Western Resources plans to sell 80% stake in Yinmao Mining

Western Resources announced a major asset sales plan on the evening of July 26th. It intends to sell 80% of the equity held by Yinmao Mining through a public listing on the property rights exchange and purchase it from the counterparty in cash. Estimated value of the underlying assets About 720 million yuan.

In addition, the Western Resources Controlling Shareholder Sichuan Hengkang transferred 33.2 million shares of the company's shares in circulation to Zhu Xiao, a natural person. The company's shares continued to be suspended.

According to the statistics, Yinmao Mining is mainly engaged in the mining of non-ferrous metals. In 2010, it acquired the mining rights of the Qixiashan lead-zinc mine. The main products include lead concentrates, zinc concentrates,*concentrates and manganese concentrates. Before the transaction, the main business of Western Resources included mineral resources business, automobile business, battery business and ** leasing business.

In recent years, China’s macroeconomic development has entered a new normal state of adjusting the structure of economic operations and promoting the transformation and upgrading of various industries. Traditional industries have generally experienced excess production capacity. The non-ferrous metals mining industry in which the company's operations are located is one of the basic industries in China, and it belongs to the traditional industry with strong cyclical nature. Macroeconomic changes will have a direct impact on the company's business development. Affected by the slow recovery of the world economy, the non-ferrous metal market is in short supply, and the production capacity is seriously over-supply, gradually reaching the saturation level of the industry, which makes the non-ferrous metals industry still face the unfavorable situation of slump. In this context, companies in the non-ferrous metals industry face the pressure of overall transformation and upgrading.

From 2013 to 2015, Western China’s revenue from resource operations was 423 million yuan, 462 million yuan, and 1.468 billion yuan, respectively. The net profits attributable to owners of parent companies were -56.36 million yuan, 16.02 million yuan, and -269 million yuan respectively. Therefore, the company urgently needs to withdraw some of its cash in order to reduce its operational risk and improve its sustainable profitability.

Western Resources indicated that after the completion of the transaction, the company will withdraw a larger amount of cash, which is conducive to improving the liquidity and debt repayment ability of the listed company; thereby reducing the company's operating risk and enhancing the ability of continuing operations.

In addition, Western Resources also disclosed the progress of equity transfer of controlling shareholders. Previously, Western Resources' stocks were suspended on April 11, 2016 as controlling shareholder Sichuan Hengkang was planning some equity transfer issues related to the company.

During the suspension period, Sichuan Hengkang successively received the intention of other third parties intending to transfer part of the shares of the company. Among them, it intends to propose to the transferee the reorganization planning of the company's asset structure and plans to put the high-quality assets it holds into the western resources. The company conducted preliminary demonstration and negotiation on the above proposal and believed that it will constitute a major asset reorganization and entered the major asset reorganization suspension procedure on April 25, 2016.

However, Sichuan Hengkang and the transferee conducted many negotiations on the transaction, and ultimately failed to reach an agreement on the specific terms of the transaction and could not form a trading plan that meets the regulatory policy requirements. After careful consideration by Sichuan Hengkang and communication with the intermediary agency, Decided to terminate the above-mentioned issues related to the transfer of controlling shares.

Although the issue of transfer of controlling interests eventually ran aground, Sichuan Hengkang had transferred some of its shares. On July 25, 2016, Sichuan Hengkang and Zhu Xiao signed the "Equity Shares Transfer Agreement." It was agreed that the 33.2 million shares of western stocks held by it will be transferred to Zhu Xiao through a contractual transfer method. The transfer price is 12.35 yuan per share. The total transfer price is 410 million yuan. After this change in equity, Sichuan Hengkang holds 35.45% of the company's total share capital.

Western Resources announced at the same time, will terminate the 2015 non-public offering of stock options. On October 16, 2015, the board of directors of the company reviewed and approved the Proposal on Non-Public Issuance of Shares Proposals of the Company and other proposals related to non-public issuance, and proposed that the total amount of funds raised from non-public issuance of shares not exceeding 10 specific investors shall not exceed 1.87 billion yuan.

Western Resources indicated that since the company disclosed its 2015 non-public offering of stock plans, many changes have taken place in the domestic capital market environment and regulatory policies and regulations. After many discussions and communication with various parties, the company has carefully studied the current situation and actual conditions. Decided to terminate the non-public offering of shares related issues.