GCL-Poly Energy Holdings Limited is pleased to announce that on 29 November 2014, GCL-Poly entered into sale and purchase agreements under which it has conditionally agreed to sell its wafer production business in two tranches, for a total consideration of RMB8 billion in cash (equivalent to approximately HK$10.1 billion). (collectively referred to as the "Proposed Transactions").
The first tranche of target companies will be sold to Jiangsu Golden Concord Energy Co., Ltd. (as the "First Tranche Purchaser") for a total consideration of RMB2.1 billion in cash (equivalent to approximately HK$2.6 billion). The second tranche of target companies will be sold to Shanghai Miaochang Investment Management Center (Limited Partnership) (as the "Second Tranche Purchaser") and Shanghai Zhongmin Yinfu Investment Management Co., Ltd. (as general partner of the Second Tranche Purchaser) for a total consideration of RMB5.9 billion in cash (equivalent to approximately HK$7.4 billion).
Within three business days of the signing of the sale and purchase agreements on 29 November 2014, the First Tranche Purchaser and the Second Tranche Purchaser will pay two separate deposits in the amount of RMB100 million (equivalent to approximately HK$126.2 million) and RMB300 million (equivalent to approximately HK$378.6 million), respectively, totaling RMB400 million (equivalent to approximately HK$504.8 million).
The consideration for the two tranches of the Proposed Transactions are based on arm's length negotiations and on the valuation of GCL-Poly's equity interests in the target companies as appraised by American Appraisal, an independent third party valuer.
The net cash proceeds (net of estimated taxes and transaction costs) from the Proposed Transactions is expected to be approximately RMB7,816 million (equivalent to approximately HK$9,863 million), which GCL-Poly intends to use for: repaying of certain indebtedness; future capital expenditures; potential strategic investments; andgeneral corporate purposes.
GCL-Poly estimates that the net debt to equity ratio will decrease from 146.5% on 30 June 2014 to a pro forma net debt to equity ratio of 38.8% after the completion of the Proposed Transactions.
Furthermore, GCL-Poly will continue to benefit from the demand for polysilicon from the wafer production business as a result of a supply framework agreement entered into with a first tranche target company for the supply of polysilicon and silicon ingots from 1 January 2015 to 31 December 2016. It is also intended that the second tranche target companies will continue to acquire polysilicon from GCL-Poly following the completion of the Proposed Transactions.
GCL-Poly will also be solidifying cost leadership and strengthen its competitiveness through continuous technology improvements through investments in the fluidized bed reactor (FBR)polysilicon production method. By the end of 2015, an increase of 25,000 tonnes of production capacity is expected for the fluidised bed reactor (FBR) polysilicon production.