Zhejiang Expressway : INSIDE INFORMATION ACQUISITION OF THE ENTIRE EQUITY INTEREST...

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(A joint stock limited company incorporated in the People's Republic of China with limited liability)

This announcement is made by the Company pursuant to Rule 13.09(2) of the Listing Rules and the inside information provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The Board is pleased to announce that, on 19 August 2016, the Company entered into the Agreement with Huangshan Travel, pursuant to which (i) the Company agreed to acquire and Huangshan Travel agreed to dispose of the entire equity interest in Huihang Expressway at a consideration of RMB570 million payable in cash; and (ii) the Company agreed to provide a shareholders' loan to Huihang Expressway in the sum of RMB500 million within 10 days after completion of the registration of the transfer of the equity interest in Huihang Expressway with the Industry and Commerce Bureau for the repayment of a loan owed by Huihang Expressway to Huangshan Travel in the sum of RMB500 million.

As the applicable percentage ratios in respect of the Agreement do not exceed 5%, the Agreement and the transactions contemplated thereunder are not subject to mandatory disclosure and shareholders' approval requirements under the Listing Rules.

This announcement is made by Zhejiang Expressway Co., Ltd. (the "Company") pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") and the inside information provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The board of directors (the "Board") of the Company is pleased to announce that, on 19 August 2016, the Company entered into an agreement (the "Agreement") with Huangshan Travel Group Co., Ltd* (黃山旅游集團有限公司), a company established in the People's Republic of China ("PRC") with limited liability ("Huangshan Travel"), pursuant to which (i) the Company agreed to acquire and Huangshan Travel agreed to dispose of the entire equity interest (the "Sale Interest") in Huangshan Yangtse Huihang Expressway Co., Ltd* (黃山長江徽杭高速公路有限責任公司) ("Huihang Expressway") at a consideration of RMB570 million (the "Consideration") payable in cash (the "Acquisition"); and (ii) the Company agreed to provide a shareholders' loan to Huihang Expressway in the sum of RMB500 million within 10 days after completion of the registration of the transfer of the Sale Interest with the Industry and Commerce Bureau for the repayment of a loan owed by Huihang Expressway to Huangshan Travel in the sum of RMB500 million.

The Consideration is the price, being the minimum asking price, at which the Company bid and succeeded at an open auction for the Sale Interest by the Anhui Asset and Equity Exchange* (安徽省產權交易中心) ("AAEE"). Prior to the auction, arm's length negotiations between the Company and Huangshan Travel had taken place in respect of the transfer of the Sale Interest.

In determining whether or not to participate in the aforesaid auction, the Company has taken into account, among other factors, the valuation of Huihang Expressway conducted by an independent valuer commissioned by the Company. The Consideration is lower than the value of Huihang Expressway as determined by the independent valuer.

The Consideration shall be satisfied by the Company by instalments in the following manner:

1. On 5 August 2016, as a condition to the Company participating in the auction, RMB171 million was paid by the Company to AAEE as a deposit (the "Deposit"). AAEE shall release the Deposit to Huangshan Travel within two business days of the effective date of the Agreement as the first instalment of the Consideration;

2. The second instalment of RMB370.5 million (the "Second Instalment") will be payable by the Company to AAEE within 10 business days of the approval of the Acquisition by the relevant department of the Transport Department of Anhui Province and completion of the transfer of the Sale Interest. The Second Instalment will be released by AAEE to Huangshan Travel within two business days of its receipt of the same.

3. The third instalment RMB28.5 million (the "Third Instalment") will be payable by the Company to AAEE within six months of the payment of the Second Instalment. The Third Instalment will be released by AAEE to Huangshan Travel within two business days of its receipt of the same.

The Agreement shall take effect upon satisfaction of the following conditions:

1. The transactions contemplated under the Agreement having been approved by the respective board of directors of Huangshan Travel and the Company;

2. The transactions contemplated under the Agreement having been approved by the board of directors of Zhejiang Communications Investment Group Co., Ltd., being the controlling shareholder of the Company;

3. The transactions contemplated under the Agreement having been approved by the relevant regulatory authorities; and

4. The parties to the Agreement having confirmed the contractual obligations and liabilities of Huihang Expressway as at 31 July 2016, as reviewed by the auditors appointed by the Company for the purposes of the Acquisition.

Within 20 days of the issue of a certificate by the EEAA confirming the release of the Deposit to Huangshan Travel, the Company and Huangshan Travel shall register the transfer of the shares in Huihang Expressway with the Industry and Commerce Bureau.

Pursuant to the Agreement, for a period of four years following the completion of the Acquisition, the Company undertakes that Huihang Expressway will commit not less than RMB100 million for the maintenance of the Anhui section of the Huihang Expressway.

A framework agreement (the "Framework Agreement") was entered into between Huihang Expressway and the Anhui Huangshan branch of Sinopec in June 2003 in relation to the development and operation of service stations on the Anhui section of the Huihang Expressway. A minutes of the general manager's office number 15 of 2016 issued by the Anhui branch of Sinopec has expressly stated Sinopec's intention to expand the service station in Zhu Village (朱村) and agreed to enter into a supplemental agreement to the Framework Agreement, pursuant to which the Anhui Province branch of Sinopec will be responsible for any construction costs for the expansion of the Zhu Village service station as well as being entitled to the revenue from its operation. Huangshan Travel has undertaken to use its best effort to procure the entering into of the supplemental agreement to the Framework Agreement between Huihang Expressway and the Anhui Province branch of Sinopec.

The Agreement may be terminated on the following circumstances:

1. Either party to the Agreement having committed a material breach of the Agreement, which renders the transactions contemplated under the Agreement not being able to complete;

2. The transactions contemplated under the Agreement not having been approved by the relevant State-owned Assets Supervision and Administration authority;

3. The parties to the Agreement having agreed to terminate the Agreement; or

4. The termination of the Agreement is requested by the relevant authorities on the basis that the Agreement is against the law or policies of the state.

Huihang Expressway is a company established in the PRC with limited liability, the principal business of which is the operation and management of the Anhui section of the Huihang Expressway in Zhejiang Province, the PRC. The Anhui section of the Huihang Expressway is a four-lane expressway with a total length of approximately 81.62km, which is connected with the Zhejiang section of the Hangzhou-Ruili Expressway (G56) operated by Zhejiang Hanghui Expressway Co., Ltd.* (浙江杭徽高 速公路有限公司), a subsidiary of the Company.

According to the audited accounts of Huihang Expressway as at 29 February 2016, the total assets and net assets of Huihang Expressway were approximately RMB1.8 billion and RMB111 million, respectively, together with an accumulated loss of approximately RMB1 billion. Huihang Expressway recorded a revenue of approximately RMB152 million and a loss of approximately RMB23 million for the year ended 31 December 2015.