On May 26, Guangdong Songfa Ceramics Co., Ltd. (*ST Songfa) issued an announcement, announcing that its issuance of shares to purchase assets has made significant progress.
The registration procedures for the new shares issued by it to purchase assets have been completed, and it has obtained the “Securities Change Registration Certificate” issued by the Shanghai Branch of China Securities Depository and Clearing Corporation Limited (CSDC).
The announcement disclosed that the issuance of shares to purchase assets issued by Suzhou Zhongkun Investment Co., Ltd., Hengneng Investment (Dalian) Co., Ltd., Suzhou Hengneng Supply Chain Management Co., Ltd., and Chen Jianhua. The issue price is RMB10.16 per share for 738 million RMB ordinary shares (A shares).
According to the restructuring report, *ST Songfa intends to exchange all of its assets and operating liabilities for the equivalent portion of the 50% equity of Hengli Heavy Industries held by Zhongkun Investment. At the same time, it intends to purchase assets from the counterparty by issuing shares, including purchasing the difference of the above-mentioned major asset replacement from Zhongkun Investment, and purchasing the remaining 50% equity of Hengli Heavy Industries held by Suzhou Hengneng, Hengneng Investment, and Chen Jianhua. In addition, *ST Songfa intends to issue shares to no more than 35 specific investors to raise supporting funds of no more than RMB 4 billion (approximately US$555 million).
According to the announcement, the valuation of the assets to be disposed of is RMB 513 million (about US$ 71 million), and the valuation of the assets to be placed in Hengli Heavy Industries is RMB 8.006 billion (about US$ 1.113 billion). After the completion of the issuance of shares to purchase assets, Zhongkun Investment will hold 39.86% of *ST Songfa’s shares, Hengneng Investment will hold 15.24% of the shares, Suzhou Hengneng will hold 15.24% of the shares, Chen Jianhua will directly hold 15.24% of the shares, Hengli Group will hold 4.34% of the shares, and the aforementioned entities will hold a total of 89.93% of *ST Songfa’s shares. *ST Songfa’s controlling shareholder will be changed to Zhongkun Investment, and the actual controller will still be Chen Jianhua and Fan Hongwei.
The replacement asset of this transaction is 100% equity interest in Hengli Heavy Industry. As of the date of this announcement, the industrial and commercial registration procedures for the transfer of 100% of the equity of Hengli Heavy Industries held by Zhongkun Investment, Suzhou Hengneng, Hengneng Investment and Chen Jianhua to *ST Songfa have been completed.
The issuance of shares to purchase assets is an important step for *ST Songfa to further integrate resources and optimize its business structure. Meanwhile, through the introduction of strategic investors, *ST Songfa is expected to further enhance its operational efficiency, strengthen its market competitiveness and realize sustainable development.
According to the announcement, before this transaction, the listed company was mainly engaged in the research and development, production and sales of daily-use ceramic products, and its main products included daily-use porcelain, fine porcelain and ceramic wine bottles. Through this transaction, the listed company will strategically withdraw from the daily-use ceramic products manufacturing industry, and Hengli Heavy Industries will become a wholly-owned subsidiary of the listed company. The main business of the listed company in the future will be the research and development, production and sales of ships and high-end equipment.