SHENZHEN INTERNATIONAL HOLDINGS LIMITED 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.
(Incorporated in Bermuda with limited liability) (Stock Code: 00152) | 深 圳 高 速 公 路 股 份 有 限 公 司 SHENZHEN EXPRESSWAY COMPANY LIMITED (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock Code: 00548) |
Each of the boards of directors of SZ International and SZ Expressway (a 50.889%-owned subsidiary of SZ International) is pleased to announce that on 30 October 2015, Mei Wah Industrial (as the purchaser), a wholly-owned subsidiary of SZ Expressway, Sumgreat Investments (as the vendor), Huayu Group and Mr. Chen (as the Guarantors) entered into the Share Transfer Agreement, pursuant to which Mei Wah Industrial has agreed to acquire the entire issued share capital of Fameluxe Investment held by Sumgreat Investments for an Initial Consideration of RMB280,000,000 (equivalent to approximately HK$341,000,000). The Initial Consideration may be subject to adjustment, please refer to the details set out under the section headed 'The Share Transfer Agreement' in this announcement. Fameluxe Investment owns 10% equity interests in Qinglong Company (principally engaged in development, construction, toll collection and management of Shuiguan Expressway). After completion of the Transaction, Fameluxe Investment will become an indirect wholly-owned subsidiary of SZ Expressway, and SZ Expressway will directly and indirectly hold an aggregate of 50% equity interests in Qinglong Company. At the same time, pursuant to the agreement and arrangement made between SZ Expressway Group and Huayu Group, SZ Expressway Group will obtain the effective control over Qinglong Company, and will have the accounts of Qinglong Company consolidated into the financial statements of SZ Expressway.
Shuiguan Expressway is an expressway (provincial highway S28) from Shuijingcun to Guanjingtou in Shenzhen, which was a bi-directional six-lane expressway expanded into a ten-lane expressway in July 2011 with a toll mileage of approximately 20 kilometers.
Shuiguan Expressway has maintained a continued growth trend in traffic volume and toll collection since its opening, and has completed the expansion in recent years with sound proven track record and relatively low investment risks. With the increase in shareholding in Qinglong Company through acquisition of Fameluxe Investment, SZ Expressway can enhance its control over the operation and management of Qinglong Company, which will in return enable SZ Expressway to facilitate the unified management of highway projects in Shenzhen and demonstrate its management advantages. Furthermore, this Transaction will help improve the profitability and cash flow of SZ Expressway and further consolidate the core advantages of SZ Expressway in investments, management, and operations of highways, which is in line with the development strategies and overall interests of SZ Expressway. Additional interests held by SZ Expressway in Qinglong Company also satisfy SZ International's strategy to consolidate premium infrastructure resources. SZ Expressway is a subsidiary of SZ International, and SZ Expressway's further strengthening its core advantages will be beneficial to SZ International as a whole.
As one or more of the applicable percentage ratios exceed 5% but under 25% in relation to the Transaction, the Transaction constitutes a discloseable transaction for SZ International and SZ Expressway under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements but exempted from shareholders' approval.
Each of the boards of directors of SZ International and SZ Expressway (a 50.889%-owned subsidiary of SZ International) is pleased to announce that on 30 October 2015, Mei Wah Industrial, a wholly-owned subsidiary of SZ Expressway, Sumgreat Investments, Huayu Group and Mr. Chen entered into the Share Transfer Agreement, pursuant to which Mei Wah Industrial has agreed to acquire the entire issued share capital of Fameluxe Investment held by Sumgreat Investments for an Initial Consideration of RMB280,000,000 (equivalent to approximately HK$341,000,000). The Initial Consideration may be subject to adjustment, please refer to the details set out under the section headed 'The Share Transfer Agreement' in this announcement. Fameluxe Investment owns 10% equity interests in Qinglong Company (principally engaged in development, construction, toll collection and management of Shuiguan Expressway). Each of Huayu Group, SZ Expressway and Fameluxe Investment holds 50%, 40% and 10% equity interests in Qinglong Company, respectively.
THE SHARE TRANSFER AGREEMENTThe major terms of the Share Transfer Agreement are set out as follows:
Sumgreat Investments (as the vendor);
Huayu Group (as the Guarantor); and
Mr. Chen (as the Guarantor)
To the best knowledge, information and belief of each of the boards of directors of SZ International and SZ Expressway having made all reasonable enquiries, each of Sumgreat Investments, Huayu Group and Mr. Chen is an Independent Third Party of SZ International and SZ Expressway.
Acquisition of the entire issued and paid-up share capital of Fameluxe Investment is free from encumbrances. Fameluxe Investment's entire revenue with effect from 1 September 2015 will be attributable to Mei Wah Industrial.
As at the date of this announcement, the 10% equity interests in Qinglong Company owned by Fameluxe Investment is pledged to China Resources Bank.
Pursuant to the Share Transfer Agreement, an Initial Consideration of RMB280,000,000 (equivalent to approximately HK$341,000,000) shall be paid by Mei Wah Industrial to Sumgreat Investments for the Transaction. The Initial Consideration shall be settled in the following manners:
The first instalment of RMB120,000,000 (equivalent to approximately HK$146,000,000) shall be paid by Mei Wah Industrial to Sumgreat Investments on the date of signing of the Share Transfer Agreement, and Sumgreat Investments shall deliver all the legal instruments mutually agreed by them to Mei Wah Industrial, including but not limited to the share transfer documents and the bought and sold notes of Fameluxe Investment; the board resolutions regarding the board of Fameluxe Investment agreed on amending the articles of Qinglong Company, the cooperation contracts and the change of directors of Qinglong Company; the deed and letter of confirmation signed by the Guarantors;
Sumgreat Investments shall complete the pledge release procedures in respect of the 10% equity interests in Qinglong Company which is held by Fameluxe Investment and pledged to China Resources Bank, and provide the relevant pledge release documents to Mei Wah Industrial within 20 working days from the date on which the Share Transfer Agreement is signed. After the pledge is released, and within 5 working days after the date on which Sumgreat Investments delivered the relevant documents, Mei Wah Industrial shall pay the second instalment of RMB100,000,000 (equivalent to approximately HK$122,000,000) to Sumgreat Investments.
Within 10 working days after Fameluxe Investment has arranged the final settlement of relevant tax (the relevant tax and expense shall be borne by Sumgreat Investments) in the PRC, obtained the tax clearance certificate and the final settlement of the relevant tax in relation to the Transaction (the relevant tax and expense shall be borne by Sumgreat Investments) has been completed, Mei Wah Industrial shall pay the outstanding balance of the consideration to Sumgreat Investments.
The consideration aforesaid shall be paid in cash. SZ Expressway Group intends to pay the consideration by internal resources and borrowing.
The consideration and other terms of the Transaction were determined after arm's length negotiations between the parties to the agreement. As the business of Fameluxe Investment is the holding of 10% equity interests of Qinglong Company, based on the investment and operation experiences and the professional abilities towards the expressway projects in the past, SZ Expressway Group comprehensively considered factors including the traffic flow, operation, policy environment and the maturity of the project of Shuiguan Expressway for assessing the estimated value of Qinglong Company, which is a major factor in negotiating the consideration of the Transaction.
The valuation of the entire shareholders' equity interests of Fameluxe Investment (constitutes a profit forecast under Rule 14.61 of the Listing Rules) as at 31 August 2015 was carried out by using the asset-based approach and income approach by DZX, an independent valuer appointed by SZ Expressway pursuant to the domestic regulatory provisions. Further details of the assumptions used for the profit forecast are set out under the section headed 'Valuation of Fameluxe Investment' below.
The Share Transfer Agreement is deemed to be completed on the date on which shares of Fameluxe Investment are transferred according to the aforesaid arrangement of payment (1).
After completion of the Transaction, Fameluxe Investment will become an indirect wholly-owned subsidiary of SZ Expressway, and SZ Expressway's shareholding in Qinglong Company will be increased to 50%. At the same time, pursuant to the agreement and arrangement made between SZ Expressway Group and Huayu Group, SZ Expressway Group will obtain the effective control over Qinglong Company, and will have the accounts of Qinglong Company consolidated into the financial statements of SZ Expressway.
Mei Wah Industrial and Sumgreat Investments agreed that, the Initial Consideration under the Share Transfer Agreement shall be adjusted (if applicable) in the following manners:
If Qinglong Company and the local government authority enter into an agreement in relation to the traffic management arrangement and adjustment scheme of Shuiguan Expressway on or before 31 December 2016, and if the comparable price (which is derived at by reference to the purchase price under the agreement and adjusted in accordance with the terms set out in the Share Transfer Agreement) is lower than the Initial Consideration, Sumgreat Investments shall pay the relevant difference to Mei Wah Industrial or deduct the difference from the outstanding balance of the consideration not yet paid by Mei Wah Industrial. No adjustment to the Initial Consideration shall be made if the aforesaid comparable price is higher than the Initial Consideration.
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