIONS 
 
Communications Group is a controlling shareholder of the Company. Zhejiang 
Hongtu is an indirect non-wholly owned subsidiary of Communications Group. 
Therefore, Zhejiang Hongtu is a connected person of the Company and as a 
result, the transactions under the Joint Venture Agreement 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 Joint Venture Agreement are more than 0.1% but less than 5%, the 
Joint Venture Agreement is subject to the reporting, announcement and annual 
review requirements but exempt from the independent Shareholders' approval 
requirement under Chapter 14A of the Listing Rules. 
 
INTRODUCTION 
 
The Board is pleased to announce that on 8 February, 2018, the Company and 
Zhejiang Hongtu have received the notification of award regarding a tender by 
Deqing County Department of Transportation to engage in the construction of 
bridges, tunnels and public service station in the PPP Project. 
 
THE PPP PROJECT 
 
The PPP Project involves the construction of bridges, tunnels and public 
service station in Deqing County. The total route length is approximately 14.62 
km and consists of constructing 4 two-way driving lanes, 3 large-sized bridges 
(1,104m), 9 medium-sized bridges (623m), 4.5 tunnels (3,496m) and one public 
service station. The planned construction period is three years. 
 
THE JOINT VENTURE AGREEMENT 
 
Parties 
 
(1)   The Company; and 
(2)   Zhejiang Hongtu. 
 
Establishment of the Joint Venture 
 
The Company and Zhejiang Hongtu will establish the Joint Venture to engage in 
the construction of bridges, tunnels and public service station in Deqing 
County and the Joint Venture Agreement took effect as of the date of this 
announcement. 
 
Registered capital of the Joint Venture 
 
The registered capital of the Joint Venture shall not be less than RMB100 
million and shall be fully paid in time, according to progress of the PPP 
Project and requirements of financing institutions (if applicable) and shall be 
injected within two years. 
 
The initial registered capital shall not be less than 30% or RMB30 million, and 
shall be injected prior to commencement of the PPP Project. 
 
The project capital of the Joint Venture is RMB320 million of which not less 
than RMB100 million shall be the registered capital and shall be contributed by 
the parties in the following proportion: 
 
Name of Shareholder      Capital    % of the total 
                    Contribution  equity interests 
                                      of the Joint 
                                           Venture 
 
                           (RMB) 
 
Company              256,320,000             80.1% 
 
Zhejiang Hongtu       63,680,000             19.9% 
 
Total                320,000,000              100% 
 
The registered capital of the Joint Venture was determined after arm's length 
negotiation between the parties and is based on the funding requirements of the 
Joint Venture. 
 
Responsibilities of the Parties 
 
The Company is responsible for construction management and Zhejiang Hongtu is 
responsible for project construction, operation and maintenance work over the 
operation period. 
 
Board Composition 
 
The board of directors of the Joint Venture shall consist of three directors, 
nominated by the Company and elected by shareholders' meeting. The term of 
office of the directors shall be three years and shall be eligible for 
re-election. The chairman and legal representative shall be nominated by the 
Company. The Joint Venture shall also consist of one supervisor, nominated by 
Zhejiang Hongtu and elected by shareholders' meeting. 
 
Apportionment of Costs 
 
Relevant expenses incurred in the implementation process of the PPP Project 
shall be apportioned according to actual workload undertaken by each party. 
 
Future financing 
 
Additional financing in excess of the registered capital shall first be 
financed by way of bank loans. If guarantees are required from the shareholders 
for financing, the obligations of each shareholder as between themselves is to 
be on a pro rata basis to their respective shareholding. 
 
Restriction on transfers 
 
Shareholders of the Joint Venture may not transfer all or part of the equity 
interests in the Joint Venture within five years (inclusive) from the date of 
establishment. Any equity transfer of the Joint Venture following five years of 
its establishment shall be in accordance with articles of association of the 
Joint Venture. 
 
REASONS FOR AND BENEFITS OF THE TRANSACTIONS 
 
One of the major business of the Company is expressway infrastructure 
investment and construction. The Directors believe that the establishment of 
the Joint Venture will facilitate the Company to better utilize its experience 
and advantages in construction to complement its existing network of 
expressways. The establishment of the Joint Venture is also consistent with the 
Company's core business goals and development strategies. 
 
The Directors (including the independent non-executive Directors) are of the 
view that the terms of the Joint Venture Agreement is 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 IMPLICATIONS 
 
Communications Group is a controlling shareholder of the Company. Zhejiang 
Hongtu is an indirect non-wholly owned subsidiary of Communications Group. 
Therefore, Zhejiang Hongtu is a connected person of the Company and as a 
result, the transactions under the Joint Venture Agreement constitutes 
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 Joint Venture Agreement are more than 0.1% but less than 5%, the 
Joint Venture Agreement is subject to the reporting, announcement and annual 
review requirements but exempt from the independent Shareholders' approval 
requirement under Chapter 14A of the Listing Rules. 
 
INFORMATION ON THE PARTIES 
 
The 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 securities brokerage, investment banking, 
asset management, margin financing and securities lending through Zhejiang 
Zheshang Securities Co., Ltd.. 
 
Zhejiang Hongtu is an indirect non-wholly owned subsidiary of Communications 
Group which is incorporated under the laws of the PRC on 31 October, 2001, and 
Zhejiang Hongtu is an associate of the Company. Zhejiang Hongtu is principally 
engaged in the business of providing construction and technical services for 
road, bridge and tunnel works, marketing and sale of construction materials, 
irrigating works, industrial and civil construction, repairing, maintaining and 
rent service for construction equipment, and investment in transportation 
construction. 
 
DEFINITIONS 
 
In this announcement, unless the context specifies otherwise, the following 
defined expressions have the following meanings: 
 
 "associate"       has the meaning ascribed to it under the Listing Rule 
 
"Board"            the board of Directors 
 
"Communications    Zhejiang Communications Investment Group Co., Ltd.*, a 
Group"             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       has the meaning ascribed to it under the Listing Rule 
shareholder" 
 
"Deqing County     the Department of Transportation* in Deqing County 
Department of 
Transportation" 
 
"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 
 
"Joint Venture"    a joint venture company to be established in the PRC 
                   pursuant to the Joint Venture Agreement 
 
"Joint Venture     the agreement entered into between the Company and Zhejiang 
Agreement"         Hongtu in relation to the formation of the Joint Venture 
 
"Listing Rules"    Rules Governing the Listing of Securities on The Stock 
                   Exchange of Hong Kong Limited 
 
"PPP Project"      The Public-Private-Partnership (PPP) project in respect of 
                   the construction of bridges, tunnels and public service 
                   station from Deqing County to the juncture between Deqing 
                   County and Anji County 
 
"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 
 
"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 
 
"%"                per cent. 
 
"Zhejiang Hongtu"  Zhejiang Hongtu Transportation Construction Company*, a 
                   limited liability company incorporated in the PRC and 
                   non-wholly owned by Communications Group, as at the date of 
                   this announcement. 
 
* English names for reference only 
 
                                                         On behalf of the Board 
                                                  Zhejiang Expressway Co., Ltd. 
                                                                 ZHAN Xiaozhang 
                                                                       Chairman 
 
Hangzhou, the PRC, 8 February, 2018 
 
As at 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 and Mr. DAI Benmeng; and 
the independent non-executive directors of the Company are: Mr. ZHOU Jun, Mr. 
PEI Ker-Wei and Ms. LEE Wai Tsang, Rosa. 
 
 
 
END 
 

(END) Dow Jones Newswires

February 08, 2018 11:16 ET (16:16 GMT)