Securities code: 002667 securities abbreviation: Anshan Heavy Duty Mining Machinery Co.Ltd(002667) Announcement No.: 2022-008
Anshan Heavy Duty Mining Machinery Co.Ltd(002667)
Announcement on the reply to the letter of concern of Shenzhen Stock Exchange
The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.
Anshan Heavy Duty Mining Machinery Co.Ltd(002667) (hereinafter referred to as the “company” or “listed company”) recently received the letter of concern on Anshan Heavy Duty Mining Machinery Co.Ltd(002667) issued by the company Department of Shenzhen Stock Exchange (company department concern letter [2022] No. 11) (hereinafter referred to as the “concern letter”). For the relevant issues mentioned in the letter of concern, the company replied as follows after verification:
On June 17, 2021, your company disclosed the announcement on signing the equity acquisition intention agreement and related party transactions (hereinafter referred to as the acquisition intention announcement), which said that your company signed the cash purchase intention agreement (hereinafter referred to as the intention agreement) with Jiangxi Yifeng Tong\’an mineral products development Co., Ltd. (hereinafter referred to as Jiangxi Tong\’an) on June 16, 2021, Your company intends to acquire no less than 51% equity of Jiangxi Xingli Technology Co., Ltd. (hereinafter referred to as “Xingli technology”) held by Jiangxi Tong\’an. Your company shall pay an exclusive intention fee of RMB 28 million to Jiangxi Tong\’an.
On August 6, 2021, your company disclosed the announcement on the progress of signing the equity acquisition intention agreement and related party transactions (hereinafter referred to as the acquisition progress announcement), which said that your company signed the cash purchase intention agreement (hereinafter referred to as the new intention agreement) with Qiangqiang investment, Jiangxi Tong\’an, Zhang Qiang Liang, Zhang Hongbin and other parties on August 5, 2021, Your company intends to acquire 51% equity of Jiangxi Tong\’an held by Gongqingcheng Qiangqiang investment partnership (limited partnership) (hereinafter referred to as “Qiangqiang investment”), a shareholder holding more than 5% of your company. The new agreement of intent stipulates that the agreement of intent shall be terminated from the date when your company pays the deposit of 58 million yuan in full to Qiangqiang investment, and Jiangxi Tong\’an shall return the exclusive deposit of 28 million yuan paid by your company within two working days from the date of termination of the agreement of intent.
According to the new intention agreement, Qiangqiang investment promises to coordinate Jiangxi Tong’an to obtain the updated mining license of Dingxing mine before August 10, 2021. If Jiangxi Tong’an fails to obtain the updated mining license of Dingxing mine, your company has the right to unilaterally terminate the agreement, Qiangqiang investment shall return the above intention deposit within 5 working days after the expiration of the signing period or it is determined that the updated mining license of Dingxing mine or the updated mining license of Dingxing mine cannot be obtained as scheduled, and the production scale of Dingxing mine is less than 1.2 million tons / year (whichever is earlier), And pay the capital use cost calculated according to the market quotation interest rate (LPR) of one-year loan in the same period and the actual use days of the capital published by the national interbank lending center authorized by the people’s Bank of China.
The announcement on the reply to the letter of concern of Shenzhen Stock Exchange disclosed by your company on December 8, 2021 shows that Dingxing mine has not obtained the updated mining license, there are major uncertainties in the equity value evaluation of Jiangxi Tong’an, the preconditions for the signing of the formal agreement have not been met, and there are substantial obstacles to the transaction. On January 10, 2022, your company disclosed the announcement on termination of equity acquisition intention agreement, which said that your company signed the termination agreement of intention agreement for cash purchase of assets (hereinafter referred to as the termination agreement) with Qiangqiang investment on January 8, 2022. If Qiangqiang investment returns the deposit paid by the company of 58 million yuan within 25 working days from the date of termination of the original agreement, There is no need to pay interest to your company. On the same day, your company disclosed the announcement on signing long-term supply agreement and related party transactions, which shows that your company plans to order lithium containing raw ore from Jiangxi Tong’an (grade range: 0.3% – 0.5%), the total annual purchase volume is not less than 600000 tons, the monthly supply volume is not less than 50000 tons, and the purchase unit price is the market price.
Our ministry is concerned about this. Please verify and explain the following matters:
Question 1: explain the specific reasons for the termination of this transaction and the specific time point leading to significant changes in this transaction. Your company and any director, supervisor and senior management know or should know the specific time point of the termination of this transaction, In the case that Dingxing mine failed to obtain the updated mining license on August 10, 2021 and your company considered that there were substantial obstacles to the transaction on December 8, 2021, the reason and rationality for your company to sign the termination agreement on January 8, 2022.
reply:
1、 Specific reasons for termination of this transaction
On August 5, 2021, the company, Gongqingcheng Qiangqiang investment partnership (limited partnership) (hereinafter referred to as “Qiangqiang investment”), Jiangxi Yifeng Tong\’an mineral products development Co., Ltd. (hereinafter referred to as “Jiangxi Tong\’an” or “target company”) and other parties signed the agreement on intention to purchase assets in cash, Qiangqiang investment promises to coordinate the target company to obtain the updated mining license of Dingxing mine before August 10, 2021.
On August 10, 2021, Qiangqiang investment feedback that the mining license has not been completed. However, all materials required to be submitted in the process have been coordinated with the target company to submit completely, all procedures are complete, the submitted documents also meet the requirements of relevant departments, and the second publicity of project environmental impact assessment has been completed at that time. Although the progress of certificate processing is less than expected, Qiangqiang investment has been actively promoted and has made continuous progress. Considering the prospect of business cooperation, the company gave understanding and did not exercise the right to terminate the agreement at that time. This is based on the judgment of the company’s strategy and benefit maximization. Continuing to promote cooperation and mineral certificate handling is the most in line with the company’s interests.
During the follow-up negotiation, drastic changes have taken place in the external macro environment, including the increased investment of new energy leading enterprises in Yichun, Jiangxi Province, and the plan to deeply layout and control the upstream resources. At the same time, the price of upstream lithium carbonate has risen rapidly due to the continuous strong downstream demand of new energy, and the lithium ore resources have become increasingly scarce, resulting in the inability of both parties to reach an agreement on the consideration of the acquisition. With the deepening of negotiations, the two sides have been unable to see the trend of resolving this difference. Meanwhile, with the advancement of the acquisition progress of Jiangxi Jinhui renewable resources Co., Ltd. (hereinafter referred to as “Jinhui renewable”), the reserve demand for raw ore is becoming more and more specific. Previously, it was considered to realize the control over the target company through equity acquisition, and then realize the control over the raw ore output. The scheme has great uncertainty in time and price. For example, changing the idea to work towards locking the long-term raw ore sales agreement is the best scheme strategically selected by the company’s management after comprehensive evaluation of various factors.
2、 Specific time point of significant change in this transaction
On August 10, 2021, Qiangqiang investment reported that the mining license had not been completed, but the company also noticed that the other party was still actively promoting the handling and made some progress.
All materials required for handling mineral certificates have been submitted normally and comply with the provisions of relevant departments. Since the signing of the new intent agreement, the company’s management team has been resident in Yifeng, Jiangxi Province. Based on the principle of friendly negotiation, both parties have adopted the way of on-site communication on the promotion of mineral certificate handling, rather than written letter.
On November 29, 2021, in order to reach substantive results in the negotiation between both parties as soon as possible, the company sent the reminder letter for performance within a time limit to Qiangqiang investment, Zhang qiangliang and Zhang Hongbin; On December 2, 2021, the company’s lawyer sent a lawyer’s letter to Qiangqiang investment, Jiangxi Tong’an, Zhang Qiang Liang and Zhang Hongbin to urge them to fulfill their contractual obligations and apply for a new mining license, but no substantive progress was made. On December 8, 2021, the listed company truthfully announced in the reply to the attention letter that all the necessary conditions for the signing of the formal agreement had not been met. The actual controller, management and handling personnel of the company met with the other party for many times to communicate the follow-up solutions, and failed to reach an agreement on promoting the transaction. Moreover, due to the external environment, the differences between the two sides on the purchase price could not be bridged. On December 17, 2021, the actual controller, management and handling personnel of the company negotiated with the counterparty again. Both parties agreed that they could not reach an agreement on different matters, and both parties intended to terminate the transaction. However, the terms and specific matters of the agreement such as the return method of the deposit and future supply arrangement need to be further negotiated, and the formal termination agreement was not signed, Nor did it fulfill the decision-making procedures of listed companies.
On January 8, 2022, all parties fulfilled the decision-making procedures and signed the termination agreement of intention agreement for cash purchase of assets, which was announced by the company.
3、 Know the specific time point of termination of this transaction
According to the insider self-examination form provided by the company’s actual controller, management, handling personnel and the counterparty, the earliest time to know that the transaction is to be terminated is December 17, 2021. At that time, both parties had oral negotiations, and both parties intend to terminate the transaction. However, the specific terms and conditions of the agreement such as the return method of the deposit and the future supply arrangement need to be further negotiated, No termination agreement signed. During this period, both parties strictly abide by the confidentiality system of listed companies and the insider management system. Through the company’s self-examination, no violation of the above provisions was found.
On January 8, 2022, the parties signed the termination agreement of the agreement on intention to purchase assets with cash. The listed company convened the board of directors to review the relevant proposals and made an announcement.
4、 Reasons and reasonableness for signing the termination agreement
The counterparty failed to urge the subject company to obtain the mining license on August 10, 2021, but the counterparty is still actively promoting the process and making continuous progress. All application materials meet the requirements and have been completely submitted. The company judges that the renewal of mining license is a delay in time rather than a reversal of fundamentals, Continuing to promote the due diligence and negotiation of formal agreement is the best choice in line with the fundamental interests of the company.
With the subsequent changes in the external macro environment, the differences between the two sides have never been bridged. Finally, after many letters and communications, both parties agreed to terminate. After performing the decision-making procedures, both parties signed the termination agreement on January 8, 2022. At the same time, the long-term supply agreement was signed to ensure that the company will continue to have a solid resource foundation for the layout and development of mining, beneficiation and metallurgy in the upstream industrial chain of new energy.
Question 2: in combination with the relevant agreements and breach clauses in the new intention agreement and termination agreement, explain whether Qiangqiang investment’s failure to fulfill its commitment to coordinate Dingxing mining to obtain the updated mining license before August 10, 2021 has constituted a breach of contract, The reason and rationality of your company’s failure to require Qiangqiang investment to bear the liability for breach of contract (including but not limited to hiring a professional intermediary to conduct due diligence and audit, evaluate the expenses incurred and the compensation for the expected benefits), and the reason and rationality that Qiangqiang investment does not need to pay interest if Qiangqiang investment returns the deposit of 58 million yuan within 25 working days as agreed in the termination agreement, Whether it is inconsistent with the provisions of the new intention agreement, and what measures your company plans to take to effectively protect the interests of listed companies and the legitimate rights and interests of small and medium-sized investors.
reply:
On August 10, 2021, although the mining license has not been completed, the subject company has completed it
The EIA was publicized twice, and the follow-up entered the third round of EIA publicity period on August 30, 2021, and there has been continuous progress since then. Although the progress is less than expected, it has been actively promoting the process. Qiangqiang investment has made every effort to coordinate the target company to obtain a new mining license, but the processing time is less than expected due to multiple factors. The new intent agreement stipulates that if Qiangqiang investment fails to obtain a new mining license on August 10, 2021, the listed company has the right to terminate the agreement and require the return of the deposit. Under the background of the rising price of terminal lithium carbonate and the increasing shortage of upstream resources, it is not in the best interests of the company to exercise the termination right rashly. Listed companies should not make every effort to cut into the urgent task of the upstream industrial chain of new energy in terms of strategy, and then invest resources, costs, time and energy into the litigation quagmire of investigating the other party’s fault and compensating losses, so as to miss the great opportunity of the company’s transformation and upgrading in vain.
With the progress of the company’s acquisition of Jinhui regeneration, the reserve demand for raw ore is becoming more and more specific. At the same time, the leading new energy enterprises have increased their investment in Yichun, Jiangxi Province, and plan to deeply layout and control the upstream resources. The listed companies plan to control the mine resources by acquiring strong investment equity, which has great uncertainty in time and consideration.
Development is the first essence of enterprises. Listed companies need to consider the opportunity cost of waiting. At present, the biggest fundamental interest of listed companies is to cut into the upstream industrial chain of new energy as soon as possible, realize production and generate profits as soon as possible, rather than consuming opportunity costs due to the uncertainty of landing. Therefore, in the follow-up and strong investment communication process, the focus of the negotiation always lies in how to implement the guarantee of the long-term ore supply agreement. After comprehensive evaluation, weighing the pros and cons, based on long-term strategic considerations, the listed company gave up its commitment to deposit interest and due adjustment of intermediaries, and the two sides signed a long-term mine supply agreement. In combination with the follow-up capital arrangement of Qiangqiang investment and the performance ability of actual repayment, both parties agreed to return the deposit of 58 million yuan within 25 working days.
On January 8, 2022, both parties signed the termination agreement and the long-term supply agreement, the terms of which are based on the core interests of the listed company and the comprehensive negotiation results of all parties, as a re agreement on all matters in the new intention agreement.
Question 3 explains whether Jiangxi Tong’an has returned 28 million yuan of interest to your company. When your company pays 58 million yuan of interest to Qiangqiang investment, the basis for determining the amount of payment and its proportion in the actual transaction amount, whether it constitutes the occupation of non operating funds by related parties, and whether your company transfers benefits to related parties, Whether this transaction damages the interests of the listed company.
reply:
On September 16, 2021, the listed company China Minsheng Banking Corp.Ltd(600016) Anshan Branch account received a refund of 28 million intention money paid by Jiangxi Tong’an Bank Of China Limited(601988) Yifeng branch account.
According to the company’s analysis and Research on the local mine and lithium mica market and the preliminary negotiation between the two parties, the 100% equity value of the subject company is about RMB 500-700 million (no written document is formed)
