Huaqi Environmental Protection stopped issuing shares to purchase the equity of the two companies, and the financial consultant was Guoyuan Securities

Recently, Anhui Huaqi Environmental Protection Technology Co., Ltd. (securities code: 300929, securities abbreviation: Huaqi Environmental Protection) released an announcement on the termination of issuing shares to purchase assets and raise matching funds and related party transactions. Huaqi Environmental Protection said that the company held the 17th meeting of the 4th Board of Directors and the 15th meeting of the 4th Board of Supervisors on October 13, 2023, reviewed and passed the Proposal on Terminating the Issuance of Shares to Purchase Assets and Raise Supporting Funds and Related Transactions, and decided to terminate the issuance of shares to purchase assets and raise supporting funds and related transactions.

Huaqi Environmental Protection originally planned to issue shares to purchase 50% equity of Guanghuan Jiangdong Environmental Energy (Ma'anshan) Co., Ltd. held by Anhui Jiangdong Urban Construction Investment Group Co., Ltd. and 51% equity of Ma'anshan Jiangdong China Railway Water Co., Ltd., and at the same time issue shares to Jiangdong Holding Group Co., Ltd. to raise supporting funds (hereinafter collectively referred to as "the transaction").

Huaqi Environmental Protection said that since the company planned and announced the transaction for the first time, the company has actively organized all parties involved in the transaction to promote the restructuring in strict accordance with relevant laws, regulations and normative documents. However, in view of the long duration of this transaction, the capital market environment has changed significantly since the beginning of this transaction, and considering the current actual situation and other factors, the company decided to terminate this transaction after full communication, prudent analysis and friendly negotiation with the relevant parties.

The impact of the termination of this transaction on the company, Huaqi Environmental Protection pointed out that the company's termination of this transaction is a prudent decision made after full consideration of the capital market environment, combined with the current actual situation and other factors, and after full communication, prudent analysis and friendly negotiation between the company and the relevant parties, there is no situation where the company and the relevant parties need to bear the relevant liability for breach of contract. At present, the business operation of the company is normal. The termination of this transaction will not have a significant adverse impact on the company's existing production and business activities and strategic development, and there is no situation that will damage the interests of the company and minority shareholders.

Huaqi Environmental Protection pointed out that according to the provisions of laws, regulations and normative documents such as the Administrative Measures for Major Asset Restructuring of Listed Companies and the Self regulatory Guidelines for Listed Companies of Shenzhen Stock Exchange No. 8 - Major Asset Restructuring (Revised in 2023), the company promised not to plan major asset restructuring for at least one month from the date of disclosure. The Board of Directors of the Company apologized for the inconvenience caused to investors by the termination of this transaction, and expressed heartfelt thanks to investors who have paid attention to and supported the development of the Company for a long time.

On the same day, Huaqi Environmental Protection released the independent financial consultant's verification opinions of Guoyuan Securities Co., Ltd. on Anhui Huaqi Environmental Protection Technology Co., Ltd.'s termination of issuing shares to purchase assets and raise matching funds and related party transactions. Upon verification, Guoyuan Securities, the independent financial consultant, believes that the listed company has fulfilled its obligation of information disclosure in accordance with relevant regulations to terminate this transaction, and this matter has obtained the independent opinion of the independent directors of the company, which has been reviewed and approved by the board of directors and the board of supervisors. The termination procedure of this transaction complies with the provisions of relevant laws and regulations such as the Administrative Measures for Major Asset Restructuring of Listed Companies.

On September 30, 2022, the 10th meeting of the 4th Board of Directors and the 8th meeting of the 4th Board of Supervisors of Huaqi Environmental Protection deliberated and passed the Proposal on the Company's Issuing Shares to Purchase Assets and Raising Supporting Funds and Connected Transactions and other proposals related to this transaction, It also disclosed the Plan for Anhui Huaqi Environmental Protection Technology Co., Ltd. to issue shares to purchase assets and raise matching funds and related party transactions.

On May 31, 2023, Huaqi Environmental Protection issued a report (draft) (revised) on issuing shares to purchase assets and raising matching funds and related party transactions. This transaction includes two parts: issuing shares to purchase assets and raising matching funds.

Huaqi Environmental Protection plans to purchase 50% equity of Guanghuan Jiangdong and 51% equity of Jiangdong China Railway held by Jiangdong Urban Investment by issuing shares. After the completion of this transaction, Guanghuan Jiangdong will become a joint venture of Huaqi Environmental Protection, and Jiangdong China Railway will become a holding subsidiary of Huaqi Environmental Protection. According to the Asset Appraisal Report (HXPBZ [2013] No. 006) and the Asset Appraisal Report (HXPBZ [2013] No. 005) issued by Hexun Appraisal, taking September 30, 2022 as the appraisal base date, the appraisal value of 100% equity of the target asset Guanghuan Jiangdong is RMB 419.2387 million, and the appraisal value of 100% equity of Jiangdong Zhongtie is RMB 39.4136 million. With reference to the evaluation value, after consensus by all parties, the transaction price of 50% equity of Guanghuan Jiangdong was determined as 209619400 yuan, and that of 51% equity of Jiangdong China Railway was determined as 20100900 yuan, all of which were paid by issuing shares.

Huaqi Environmental Protection plans to raise supporting funds from Jiangdong Holdings by issuing shares at a fixed price. The number of shares issued does not exceed 30% of the total capital stock of Huaqi Environmental Protection before this transaction, and the total amount of supporting funds raised does not exceed 100% of the transaction price of assets purchased by issuing shares in this transaction. The total amount of supporting funds to be raised this time shall not exceed 200 million yuan. The final issuance quantity will be determined by the board of directors of the listed company according to the authorization of the general meeting of shareholders and the purpose of Jiangdong Holdings to obtain the control right of Huaqi Environmental Protection in accordance with the provisions of relevant laws, administrative regulations and normative documents after the transaction is approved by the Shenzhen Stock Exchange and registered by the CSRC.

The purpose of this transaction is to obtain the control right of Huaqi Environmental Protection by Jiangdong Holdings. The effectiveness and implementation of asset purchase by issuing shares and the full subscription of raised matching funds are mutually prerequisite, and together constitute an integral part of this transaction. If any of them cannot be implemented due to the failure to obtain the required approval or other reasons, neither of the above two will be implemented.

The underlying assets of this transaction are 50% equity of Guanghuan Jiangdong and 51% equity of Jiangdong China Railway. According to the above calculation, the proportion of the underlying assets of this transaction in the relevant financial data of the listed company is not more than 50%. According to the Administrative Measures for Restructuring, this transaction does not constitute a major asset restructuring of the listed company. At the same time, this transaction involves the purchase of assets by issuing shares, which can only be implemented after being approved by Shenzhen Stock Exchange and registered by the CSRC.

After the completion of this transaction, the controlling shareholder of Huaqi Environmental Protection will be changed to Jiangdong Holdings, and the actual controller will be changed to Maanshan Municipal People's Government. This transaction constitutes the purchase of assets from the acquirer and its related persons within 36 months from the date of change of the Company's self-control right. According to the Administrative Measures for Restructuring and the Listing Rules, this transaction is a transaction between the company and potential related parties, which constitutes a related transaction.

key word: Vernon Hua Purchase of assets Guoyuan Securities Issuance of shares Potential related parties