|VOLUME XXI No. 169||T H U R S D A Y||August 8, 2019|
XINYI ENERGY HOLDINGS LTD:
VERY OFTEN, THINGS ARE NOT ALL THAT THEY SEEM
Five months and 21 days after this company had made the claim that it had been forced to abort its first attempt to list its shares on the premier equity market of the Hongkong Special Administrative Region (HKSAR) of the People’s Republic of China (PRC), it came up trumps.
The Company, to which TARGET (泰達財經) is referring, is Xinyi Energy Holdings Ltd (信義能源控股有限公司) (Code: 3868, Main Board, The Stock Exchange of Hongkong Ltd).
On December 10, 2018, Xinyi Energy Holdings Ltd published and disseminated its Global Offering Prospectus on The Stock Exchange of Hongkong Ltd, but four days later, on December 14, 2018, the Company stated that it had been forced to make the following announcement and, by so doing, abnegated many of its previously intimated statements in part or in whole:
‘The Board (of Directors) announces that the Global Offering (including the XYS Assured Offering), the Spin-Off, and the Listing will not proceed as originally scheduled in view of the current continuing stock market volatility. The Price Determination Agreement will not be entered into, and the obligations under the Hong Kong Underwriting Agreement will not become unconditional.’
On May 15, 2019, in Management’s second attempt to list its shares on the premier equity market of the HKSAR, it was a completely different story to that which had come to pass in December of 2018 – with the Company, netting $HK3,526,000,000.00 in a cash-raising exercise.
However, in this medium’s opinion, questions could be raised in respect of certain very material financial matters that, to some extent, appear to have been, by design or accident, obfuscated within the 900-Page Global Offering Prospectus of Xinyi Energy Holdings Ltd.
(More about these matters at the end of this analysis.)
The Initial Public Offering (IPO) Of Xinyi Energy Holdings Ltd
Xinyi Energy Holdings Ltd launched its second attempt at a listing on the Main Board of The Stock Exchange of Hongkong Ltd on May 15, 2019.
The Company Offered a total of 1,882,609,471, one-cent Shares at the Indicative Offer Price Per Share, ranging from a low of $HK1.89 to a high of $HK2.35.
Investors of the HKSAR were Offered the opportunity to subscribe to 188,300,000 Shares (the HKSAR Shares Offer tranche) and International Investors – Institutional Investors, Professional Investors and select, Well-Heeled Investors, along with any corporate entity in which they held an equity control – were Offered 1,694,309,471 Shares (the International Shares Offer tranche).
On May 27, 2019, Management announced that the Offer Price Per Share had been struck at $HK1.94 and that the net proceeds from the Global Offering were estimated to come in at about $HK3,526,000,000.00.
With regard to the HKSAR Shares Offer tranche, one was told, in the ‘ANNOUNCEMENT OF OFFER PRICE AND ALLOTMENT RESULTS’, that it had been ‘slightly over-subscribed’ by about 1.07 times (201,762,000 Shares).
As for the International Shares Offer tranche, one was informed that it had been ‘moderately over-subscribed’ by about 2.19 times (1,944,455,934 Shares).
At Page 13 of this Announcement, one was informed as to the expected utilisation of the net proceeds of the Global Offering:
$HK3,173,400,000.00, that is 90 percent of the net proceeds, ‘for the payment of the Agreed Purchase Price, of which an upfront payment of 50.0% will be settled upon completion of the Target Acquisition and the remaining balance, being the Outstanding Amount, will be settled on the earlier of (a) the fourth anniversary of the Listing Date and (b) by instalments following the receipt of the tariff adjustment receivables relating to the solar farm projects under the Target Portfolio pursuant to the Target Sale and Purchase Agreement; and,
$HK352,600,000.00, that is 10 percent of the net proceeds, ‘for our working capital and loan refinancing for the purpose of reducing our interest expenses.’
The Business Of Xinyi Energy Holdings Ltd
Xinyi Energy Holdings Ltd describes itself at Page S-1 of the Global Offering Prospectus as being ‘a leading non-State owned solar farm owner and operator in the PRC in terms of the approved capacity of the utility-scale ground-mounted solar farm projects in operation owned by us and under our management.’
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