Huaxun Fangzhou Co.Ltd(000687) : pre disclosure announcement on the share reduction plan of shareholders holding more than 5%

Securities code: 000687 securities abbreviation: * ST Huaxun Announcement No.: 2022-026

Huaxun Fangzhou Co.Ltd(000687)

Pre disclosure announcement on the share reduction plan of shareholders holding more than 5%

China Hengtian Group Co., Ltd., a shareholder holding more than 5% of the company’s shares, guarantees that the information provided to the company is true, accurate and complete without false records, misleading statements or major omissions.

The company and all members of the board of directors guarantee that the contents of the announcement are consistent with the information provided by the information disclosure obligor.

Special tips:

China Hengtian Group Co., Ltd. (hereinafter referred to as “Hengtian Group”), the shareholder holding 94410000 shares of the company (accounting for 12.32% of the total share capital of the company), plans to reduce the shares of the company with no more than 15323987 share capital (no more than 2% of the total share capital of the company) by means of centralized bidding within six months after 15 trading days from the date of this announcement.

Huaxun Fangzhou Co.Ltd(000687) (hereinafter referred to as “the company” or “Huaxun Ark”) received the notification letter on the proposed reduction of Huaxun Fangzhou Co.Ltd(000687) shares issued by China Hengtian Group Co., Ltd., the shareholder holding more than 5% of the company, on February 23, 2022. The company hereby announces the relevant information as follows:

1、 Basic information of shareholders

(I) name of shareholder: China Hengtian Group Co., Ltd

(II) the total number of shares held by shareholders and their proportion in the total share capital of the company.

China Hengtian Group Co., Ltd. currently holds 94410000 shares of the company, accounting for 12.32% of the total share capital of the company.

2、 Main contents of this reduction plan

(I) the reason for the proposed reduction, share source, quantity, mode, proportion in the total share capital of the company, reduction period, price range and other specific arrangements.

1. Reasons for this reduction: the need for the adjustment of the shareholding structure of Hengtian Group;

2. Source of this share reduction:

① In 2011, the predecessor of Huaxun Fangzhou Co.Ltd(000687) Baoding Shandong Swan Cotton Industrial Machinery Stock Co.Ltd(603029) Co., Ltd. issued non-public shares, and Hengtian Group subscribed 55568862 shares.

② In 2012, Hengtian Fiber Group Co., Ltd. transferred 128576800 shares to Hengtian Group free of charge.

Securities code: 000687 securities abbreviation: * ST Huaxun Announcement No.: 2022-026

3. Quantity and proportion of this reduction: the number of shares reduced this time shall not exceed 15323987 shares (i.e. not more than 2% of the total share capital of the company), In any 90 consecutive days, the total number of shares reduced through the centralized bidding transaction of the stock exchange shall not exceed 1% of the total number of shares of the company (if there are changes in share capital such as share distribution and conversion of capital reserve into share capital during this period, the number shall be adjusted accordingly);

4. Reduction period: within six months after 15 trading days from the date of this announcement;

5. Reduction method: centralized bidding method of stock exchange;

6. Price range of reduction: determined according to the secondary market price at the time of reduction.

(II) whether the proposed reduction is consistent with the previously disclosed intentions and commitments of relevant shareholders. 1. In 2011, Baoding Shandong Swan Cotton Industrial Machinery Stock Co.Ltd(603029) Co., Ltd., the predecessor of the company, issued non-public shares. Of the 115768462 shares issued this time, 55568862 shares subscribed by Hengtian Group were voluntarily locked up for 36 months after the issuance, that is, they were not listed, traded or transferred within 36 months from the date of listing of the shares issued this time. During the lock up period, Any shares arising from the shares issued this time (including but not limited to the shares increased by means of share splitting and bonus shares) will not be listed or transferred. From the first day of listing, the expected listing and circulation time is May 2, 2015 (in case of non trading days, it will be postponed).

2. In the announcement on the completion of the shareholding increase plan of the company’s second largest shareholder disclosed by the company on July 30, 2015, Hengtian Group promised not to reduce its shares in the company during the shareholding increase period and within 6 months after the completion of the shareholding increase.

3. According to the pre disclosure announcement on the reduction of Huaxun Fangzhou Co.Ltd(000687) major shareholders’ shares disclosed on May 7, 2016, Hengtian Group will reduce its holdings of no more than 37868423 shares of the company through centralized bidding trading through the trading system of Shenzhen Stock Exchange within six months after 15 trading days from the date of the announcement of the reduction plan, that is, no more than 5% of the total share capital of the company, Among them, the total number of shares reduced through the centralized bidding transaction of the stock exchange in every three months shall not exceed 1% of the total number of shares of the company (excluding the shares increased by the company through Huatai asset management plan. If there are changes in share capital such as share distribution and conversion of capital reserve into share capital during this period, the number shall be adjusted accordingly).

4. According to the pre disclosure announcement of Huaxun Fangzhou Co.Ltd(000687) major shareholders’ share reduction disclosed on November 29, 2016, Hengtian Group will reduce its holdings of no more than 22721053 shares of the company through centralized bidding trading through the trading system of Shenzhen Stock Exchange within six months after 15 trading days from the date of announcement of the share reduction plan, that is, no more than 3% of the total share capital of the company, Among them, the total number of shares reduced through the centralized bidding transaction of the stock exchange in every three months shall not exceed 1% of the total number of shares of the company (excluding the company through Huatai asset management)

Securities code: 000687 securities abbreviation: * ST Huaxun Announcement No.: 2022-026

If there are changes in share capital such as share distribution and conversion of capital reserve into share capital during this period, the number of shares planned to be increased shall be adjusted accordingly).

5. According to the pre disclosure announcement of Huaxun Fangzhou Co.Ltd(000687) major shareholders’ share reduction disclosed on November 3, 2017, Hengtian Group will reduce its holdings of no more than 20077004 shares of the company through centralized bidding trading through the trading system of Shenzhen Stock Exchange within six months after 15 trading days from the date of announcement of the share reduction plan, that is, no more than 2.62% of the total share capital of the company, Among them, the total number of shares reduced through the centralized bidding transaction of the stock exchange in every three months shall not exceed 1% of the total number of shares of the company (excluding the shares increased by the company through Huatai asset management plan. If there are changes in share capital such as share distribution and conversion of capital reserve into share capital during this period, the number shall be adjusted accordingly).

The above commitments have been fulfilled, and the reduction plan does not violate the above commitments.

3、 Relevant risk tips

1. This announcement is the pre disclosure information made by the company in accordance with the provisions of the CSRC on the reduction of shares held by shareholders, directors, supervisors and senior managers of listed companies and the implementation rules for the reduction of shares held by shareholders, directors, supervisors and senior managers of Listed Companies in Shenzhen Stock Exchange. Hengtian Group will decide whether to implement the share reduction plan according to the market conditions and the company’s share price;

2. Hengtian Group is not the controlling shareholder or actual controller of the company. This reduction will not affect the company’s governance structure and sustainable operation, and will not lead to the change of the company’s control right;

3. During the period of reducing the shares of the company according to the above plan, Hengtian Group promises to strictly abide by the provisions on reducing the shares of shareholders, directors, supervisors and senior managers of listed companies issued by the CSRC, the measures for the administration of the acquisition of listed companies, the detailed rules for the implementation of reducing the shares of shareholders, directors, supervisors and senior managers of listed companies issued by the Shenzhen Stock Exchange, and the stock listing rules Relevant laws and regulations such as the guidelines for the standardized operation of listed companies and the company’s rules and regulations.

4、 Other risk tips

The company disclosed the performance forecast for 2021 (Announcement No.: 2022-012) on January 25, 2022. It is estimated that the net profit of the company in 2021 will be negative, the operating income will be less than 100 million yuan, and the net assets of the company at the end of 2021 will be negative. In addition, the elimination of the impact of the matters involved in the audit report for 2020 will be reviewed by the annual audit accountant, According to article 9.3.11 of the Listing Rules of Shenzhen Stock Exchange (revised in 2022), If the annual report of the company in 2021 shows that “the net profit attributable to the shareholders of the listed company in 2021 is negative and the operating income is less than RMB 100 million”, or “the net assets at the end of 2021 are negative”, or “the financial and accounting report in 2021 has been issued with qualified opinions, unable to express opinions or negative opinions”

Securities code: 000687 securities abbreviation: * ST Huaxun Announcement No.: 2022-026

The listing of the company’s shares will be terminated. Please invest rationally and pay attention to investment risks.

5、 Documents for future reference

1. Notification letter on the proposed reduction of Huaxun Fangzhou Co.Ltd(000687) shares issued by China Hengtian Group Co., Ltd.

Huaxun Fangzhou Co.Ltd(000687)

Board of directors

February 24, 2022

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