Securities code: Tianyu Eco-Environment Co.Ltd(603717) securities abbreviation: Tianyu Eco-Environment Co.Ltd(603717) Announcement No.: 2022021
Tianyu Eco-Environment Co.Ltd(603717)
Announcement on the progress of the company’s foreign investment
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.
Important content tips:
The company has issued the announcement on the company’s proposed foreign investment (Announcement No.: 2022011) on February 22, 2022. Now, according to the audit and the latest operation of the target company, the transaction plan is changed according to the agreement of Article 4, paragraph 2, of the memorandum of core business terms through consultation between the two parties. The changed new transaction plan is that the company invests RMB 210 million in the target company in the form of capital increase to obtain 35% equity of the target company. The accumulated profit and loss attributable to the parent company in the year 2022 (after deducting the commitment of RMB 2022.3 billion in the year 2022) in the year 2023 after the audit of the target company in Qinghai is the net profit and loss attributable to the parent company in the year 2022.
The two parties to this transaction have signed the memorandum of core business terms in February 2022. The change of this transaction has been deliberated and adopted at the 40th meeting of the third board of directors of the company, and has obtained the written consent of Liu Bingsheng, the actual controller of the target company. The company has signed the equity strategic investment agreement on March 28, 2022. However, due to special reasons for epidemic prevention and control in Shanghai, the target company and its actual controller Liu Bingsheng (i.e. performance commitment compensation obligor) have not signed.
According to the relevant laws and regulations such as the Listing Rules of Shanghai Stock Exchange and the measures for the administration of major asset restructuring of listed companies, this transaction does not need to be submitted to the general meeting of shareholders for deliberation, nor does it constitute related party transactions and major asset restructuring.
1、 Overview and progress of this transaction
(I) basic information and progress of this transaction
In order to realize the strategic layout of listed companies and improve the sustainable profitability of listed companies, Tianyu Eco-Environment Co.Ltd(603717) (hereinafter referred to as “the company”) held the 39th meeting of the third board of directors on February 20, 2022, deliberated and adopted the proposal on investing in Qinghai juzhiyuan new materials Co., Ltd, It is agreed that the company plans to increase the capital of Qinghai juzhiyuan New Material Co., Ltd. (hereinafter referred to as “target company” or “Qinghai juzhiyuan”) in cash for the production capacity improvement and business development of the target company, and obtain the control right of the target company. For details, see the announcement on the company’s proposed foreign investment (Announcement No.: 2022011) issued by the company on the official website of Shanghai Stock Exchange and the designated information disclosure media on February 22, 2022.
According to the audit and valuation of the target company, the transaction plan is changed according to the agreement of paragraph 2, Article 4 of the memorandum of core business terms through consultation between the two parties.
(II) this transaction change has been deliberated and approved at the 40th meeting of the third board of directors of the company, and has obtained the written consent of Liu Bingsheng, the actual controller of the target company. The company has signed the equity strategic investment agreement on March 28, 2022. However, due to special reasons for epidemic prevention and control in Shanghai, the target company and its actual controller Liu Bingsheng (i.e. performance commitment compensation obligor) have not signed.
(III) according to relevant laws and regulations such as the Listing Rules of Shanghai Stock Exchange and the measures for the administration of major asset restructuring of listed companies, this transaction does not need to be submitted to the general meeting of shareholders for deliberation, nor does it constitute related party transactions and major asset restructuring.
2、 Overview of changes in this transaction
(I) trading scheme
The original transaction plan is: the company plans to invest 610 million yuan in the target company in the form of capital increase to obtain 51% equity of the target company.
The new transaction plan after the change is: the company invests 210 million yuan to the target company in the form of capital increase to obtain 35% equity of the target company.
(II) payment terms
1. According to the memorandum of core business terms signed by both parties, the company has paid 60 million yuan in advance to the target company, which will be converted into this capital increase.
2. The remaining capital increase of 150 million yuan of the company will be paid to the co managed account between the company and the target company within 15 working days after the transaction is reviewed and approved by the board of directors of the company, which will be used to repay the due debts of the target company.
(III) equity change
1. The target company promises to complete the industrial and commercial change registration of the target company before May 30, 2022.
2. If any event that has a significant adverse impact on the target company occurs before (including) the date of industrial and commercial change registration, the target company shall accurately and completely disclose it to the capital increasing party within two days after the occurrence of the event.
(IV) attribution and arrangement of profits and losses during the transition period:
1. The transition period is from the time when the company’s full investment funds are remitted into the target company’s account to the completion of industrial and commercial change procedures. 2. During the transition period, if the relevant assets corresponding to the underlying equity realize profits or increase the net assets for other reasons, the corresponding 35% of the underlying equity shall be owned by the capital increaser.
3. During the transition period, if the relevant assets corresponding to the underlying equity suffer losses, or the net assets are reduced due to other reasons, the losses and reduced net assets shall be borne by the original shareholders.
(V) corporate governance
As the capital increaser, the company enjoys the rights of shareholders after the investment funds are received, and has the right to appoint one director, one financial manager and one risk control / internal audit manager to the target company to help the target company improve its enterprise management ability. The financial system of the target company is adjusted to be consistent with that of the company, and the company’s annual audit accounting firm is agreed to be the designated annual audit unit of the target company.
(VI) performance gambling arrangement
The subject of this performance commitment is the target company Qinghai juzhiyuan and its controller Liu Bingsheng. The performance commitment compensation obligor is Mr. Liu Bingsheng. According to the adjustment of this transaction after consensus, the performance commitment terms and compensation methods are changed as follows: the net profit of the target company after the audited cumulative deduction of non recurring profits and losses in 2022, 2023 and 2024 is RMB 900 million, and the net profit assessment is calculated according to the total number of three years, totaling RMB 900 million.
If Qinghai juzhiyuan fails to complete the performance agreement:
(1) If Qinghai juzhiyuan’s audited net profit loss attributable to the parent company after deducting non recurring profits and losses in 2022, the listed company can choose Mr. Liu Bingsheng to repurchase the shares held by the listed company at a premium of 20% of the transaction price within one month after the issuance of the audit report (the same time as the issuance of the listed company), or make a one-time cash compensation for the insufficient profits
(2) If the total amount of net profit attributable to the parent company after deducting non recurring profits and losses audited by Qinghai juzhiyuan fails to meet the commitment in the three-year assessment, Mr. Liu Bingsheng will make a one-time cash compensation for the insufficient profit within one month after the issuance of the audit report (the same time as that of the listed company).
Amount of cash compensation to be compensated = (total accumulated committed net profit – total accumulated actual net profit) shareholding ratio of listed company
(3) If the performance of Qinghai juzhiyuan is over fulfilled, it is agreed that the distributable profits attributable to the parent company after deducting non recurring profits and losses formed by the over fulfilled part (the part greater than 900 million yuan and less than 1.2 billion yuan) shall be distributed in the form of cash distribution by Mr. Liu Bingsheng after the total calculation of their actual shareholding ratio at that time, and the remaining 30% of the excess profits shall be converted into capital reserve and retained by Qinghai juzhiyuan company; For the distributable profits attributable to the parent company after deducting the non recurring profits and losses formed by the over completed part (the part greater than 1.2 billion yuan), after the total calculation of their actual shareholding ratio at that time, the excess part shall be distributed by Mr. Liu Bingsheng’s cash distribution of 30%, and the remaining excess profits shall be transferred to the capital reserve and retained in Qinghai juzhiyuan company.
3、 Impact of this transaction change on Listed Companies
The listed company needs cash investment of 210 million yuan in this transaction. The transaction scale is small. The strategic investment Qinghai juzhiyuan can effectively avoid the risk of M & A integration after the holding acquisition and will not have an adverse impact on the existing production and operation of the listed company. After the completion of this transaction, Qinghai juzhiyuan will become a participating subsidiary of the listed company, and its financial status and operating results will continue to have a partial impact on the financial statements of the listed company.
In the follow-up, the company will perform the obligation of information disclosure in time by stages according to the progress of relevant matters. Please continue to pay attention to the company’s follow-up announcements, invest cautiously and pay attention to investment risks. It is hereby announced.
Tianyu Eco-Environment Co.Ltd(603717) board of directors March 28, 2022
