China Zhongwang announces proposed spin-off of industrial aluminium extrusion business

China Zhongwang Holdings Limited, 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, a Shanghai A-share listed company, for the purchase of the entire equity interests in Liaoning Zhongwang Group Co., Ltd. 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 per centof 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."

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.

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