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Hengli Petrochemical had been planning for more than a year to spin off its subsidiary and list it through a backdoor listing, but suddenly news of the termination came.

On the evening of August 22, Hengli Petrochemical announced that in view of the significant changes in the current market environment compared to the initial planning of the spin-off and listing, the company has decided to terminate the reorganization and listing of its subsidiary Kanghui New Materials.

Dalian Thermal Power, the target of this restructuring, also announced that the company has decided to terminate the sale of major assets and the issuance of shares to purchase assets and raise supporting funds. In addition, the company is scheduled to hold an investor briefing on this major event from 15:00 to 16:00 on August 26, 2024 (Monday).

In late June 2023, Hengli Petrochemical, a private petrochemical giant with a market value of 100 billion yuan, announced its intention to spin off its subsidiary and go public through a backdoor listing with Dalian Thermal Power, which attracted much attention from the market. Subsequently, the two parties announced a preliminary transaction plan on July 5, 2023. Under the influence of this news, Dalian Thermal Power directly hit 7 daily limit ups at that time.

The market environment has changed significantly

Hengli Petrochemical said that the reason for terminating the spin-off listing was that since the planning of the matter, the company and relevant parties have actively promoted various tasks and fulfilled information confidentiality and disclosure obligations in accordance with relevant regulations. "However, given that the current market environment has changed significantly compared to the beginning of the planning of this spin-off listing, in order to effectively safeguard the interests of listed companies and the majority of investors, after full consideration and prudent demonstration with relevant parties, the company decided to terminate the spin-off listing of Kanghui New Materials."

Hengli Petrochemical said that the termination of the spin-off listing will not have a substantial impact on the company, will not have a significant adverse impact on the company's existing production and operation activities and financial condition, and will not affect the implementation of the company's future strategic planning.

Dalian Thermal Power also stated that the termination of this major asset restructuring and the withdrawal of the application documents were made after comprehensive consideration of the current external market environment and the actual progress of the project, and after full communication and consultation with relevant parties, in order to effectively safeguard the interests of the listed company and the majority of investors. There is no situation where the listed company and related parties need to bear relevant liability for breach of contract. The termination of this transaction will not have a significant adverse impact on the existing production and operation activities of the listed company.

According to the announcement in September last year, the transaction plan was originally planned for Dalian Thermal Power to sell all its assets and liabilities to "clear the shell" first, and the asset sale price was 652 million yuan; at the same time, Dalian Thermal Power purchased Kanghui New Materials from Hengli Petrochemical and Hengli Chemical Fiber by issuing shares, with a price of 10.153 billion yuan. Dalian Thermal Power also simultaneously issued shares to raise no more than 3 billion yuan in supporting funds.

If the transaction is completed, Dalian Thermal Power will become the controlling shareholder of Kanghui New Materials, and Hengli Petrochemical will become the controlling shareholder of Dalian Thermal Power, and Hengli Petrochemical will become the indirect controlling shareholder of Kanghui New Materials. The ultimate actual controllers will be Chen Jianhua and Fan Hongwei.

Both companies released their semi-annual reports

On the evening of August 22, Hengli Petrochemical and Dalian Thermal Power both released their 2024 semi-annual reports.

According to the announcement, Hengli Petrochemical achieved operating income of 112.539 billion yuan in the first half of this year, a year-on-year increase of 2.84%; net profit attributable to shareholders of listed companies was 4.018 billion yuan, a year-on-year increase of 31.77%; non-net profit was 3.542 billion yuan, a year-on-year increase of 55.69%.

According to the data, Hengli Petrochemical is the core listed subsidiary of Hengli Group, a Fortune 500 company. The company's main products include refining and chemical products, PTA, polyester products, etc. Hengli Group was founded in 1994, starting with weaving, and gradually developed into an international enterprise with the development of the entire industrial chain of oil refining, petrochemicals, polyester new materials and textiles.

As of August 22, Hengli Petrochemical's latest market value was 94.2 billion yuan. As of the end of June this year, the company had 97,500 shareholders.

Dalian Thermal Power's operating income in the first half of 2024 was approximately 405 million yuan, a year-on-year increase of 0.84%; the net profit attributable to shareholders of the listed company was a loss of approximately 41.36 million yuan.

Dalian Thermal Power is a leading enterprise in the combined heating and power supply in Dalian. Its group is one of the largest combined heat and power and central heating enterprises in Northeast China. As of August 22, the company's market value was 2.488 billion yuan, and as of August 20, the company had 45,100 shareholders.