Zhejiang Expressway Connected Transaction
March 16 2018 - 9:42AM
UK Regulatory
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
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March 16, 2018 10:42 ET (14:42 GMT)
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