ZHEJIANG EXPRESSWAY CO., LTD.
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)
COMPLETION OF MAJOR AND CONNECTED TRANSACTION
IN RELATION TO
DISPOSAL OF 50% EQUITY INTEREST IN PETROLEUM CO
AND
CONTINUING CONNECTED TRANSACTIONS
COMPLETION OF THE DISPOSAL
Reference is made to the Company's announcement dated 12 October 2015. The
Board is pleased to announce that all of the conditions precedent set out in
the Share Purchase Agreement have been fulfilled and Completion took place on 4
January 2016. Upon Completion, the Company has ceased to hold any interest in
Petroleum Co and Petroleum Co has ceased to be an associate of the Company.
CONTINUING CONNECTED TRANSACTIONS
The Board also announces that, on 28 January 2016, Development Co and Petroleum
Co entered into (i) the Petroleum Supply Agreement in relation to the supply of
petroleum to the Service Stations; and (ii) the Service Stations Management
Agreement in relation to the day-to-day management of the Service Stations.
LISTING RULES IMPLICATIONS
After Completion, 50% of the equity interest in Petroleum Co is held by
Zhejiang Communications Investment, which is a wholly-owned subsidiary of
Communications Group, the controlling shareholder of the Company. Therefore,
Petroleum Co is an associate of Zhejiang Communications Investment and a
connected person of the Company, and the entering into of the Petroleum Supply
Agreement and the Service Stations Management Agreement constitutes a connected
transaction for the Company under Chapter 14A of the Listing Rules.
As the relevant percentage ratios in respect of the Cap is over 0.1% but less
than 5%, the entering into of the Petroleum Supply Agreement and the Service
Stations Management Agreement is subject to the reporting and announcement
requirements but exempt from the independent Shareholders' approval requirement
under Chapter 14A of the Listing Rules.
Reference is made to the announcement of Zhejiang Expressway Co., Ltd. (the "
Company") dated 12 October 2015 in relation to the disposal of 50% equity
interest in Petroleum Co (the "Announcement"). Unless otherwise stated, terms
used in this announcement have the same meanings as defined in the
Announcement.
COMPLETION OF THE DISPOSAL
The Board is pleased to announce that all of the conditions precedent set out
in the Share Purchase Agreement have been fulfilled and Completion took place
on 4 January 2016. Upon Completion, the Company has ceased to hold any interest
in Petroleum Co and Petroleum Co has ceased to be an associate of the Company.
CONTINUING CONNECTED TRANSACTIONS
As stated in the Announcement, Petroleum Co has been supplying petroleum to
Development Co (a wholly-owned subsidiary of the Company), and has been
providing management services to the Service Stations. After Completion,
Petroleum Co has become a connected person of the Company by virtue of it being
an associate of Zhejiang Communications Investment, which is a wholly-owned
subsidiary of Communications Group, the controlling shareholder of the Company.
Therefore, transactions between Petroleum Co and Development Co would become
connected transactions for the Company under Chapter 14A of the Listing Rules.
It is the intention of the Company that the operation of the Service Stations
will be contracted out to Petroleum Co, pursuant to which Petroleum Co will
operate the Service Stations, be entitled to the revenue generated and bear the
costs and expenses arising from its operation of the Service Stations. On the
other hand, Development Co, being the owner of the Service Stations, will
receive a fee on an annual basis to be determined based on the sales volume of
the Service Stations.
As the proposed contracting out of the Service Stations to Petroleum Co
requires the change of the business licence for the Service Stations in the PRC
which is expected to take approximately two to three months after the date of
Completion, on 28 January 2016, Development Co and Petroleum Co entered into
the Petroleum Supply Agreement pursuant to which Petroleum Co agreed to supply
petroleum to Development Co. In consideration of the purchase of petroleum by
Development Co pursuant to the Petroleum Supply Agreement, on 28 January 2016,
Development Co and Petroleum Co entered into the Service Stations Management
Agreement pursuant to which Petroleum Co agreed to provide management services
to the Service Stations.
It is anticipated that the Petroleum Supply Agreement and the Service Stations
Management Agreement will be terminated and a new agreement will be entered
into between Petroleum Co and Development Co in respect of the contracting out
of the Service Stations to Petroleum Co. Further announcement will be made by
the Company in accordance with the Listing Rules as and when appropriate.
Details of the Petroleum Supply Agreement and the Service Stations Management
Agreement are set out below.
Petroleum Supply Agreement
Date: 28 January 2016
Parties: (1) Development Co; and
(2) Petroleum Co
Term: from 28 January 2016 to 30 April 2016, provided that
the Cap is not exceeded during such period
Nature of transaction: Petroleum Co has agreed to supply petroleum to the
Service Stations
Price and pricing basis: The petroleum supplied by Petroleum Co will be charged
at the prevailing market price with a discount of no
less than RMB260 per ton. Payment for the petroleum
supplied will be settled by Development Co within
three Business Days of the supply of the petroleum.
Cap during the Term: RMB380,000,000
The cap is determined based on (i) the historical
annual supply of petroleum by Petroleum Co to
Development Co in the amounts of RMB1,781,179,000 and
RMB1,931,466,000 for the year ended 31 December 2013
and 31 December 2014, respectively; (ii) the expected
consumption of petroleum during the Term; and (iii)
the expected price of petroleum during the Term.
Service Stations Management Agreement
Date: 28 January 2016
Parties: (1) Development Co; and
(2) Petroleum Co
Term: from 28 January 2016 to 30 April 2016, provided that the Cap is
not exceeded during such period
Nature of Petroleum Co has agreed to provide day-to-day management services
transaction: to the Service Stations, including the preparation of monthly
management report in respect of the Service Stations, management
and maintenance of the Service Stations
Price and No fees are payable by Development Co for the management services
pricing to be provided by Petroleum Co under the Service Stations
basis: Management Agreement in consideration of Development Co agreeing
to purchase petroleum from Petroleum Co pursuant to the Petroleum
Supply Agreement
Cap during No cap is determined in respect of the transactions under the
the Term: Service Stations Management Agreement as no fees are payable by
Development Co for the management services to be provided by
Petroleum Co
Deposit: A refundable deposit in the sum of RMB20,000,000 will be payable
by Petroleum Co to Development Co as security for the provision of
the management services by Petroleum Co in accordance with the
Service Stations Management Agreement
REASONS FOR AND BENEFITS OF THE TRANSACTIONS
The Directors consider that, as Petroleum Co has been supplying petroleum to
Development Co and providing management services to Development Co prior to
Petroleum Co became a connected person of the Company, the entering into of the
Petroleum Supply Agreement and the Service Stations Management Agreement will
enable Development Co to continue purchasing petroleum and obtaining management
services from Petroleum Co pending the change of the business licence for the
Service Stations and the entering into of an agreement for the contracting out
of the operation of the Service Stations to Petroleum Co.. The Directors also
consider that the entering into of the Service Stations Management Agreement
will enable the Company to outsource the management of the Service Stations to
Petroleum Co, which reduces the operating costs of the Company.
Given the above, the Directors (including the independent non-executive
Directors) are of the view that the terms of the Petroleum Supply Agreement and
the Service Stations Management Agreement are on normal commercial terms and
are fair and reasonable and in the interests of the Company and the
Shareholders as a whole.
LISTING RULES IMPLICATIONS
After Completion, 50% of the equity interest in Petroleum Co is held by
Zhejiang Communications Investment, which is a wholly-owned subsidiary of
Communications Group, the controlling shareholder of the Company. Therefore,
Petroleum Co is an associate of Zhejiang Communications Investment and a
connected person of the Company, and the entering into of the Petroleum Supply
Agreement and the Service Stations Management Agreement constitutes a connected
transaction for the Company under Chapter 14A of the Listing Rules.
As the relevant percentage ratios in respect of the Cap is over 0.1% but less
than 5%, the entering into of the Petroleum Supply Agreement and the Service
Stations Management Agreement are subject to the reporting and announcement
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 resolutions with respect to the approval of
the Petroleum Supply Agreement and the Service Stations Management 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 Petroleum
Supply Agreement and the Service Stations Management Agreement or is required
to abstain from voting on the relevant Board resolutions to approve the same.
INFORMATION ON THE COMPANY
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 operation of gas stations, restaurants and
shops in service areas, advertising at expressway interchanges and external
road maintenance, as well as securities related business.
INFORMATION ON THE PARTIES
Development Co is a company incorporated in the PRC on 28 May 2003 and a
wholly-owned subsidiary of the Company, the principal business of which is the
operation of service areas and roadside advertising along the expressways
operated by the Group.
Petroleum Co is a company incorporated in the PRC jointly held by Zhejiang
Communications Investment and Sinopec on a 50:50 basis. The business of
Petroleum Co primarily consists of (i) storage and sale of petroleum and
petroleum products; (ii) wholesale of gasoline, kerosene and diesel; and (iii)
investing in, constructing and operating gas stations along the high grade
roads.
DEFINITIONS
In this announcement, unless the context specifies otherwise, the following
defined expressions have the following meanings:
"Cap" RMB380,000,000, being the
maximum amount of petroleum
that Petroleum Co may supply
to Development Co during the
Term
"Petroleum Co" Zhejiang Expressway Petroleum
Development Co., Ltd.*, a
company incorporated in the
PRC and is jointly held by
Zhejiang Communications
Investment and Sinopec on a
50:50 basis
"Petroleum Supply the agreement dated 28
Agreement" January
2016 entered into between
Development Co and Petroleum
Co, pursuant to which
Petroleum Co agreed to supply
petroleum to the Service
Stations
"Service Stations the agreement dated 28
Management Agreement" January 2016 entered into
between Development Co and
Petroleum Co, pursuant to
which Petroleum Co agreed to
provide management services
to the Service Stations
"Term" a period from 28 January 2016
to 30 April 2016, provided
that the Cap is not exceeded
during such period
* English names for reference only.
On behalf of the Board
ZHEJIANG EXPRESSWAY CO., LTD.
ZHAN Xiaozhang
Chairman
Hangzhou, PRC, 28 January 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.
ZHEJIANG EXPRESSWAY : LD - Completion of Major and Connected Transaction
January 28, 2016 at 04:06 pm
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© PRNewswire - 2016
