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CHINA RUIFENG RENEWABLE ENERGY HOLDINGS LIMITED ʕࠬอঐ๕છٰϞࠢʮ̡
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 00527)
SUPPLEMENTAL ANNOUNCEMENT
CONNECTED TRANSACTION
IN RELATION TO THE PROPOSED EXTENSION OF MATURITY
DATE OF THE CONVERTIBLE BONDS
Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders
PROPOSED EXTENSION OF MATURITY DATE OF THE CONVERTIBLE BONDS
References are made to (i) the announcements of China Ruifeng Renewable Energy Holdings Limited (the "Company") dated 31 December 2018, 1 February 2019, 20 February 2019, 25 March 2019 and 30 March 2020 in relation to the issuance of the Convertible Bonds and (ii) the announcements of the Company dated 10 September 2020 and 29 January 2021 and in relation to the proposed amendments to the terms and conditions of the Convertible Bonds (the "Announcements"); and (iii) the circular in relation to the issuance of the Convertible Bonds dated 31 January 2019. Capitalised terms used herein shall have the same meanings as those defined in the Announcements unless the context requires otherwise.
On 24 March 2021 (after trading hours of the Stock Exchange), in accordance with the terms and conditions of the Convertible Bonds, the Supplemental Agreements and Subscription Agreements, the Company and the Bondholders entered into extension agreements (the "Extension Agreements") to (i) extend the term of the Convertible Bonds for one year from 25 March 2021 to 25 March 2022 (i.e. the "Extended CB Maturity Date"); and (ii) extend the Long Stop Date of the Supplemental Agreements to 24 April 2021 (the "Extended Long Stop Date") (collectively, the "Proposed Extension"), with all the terms and conditions of the Convertible Bonds and Supplemental Agreements remain unchanged. For the terms and conditions of the Convertible Bonds and Supplemental Agreements, please refer to the Announcements.
REASONS FOR AND BENEFITS OF THE PROPOSED EXTENSION
The Convertible Bonds would mature on 25 March 2021 unless they are further extended. As the original conversion price of the Convertible Bonds (being HK$0.485) is 76.36% higher than the closing price of the Shares as quoted on the Stock Exchange (being HK$0.275) as at the date of this announcement, it is expected the Bondholders are not going to exercise their conversion rights by the maturity date and the Company is expected to have a very substantial cash outflow with principal amount of HK$313,795,000 in order to redeem the Convertible Bonds.
As the Company and the Bondholders entered into the Supplemental Agreements to adjust the conversion price of the Convertible Bonds downward to HK$0.190 and the interest rate of the Convertible Bonds upward from 8% and 10% per annum, the Board considers that it is necessary to extend the terms of the Convertible Bonds and the Long Stop Date of the Supplemental Agreements so that the Company will be able to (i) postpone such substantial cash outflow, release the liquidity and working capital pressure of the Company in this financial year; and (ii) allow additional time for the Shares' performance to reach the adjusted conversion price according to the Supplemental Agreements.
Therefore, the Board (excluding the independent non-executive Directors who will express their view after considering the advice from the Independent Financial Adviser to the Independent Board Committee) considers that the terms and conditions of the Extension Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
IMPLICATIONS UNDER THE LISTING RULES
Pursuant to Rule 28.05 of the Listing Rules, any alteration in the terms of convertible debt securities after issue must be approved by the Stock Exchange, except where the alteration takes effect automatically under the existing terms of such convertible debt securities. The Proposed Extension will take effect (1) upon the approval of the Stock Exchange being granted; and (2) the approval of the Independent Shareholders in the EGM. An application will be made to the Stock Exchange for its approval of the Proposed Extension pursuant to Rule 28.05 of the Listing Rules when appropriate.
As at the date of this announcement, Filled Converge is wholly-owned by Mr. Zhang, who is an executive Director and a substantial Shareholder. Filled Converge is an associate of Mr. Zhang and accordingly a connected person of the Company. As such, the Extension Agreements and the transactions contemplated thereunder constitute a connected transaction of the Company and is subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.
Mr. Zhang has material interest in the Extension Agreements and has abstained from voting on the resolutions passed by the Board to approve the Extension Agreements and the transactions contemplated thereunder.
Diamond Era, which is wholly-owned by Mr. Zhang, holds 448,910,325 Shares (representing approximately 22.68% of the total number of issued Shares) as at the date of this announcement. Mr. Zhang and his associates will be required to abstain from voting on the resolutions in respect of the Extension Agreements and the transactions contemplated thereunder at the EGM. To the best of the information, belief and knowledge of the Directors, save for Mr. Zhang and his associates, no other Shareholder has any material interest in the Extension Agreements and the transactions contemplated thereunder and is required to abstain from voting on the resolutions to approve the Extension Agreements and the transactions contemplated thereunder in the EGM. Save for Mr. Zhang, none of the Directors has material interest in the Extension Agreements and the transactions contemplated thereunder and is required to abstain from voting on the resolutions passed by the Board to approve the Extension Agreements and the transactions contemplated thereunder.
GENERAL
The Independent Board Committee has been established to make recommendation to the Independent Shareholders regarding the Extension Agreements and the transactions contemplated thereunder. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the Extension Agreements and the transactions contemplated thereunder.
The EGM will be convened and held for the Independent Shareholders to consider, and if thought fit, to approve the Extension Agreements and the transactions contemplated thereunder. A circular containing, among other things, (i) further information of the Extension Agreements and the Proposed Extension; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Extension Agreements and the transactions contemplated thereunder; (iii) the advice of the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Extension Agreements and the transactions contemplated thereunder; and (iv) a notice convening the EGM, is expected to be despatched to the Shareholders on or before 26 April 2021.
FURTHER INFORMATION ABOUT THE DETERMINATION OF THE ADJUSTED CONVERSION PRICE
Save as disclosed in the announcement of the Company dated 29 January 2021, the Board would like to supplement that the determination of HK$0.190 per Conversion Share were arrived at after arm's length negotiations between the Company and the Bondholders, after taking into consideration (i) the decreasing trend of the trading price of the Shares since the date of the Subscription Agreement; (ii) the prevailing market price of the Shares; (iii) the potential financial impact of the Company due to early redemption of the Convertible Bonds; and (iv) recent amendments to the terms on convertible bonds/notes transactions of listed issuers in the market.
By Order of the Board
China Ruifeng Renewable Energy Holdings Limited
Zhang Zhixiang
Executive Director and Chief Executive Officer
Hong Kong, 24 March 2021
As at the date of this announcement, the executive Directors are Mr. Zhang Zhixiang (Chief Executive Officer), Mr. Ning Zhongzhi, Mr. Li Tian Hai and Mr. Peng Ziwei; and the independent non-executive Directors are Mr. Jiang Senlin, Mr. Qu Weidong and Ms. Hu Xiaolin.