Huaxin Cement Co., Ltd. Announcement on Changing the Use of the Raised Funds for Some Projects of the Private Placement

Transcription

1 Stock Codes: , Stock abbreviations: Huaxin Cement, Huaxin B Share Ref: Lin Huaxin Cement Co., Ltd. Announcement on Changing the Use of the Raised Funds for Some s of the Private Placement To the best of our knowledge, the Board of Directors of the Company and its members confirm that there is no material false or misleading statement or material omission in this announcement and shall be severally and jointly liable for the truthfulness, accuracy and completeness of its content. The Twenty First Meeting of the Seventh Board of Directors was convened on November 8-9, The Meeting reviewed and adopted the Proposal in Respect of Changing the Use of the Raised Funds for Some s of the Private Placement. The relevant issues regarding changing the use of the raised funds for some projects are hereby announced as follows: I. Overview on Changing the s of the Private Placement 1. Basic information of the raised funds Approved by Document Zheng Jian Xu Ke [2011] No.1299 issued by the CSRC, Huaxin Cement Co., Ltd. (hereinafter referred to as the Company ) made the private placement of RMB ordinary shares (A share) in amount of 128,099,928 shares with the face value of 1Yuan per share on October 31, The issuing price was Yuan per share. According to the Report on Capital Verification (PricewaterhouseCoopers Zhong Tian Yan Zi (2011) No. 323) issued by PricewaterhouseCoopers Zhong Tian CPAs Limited Company, the total raised funds from the private placement was 1,794,679,991 Yuan. The net amount of the raised funds was 1,742,887,551 Yuan minus underwriting fee and other transaction fees of 51,792,440 Yuan. The investment projects which use the funds raised by this private placement include: 719,870 k Yuan investment in 15 cement kiln s, 455,810 k Yuan investment in 25 station projects, 159,000 k Yuan investment in 1 aggregate production line project and 460,000 k Yuan for repaying loans of the Company. 2. Actual use of the raised funds for the projects which are planned to be changed Considering that projects invested by the raise funds have been completed and put into production, Yichang project is still in the planning and investment in other projects was reduced due to cancelling procurement of pump trucks and other equipment, in order to ensure the timely, effective and reasonable use of the raised funds from the private placement and according to the Administrative Rules on Raised Funds of Listed Companies of Shanghai Stock Exchange and Administrative Rules on Storage and Use of Raised Funds" of the Company, after deliberation, the Company plans no longer use the raised funds (112,460, Yuan) to construct Sichuan Wanyuan 7.0 MW cement kiln pure low temperature, Hubei Yichang 300 km3/y Station and other 19 projects listed in the below table 1. Table 1: As at September 30, 2013, use of the raised funds for Sichuan Wanyuan 7.0 MW cement kiln pure low temperature and other projects

2 No Abbreviation Planned use of the raised funds (0000 Yuan) Sichuan Wanyuan 7.0 MW cement kiln Hunan Chenzhou 9.0 MW cement kiln Yunnan Dongchuan 4.5 MW cement kiln Hunan Daoxian 7.5 MW cement kiln Hubei Huangshi 15.0 MW cement kiln Yunnan Zhaotong 7.5 MW cement kiln Hubei Yangxin 200 km3/y Station Hubei Huanggang 200 km3/y Station Hubei Daye 200 km3/y Station Sichuan Wanyuan 200 km3/y Station Henan Xinyang 200 km3/y Station Hubei Ezhou 200 km3/y Station Hubei Hanchuan 200 km3/y Station Hubei Shishou 200 km3/y Station Hubei Tianmen 200 km3/y Station Hubei Wuhan Donghu Gaoxin 300 km3/y Station Hubei Xianning 200 km3/y Station Hubei Ezhou Gedian 200 km3/y Station Hubei Yichang 300 km3/y Station Hubei Chibi 200 km3/y Station Hubei Zigui 200 km3/y Station Wanyuan Chenzhou Dongchuan Daoxian Huangshi Zhaotong Actual use of the raised funds Unused raised funds 5, , , , , , , , , , , , Yangxin 1, Huanggang 1, Daye 1, , Wanyuan 1, Xinyang 1, , Ezhou 1, , Hanchuan 1, , Shishou 1, , Tianmen Donghu (Fenghuang) Xianning 1, , , , , , , Gedian 2, , Yichang 2, , Chibi 1, , Zigui 1, , The raised funds used in the above projects are mainly for the construction of these projects. 3. Information of the new fundraising projects The Company intends to change and adjust the injection of the unused 112,460, Yuan (as at September 30, 2013) for the listed 21 projects. The net amount of 60,667, Yuan (after deducting the issuance cost 51,792,440 Yuan) shall be invested for the construction of Huaxin Aggregate (Yangxin) Ltd. phase II project 1000tph production line (hereinafter referred to as "Yangxin AGG II").

3 This change of use of the raised funds is not related transaction. II Specific reasons for not implementing the original projects Sichuan Wanyuan 7.0MW cement kiln power generation and other 5 projects listed in table 1 have unused raised funds of 21,703, Yuan, mainly because that such projects have been put into production, some quality assurance deposits were unpaid or the Company deferred paying for the final payments; in addition, total investment in some projects was controlled and the amount of remaining raised funds was greater than the unpaid final payment. (e.g. Hunan Daoxian 7.5MW cement kiln ). Hubei Yichang 300 km3/y Station is still in the planning, the invested amount is less than 1% of the committed amount. The project is currently in an indeterminate state due to objective changes. Regarding the 14 station projects listed in table 1, their main equipment have been put into operation. As the Company adjusted logistics operating mode of business according to the market situation (change from the original planned self-built logistics mode to more efficient third-party logistics mode), the above station projects do not have the plan to buy pump truck and other relevant equipment. So some raised funds have not been used yet. To speed up the use of raised funds and improve efficiency of the fund use, the Company decided that the unused raise funds will no longer be injected for the construction of such projects. If above projects have fund gap, the Company will complete the investment with its own funds. III. Information of the new fundraising projects As at September 30, 2013, raised funds with total amount of 60,667, Yuan will changed its injection, the Company intends to inject the aforesaid raised funds for the construction of Yangxin aggregate phase II project. Detailed information of Yang aggregate phase II is as follows: (1) site: Fuchi town, Yangxin County, Huangshi City. The phase II production line shall be erected on the north side of the existing phase I production line. (2) Scale of construction: a 1000 tph gravel aggregate production line. The annual capacity of gravel aggregate is 4.8 million tons. (3) Construction period: Starting construction: Sep 2012; time of completion: Dec 2013 (Geological changes lead to civil construction delay, the completion time was delayed from the planned September 2013 to December 2013). (4) investment plan: Total investment of the project is 128,518.9 k Yuan (including FAI 124,901.8 k Yuan; 12,056.9 k Yuan working capital shall be invested after the project is put into operation, of which k Yuan is derived from bank loans, and the rest k Yuan is derived from self-owned capital of the Company). On April 20, 2012, after the First Meeting of the Seventh Board of Directors and the Second Extraordinary Shareholders General Meeting 2012 on May 15, 2012, the Company approved the change of the use of the raised funds, 60,000.6 k Yuan raised funds from the 2011 private placement was injected in the construction of Yangxin aggregate phase II projects. As at

4 September 30, 2013, the aforesaid raised funds have been used up according to the planned investment. On this basis, the Company intends to continuously inject the unused 60,667, Yuan raised funds from the 2011 private placement for the construction of Yangxin aggregates phase II project. (5) feasibility The implementation of the project shall be in line with the general trend of national economic strategy for sustainable development and China's industry transformation and upgrading initiatives defined in the "12 th Five-year Plan", it can introduce advanced technology to produce quality sand and gravel aggregates which cannot be supplied by small private companies. When the project completes, the production mix of sand and ravel aggregate shall be improved in the whole region. From resource perspective, raw materials, transportation, water and power supply shall be available to meet the needs of building the project. The project will employ reliable, advanced, economic and proper technical solutions which could not only ensure efficient production after being put into operation and achieve the desired energy-saving and environmental-protection effects, but also obtain better economic and environmental benefits. The Company has sufficient experience in production management and technical upgrading. It has a team who are good at production technology and business management. They can make this project be completed within a short period of time and faster achieve the standards of production. Thereby the Company can obtain better economic returns. This project is the third gravel aggregate production line in the aggregates company's development plan. After completion of this production line, it will combine with Yangxin aggregate phase I production line and become a production line with 7.8 million ton/year aggregate production line which will improve the overall economic efficiency of Yangxin Aggregate. After this production line s operation, Huaxin Aggregate (Yangxin) Limited will have the largest gravel aggregate production line in China for the moment. (6) Financial evaluation of the project First complete accounting year after the operation Sales revenue Total profit Annual average of the production period Sales revenue Total profit Internal rate of return (after tax) (%) Payback period for the investment (year, after tax, including construction period) Xiangxin Aggregate II project 8,809 1,158 11, , % 6.5 IV. Opinions of the Independent Directors Independent directors reviewed and verified the matters relating to the change of the use of the raised funds for some projects of the private placement. They believed that: "The change of the use of the raised funds is reasonable and in line with relevant rules on management of raised

5 funds issued by the securities regulatory authorities. It is helpful to enhance the continued profitability of the Company and it is in line with the interests of the Company and all shareholders." V. Opinions of the Board of Supervisors After careful reviewing, the Board of Supervisors believed that the change of the use of the raised funds for some projects of the private placement was in line with the strategic development direction of the Company. It is helpful to continuously expand the main businesses and enhance the core competitiveness of the Company. It is in line with the interests of all shareholders. Procedures of the change are in compliance with the provisions of relevant laws and regulations. There is no damage to the interests of shareholders of the Company, especially the interests of minority shareholders. VI. Opinions of the Sponsor Sponsor of the Company CITIC Securities Co., Ltd. issued Sponsor s Opinions on the Change of the Use of the Raised Funds for Some s of the Private Placement of Huaxin Cement Co., Ltd., it believed that: The change of the Use of the Raised Funds for Some s of the Private Placement has been reviewed and adopted by the Board of Directors and Board of Supervisors. The Independent Directors issued affirmative opinions. Thus the matter fulfilled the necessary decision-making process. It is in line with the provisions contained in the Administrative Rules on Sponsoring business for Issuance of Securities, "Stock Listing Rules of Shanghai Stock Exchange, Administrative Rules on Raised Funds of Listed Companies Issued by Shanghai Stock Exchange and other relevant laws and regulations. Regarding the change of use of the raised funds, the Company fully considered the feasibility of the implementation of the fundraising investment projects and its future long-term development needs. It is in line with the principle of prudent use of funds raised. The investment direction was in line with the Company's main business and its long-term development needs. It is not only helpful to make full use of the resources, but also helpful to improve the efficient use of the raised funds. It is in line with the interests of the Company and its shareholders. There is no case of illegal use of raised funds. There is neither disguised change of raised funds injection nor damage to the interests of shareholders. Before the Company decided the change of the fundraising projects, it communicated with the sponsor, and fulfilled the necessary statutory procedures in accordance with the requirements of the relevant provisions of the Stock Listing Rules of Shanghai Stock Exchange" and "Administrative Rules on Raise Funds of Listed Companies of Shanghai Stock Exchange". The sponsor has no objection to this change of the use of the raised funds for some projects of the Private Placement. VII. Change of the fundraising projects still needs the approval of the Shareholders' General Meeting The change of the raised funds has been reviewed and adopted by the Twenty First Meeting of the Seventh Board of Directors of the Company. It needs to be submitted to the Second Extraordinary Shareholders General Meeting 2013 for approval before implementation. VIII. Documents for future reference

6 1. Resolutions of the Twenty First Meeting of the Seventh Board of Directors 2. Resolutions of the Thirteenth Meeting of the Seventh Board of Supervisors 3. Opinions of the Independent Directors 4. Sponsor s Opinions on Changing the Use of the Raised Funds for Some s of the Private Placement of Huaxin Cement Co., Ltd. issued by CITIC Securities Co., Ltd. It is herewith announced. Huaxin Cement Co., Ltd. Board of Directors November 12, 2013