On the evening of July 31st, Huacan Optoelectronics announced that the company had decided to request the China Securities Regulatory Commission (CSRC) to temporarily halt the issuance of shares aimed at purchasing the equity of Harmony Corelight (Yiwu) Optoelectronics Technology Co., Ltd., which we'll refer to as "Harmony Optoelectronics." This decision came after careful deliberation regarding the ongoing transaction process.
Huacan Optoelectronics planned to acquire 100% of the equity held by New Sure Limited and Yiwu Harmony Corelight Equity Investment Partnership (Limited Partnership) through the issuance of shares. To finance this acquisition, the company intended to raise no more than $50 million from specific investors via an inquiry-based method. The issue price for these shares was set at 6.95 yuan per share. However, considering the company's 2016 dividend distribution of 0.5 yuan for every 10 shares, which took place on May 17, 2017, the issue price was adjusted to 6.90 yuan per share. The total fundraising amount was capped at 200 million yuan. It’s worth noting that the success of the fundraising would not impact the implementation of the asset acquisition through share issuance.
As of December 31, 2016, the estimated value of the underlying assets stood at 1.719 billion yuan. Harmony Optoelectronics, the target company, did not have any active business operations. Instead, its primary asset was a 100% stake in MEMSIC, Inc., held by its Hong Kong subsidiary. Based on the valuation of the target company's 100% equity, the transaction value was determined to be 1.65 billion yuan.
On July 3rd, 2017, the company received the CSRC's "Notice of Acceptance of Administrative Licensing Application" (No. 171031), dated June 30th, 2017. The CSRC had reviewed the application materials submitted by Huacan Optoelectronics for the approval of the share issuance by listed companies and found them complete and compliant with legal requirements. Consequently, the application for administrative licensing was accepted.
Throughout the planning and promotion of this share purchase, the company adhered to relevant CSRC and Shenzhen Stock Exchange regulations. Extensive due diligence, audits, and evaluations were conducted on the target company. Additionally, the company convened a board meeting and a shareholders' general meeting to approve the transaction proposals. Matters related to the transaction also underwent scrutiny by the U.S. Committee on Foreign Investment (CFIUS).
Currently, some financial data in the share issuance application documents has expired, necessitating supplementary audits by the company and the target company. Both parties, along with the audit institutions, are diligently working on these audits.
To safeguard the interests of all shareholders, particularly small and medium-sized investors, the company convened its third meeting of the third board of directors on July 29th, 2017. After thorough discussion and consultation with the parties involved in the transaction, it was decided to temporarily suspend the review of the company's share issuance for asset purchases. An application for this suspension was submitted to the CSRC. Once conditions permit, the company plans to restart the process.
The temporary suspension of the share issuance will not significantly disrupt the company's day-to-day operations. While the review process is paused, the company remains committed to advancing this transaction. Upon completion of the necessary steps, the company will promptly reapply for the resumption of the administrative licensing review.
As the market continues to evolve, such strategic moves are crucial for maintaining competitive advantage. Huacan Optoelectronics' decision reflects a prudent approach to managing risks while pursuing growth opportunities. We can only hope that once the conditions improve, the company can swiftly proceed with this acquisition, ensuring long-term value creation for all stakeholders.1500-3000 Kw Marine Diesel Engine
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