Announcement on the Related Transaction of Shanghai Worldbest Co.,Ltd.
Stock Code : 600094 900940 Stock Abbreviation: Worldbest A Share Worldbest B Share No: Lin 2004-012
Announcement on the Related Transaction of Shanghai Worldbest Co.,Ltd.
The Company and the all the members of Board of Directors guarantee the authenticity, precision and the integrity of the announcement and will be liable for any false recording, misleading statement or serious omission in the announcement.
Important Notice:
·Content of the transaction: The Company will exchange 13.08% of the equity of China Worldbest Life Industry Co.,Ltd. (Briefed as “Worldbest Life”) and 42% of the equity of China Worldbest (Mexico) Textile Industrial Co.,Ltd. (originally China Worldbest North American Mexico Co.,Ltd., herein after briefed as “Worldbest North American”) with 100% equity of China Worldbest (Thailand)Industrial Co.,Ltd.(briefed as “Thailand Industrial”) and 100% equity of Worldbest International Enterprise (Thailand) Co.,Ltd. (briefed as “Thailand International”) and 44% of the equity of Anhui Huawan Carbon Fiber Co.,Ltd. (briefed as “An Hui Hua Wan ”) held by Shanghai Worldbest Investment and Development (Group) Co.,Ltd. (briefed as “Worldbest Investment and Development”).
·Target of Transaction: 13.08% of the equity of “Worldbest Life”,42% of the equity of “Worldbest North American”,100% equity of “Thailand Industrial”,100% equity of “Thailand International” and 44% of the equity of “An Hui Hua Wan ”.
·Amount of Transaction: RMB 515.07 million
·Withdraw of related directors: Related-party directors Ji Qunli, Wang Caifu, Fu Weimin whose interests are related with this transaction abstained from voting in the spirit of being responsible for all shareholders.
·Influence of transaction upon the Company’s sustainable operating ability, gain and loss, and status of assets:
The amount of the related party transaction accounting for 32.89 % of the net assets of the Company, and the transaction made no important influence on the loss and gain of the current period as well as the asset status. After the assets exchange, the overseas cotton project of the Company will be centralized to Thailand which will be beneficial for the adjustment of the product structure of the cotton project., the improvement of the market competitiveness of the products ,as well as strengthening the centralized management of overseas project ,decreasing the management cost effectively and increasing the profits.
·Other issues to be noticed by investors: After the transaction, the Company will no longer hold any share equity of “Worldbest North American” and “Worldbest Life ”;and the Company will hold 100% equity of “Thailand Industrial” ,100% of equity of “Thailand International” and 44% of the equity of “An Hui Hua Wan ”. The aforesaid transaction has no additional conditions.
The assets exchange shall be submitted to 2004 1st Extraordinary Shareholders Meeting of the Company for review.
1. Brief Introduction of the related transaction:
On Nov 9th 2004., the Company and “Worldbest Investment and Development” signed the “Agreement on the Assets Exchange between Shanghai Worldbest Co.,Ltd. and Shanghai Worldbest Investment and Development(Group)Co.,Ltd. “(briefed as “Agreement”).In accordance with the “Agreement”, the Company exchanged 13.08% of the equity of “Worldbest Life” and 42% of the equity of “Worldbest North American” with 100% equity of “Thailand Industrial ”,100% equity of “Thailand International” and 44%of the equity of “An Hui Hua Wan” held by “Worldbest Investment and Development”.
“Worldbest Group” is the biggest shareholder of “Worldbest Investment and Development” and the Company, in accordance with the relative stipulations, the transaction belongs to related transaction.
The 2004 1st Extraordinary Board of Directors Meeting of the Company was held on Nov 9th,2004, the Meeting carefully reviewed the related transaction ,the related-party directors all abstained from the voting and the non-related directors approved the proposal unanimously.
2. Introduction of the related party.
Shanghai Worldbest Investment and Development (Group) Co.,Ltd.
1). Name of the Enterprise: Shanghai Worldbest Investment and Development (Group) Co..Ltd.
2). Registered Address: Room 3108---3120, No.161 Lu Jia Zui Road (E), Shanghai
3). Legal Representative: Fu Weimin
4). Category of Enterprise: Limited Liability Company(Domestic Joint Venture)
5). Registered Capital :RMB 750 million
6).Business Scope: The development and operation of real estate, the investment and development of the projects related to real estate, mental material and products, electric machinery, hardware and electric appliances, construction material, decoration material, house equipments, real estate consultation, automobile spare parts, knitting and weaving products, dyeing products, communication equipments and the related products, computer and the spare parts, high molecular medical splint, self operation and agency of the import and export of various commodities and technologies, except those commodities or technologies limited or prohibited by the State (operates with license for operation as required.)
7). Major financial status: In 2003 the total profits of “Worldbest Investment and Development” was RMB 32.28 million, on Dec 31st ,2003 the net assets was RMB 1058.17million
8).The related relationship: ”Worldbest Group” is the biggest shareholder of “Worldbest Investment and Development” and the Company.
3. The brief introduction of the target of the related transaction
1. China Worldbest Life Industry Co.,Ltd.
1) Name of the Enterprise: China Worldbest Life Industry Co.,Ltd.
2) Registered Address: No.44, Hong Lian Nan Village, Hai Dian District, Beijing
3) Legal Representative: Zhou Yucheng
4) Category of Enterprise: Limited Liability Company (invested by foreign enterprise)
5) Registered Capital: RMB1.3 billion.
6) Business Scope: The investment, operation and management of pharmaceutical, life science, and biotechnology industry ,the R& D, promotion, application, consultation, information service and production of the related technology and products; the research ,development and production of pharmaceutical machinery, medical equipments, chemical raw material for pharmaceutical , intermediate, raw material, hygiene products, health care products, petrol chemical products, light industry products, instrument and appearance ,electric devices, electric equipments, construction material (except those limited by the special stipulations by the national government. )
7) Major financial status: Evaluated by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, upon August 31st ,2004, the total assets of “Worldbest Life” was RMB 1665.6925 million, the total liabilities was RMB 263.3042 million, the net assets was RMB 1402.3883 million. From January to August, “Worldbest Life” achieved the net profits about RMB 31.80 million.
2. China Worldbest (Mexico) Textile Industrial Co.,Ltd.
1) Name of the Enterprise: China Worldbest (Mexico) Textile Industrial Co., Ltd.
2) Registered Address: Obregon, Sonora, Mexico
3) Legal representative: Li Jianhua
4) Category of Enterprise: Limited Liability Company
5) Registered Capital: USD 20 million
6) Business Scope: the research, production and sales of spinning, weaving, dyeing, garment and textile machinery.
7) Major financial status: Evaluated by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, upon August 31st ,2004, the total assets of “Worldbest North American” was 959.1220 million peso, the total liabilities was 28.5123 million peso, the net assets was 930.6097 million peso. From January to August, “Worldbest North American” achieved the net profits about RMB 31 million.
3. China Worldbest (Thailand )Industrial Co.,Ltd.
1) Name of Enterprise: China Worldbest(Thailand )Industrial Co.,Ltd.
2) Registered Address: Sathorn Thani Tower, Bangkok, Thailand
3) Legal Representative: Xue Jinkui
4) Category of Enterprise: Limited Liability Company
5) Registered Capital: USD 15 million
6) Business Scope: The production and sales of high-grade cotton yarn.
7) Major financial status: Evaluated by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, upon August 31st, 2004, the total assets of “Thailand Industrial “ was 1.393 billion baht , the total liabilities was 418 million baht, the net assets was 976 million baht .
The project is a 30 thousand –spindle cotton spinning enterprise, at present it is in the trial production period. .
4. Worldbest International Enterprise (Thailand) Co.,Ltd.
1) Name of Enterprise: Worldbest International Enterprise (Thailand) Co.,Ltd.
2) Registered Address: Sathorn Thani Tower, Bangkok,Thailand
3) Legal Representative: Xue Jinkui
4) Category of Enterprise: Limited Liability Company
5) Registered Capital: USD 15 million
6) Business Scope: The production and sale of pure cotton combing high count yarn, spandex core-spun yarn, etc.
7) Major financial status: Evaluated by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, upon August 31st,2004, the total assets of “Thailand International” was 1.176 billion baht, the total liabilities was 84 million baht, the net assets was 1.092 billion baht.
The project is a 30 thousand -spindle cotton spinning enterprise; at present it is in the equipment installation period.
5. An Hui Hua Wan Carbon Fiber Co.,Ltd.
1) Name of the Enterprise: An Hui Hua Wan Carbon Fiber Co.,Ltd.
2) Registered Address: Changhua Road (Mid), High Tech Zone, Bang Bu
3) Legal Representative: Qian Chunyu
4) Category of Enterprise: Limited Liability Company (not state owned solely invested)
5) Registered Capital: RMB 165 million
6) Business Scope: The production and sale of carbon fiber, gray silk and compound products with gray silk and carbon fiber, corduroy and various kinds of cotton and chemical fiber dyeing fabric, sales of the raw material of textile and spinning and weaving equipments and spare parts, the export of the products made by the company and the import of the machinery, spare parts,, raw materials for the production of the company (except those commodities and technologies limited or prohibited by the state.)
7) Major financial status: Evaluated by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, upon August 31st,2004, the total assets of “An Hui Hua Wan” was RMB 592.3 million, the total liabilities was RMB 385.27million, the net assets was RMB 207.02 million.
The carbon fiber project is in the construction period.
4. The major content and the pricing principles of the transaction
1) The parties of the agreement: Shanghai Worldbest Investment and Development (Group) Co.,Ltd.and Shanghai Worldbest Co.,Ltd.
2) The signature date of the agreement: Nov 9th, 2004
3) The target of the transaction: 13.08% of the equity of “Worldbest Life”, 42% of the equity of “Worldbest North American” 100% equity of “Thailand Industrial” ,100% equity of “Thailand International” and 44% of the equity of “An Hui Hua Wan”.
4)The pricing principle of the transaction: In accordance with the evaluation report provided by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, upon August 31st,2004, (the details see the website of Shanghai Stock Exchange): Upon August 31st,2004, the evaluated value of the net assets corresponding to 13.08% of the equity of “Worldbest Life” was RMB 184.88 million, and after the two parties negotiation ,confirmed the evaluated value of net assets as the price of transaction; the evaluated value of the net assets corresponding to 42% of the equity of “Worldbest North American” was RMB 300.17 million, and after the two parties negotiation, based on the evaluated value of the net assets plus10% appreciation totally RMB 330.19 million as the price of transaction; after the two parties negotiation , the share equity transfer price of the aforesaid two assets put out was RMB 515.07 million.
In accordance with the evaluation report provided by Shanghai Orient Certified Appraisal Co., Ltd., an evaluation organization qualified for securities business, (the details see the website of Shanghai Stock Exchange):Upon August 31st,2004, the evaluated value of the net assets corresponding to the 100% equity of “Thailand Industrial” was RMB 194.36 million, the evaluated value of the net assets corresponding to the 100% equity of “Thailand International” was RMB 217.55 million, the total of the two was RMB 411.91 million, after the two party’s negotiation, based on the evaluated value of the net assets (RMB 411.91 million) plus 2.9% appreciation totally RMB 423.85 million as the price of the transaction ;upon August 31st,2004, the evaluated value of the net assets corresponding to the 44% of the equity of “An Hui Hua Wan” was RMB 91.22 million, after the two parties negotiation, confirmed the evaluated value of the net assets as the price of the transaction .With the two parties negotiation and confirmation, the price of the aforesaid three equity transfer of the input assets input was RMB 515.07 million.
5). The settlement of the transaction: The Company shall pay totally RMB 515.07 million to “Worldbest Investment and Development ” for the input assets, “Worldbest Investment and Development ”shall pay the Company totally RMB 515.07 million for the input assets .The two parties agreed to defray the two payments.
6) The effectiveness of the agreement: The agreement shall be signed and sealed by the legal representative or the authorized representative of the parties and it will be effective on the date when it is reviewed and approved by the board of directors, shareholders meetings of the parties or by the management authorities. The agreement will be effective after it is reviewed and approved by the shareholders meeting of the Company.
5.The opinions made by the board of directors of the Company on the related transaction:
1)The purpose of the transaction:
To strengthen the centralized management of the overseas enterprises of the Company, and to reduce the management cost effectively. By transferring the equity of Worldbest Life, the Company can avoid the horizontal competition with the Worldbest Group in the Life Science Industry.
2) The influence of the transaction to the Company:
After the merge of the Thailand cotton spinning projects, the overseas cotton spinning projects will be moved together to Thailand. and the current situation that overseas projects were scattered can be changed and the big scale advantage can be realized, and it will be beneficial for the enterprise to adjust the product varieties reasonably according to the market demand and to improve the competitiveness of the products, and to avoid the disorder competition of the cotton spinning projects in Thailand , reduce the management cost effectively and to achieve the best profits. Meanwhile, after the merge of the Thailand cotton spinning projects, it will also be beneficial for the Company to establish the dynamic production chains between the domestic and overseas textile and chemical fiber enterprises in order to reduce the market risk. After the input of the equity of An Hui Hua Wan ,. the unique advantage and prospect of carbon fiber will enhance the high and new technology resources of Shanghai Worldbest Co.,Ltd. After the transfer of the equity of Worldbest Life, the Company can avoid the horizontal competition with Worldbest Group in the life industry effectively.
6.The opinions made by the independent directors
The independent directors of the Company Zhang Wenxian, Chen Yanmo and Yang Guisheng believed that vote of this related party transaction was standard and the operation was in conformity with the relative laws and regulations of “Company Law” and the stipulations of the “Articles of Association”. The price of the transaction is fair, the transaction is equitable and reasonable and does not jeopardize the rights of non-related shareholders, which is in conformity with the interests of the Company and all the shareholders. .
7.The opinions made by the independent financial consultant
The Company engaged Zhong Lei Certified Public Accountants Co., Ltd. which is qualified for securities business to provide the independent consulting report for the related transaction.(the details see the website of Shanghai Stock Exchange.) The independent financial consulting report believed that the related transaction was in conformity with the relative stipulations of the laws and regulations of “Company Law “ and “Security Law”, and it followed the principle of open, equity and justice, which is in conformity with the interests of the listed company as well as all the shareholders.
8 Documents for reference
1. The Resolutions of 2004 1st Extraordinary Board of Directors Meeting of the Company
2. The Opinion made by the Independent Directors
3. The Agreement on the assets exchange between Shanghai Wordlbest Co.,Ltd; and Shanghai Worldbest Investment and Development (Group)Co.,Ltd.
4. The Evaluation Report made by Shanghai Orient Certified Appraisal Co., Ltd.
5. The Independent Financial Consulting Report made by Zhong Lei Certified Public Accountants Co.,Ltd..
Hereby Announced
Shanghai Worldbest Co.,Ltd.
Nov 10th ,2004
04/02/2005
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