Mon 09/07/2020 18:28 PM
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SanXing Trade Co. Ltd., a wholly-owned subsidiary of Zouping Sanxing Grease Industry Company Limited(鄒平三星油脂工業有限公司), which is in turn 54.6% owned by Shandong Sanxing and 45.4% owned by Cinda Fund, has proposed to privatize Hong Kong-listed Changshouhua Food Company, confirming a report on Friday by Reorg before the company announcement Monday, Sept. 7, to the Hong Kong stock exchange.

SanXing Trade proposed to purchase 274.5 million shares, or 47.9% of Changshouhua’s total issued shares from shareholders for HK$4.19 per share in cash, representing a 16.4% premium to the closing price of HK$3.6 per share on Sept. 2, the last trading day before Changshouhua’s shares were suspended from trading.

Upon completion of the transaction, SanXing Trade would hold 573.6 million shares in Changshouhua, which accounted for the company’s total issued shares.

CICC serves as financial advisor to Shandong Sanxing, the statement shows.

To help Shandong Sanxing restructure its debt, China Cinda has acquired certain intra-group debt owed by Shandong Sanxing to Sanxing Grease in the aggregate amount of RMB 1.31 billion, with the proceeds received by Sanxing Grease being used to repay existing indebtedness of Sanxing Group. To secure repayment of the debt, Shandong Sanxing has pledged all its shares in Sanxing Grease with China Cinda.

To fund the privatisation of Changshouhua, Cinda Fund was set up as the general partner, China Cinda as the preferential limited partner and Shandong Zhichuang Enterprise Management Company (山東智創企業管理諮詢有限公司), a wholly-owned subsidiary of Shandong Sanxing, as the deferred limited partner.

Cinda Fund then provided equity contribution of about RMB 605 million for 45.4% of Sanxing Grease, as well as providing a shareholder loan of roughly RMB 568 million to Shanxing Grease. The maximum cash consideration payable for the transaction is roughly HK$1.2 million, according to the statement. Shandong Sanxing owns the remainder 54.6% of Sanxing Grease upon completion.

Upon close, all the shares held by Shandong Sanxing in Sanxing Grease will be transferred to Sanxing LP, a limited partnership set up by Shandong Nuoda Enterprise Management Consultation Company Limited (山東諾達企業管理諮詢有限公司), a wholly-owned subsidiary of Shandong Sanxing, as its general partner, and Shandong Sanxing and China Cinda as its deferred limited partner and preferential limited partner, as Shandong Sanxing’s capital contribution to Sanxing LP. The RMB 1.31 billion outstanding debt owed by Shandong Sanxing and acquired by China Cinda will also be transferred to Sanxing LP as China Cinda’s capital contribution.

Once the proposal becomes effective, the RMB 1.31 billion debt will be repaid by internal funds of Sanxing Group and other funding sources. Shandong Sanxing will re-acquire all the equity interests held by each of Sanxing LP and Cinda Fund in Sanxing Grease.

Capital Structure of Shandong Sanxing is listed below:
(Click HERE to enlarge)
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