Shandong huayang's reorganization with mining company encounters resistance


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Shandong Huayang's reorganization with mining company encounters resistance.

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Shandong huayang's reorganization with mining company encounters resistance

  1. 1. Shandong Huayangs Reorganization with Mining Company Encounters ResistanceJune 14, 2011, CCM - After about three months stock trading suspension for the discussion ofreorganization, Shandong Huayang Technology Co., Ltd. (Shandong Huayang), a large pesticidecompany in Shandong Province, resumed its stock trading on 29 April 2011. With ShandongHuayang changing into mining company, its stock records seven surging limits after theresumption.At the same time, Shandong Huayang reveals the plan of its reorganization with Zibo HongdaMining Co., Ltd. (Zibo Hongda), a big mining company and the biggest share holder-to-be ofShandong Huayang. Shandong Huayang plans to set out all of its assets and liabilities aiming toissue 254 million shares to Zibo Hongda and other investors. The price of each share is set to beUSD1.46.Once the plan is successfully carried out, the total assets and liabilities of Zibo Hongda and someequities of other investors will be injected into Shandong Huayang. All the related assets are ironore assets, worth USD414.11 million.However, although the reorganization plan has been released, there is still some problems lyingahead making the reorganization of Shandong Huayang unstable.Firstly, after analyzing the asset conditions of Zibo Hongda, a big problem comes out and it maybe the main obstacle to the reorganization. According to Zibo Hongda, most of the assets in itssubsidiaries, such as the exploitation right, etc., are pledged for loans from bank and the pledgeperiod lasts for several years. If the pledge condition of these assets can not be removed in thenear future, the reorganization plan may be not that easy to carry out.Secondly, mining companies who intend to launch backdoor listing may be not that easy in Chinadue to the special nature of mining industry with limited resource and the much complicatedprocedure to get the exploitation right. In 2010, no mining companies has been approved byChina Securities Regulatory Commission (CSRC) to conduct backdoor listing.Thirdly, on 26 Aug. 2010, Shandong Huayang was investigated by CSRC for being suspected ofviolating securities laws and regulations. Although the investigation is finished, the result has notbeen released by now and the reorganization will somehow be influenced.we now cant be too early to give a prediction about the result of the reorganization of ShandongHuayang due to unstable conditions in the progress, even though both Shandong Huayang andZibo Hongda show their confidence toward the reorganization plan. But we can sure thatShandong Huayang needs the reorganization.Global economic recession, overcapacity, chaotic pesticide industry and other factors in Chinahave caused the downturn of pesticide industry in recent years. Huayang Technology as one ofthe famous listed pesticide enterprises in China has posted depressed performance in the lastthree years. On 29 April 2011, Shandong Huayang released its Financial Report of 2010 showingits great deficit in 2010. Its revenue and net profit in 2010 reached USD77.70 million and USD-9.24 million, up 25.30% and down 1480.09% respectively over last year. Then in the next day, it
  2. 2. disclosed that the Q1 Financial Report of 2011 also showed deficit with Q1 net profit in 2011reaching USD-1.46 million.Source: Crop Protection China News 1109Content of Crop Protection China News 1109:Shandong Huayang’s reorganization runs agroundNutrichem to develop pesticide technology for Huapont PharmLianyungang Jindun to launch carbendazim production lineFujian Sannong: pesticide production suspendedZibo Wanchang to launch IPOImported pesticides supported more by goverment?ChemChinas acquisition of MAI totally approved by ChinaAn explosion happens in Guangxi JinsuiHunan releases Twelfth Five-year Plan for Pesticide Industry (Hunan)Crop Protection China News, a semimonthly publication issued by CCM International on 15thand 30th(31th) of every month, aims to gain a deep insight into Chinese market, supply the latestmarket data and strategy support, analyze the newest legislation and policy and grasp the futuremarket trend.Please visit for more information or contact us atecontact@cnchemicals.comCCM International Ltd.Guangzhou CCM Information Science & Technology Co., Ltd.17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou510070, China