Preliminary Prospectus dated 25 April 1997 IMPORTANT If you are in any doubt about this prospectus, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser. A copy of this prospectus, having attached thereto the documents specified in the 13th paragraph headed “Documents delivered to the Registrar of Companies in Hong Kong” in Appendix XI, has been registered by the Registrar of Companies in Hong Kong as required by section 342C of the Companies Ordinance of Hong Kong. The Registrar of Companies in Hong Kong and the Securities and Futures Commission in Hong Kong take no responsibility for the contents of this prospectus or any of the documents referred to above. The Stock Exchange of Hong Kong Limited (“Stock Exchange”) and Hong Kong Securities Clearing Company Limited (“Hongkong Clearing”) take no responsibility for the contents of this prospectus, 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 prospectus. (a joint stock limited company incorporated in the People’s Republic of China with limited liability) Placing and New Issue of 1,246,830,000 H Shares of nominal value RMB 1.00 each at an issue price of not more than HK$ 2.38 per H Share payable in full on application in Hong Kong dollars, subject to refund Global Co-ordinator, Sponsor and Lead Manager BZW Asia Limited Senior Co-lead Manager China Development Finance Co. (H.K.) Ltd. Co-lead Managers Credit Lyonnais Securities Asia Deutsche Morgan Grenfell Goldman Sachs (Asia) L.L.C. Morgan Stanley Asia Limited Co-Managers C.A. Pacific Capital Limited CEF Capital Limited DBS Asia Capital Limited Guangdong Securities Limited Ka Wah Capital Limited The Nikko Securities Co. (Asia) Limited Sassoon Securities Limited Seapower Securities Limited Shenyin Wanguo Capital (H.K.) Limited Tai Fook Securities Company Limited Tung Tai Securities Co. Ltd. Zhejiang Fuchuen Company Limited Financial Adviser Guangdong Capital Finance Limited The Issue Price per H Share will be not more than HK$2.38 and is expected to be not less than HK$2.06, although the Company and BZW (on behalf of the Underwriters) may agree a lower price. Applicants for H Shares are required to pay, on application, the maximum price of HK$2.38 per H Share, subject to refund if the Issue Price should be lower than the maximum price. The Issue Price is expected to be determined by BZW and the Company on or around 9 May 1997, but in any event not later than 12 May 1997. If BZW and the Company are unable to reach agreement on the Issue Price by 9 May 1997, or such later time as may be agreed by the Company and BZW (on behalf of the Underwriters), but in any event not later than 12 May 1997, the H Share Offer will not become unconditional and will lapse. Further details are set out in the sections “The H Share Offer and Conditions” and “Procedure for Application” in this prospectus. The Company is incorporated, and its businesses are conducted, in the PRC. Potential investors in the Company should be aware of the difference in the legal, economic and financial systems between the PRC and Hong Kong and the different risk factors involved in investing in companies established and incorporated and which operate in the PRC. Potential investors should also be aware that the companies and securities regulatory framework in the PRC, to which the Company is subject, is different from the regulatory framework in Hong Kong. Potential investors should also take into consideration the different market nature of the shares of the Company. Certain of such differences and risk factors are set out in Appendix IX and under the section “Risk Factors” of this prospectus respectively. Application has been made to the Stock Exchange for the listing of, and permission to deal in, the H Shares being offered pursuant to the H Share Offer. The procedure for application for H Shares under the New Issue is set out at the end of this prospectus. The attention of potential investors and of nominees who wish to submit separate applications on behalf of different beneficial owners is drawn to the section “Procedure for Application” set out at the end of this prospectus relating to multiple applications. Multiple or suspected multiple applications and any application by one applicant for more than 100% of the New Issue Shares will be rejected. The application lists for the H Shares now being offered in Hong Kong pursuant to the section “New Issue” will open at 11.45 a.m. on Friday, 9 May 1997 and will close at 12.00 noon on the same day (subject to change according to the conditions set out in the section “Procedure for Application” in this prospectus). In connection with the H Share Offer, BZW or its nominee may over-allocate or effect transactions which stabilise or maintain the market price of the H Shares at a level which might not otherwise prevail. Such stabilising may be effected in all jurisdictions where it is permissible to do so, in each case in compliance with all applicable laws and regulatory requirements and, if commenced, may be discontinued at any time. In Hong Kong, such stabilisation activities on the Stock Exchange are restricted to cases where Underwriters genuinely purchase shares in the secondary market solely for the purposes of covering over-allocations in the H Share Offer. The relevant provisions of the Securities Ordinance of Hong Kong prohibit market manipulation in the form of pegging or stabilising the price of securities in certain circumstances. The number of H Shares being offered under the H Share Offer may be increased up to an aggregate of 187,024,500 H Shares through the exercise of the Over-allotment Option. Further details are set out in the section “The H Share Offer and Conditions” in this prospectus. Subject to the granting of the listing of, and permission to deal in, the H Shares on the Stock Exchange, the H Shares will be accepted as eligible securities by Hongkong Clearing for deposit, clearance and settlement in the Central Clearing and Settlement System (“CCASS”) with effect from the commencement date of dealings in the H Shares on the Stock Exchange or such other date as determined by Hongkong Clearing. All activities under CCASS are subject to the General Rules of CCASS and the CCASS Operational Procedures in effect from time to time. 6 May 1997 The information in thisand document, Futures which Commission isthe in in prospectus draft Hong in form, its Kong)Limited is final without subject nor form. notice. This to is document updating, Inof, it does completion, particular, or calculated not revision, this to constitute to furthernot or document be invite, verification form be refers and relied nor part delivered amendment to on does ofin (including to any certain in it such its offer persons events connection permit to amendments final other as the with sell asreliance form than or making any having may may are solicitation be the of, contract occurred be of reminded required person any therefor. which placedon any that by This offers offer to for have the any The to document to whom any not Stock basis purchase purchase is purchase purpose this Exchange or occurred or hereof. or being of whatsoever subscribe copy on subscription for Hong subscribe distributed on is shall the any Kong for the to delivered. be securities, date Limited any information certain or Recipients made and this contained securities rights selected of the solely document to in or persons Securities this on purchase is this rights only or the document published document to subscribe to basis who or but for subscribe assess of intend any on are for the the securities to its expected or in level information purchase completeness. to purchase Zhejiang of contained No or Expressway any occur investor in Company legal subscribe securities, on interest the commitments for nor or in prospectus are any shall prior in to the securities it to be its H in or entered publication final Share Zhejiang any into form of Offer part Expressway and which for of Company no may the it Limited offers be purpose or relating following materially of to the publication different arranging the fact of from selective H of the the marketing, Share its information prospectus and Offer distribution contained are must form in sought the this or basis document. are No permitted to be made CONTENTS Page Summary ............................................................... 1 Expected Timetable ....................................................... 8 Definitions .............................................................. 9 Risk Factors ............................................................. 15 Preliminary ............................................................. 23 The H Share Offer and Conditions .......................................... 26 Share Capital ............................................................ 30 Indebtedness ............................................................ 31 Liquidity and Financial Resources .......................................... 32 Directors and Supervisors ................................................. 33 Parties Involved in the H Share Offer and Corporate Information ................ 35 Overview of High Grade Road Infrastructure in the PRC ....................... 41 Background to Shanghai Municipality and Zhejiang Province ................... 49 Particulars of the Company Introduction