China Zhongwang Announces Proposed Spin-off of Industrial Aluminium Extrusion Business to Unlock Corporate Value

HONG KONG, March 23, 2016 /PRNewswire/ -- China Zhongwang Holdings Limited ("China Zhongwang" or the "Company", together with its subsidiaries, the "Group", HKSE stock code: 01333), the world's leading processed aluminium product developer and manufacturer, announced details of the proposed spin-off of the Group's industrial aluminium extrusion business. The Group, through an indirectly wholly-owned subsidiary, entered into an asset purchase agreement with CRED Holding Co. Limited ("CRED Holding", SSE stock code: 600890), a Shanghai A-share listed company, for the purchase of the entire equity interests in Liaoning Zhongwang Group Co., Ltd. ("Liaoning Zhongwang") which focuses on the industrial aluminium extrusion business. The consideration will be settled in the form of share issue by CRED Holding to China Zhongwang, and through injecting its extrusion business into CRED Holding, China Zhongwang will achieve a spin-off listing on the A-share market.  

The initial valuation of Liaoning Zhongwang amounted to RMB41.7 billion, and after deducting a proposed dividend payout of approximately RMB13.5 billion to be paid by Liaoning Zhongwang to a subsidiary of China Zhongwang, the transaction consideration was set at RMB28.2 billion. CRED Holding will allot and issue 3.93 billion shares to China Zhongwang at RMB7.12 per share.

At the same time, to support the future development of the industrial aluminium extrusion business, CRED Holding will allot and issue by way of non-public offer of approximately 702 million placing shares, to no less than six but no more than ten qualified designated investors, at RMB7.12 per share to raise up to RMB5 billion.

Upon completion of the transaction and the share placement, the Group will hold approximately 75% of the enlarged equity interests in CRED Holding. The transaction is subject to the approval from regulatory authorities as well as shareholders of both the Group and CRED Holding.

Mr. Lu Changqing, President and Executive Director of China Zhongwang, said, "The spin-off will set a major milestone in our corporate development history, and is an important step to unlocking the intrinsic value ‎of China Zhongwang. Upon completion, the Hong Kong listed China Zhongwang will further strengthen the leading position of its industrial aluminium extrusion business via the A-share platform, and at the same time, continue to benefit from the fast growing deep processing business and the flat rolling business which will soon commence commercial production this year. The new A-share platform give mainland investors access to invest in a world leading player in the aluminium extrusion industry, enabling the market to better understand the intrinsic value of the Company. It will also provide the Company a new financing platform. Under a clearer corporate structure, the Hong Kong listed entity will have a more distinctive business focus and competitive strengths. These will benefit the Group's long-term development and create value for its shareholders."

Pursuant to the asset purchase agreement, China Zhongwang has made profit guarantee to CRED Holding that the committed net profits of Liaoning Zhongwang for 2016, 2017, 2018 and 2019 will be no less than RMB2.8 billion, RMB3.5 billion, RMB4.2 billion and RMB4.8 billion respectively.

For more details, please refer to the announcement published on the HKEx website and the Company website.

Appendix: Summary of the Proposed Spin-off 

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About China Zhongwang Holdings Limited

China Zhongwang is the second largest industrial aluminium extrusion product developer and manufacturer in the world and the biggest one in Asia. It has, over the years, been focusing on the light-weight development of transportation, machinery and equipment and electric power engineering sectors through the provision of quality industrial aluminium extrusion products. It now has over 90 internationally advanced aluminium extrusion production lines including 21 production lines of large-scale aluminium extrusion presses of 75MN or above.

In addition, to further leverage its existing strengths in the industry, the Group is developing the high value-added aluminium flat rolled product project. Phase I of the project with a planned annual production capacity of 1.8 million tonnes consists of two production lines. Plant construction and equipment installation for the first production line have been completed and the equipment testing of the entire production line at the Tianjin plant is being carried out. This new business venture will not only enable the Group to further capitalize on its leading edge in aluminium alloy smelting and casting and product research and development, but also achieve synergies with its existing industrial aluminium extrusion and deep processing businesses by taking full advantage of their customer and market resources in related downstream application sectors.

For further information on the Group, please visit www.zhongwang.com.

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