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)
PROPOSED DISCLOSEABLE TRANSACTION IN RELATION TO
THE PROPOSED SPIN-OFF AND SEPARATE LISTING OF SPINCO
ON THE SHANGHAI STOCK
EXCHANGE
THE PROPOSED SPIN-OFF
Reference is made to the announcements of the Company dated
16 November 2012, 7 May 2013, 2 May
2017 and 23 May 2017 in
relation to the Proposed Spin-off (the " Announcements ").
Terms defined in the Announcements shall have the same meanings
therein, unless the context otherwise requires.
The Hong Kong Stock Exchange has confirmed that the Company may
proceed with the Proposed Spin-off. By the Approval for the Initial
Public Offering of Shares of Zheshang Securities Co., Ltd. issued
by the CSRC on 12 May 2017, the CSRC
has formally approved SpinCo's application for the A Share Listing.
According to the latest listing timetable, SpinCo has launched its
initial public offering in the PRC on 13
June 2017 and the dealings in the A shares of the SpinCo on
the Shanghai Stock Exchange are expected to commence on
26 June 2017.
The Proposed Spin-off is conditional upon, among other things,
the approval of the Shanghai Stock Exchange and completion of the
Offering. Further announcement(s) will be made by the Company in
relation to any material development with respect to the Proposed
Spin-off and the A Share Listing as and when appropriate.
PROPOSED DISCLOSEABLE TRANSACTION
As at the date of this announcement, the Company has an indirect
interest of approximately 52.15% in SpinCo. It is expected that if
the Offering proceeds, the total number of shares to be offered
under the Offering will be 333,333,400 shares and the offer price
is RMB8.45 per share.
It is contemplated that immediately following the completion of
the Proposed Spin-off, the indirect interest of the Company in
SpinCo will be reduced to approximately 46.93% and SpinCo will
continue to be an indirect subsidiary of the Company.
The Proposed Spin-off will result in a reduction of the indirect
shareholding of the Company in SpinCo, so it will constitute a
deemed disposal on the part of the Company under Rule 14.29 of the
Listing Rules. Since it is contemplated that one or more of the
relevant percentage ratios of the Proposed Spin-off exceeds 5% but
is less than 25%, the Proposed Spin-off will constitute a
discloseable transaction of the Company subject only to reporting
and announcement requirements but exempt from shareholders'
approval requirement.
NO ASSURED ENTITLEMENT TO SHAREHOLDERS
Due to the legal and regulatory impediments to the Company's
provision of the Assured Entitlement to the Shareholders in respect
of the Proposed Spin-off, the Company applied to the Hong Kong
Stock Exchange for the Waiver and the Waiver was granted to the
Company on 22 March 2013.
Accordingly, the Shareholders will not be entitled to any
distribution in specie of, or preferred application, for the A
shares of SpinCo in connection with the Proposed Spin-off even if
it materializes.
Having considered the benefits that the Proposed Spin-off may
bring to the Group as set out in the section headed "Reasons for
and benefits of the Proposed Spin-off" below, the Board considers
that the Proposed Spin-off in the absence of the Assured
Entitlement is fair and reasonable and in the interests of the
Company and the Shareholders as a whole.
GENERAL
Shareholders and potential investors should note that the
Proposed Spin-off is subject to, among other things, the approval
of the Shanghai Stock Exchange and the completion of the offering.
There is no assurance that the Proposed Spin-off will take place.
Accordingly, Shareholders and potential investors are reminded to
exercise caution when dealing in the securities of the
Company.
THE PROPOSED SPIN-OFF
Reference is made to the announcements of the Company dated
16 November 2012, 7 May 2013, 2 May
2017 and 23 May 2017 in
relation to the Proposed Spin-off.
The Hong Kong Stock Exchange has confirmed that the Company may
proceed with the Proposed Spin-off. By the Approval for the Initial
Public Offering of Shares of Zheshang Securities Co., Ltd. issued
by the CSRC on 12 May 2017, the CSRC
has formally approved SpinCo's application for the A Share Listing.
According to the latest listing timetable, SpinCo has launched its
initial public offering in the PRC on 13
June 2017 and the dealings in the A shares of the SpinCo on
the Shanghai Stock Exchange are expected to commence on
26 June 2017.
Change of the shareholding structure of SpinCo
As at the date of this announcement, the Company has an indirect
interest of approximately 52.15% in SpinCo. It is expected that if
the Offering proceeds, the total number of shares to be offered
under the Offering will be 333,333,400 shares and the offer price
is RMB8.45 per share.
It is contemplated that immediately following the completion of
the Proposed Spin-off, the indirect interest of the Company in
SpinCo will be reduced to approximately 46.93% and SpinCo will
continue to be an indirect subsidiary of the Company.
The shareholding structure of SpinCo as at the date of this
announcement is set out below:
https://photos.prnasia.com/prnk/20170613/1874744-1
The shareholding structure of SpinCo immediately following
completion of the Proposed Spin-off is set out below:
https://photos.prnasia.com/prnh/20170613/1874744-1-b
Conditions
The Proposed Spin-off is conditional upon, among other things, the
approval of the Shanghai Stock Exchange to the A Share Listing and
completion of the Offering. Further announcement(s) will be made by
the Company in relation to any material developments with respect
to the Proposed Spin-off and the A Share Listing as and when
appropriate.
Intended use of proceeds
SpinCo is estimated to receive net proceeds of approximately
RMB2.76 billion from the Offering
(after the deduction of the underwriting fees and other expenses in
relation to the A Share Listing). SpinCo intends to use the
proceeds from the Offering to increase the net capital and expand
the business of SpinCo (including but not limited to expanding its
investment banking business and enhancing its research team).
INFORMATION ON THE COMPANY, THE GROUP AND
SPINCO
The Company is an infrastructure company principally engaged in
investing in, developing and operating high-grade roads. The Group
also engages in securities related business carried on by
SpinCo.
SpinCo is a joint stock limited company restructured in the PRC
on 12 September 2012 and is an
indirectly-owned subsidiary of the Company. As at the date of this
announcement, it is engaged in securities related business
(including but not limited to securities brokerage, investment
banking, proprietary trading and asset management).
Set out below is certain financial information in relation to
SpinCo Group for the two years ended 31
December 2016, respectively, as extracted from the PRC
audited consolidated financial statements of SpinCo for the
relevant years:
|
|
For the year ended
31 December 2015 |
For the year ended
31 December 2016 |
|
|
(Audited) |
(Audited) |
|
|
RMB |
RMB |
Net Profit before tax |
|
2,525,081,495.76 |
1,643,219,655.04 |
Net Profit after tax |
|
1,834,338,303.77 |
1,240,999,462.08 |
Net assets |
|
8,449,116,259.83 |
9,565,498,901.73 |
REASONS FOR AND BENEFITS OF THE PROPOSED
SPIN-OFF
The Board believes that the Proposed Spin-off would be in the
interests of the Group as it would enable the market to appraise
and assess the value of the Group more effectively and provide a
separate fund raising platform for SpinCo, which will allow SpinCo
to develop new businesses and become more competitive and will in
turn benefit the Group.
The Proposed Spin-off is designed to facilitate the future
growth of both the SpinCo Group and the Remaining Group. As the
SpinCo will remain as a subsidiary of the Company, the Company's
shareholders will continue to enjoy the benefits from the
development of the securities related businesses.
As the Proposed Spin-off will not result in the Company's loss
of control over SpinCo, the Proposed Spin-off will be accounted for
as an equity transaction and will not result in the recognition of
any gain or loss in the Company's consolidated statement of profit
or loss and other comprehensive income.
Having considered the benefits that the Proposed Spin-off may
bring to the Group as set out above, the Board considers that the
Proposed Spin-off is fair and reasonable and in the interests of
the Company and the Shareholders as a whole.
NO ASSURED ENTITLEMENT
Under the Listing Rules, a listed issuer is required to have due
regard to the interests of its existing shareholders by providing
them with an assured entitlement to the shares in the entity which
is proposed to be spun-off for separate listing. After due and
careful consideration of the Proposed Spin-off and having taken
into account the advice from the Company's PRC legal counsel, the
Board has resolved not to provide the Shareholders with the Assured
Entitlement under the Proposed Spin-off for the following
reasons:
- The
shares proposed to be offered by SpinCo and listed
on the Shanghai Stock Exchange are A shares which, under the
relevant PRC laws, are only available for subscription by investors
within the PRC (excluding Hong
Kong, Macau and
Taiwan regions).
-
Individual investors who are foreign natural persons cannot invest
in the A share market of the PRC, except for those from
Hong Kong, Macau Special
Administrative Region and Taiwan
who work and live in the PRC or those foreign natural persons who
have obtained the permanent resident permit in the PRC. As to
institutional investors, those who are foreign legal persons are
not permitted to invest in the A share market of the PRC other than
as explicitly provided under the relevant PRC laws and regulations
(that is, in the capacity of qualified foreign institutional
investor in accordance with Measures for the Administration of
Securities Investment within the Borders of China by Qualified Foreign Institutional
Investors, Measures for the Pilot Programme of Domestic Securities
Investment by RMB Qualified Foreign Institutional Investors or in
accordance with the provisions of the Administrative Measures for
Foreign Investors' Strategic Investment in Listed Companies).
Accordingly, there are legal impediments and it is not feasible to
make available an assured entitlement to the shares in SpinCo to
all the existing shareholders of the Company under the relevant PRC
laws and regulations.
Due to the legal and regulatory impediments to the Company's
provision of the Assured Entitlement to the Shareholders in respect
of the Proposed Spin-off as mentioned above, the Company applied to
the Hong Kong Stock Exchange for the Waiver and the Waiver was
granted to the Company on 22 March
2013. Accordingly, the Shareholders will not be entitled to
any distribution in specie of or preferred application for the A
shares of SpinCo in connection with the Proposed Spin-off even if
it materializes.
Having considered the benefits that the Proposed Spin-off may
bring to the Group as set out in the section headed "Reasons for
and benefits of the Proposed Spin-off" above, the Board considers
that the Proposed Spin-off in the absence of the Assured
Entitlement is fair and reasonable and in the interests of the
Company and the Shareholders as a whole.
OVERLAPPING OF DIRECTORSHIPS
As the Company is an indirect controlling shareholder of SpinCo,
there is an overlapping of directorships between the Company and
SpinCo. There are nine directors on the board of SpinCo, comprising
six directors and three independent directors. Mr. Zhan Xiaozhang and Ms. Luo Jianhu, two executive
Directors, are also members of the board of directors of
SpinCo.
Mr. Zhan Xiaozhang and Ms. Luo
Jianhu were appointed to the board of SpinCo to represent the
interests of the Company. Neither of them takes part in the daily
operation of SpinCo.
Mr. Wu Chenggen is a director and
the chief executive officer of SpinCo. The daily operations of
SpinCo are principally managed by Mr. Wu
Chenggen and other non-director senior management of SpinCo.
Mr. Wu Chenggen is responsible for
overseeing SpinCo's day-to-day operations and management, and
implementing decisions and plans approved by the board of directors
of SpinCo. Except for Mr. Wu
Chenggen, all other directors of SpinCo (including Mr.
Zhan Xiaozhang and Ms. Luo Jianhu)
do not take part in the daily operations of SpinCo.
If any situation of conflict of interest arises, Mr.
Zhan Xiaozhang and Ms. Luo Jianhu
will, if required, abstain from voting on the relevant resolutions
in the meetings of the boards of the respective companies in
accordance with the respective articles of association and PRC
laws. Under the Company's articles of association, each Director
has one vote at the meetings of the Board regardless of whether
he/she is an executive or non-executive Director. If in any
circumstances where Mr. Zhan
Xiaozhang and Ms. Luo Jianhu were required to abstain from
voting on relevant resolutions in any board meeting of the Company
due to their directorship in SpinCo, there will remain four out of
six Directors (excluding the INEDs), or seven out of nine Directors
(including the INEDs) who would be entitled to vote. Similarly, at
SpinCo's level, there will be four out of six directors (excluding
the INEDs), or seven out of nine directors (including the INEDs)
who will be entitled to vote if Mr. Zhan
Xiaozhang and Ms. Luo Jianhu were required to abstain from
voting. Therefore, there will be sufficient non-common members of
the Board to function independently and properly.
LISTING RULES IMPLICATIONS
The Proposed Spin-off will result in a reduction of the indirect
shareholding of the Company in SpinCo, so it will constitute a
deemed disposal on the part of the Company under Rule 14.29 of the
Listing Rules. Since it is contemplated that one or more of the
relevant percentage ratios of the Proposed Spin-off exceeds 5% but
is less than 25%, the Proposed Spin-off will constitute a
discloseable transaction of the Company subject only to reporting
and announcement requirements but exempt from shareholders'
approval requirement.
Since no Shareholders' approval is required for the Proposed
Spin-off, the Company will not form an independent board committee
to advise the Shareholders on the implications of not providing the
Assured Entitlement. Please refer to the section headed "No Assured
Entitlement" for (i) the reasons why the Board has decided not to
provide the Shareholders with the Assured Entitlement under the
Proposed Spin-off and (ii) the view of the Board on the
implications of not providing the Assured Entitlement.
GENERAL
Shareholders and potential investors should note that the Proposed
Spin-off is subject to, among other things, the approval of the
Shanghai Stock Exchange and completion of the Offering. There is no
assurance that the Proposed Spin-off will take place. Accordingly,
Shareholders and potential investors are reminded to exercise
caution when dealing in the securities of the Company.
DEFINITIONS
In this announcement, unless the context specifies otherwise, the
following defined expressions have the following meanings:
"A shares" |
the shares of an issuer which are listed on the
A-share market of a stock exchange on the PRC |
"A Shareholders" |
the holders of A shares of SpinCo |
"A Share Listing" |
the proposed listing of the A shares of SpinCo on the
Main Board of the Shanghai Stock Exchange |
"Assured Entitlement" |
in relation to the Proposed Spin-off, means the
assured entitlement to the A shares of SpinCo either by way of a
distribution in specie of the A shares of SpinCo held by the Group
or by way of preferred application in any offering of existing or
new shares in SpinCo under the Offering |
"Board" |
the board of Directors |
"Company" |
Zhejiang Expressway Co., Ltd., a joint
stock limited company incorporated in the PRC with limited
liability |
"CSRC" |
the China Securities Regulatory Commission |
"Director(s)" |
director(s) of the Company |
"Group" |
the Company and its subsidiaries |
"H shares" |
overseas listed foreign shares in the ordinary share
capital of the Company, with a par value of RMB1.00 each, which are
listed on the Hong Kong Stock Exchange |
"H Shareholders" |
the holders of H shares |
"Hong Kong" |
the Hong Kong Special Administrative Region of the
PRC |
"Hong Kong Stock Exchange" |
The Stock Exchange of Hong Kong Limited |
"INED" |
the independent non-executive director |
"Listing Rules" |
the Rules Governing the Listing of Securities on the
Hong Kong Stock Exchange |
"Offering" |
the proposed initial public offering of the A shares
of SpinCo in connection with the A Share Listing |
"PRC" |
the People's Republic of China, for the purpose of
this announcement, excludes Hong Kong, Macau Special Administrative
Region and Taiwan |
"Proposed Spin-off" |
the proposed spin-off and separate listing of SpinCo
on the Shanghai Stock Exchange |
"Remaining Group" |
the Group excluding the SpinCo Group |
"SpinCo" |
Zheshang Securities Co., Ltd, a joint stock limited
company restructured in the PRC on 12 September 2012 and is an
indirectly-owned subsidiary of the Company |
"SpinCo Group" |
SpinCo and its subsidiaries |
"Shanghai Stock Exchange" |
the Shanghai Stock Exchange |
"Shareholders" |
shareholders of the Company |
"Waiver" |
a waiver from strict compliance with the requirements
of offering the Assured Entitlement to the Shareholders under
paragraph 3(f) of Practice Note 15 of the Listing Rules |
On behalf of the
Board
ZHEJIANG EXPRESSWAY CO., LTD.
ZHAN
Xiaozhang
Chairman
Hangzhou, PRC, 13 June 2017
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, 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.