Discloseable Transaction - Proposed Acquisition

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take no responsibility for the contents of this announcement, make no representation 
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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)


                             DISCLOSEABLE TRANSACTION
                 PROPOSED ACQUISITION OF 50% EQUITY INTEREST IN 
                            SHENGXIN EXPRESSWAY COMPANY


On 6 July 2012, the Company entered into the Sale and Purchase Agreement with the 
Vendor, pursuant to which the Company has conditionally agreed to purchase from the 
Vendor a 50% equity interest in Shengxin Expressway Company for a cash consideration 
of RMB 355,032,803 plus interest accrued on the consideration from 31 March 2012 to 
the date of receipt by the Vendor of the payment of the consideration, which is 
estimated to be approximately RMB 9 million.

As the applicable percentage ratios in respect of the Acquisition contemplated under 
the Sale and Purchase Agreement are more than 5% but less than 25%, the Acquisition 
constitutes a discloseable transaction under Chapter 14 of the Listing Rules and is 
subject to the reporting and announcement requirements as set out in Rule 14.33 of 
the Listing Rules.

THE ACQUISITION IS CONDITIONAL UPON THE SATISFACTION OF THE CONDITION PRECEDENT. 
THEREFORE, THE ACQUISITION MAY OR MAY NOT PROCEED. INVESTORS AND SHAREHOLDERS ARE 
ADVISED TO EXERCISE CAUTION IN DEALING IN THE COMPANY'S SECURITIES.


THE SALE AND PURCHASE AGREEMENT

On 12 December 2011, the Company's parent, Communications Group, had, independently 
of the Company, entered into the Parent Agreement with the Vendor in relation to a 
proposed acquisition of the Sale Interest. Under such agreement, Communications Group 
was entitled to itself acquire the Sale Interest or designate any of its subsidiaries
to acquire the Sale Interest. On 6 July 2012, the Company separately entered into the
Sale and Purchase Agreement with the Vendor, pursuant to which the Company agreed 
conditionally to acquire the Sale Interest on the terms as set out in the Sale and 
Purchase Agreement. The Sale and Purchase Agreement is not conditional upon, and is 
entirely independent of the Parent Agreement. Further, the Company has not paid or 
received any benefit or payment from or to Communications Group in connection with 
the Company's entering into of the proposed Acquisition. The Company's PRC legal 
counsel have advised that the Parent Agreement remains legally binding on the 
Vendor, but that upon the completion of the Sale and Purchase Agreement after the 
receipt of the approval from the State-owned Assets Supervision and Administration 
Commission of the PRC and the relevant government authorities, and the completion 
of the change of industrial and commercial registration at the State Administration
for Industry and Commerce in the PRC by the Company in relation to the Sale 
Interest, the Company shall become the sole owner of the Sale Interest.

The principal terms of the Sale and Purchase Agreement are as follows:

Date
6 July 2012

Parties
(i)  the Company as purchaser; and
(ii) the Vendor as vendor.

To the best of the Directors' knowledge, information and belief and having made all 
reasonable enquiries, the Vendor and its ultimate beneficial owner are third parties 
independent of the Company and its connected person(s) (as defined under the Listing 
Rules). The Group has not engaged in any previous transactions related to the 
transactions contemplated under the Sale and Purchase Agreement which would be 
required to be aggregated under Rule 14.22 of the Listing Rules.


Subject matter of the Sale and Purchase Agreement

Pursuant to the Sale and Purchase Agreement, the Company has conditionally agreed to 
purchase from the Vendor a 50% equity interest in Shengxin Expressway Company.

Shengxin Expressway Company will hold the Operating Rights upon the completion of the 
transfer of the Operating Rights from the Vendor and the receipt of the approval from 
Zhejiang Provincial Government. Shengxin Expressway Company is a limited liability 
company established in the PRC with a registered and paid-up capital of RMB5 million.


Consideration

The consideration for the Acquisition is RMB355,032,803. The Company shall pay to the 
Vendor interests accrued on the consideration from 31 March 2012 to the date of 
receipt by the Vendor of the payment of the consideration, which is estimated to be 
approximately RMB 9 million. The rate of interest will be based on the one to 
three-year RMB benchmark lending rate of the People's Bank of China as at the date of
receipt by the Vendor the first installment of the consideration under the Sale and 
Purchase Agreement.
 
The consideration will be satisfied by three installments to be paid in the following 
manner:


(i)   10% of the consideration plus relevant interests shall be paid in cash within 
      five business days of the signing of the Sale and Purchase Agreement;

(ii)  40% of the consideration plus relevant interests shall be paid in cash within 
      ten business days from the date of approval by the relevant provincial 
      State-owned Assets Supervision and Administration Commission for (a) the Sale 
      and Purchase Agreement, (b) the Account Transfer and (c) the Loan Novation, 
      whichever is later; and

(iii) 50% of the consideration plus relevant interests shall be paid in cash within 
      ten business days from the date of completion of the change of industrial and 
      commercial registration in the PRC in relation to the Acquisition.


Board representation

The board of directors of Shengxin Expressway Company shall comprise seven directors. 
Each of the Company and the Vendor is entitled to appoint three directors of Shengxin 
Expressway Company respectively, while the employees of Shengxin Expressway Company 
are entitled to appoint one director to the board.


Basis of determination of the consideration

The consideration for the Acquisition was determined after arm's length negotiations 
between the Company and the Vendor by reference to 50% of the appraised value of the 
entire shares of Shengxin Expressway Company of RMB710,065,607 as at 31 March 2012 
based on a valuation report prepared by Shaoxing Hongtai Assets Appraisal Co., Ltd.

The consideration under the Sale and Purchase Agreement payable by the Company will be
financed by internal resources of the Company.


Condition precedent

Completion of the Acquisition is conditional upon, amongst others, the approval from 
the relevant provincial and municipal departments of the State-owned Assets 
Supervision and Administration Commission of the PRC in relation to the Acquisition 
being obtained and the transfer of the Operating Rights from the Vendor to Shengxin 
Expressway Company being completed upon receipt of the approval of the Zhejiang 
Provincial Government.
 

Termination

The parties are entitled to terminate the Sale and Purchase Agreement under, amongst 
others, the following circumstances:


(i)   if the Company does not pay any installment of the consideration according to 
      the Sale and Purchase Agreement for more than 20 days, the Vendor is entitled 
      to (i) terminate the Sale and Purchase Agreement and to a sum of at least 5% of
      the consideration under the Sale and Purchase Agreement as liquidated damages or
      (ii) demand the Company to pay a sum equivalent to 0.03% of the outstanding 
      consideration as liquidated damages for each day of delayed payment; or


(ii)  if the Account Transfer and the Loan Novation cannot be completed due to (i) 
      any policies, rules or regulations, (ii) the disagreement of any holder of 
      notes or medium-term notes of the Vendor to the Account Transfer or the Loan 
      Novation or (iii) any other reasons not attributable to the fault of the Vendor,
      and the Vendor has endeavored but failed to effect these transfers, the Sale 
      and Purchase Agreement shall terminate and the Vendor shall repay all amounts 
      received from the Company under the Sale and Purchase Agreement and any interest
      thereon.

In the event that the transfer of Operating Rights into Shengxin Expressway Company or
the transfer of Sale Interest to the Company is revoked within one year after the 
completion of the Acquisition, the Vendor shall repay all amounts received from the 
Company under the Sale and Purchase Agreement plus any interest accrued thereon. In 
the event that the transfer of Operating Rights into Shengxin Expressway Company or 
the transfer of the Sale Interest to the Company is revoked after one year from the 
completion of the Acquisition, the Company and the Vendor shall each be entitled to 
enjoy 50% of the rights and bear 50% of the obligations of the Operating Rights until
the termination of such rights.


INFORMATION ON SHENGXIN EXPRESSWAY COMPANY AND THE YONGJIN EXPRESSWAY

Shengxin Expressway Company is a limited liability company established in the PRC with
a registered and paid-up capital of RMB5 million and is wholly-owned by the Vendor as 
at the date of this announcement. Shengxin Expressway Company will hold the Operating 
Rights upon the completion of the transfer of the Operating Rights from the Vendor to 
Shengxin Expressway Company and the receipt of approval from the Zhejiang Provincial 
Government. According to the unaudited accounts of Shengxin Expressway Company, it 
recorded an unaudited net loss of approximately RMB34.7 million and RMB34.7 million 
before and after taxation for the year ended 31 December 2011, respectively. The 
unaudited net asset value of Shengxin Expressway Company was approximately 
RMB579 million as at 31 March 2012. The financial statements of Shengxin Expressway 
Company for the year ended 31 December 2010 are not available since it was only 
incorporated on 29 June 2011. As such, the net profit for the year ended 31 December 
2010 and the net asset value of Shengxin Expressway Company as at 31 December 2010 
are not available.
 
Yongjin Expressway is a branch line of Shenyang-Haikou Expressway within the State 
expressway network linking the eastern and western parts of the Zhejiang Province of 
the PRC and is connected to Hangjinqu Expressway and Ningbo Loop Expressway. The 
Shaoxing Section of Yongjin Expressway is located in Xinchang City and Shengzhou City 
of the PRC with a total length of 73 km and four toll collection stations. It 
commenced operation in 2006. The Vendor acquired the Operating Rights at an open 
auction in December 2010 for RMB3.06 billion and will complete the transfer of the 
Operating Rights to its wholly-owned subsidiary, Shengxin Expressway Company, upon 
receipt of the relevant approval from the Zhejiang Provincial Government.


INFORMATION ON THE VENDOR

The Vendor is a PRC State-owned company with a registered capital of RMB500 million 
and engaged in investment, operation and management in state-owned assets, 
acquisition and development of land, urban development, and the provision of services
in the design, production, publication and agency business for advertisements.


INFORMATION ON THE COMPANY

The Company was established on 1 March 1997 in the PRC and is a joint stock limited 
company with a registered share capital of RMB4,343,114,500 at present. The main 
businesses of the Group are (i) investment in, development, operation, management and 
collection of tolls of the Shanghai-Hangzhou-Ningbo Expressway and the Shangsan 
Expressway, both of which are in the Zhejiang Province of the PRC and (ii) businesses 
ancillary to the operation of the expressways, such as billboard advertising and 
operation of service areas on the expressways.


REASONS FOR ENTERING INTO THE SALE AND PURCHASE AGREEMENT

The Directors are of the view that the Acquisition would allow the Group to expand 
its business interests in expressways in the PRC. The Vendor is a wholly State-owned 
enterprise.

The Directors are of the view that the financial return of the Acquisition is 
expected to meet the investment criteria set by the Company which is based on the 
forecasted toll fees expected to be collected by Shengxin Expressway Company from its 
operation of the Shaoxing section of the Yongjin Expressway over the anticipated 
25-year toll collection period. Further, the Directors are of the view that the 
Acquisition will generate synergies for the Company's operation and will have a 
positive impact on the earnings and assets of the Company over an extended period of 
time after a further period of traffic volume build-up at the Shaoxing section of the 
Yongjin Expressway.

Based on the above, the Directors, including the independent non-executive Directors, 
consider that the terms of, and the transactions contemplated under, the Sale and 
Purchase Agreement are fair and reasonable, are in normal commercial terms, and are 
in the best interests of the Group and the Shareholders as a whole.
 

LISTING RULES IMPLICATIONS

As the applicable percentage ratios in respect of the Acquisition contemplated under 
the Sale and Purchase Agreement is more than 5% but less than 25%, the Acquisition 
constitutes a discloseable transaction under Chapter 14 of the Listing Rules and is 
subject to the reporting and announcement requirements as set out in Rule 14.33 of the
Listing Rules. The Acquisition is not subject to approval of Shareholders under the 
Listing Rules. None of the Directors has a material interest in the transactions 
contemplated under the Sale and Purchase Agreement or is required to abstain from 
voting on the relevant board resolution approving the Sale and Purchase Agreement and 
the transactions contemplated thereunder.



THE ACQUISITION IS CONDITIONAL UPON THE SATISFACTION OF THE CONDITION PRECEDENT. 
THEREFORE, THE ACQUISITION MAY OR MAY NOT PROCEED. INVESTORS AND SHAREHOLDERS ARE 
ADVISED TO EXERCISE CAUTION IN DEALING IN THE COMPANY'S SECURITIES.


DEFINITIONS

In this announcement, the following expressions have the meanings set out below 
unless the context requires otherwise.


"Account Transfer"             the transfer of the toll fee collection account in 
                               respect of the Shaoxing section of the Yongjin 
                               Expressway from the Vendor to Shengxin Expressway 
                               Company;

"Acquisition"                  the acquisition of the Sale Interest pursuant to the 
                               Sale and Purchase Agreement;

"Communications Group"         Zhejiang Communications Investment Group Co., Ltd., a 
                               wholly State-owned enterprise established on 29 
                               December 2001. Communications Group beneficially  
                               owns 2,909,260,000 Domestic Shares, which represent 
                               approximately 67% of the issued share capital of the 
                               Company as at the date of this announcement, and is a 
                               substantial Shareholder (as defined under the Listing 
                               Rules) of the Company;

"Company"                      Zhejiang Expressway Co., Ltd.;

"Directors"                    the directors of the Company;

"Domestic Shares"              the domestic invested shares of RMB1.00 each in the 
                               share capital of the Company;
 
"Group"                        the Company and its subsidiaries;

"HK$"                          Hong Kong dollars, the lawful currency of the Hong Kong
                               Special Administrative Region;

"Listing Rules"                the Rules Governing the Listing of Securities on the 
                               Stock Exchange of Hong Kong Limited;

"Loan"                         a loan of a principal amount of RMB2.414 billion owed 
                               by the Vendor to China Development Bank and Industrial
                               and Commercial Bank of China;

"Loan Novation"                the novation of the Loan by the Vendor, as debtor, to 
                               Shengxin Expressway Company;

"Operating Rights"             the operating rights, including the toll fee collection
                               rights, in respect of the Shaoxing section of the 
                               Yongjin Expressway;

"Parent Agreement"             an agreement entered into on 12 December 2011 between 
                               Communications Group and the Vendor under which 
                               Communications Group has conditionally agreed to 
                               acquire the Sale Interest;

"percentage ratios"            has the meaning as ascribed to it under the Listing 
                               Rules, as applicable to a transaction;

"PRC"                          the People's Republic of China;

"RMB"                          renminbi, the lawful currency of the PRC;


"Sale and Purchase             the sale and purchase agreement dated 6 July 2012
Agreement"                     entered into between the Company and the Vendor in 
                               relation to the acquisition of the Sale Interest by 
                               the Company from the Vendor;

"Sale Interest"                50% of the equity interest in Shengxin Expressway
                               Company owned by the Vendor;

"Shareholder"                  the Shareholders of the Company;

"Shengxin Expressway           Shengxin Expressway Co., Ltd, a PRC-incorporated 
Company"                       company; and
 
"Vendor"                       Shaoxing Communications Investment Group Co., Ltd., a 
                               wholly State-owned enterprise.


                                                               By Order of the Board
                                                                    ZHAN Xiaozhang
                                                                        Chairman


Hangzhou, 9 July 2012

As at the date of this announcement, the executive directors of the Company are: 
Messrs. ZHAN Xiaozhang, LUO Jianhu and DING Huikang; the non-executive directors of 
the Company are: Messrs. LI Zongsheng, WANG Weili and WANG Dongjie; and the 
independent non-executive directors of the Company are: Messrs. ZHANG Junsheng, ZHOU 
Jun and PEI Ker-Wei.