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after the actual controller was changed from liu canglon to sichuan state-owned assets shudao group, hongda co., ltd. plans to raise no more than 2.8 billion yuan from shudao group through a private placement to repay debts and supplement liquidity.

hongda co., ltd. held the seventh meeting of the tenth board of directors on september 18, 2024, and reviewed and approved the relevant proposals on the company's issuance of shares to specific objects.

the issue price of this issuance is 4.68 yuan per share, which is not lower than 80% of the average trading price of the company's stock in the 20 trading days before the pricing benchmark date. the number of shares issued in the private placement is 610 million shares, and the funds raised shall not exceed 2.853 billion yuan.

sichuan hongda industrial co., ltd., the former controlling shareholder of hongda co., ltd., entered bankruptcy reorganization procedures in june 2023. on july 19, 2024, the shifang municipal people's court ruled to approve the "reorganization plan (draft) for the merger and reorganization of sichuan hongda (group) co., ltd. and sichuan hongda industrial co., ltd." and terminated the reorganization procedures of hongda group and hongda industrial. according to the "reorganization plan", shudao investment group will take over 536 million shares held by hongda industrial, accounting for 26.39% of the company's total share capital.

due to the implementation of the reorganization plan, the hongda shares (unrestricted tradable shares) originally registered in the hongda industrial securities account were transferred to the shudao group's securities account on september 5, 2024. so far, the company's controlling shareholder has changed from liu canglong to shudao group, and the actual controller has changed to the sichuan provincial government state-owned assets supervision and administration commission.

hongda holdings is one of sichuan trust's shareholding companies, holding 22.1605% of sichuan trust's shares. in december 2020, due to illegal operations, the regulatory authorities and local governments sent a working group to implement control and risk management on sichuan trust. on april 1, 2024, sichuan trust's application for administrative approval for bankruptcy reorganization was approved by the national financial supervision and management department. in the disposal of sichuan trust, shudao group played an important role.

the funds raised from shudao group this time, after deducting issuance expenses, will be used to repay debts and supplement working capital.

hongda shares' debt problem has been around for a long time. from 2003 to 2009, the company acquired 60% of the equity of its former holding subsidiary jinding zinc through capital increase and equity transfer. due to a contract dispute, the four shareholders of jinding zinc, yunnan metallurgical group co., ltd., nujiang state-owned assets management co., ltd., yunnan lanping bai and pumi autonomous county finance bureau, and yunnan copper (group) co., ltd., sued the company and hongda group as plaintiffs.

on december 24, 2018, the supreme people's court made a final judgment on the company's jinding zinc contract dispute case. according to the judgment, the company's original 60% equity in jinding zinc was invalid, and after deducting the 496 million yuan of capital increase already paid, the company must return 1.074 billion yuan in profits obtained from 2003 to 2012 to jinding zinc within 15 days from the date of the judgment.

as of the end of june 2024, the company has returned rmb651 million in profits to jinding zinc industry through cash and asset-debt settlement. it still has rmb423 million in principal and rmb210 million in delayed performance fees payable to jinding zinc industry, accounting for a total of 28.76% of the company's total assets as of the end of june 2024.

in addition, the yunnan provincial high court, chengdu intermediate court, and qingyang district court have frozen and sealed some of the company's assets, including 10% of the company's 22.1605% stake in sichuan trust and the company's equity in seven subsidiaries. as of the end of june 2024, the book value of fixed assets and intangible assets seized due to the jinding zinc contract dispute was rmb 42.6561 million and rmb 36.8284 million, respectively. the aforementioned related assets are at risk of judicial disposal, which may have an adverse impact on the company's production and operation.

the contract dispute case of jinding zinc industry has led to increased debt repayment pressure and operating risks for the company, and operating funds are tight in the short term. in order to ensure the healthy development of the company, the company needs to raise funds to solve the problem of excessive debt burden.

according to the company's "2024 semi-annual report", from january to june 2024, the company's net profit attributable to shareholders of listed companies and the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses were rmb 58.343 million and rmb 56.3726 million, respectively.

hongda shares stated that shudao group becoming the company's controlling shareholder is conducive to the company's long-term healthy development. as the company's controlling shareholder, shudao group will use its own resources to organically cooperate with the company, and fully support the company's development in terms of strategic planning, business development, brand building, market expansion, financial strength, etc., to enhance the company's profitability. at the same time, shudao group becoming the company's controlling shareholder will help the company further standardize its operation and management, lay a solid foundation for the company's long-term healthy development, and bring good returns to all shareholders.