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Christine Chan

Shenzhen Expressway is paying 625.2 million yuan (about HK$581.99 million) for the 45 per cent stake in a highway it does not already own.

 The 19.3-kilometre Meiguan Expressway, links Meiguan in Shenzhen to Dongguan in Guangdong.

 The stake has been bought from Road King Infrastructure, which invests, operates and manages toll roads on the mainland.

 Shenzhen Expressway said the purchase would enhance its profitability, lower operating costs and further consolidate its resources.

 The acquisition also conforms with its strategy to actively develop infrastructure projects in Shenzhen and other areas in the mainland.

 The acquisition is conditional on the stock exchange granting the H share a waiver on convening a shareholders' meeting to approve the deal.

 'Such a waiver may or may not be granted,' the two companies said yesterday.

 Other conditions include regulatory approvals from the relevant mainland authorities.

 The consideration has to be paid by the H share in 'one lump sum' in Hong Kong dollars, equivalent to about HK$584.2 million, within seven days after the conditions are fulfilled.

 The consideration has been concluded 'after arm's length negotiation' including the business valuation of the highway interest of 691 million yuan as of January 9, this year, as appraised by an independent valuer.

 The H share said the toll road was an essential part of the highway network linking Hong Kong, Shenzhen and Dongguan, the most prosperous areas in the Pearl River Delta.

 It has seen strong growth since it began operation in 1995, having recorded a growth rate of 63 per cent in the past few years, the company said.

 Net assets reached 373.4 million yuan in 1997. Profit came in at 50.2 million yuan in 1997 and 79.6 million yuan in 1998.

 The figures have been compiled in accordance with Hong Kong accounting principles.

 The Meiguan Expressway is a Sino-foreign co-operative joint investment worth 892.5 million yuan, maturing in 30 years.

 Road King chairman William Zen Wei-pao said: 'In the current capital market environment, it is a sound commercial practice to realise an investment gain at a reasonable price.' 



Shenzhen Expressway buys remaining stake