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China Tungsten Hi-Tech Plans to Acquire 84.97% Equity of Southern Hard Company to Eliminate Horizontal Competition and Improve Core Competitiveness

Release time：

2021-09-15

On the evening of August 23, China Tungsten High-tech (000657.SZ) announced that in order to further integrate the superior cemented carbide business, implement the strategic layout of the company's high-end cemented carbide industry, and fulfill the commitment of the actual controller to eliminate actual control. The company intends to acquire Nanchang Cemented Carbide Co., Ltd. (hereinafter referred to as Minmetals Tungsten) held by its actual controller subsidiary Minmetals Tungsten Group Co., Ltd. (hereinafter referred to as Minmetals Tungsten) through non-public agreement transfer Southern Hard Company) 84.97% stake.
China Industrial Economic Information Network has learned that the counterparty to the above transaction, Minmetals Tungsten, was established in September 2018. Minmetals Nonferrous Metals Holdings Co., Ltd. holds 100% of the shares of Minmetals and Tungsten, and the actual controller of Minmetals Tungsten is China Five Mining Group Co., Ltd. (hereinafter referred to as China Minmetals), and the actual controller of China Tungsten High-tech is also China Minmetals.
According to the relevant provisions of the Shenzhen Stock Exchange Listing Rules, Minmetals Tungsten is a related party of China Tungsten High-tech, and the above transaction constitutes a related transaction. According to the "Measures for the Supervision and Administration of Transactions of State-owned Assets of Enterprises" (Order No. 32 of the State-owned Assets Supervision and Administration Commission of the State Council and the Ministry of Finance), with the approval of China Minmetals, the above-mentioned transactions were carried out by means of non-public agreement transfer. On August 21, 2020, China Tungsten High-tech held the 19th meeting of the 9th Board of Directors, and reviewed and approved the "Proposal on the Acquisition of Equity Interests in Nanchang Cemented Carbide Co., Ltd. and Related Transactions". Related directors Li Zhongze, Deng Chuping, Du Weiwu Abstaining from voting, the independent directors issued prior approval opinions and agreed independent opinions.
Minmetals Tungsten is a shareholding platform for China Minmetals' unlisted tungsten assets. In order to further integrate internal tungsten-related assets, straighten out the equity relationship of tungsten assets, and promote the rapid development of the tungsten production chain, China Minmetals established Minmetals Tungsten Industry through its subsidiary holding subsidiary and regarded it as the unlisted tungsten asset of China Minmetals. holding platform. In addition to the above-mentioned transactions, from the beginning of 2020 to the date of the announcement, the accumulated daily connected transactions between China Tungsten High-tech and Minmetals Tungsten totaled 176 million yuan. Among them, the purchase of goods and acceptance of labor services is 174 million yuan, the leased assets are 119,900 yuan, and the other 2,358,500 yuan.
It is reported that the target company of this transaction, Nanjiu Company, was restructured and established by Nanchang Cemented Carbide Factory. The predecessor of Nanchang Cemented Carbide Plant was the 603 Plant and Ferroalloy Plant built by the Ministry of Metallurgy in the northern suburbs of Nanchang City in 1959. After several reorganizations and capital increases, in February 2020, the registered capital of Nanchang Cemented Carbide Company was 335 million yuan. Minmetals Tungsten Industry, Tungaloy Co., Ltd., and Nanchang Yongsheng Assets Management Co., Ltd. hold 84.97%, 11.19%, and 3.84% of the equity of Southern Hard Company respectively.
Southern hard company is mainly engaged in the sales of cemented carbide and tungsten products. It is an asset-intensive enterprise. It has many fixed assets per capita and a high proportion of physical and chemical labor in product costs. According to the appraisal report issued by the appraisal agency with securities and futures-related business qualifications hired by China Tungsten High-tech, after the asset-based approach, the market value of all the shareholders’ equity of Southern Hard Company on the appraisal base date was 336 million yuan, which is more than The value-added value of the owner's (shareholder) equity assessment in the audited accounting statement was 127 million yuan, with an appreciation rate of 60.95%, of which the value-added value of land assessment was close to 81 million yuan, and the value-added value of fixed assets was also more than 37 million yuan. Based on the aforementioned assessment conclusion and after negotiation by both parties, the above transaction price is set at 285 million yuan. For the above transaction, Tungalow Co., Ltd. and Nanchang Yongsheng Assets Management Co., Ltd. have given up their right of preemption.
China Industrial Economic Information Network has noted that on May 11, 2017, in order to avoid horizontal competition with China Tungsten High-tech, China Minmetals committed to the parent company's net profit after deducting non-recurring gains and losses for two consecutive years. If the listing conditions are met, the company will be given priority to inject into China Tungsten High-tech under the same conditions, and the injection procedure will be started within one year from the date of meeting the above conditions. In 2018 and 2019, the Southern hard company has been profitable for two consecutive years, and has been entrusted to China Tungsten High-tech. China Tungsten High-tech's acquisition of its equity will help eliminate business competition with the actual controller.
After the above transaction is completed, Southern Hard Company will be included in the consolidated statements of China Tungsten High-tech. Although the operating results in 2020 have not been significantly affected, China Tungsten High-tech can further strengthen its business layout and improve product delivery capabilities through effective resource integration and business coordination in the future, which will help improve the company's overall profitability and enhance its business development. Core competitiveness in high-end cemented carbide business.
At present, China Tungsten Hi-Tech's acquisition of Nanhard is still subject to the approval of the shareholders' meeting of China Tungsten Hi-Tech. China Industrial Economic Information Network will continue to pay attention to this.