(12 September 2019, Hong Kong) Yuexiu Transport Infrastructure Limited (“Yuexiu Transport” or the “Company”) was pleased to announce that the wholly-owned subsidiary of the Company, Guangzhou Yueda Investment Company Limited, had signed an agreement to acquire three expressways in Hubei province from Guangzhou Yue Xiu Holdings Limited for a total consideration of about RMB[5.99] billion. The Company intends to finance approximately 60% of the Total Consideration by bank loan for acquisition and approximately 40% by internal resources.

The assets to be acquired under the agreement includes 100% of the equity interests in Yuexiu (Hubei) Expressway Company Limited (“YXHB”), 38.5% of the equity interests in Hancai Expressway Company Limited of Hubei Province (“Hancai”), and all the rights, benefits and title of and in the entire shareholder’s loan owed by YXHB to the Vendor from 20 March 2019 under the Previous Loan Facility, the principal amount of which being approximately RMB[4.65] billion together with the interest accrued thereon at the interest rate of 6.5% per annum. YXHB and Hancai respectively hold three toll road projects: Hancai Expressway, Han’e Expressway and Daguangnan Expressway. This transaction involves connected transactions and is subject to Independent Shareholders approval.

This acquisition is in line with the Company’s development strategy of consolidating its foothold in the Guangdong-Hong Kong-Macao Greater Bay Area (the “Greater Bay Area”) and seeking opportunities for mergers and acquisitions in central China, sharing the profits brought by the economic development of the central region. In the meantime, the expressways to be acquired by the Company include the radial pathways out of Wuhan, a section of the Wuhan City Ring Expressway and national expressway network of China. The Company is expected to have a geographical advantage brought by the spillover effect of Wuhan’s economic development. On one hand, the city is known as the “Thoroughfare to Nine Provinces”. As the transportation hub of the hinterland of China, Wuhan is connected to nine provinces, including Sichuan, Shaanxi, Henan, Hunan, Guizhou, Jiangxi, Anhui, Jiangsu and Hubei through the land and water transportation. On the other hand, the National Development and Reform Commission has marked out Wuhan for development into a national central city that will function as an economic center, a scientific and technological innovation center, a logistics center for commerce and an international exchange center to support the country’s development. At present, the three target expressways have been opened to traffic, and will also bring real-time contribution to the company's income and cash flow after the Acquisition. The Company believes that the three expressways are already maturing as business operations and going to become some of the key drivers of the growth in the Company’s cash flow and profit in the medium and long term.

It is expected that after the Acquisition, the Company will form a 'Bay Area + Central China' bipolar asset distribution and income structure, which will significantly enhance the company's asset size and income level. On completion of the Acquisition, the toll mileage of controlled expressways will significantly increase from 337.1 km to 534.9 km, representing an increment of approximately 58.7%. The weighted average remaining concession period of controlled expressways held and operated by the Company will enjoy a favorable extension from approximately 17.2 years to approximately 19.1 years. Among them, the holding expressway project in Hubei Province will be increased to five, and the toll mileage will be increased from 136.6 km to 334.4 km, representing an increment of approximately 144.8%.

On completion of the Acquisition, the Company will increase projects revenue and vehicle flow through precision marketing; At the same time, with the investment-grade credit rating granted by the three major international rating agencies, i.e. Moody's, Standard & Poor's as well as Fitch, the Company is able to rely on its steady business operation and sound financial position, thus maintaining its advantages in terms of financing capability;
The Company will centralize management through the establishment of regional companies, in order to utilize the scale effect for cost reduction. According to the forecast of the traffic study report, the improvement of the operation efficiency of the target expressways and the optimal allocation of the Company's financial resources, the Company believes that the acquisition will bring medium and long-term benefits.

Mr. Li Feng, Chairman of Yuexiu Transport Infrastructure, said that the Acquisition enhanced the company's asset size and prolonged the toll road life. It will bring better and stable benefits for the Company in the medium and long term way, which is in line with the Company’s development strategy. Yuexiu Transport Infrastructure Limited should adhere to the main investment of toll roads, prospective layout of key areas, and optimization of asset portfolios. In the future, in order to promote mergers and acquisitions of high-quality expressway projects, the Company will actively participate in the infrastructure projects in the “Greater Bay Area”. It will also seek opportunities for mergers and acquisitions in central China. The Company aims at expanding its scale, strengthening its management and increasing its benefits to create better benefits for shareholders.

Hancai Expressway

Han’e Expressway

Daguangnan Expressway