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 
                    INDEPENT FINANCIAL ADVISER AGREEMENT 
 
THE INDEPENT FINANCIAL ADVISER AGREEMENT 
 
On May 12, 2017, Zheshang Securities, an indirect non wholly-owned subsidiary 
of the Company, entered into the Independent Financial Adviser Agreement with 
Zhejiang Communications Technology (formerly known as Jiangshan Chemical), a 
non wholly-owned subsidiary of the controlling shareholder of the Company, and 
Dongxing Securities, an independent third party, pursuant to which Zhejiang 
Communications Technology agreed to appoint Zheshang Securities and Dongxing 
Securities, as joint independent financial advisers, to provide financial 
advisory services with respect to its Substantial Assets Transaction. 
 
LISTING RULES IMPLICATIONS 
 
As at the date of this announcement, Communications Group is a controlling 
shareholder of the Company. Zhejiang Communications Technology is a non 
wholly-owned subsidiary of Communications Group. Therefore, Zhejiang 
Communications Technology is a connected person of the Company and as a result, 
the transaction under the Independent Financial Adviser Agreement constitutes a 
connected transaction for the Company under Chapter 14A of the Listing Rules. 
 
As the applicable percentage ratios in respect of the transaction contemplated 
under the Independent Financial Adviser Agreement are more than 0.1% but less 
than 5%, the Independent Financial Adviser 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 with respect to the Independent Financial Adviser Agreement will be 
disclosed in the Company's annual report for the year ended December 31, 2017. 
 
THE INDEPENT FINANCIAL ADVISER AGREEMENT 
 
On May 12, 2017, Zheshang Securities, an indirect non wholly-owned subsidiary 
of the Company, entered into the Independent Financial Adviser Agreement with 
Zhejiang Communications Technology (formerly known as Jiangshan Chemical), a 
non wholly-owned subsidiary of the controlling shareholder of the Company, and 
Dongxing Securities, an independent third party, pursuant to which Zhejiang 
Communications Technology agreed to appoint Zheshang Securities and Dongxing 
Securities, as joint independent financial advisers, to provide financial 
advisory services with respect to its Substantial Assets Transaction. 
 
Principal terms of the Independent Financial Adviser Agreement are set out 
below: 
 
Date:          May 12, 2017 
 
Parties:       (1)    Zhejiang Communications Technology; 
               (2)    Zheshang Securities; and 
               (3)    Dongxing Securities 
 
Underlying     Zhejiang Communications Technology's acquisition of the 100.00% 
transaction:   equity interests in Zhejiang Communications Engineering and 
               raising counterpart funds (the "Substantial Assets Transaction 
               "). 
 
Term:          From May 12, 2017 to the date of completion of the Substantial 
               Assets Transaction 
 
Scope of       Zheshang Securities and Dongxing Securities agreed to provide 
services:      financial advisory services with respect to the Substantial 
               Assets Transaction as joint independent financial advisers, 
               including but not limited to conducting due diligence, issuing 
               the independent financial advisers report and filing relevant 
               documents with the China Securities Regulatory Commission. 
 
Consideration: RMB24,000,000, of which Zheshang Securities and Dongxing 
               Securities will be paid 80% and 20% respectively 
 
Basis of       The consideration was determined based on the price tendered 
consideration: during the bidding process. The tenderers with the lowest price 
               would be selected and appointed as the independent financial 
               advisers for the Substantial Assets Transaction. 
 
Payment:       The  consideration is paid in three installments: (i) 
               RMB1,000,000 within five working days after disclosure of 
               Substantial Assets Transaction plans, (ii) RMB15,000,000 within 
               five working days after completion of business registration of 
               the assets under the Substantial Assets Transaction, and (iii) 
               RMB8,000,000 upon completion of financing of the Substantial 
               Assets Transaction. 
 
Governing law: PRC law 
 
Due to the inadvertence of the management, the Independent Financial Adviser 
Agreement was discovered only during the annual review process of the connected 
transactions entered into for the financial year ended 2017. As the applicable 
percentage ratios in respect of the transaction contemplated under the 
Independent Financial Adviser Agreement are more than 0.1% but less than 5%, 
thus, such transaction is subject to the reporting, annual review and 
announcement requirements, but exempt from independent shareholders' approval 
requirements. 
 
Failure to disclose this transaction constitutes a breach of the Listing Rules. 
The Company will take steps to strengthen its internal control measures to 
monitor connected transactions going forward, in order to avoid repeating 
similar breach. In this regard, the Company will review the internal 
communication and reporting system and practice with the relevant departments 
and staff, particularly over the reporting of potential connected transactions. 
 
REASONS FOR AND BENEFITS OF THE TRANSACTIONS 
 
Financial advisory services is one of the major business of Zheshang 
Securities. The income generated from financial advisory services accounted for 
a significant proportion of Zheshang Securities' total revenue in the past few 
years. By entering into the Independent Financial Adviser Agreement, Zheshang 
Securities was able to earn the advisory fees and participate in a transaction 
which had significant influence in the PRC capital market, thus strengthening 
its position as a leader in the financial services market in Zhejiang. 
 
Given the above, the Directors (including the independent non-executive 
Directors) are of the view that the terms of the Independent Financial Adviser 
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 IMPLICATIONS 
 
As at the date of this announcement, Communications Group is a controlling 
shareholder of the Company. Zhejiang Communications Technology is a non 
wholly-owned subsidiary of Communications Group. Therefore, Zhejiang 
Communications Technology is a connected person of the Company and as a result, 
the transaction under the Independent Financial Adviser Agreement constitute 
connected transactions for the Company under Chapter 14A of the Listing Rules. 
 
As the applicable percentage ratios in respect of the transaction contemplated 
under the Independent Financial Adviser Agreement are more than 0.1% but less 
than 5%, the Independent Financial Adviser 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 with respect to the Independent Financial Adviser Agreement will be 
disclosed in the Company's annual report for the year ended December 31, 2017. 
 
None of the Directors have a material interest in the transaction contemplated 
under the Independent Financial Adviser Agreement and none are required to 
abstain from voting on the relevant Board resolutions. 
 
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 Zheshang 
Securities. 
 
Zheshang Securities is a joint stock company established under the laws of the 
PRC with limited liability on 9 May 2002, the shares of which are listed on the 
Shanghai Stock Exchange (stock code: 601878). As at the date of this 
announcement, Zheshang Securities is owned as to 46.93% by the Company 
indirectly. Zheshang Securities is principally engaged in the provision of 
securities broking services, margin financing and securities lending services, 
securities underwriting and sponsorship services, asset management, advisory 
services and proprietary trading. 
 
Zhejiang Communications Technology is a joint stock company established under 
the laws of the PRC with limited liability on 23 November 1998, the shares of 
which are listed on the Shenzhen Stock Exchange (stock code: 002061). As at the 
date of this announcement, Zhejiang Communications Technology is owned as to 
60.24% by Communications Group directly, and therefore Zhejiang Communications 
Technology is an associate of the Company. Zhejiang Communications Technology 
is principally engaged in production, development and sales of chemical 
products as well as engineering construction services. 
 
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 Rules 
 
"Board"         the board of Directors 
 
"Communications Zhejiang Communications Investment Group Co., Ltd.*,  a  wholly 
Group"           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      has the meaning ascribed to it under the Listing Rules 
person" 
 
"controlling    has the meaning ascribed to it under the Listing Rules 
shareholder" 
 
"Director(s)"   the directors of the Company 
 
"Dongxing       Dongxing Securities Corporation Limited, a company incorporated 
Securities"     in the PRC and the shares of which are listed on the Shanghai 
                Stock Exchange (stock code: 601198) 
 
"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 
 
"Independent    the independent financial adviser agreement dated May 12, 2017 
Financial       entered into among Zhejiang Communications Technology, Zheshang 
Adviser         Securities and Dongxing Securities, pursuant to which Zhejiang 
Agreement"      Communications Technology agreed to appoint Zheshang Securities 
                and Dongxing Securities, as joint independent financial 
                advisers, to provide financial advisory services with respect 
                to its Substantial Assets Transaction 
 
"independent    has the meaning ascribed to it under the Listing Rule 
third party" 
 
"Jiangshan      Zhejiang Jiangshan Chemical Co., Ltd.*, subsequently changed 
Chemical"       its name to Zhejiang Communications Technology on December 22, 
                2017 
 
"Listing        Rules Governing the Listing of Securities on The Stock Exchange 
Rules"          of Hong Kong Limited 
 
"percentage     has the meaning ascribed to it under Rule 14.04(9) of the 
ratio"          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          The Stock Exchange of Hong Kong Limited 
Exchange" 
 
"subsidiary     has the meaning ascribed to it under the Listing Rules 
(ies)" 
 
"Substantial    the acquisition of 100.00% equity interests in Zhejiang 
Assets          Communications Engineering and raising counterpart funds by 
Transaction"    Zhejiang Communications Technology 
 
"%"             per cent. 
 
"Zhejiang       Zhejiang Communications Engineering Group Co., Ltd.*, a company 
Communications  incorporated in the PRC and a non wholly-owned subsidiary of 
Engineering"    Communications Group 
 
"Zhejiang       Zhejiang Communications Technology Co., Ltd., a company 
Communications  incorporated in the PRC and a non wholly-owned subsidiary of 
Technology"     Communications Group 
 
"Zheshang       Zhejiang Zheshang Securities Co., Ltd., a limited liability 
Securities"     company incorporated in the PRC and an indirect non 
                wholly-owned subsidiary of the Company 
 
*         English names for reference only 
 
                                                     By Oder of the Board 
                                                  Zhejiang Expressway Co., Ltd. 
                                                         ZHAN Xiaozhang 
                                                           Chairman 
 
Hangzhou, the PRC, March 16, 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

March 16, 2018 10:42 ET (14:42 GMT)