Zhengzhou Coal Mining Machinery Group Company Limited 鄭州煤礦
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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant, independent adviser or other professional adviser. If you have sold or otherwise transferred all your shares in Zhengzhou Coal Mining Machinery Group Company Limited, you should at once hand this circular and the enclosed form of proxy and reply slip to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company. Zhengzhou Coal Mining Machinery Group Company Limited 鄭州煤礦機械集團股份有限公司 (A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 00564) VERY SUBSTANTIAL ACQUISITION AND CONNECTED TRANSACTION REPORT OF THE BOARD FOR THE YEAR 2015 REPORT OF THE BOARD OF SUPERVISORS FOR THE YEAR 2015 ANNUAL REPORT FOR THE YEAR 2015 REPORT OF THE INDEPENDENT NON-EXECUTIVE DIRECTORS ON THEIR PERFORMANCE IN THE YEAR 2015 APPOINTMENT OF THE EXTERNAL AUDITORS FOR THE YEAR 2016 THE PROVISION OF REPURCHASE GUARANTEE TO CUSTOMERS UNDER FINANCE LEASE BUSINESS THE USE OF SELF-OWNED IDLE FUNDS AND IDLE PROCEEDS FROM THE H SHARES FOR THE INVESTMENT OF WEALTH MANAGEMENT PRODUCTS PROFIT DISTRIBUTION PLAN FOR THE YEAR 2015 AMENDMENTS TO THE ARTICLES OF ASSOCIATION FORMULATION OF THE DIVIDEND DISTRIBUTION PLAN FOR SHAREHOLDERS OF THE COMPANY FOR THE NEXT THREE YEARS (2016-2018) AND NOTICE OF THE 2015 ANNUAL GENERAL MEETING NOTICE OF THE 2016 FIRST H SHAREHOLDERS CLASS MEETING Independent Financial Adviser to Independent Board Committee and Independent Shareholders The Company will convene the 2015 AGM and the 2016 first H Shareholders Class Meeting at 9:00 a.m. on Monday, 13 June 2016 at the Convention Centre, Office Building of Zhengzhou Coal Mining Machinery Group Company Limited, No. 167, 9th Street, Econ-Tech Development Zone, Zhengzhou, Henan Province, PRC. Notice of the AGM and Notice of the 2016 first H Shareholders Class Meeting are set out respectively on pages 93 to 97 and 98 to 100 of this circular. The letter from the Board and the letter from the Independent Board Committee are set out respectively on pages 9 to 68 and page 69 of this circular. The letter from the Independent Financial Adviser is set out on pages 70 to 92 of this circular, which contains its advice to the Independent Board Committee and Independent Shareholders. The notice, proxy form and reply slip for the AGM and the 2016 first H Shareholders Class Meeting were dispatched on 29 April 2016. 23 May 2016 CONTENTS Page Definitions ...................................................... 1 Forward-looking Statements ......................................... 7 Letter from the Board .............................................. 9 (I) Very substantial acquisition and connected transaction ........... 10 (II) AGM and the 2016 First H Shareholders Class Meeting ........... 49 (III) Recommendation ......................................... 59 (IV) Additional Information .................................... 59 Letter from the Independent Board Committee .......................... 69 Letter from the Independent Financial Adviser ......................... 70 Notice of 2015 Annual General Meeting ................................ 93 Notice of 2016 First H Shareholders Class Meeting ....................... 98 Appendix I — Information about the Target Companies 1. Glossary of Technical Terms ................................. I-1 2. Risk Factors ............................................. I-3 3. Industry Overview ........................................ I-18 4. Regulatory Overview ...................................... I-35 5. History and Reorganisation ................................ I-53 6. Business ................................................ I-65 7. Directors, Supervisors and Senior Management ................. I-109 8. Financial Information ...................................... I-127 Appendix II — Financial Information of the Group ................. II-1 Appendix III — Audited Financial Information of the Target Companies 1. Accountant’s Report of CACG I ............................. III-1 2. Accountant’s Report of ASIMCO Camshaft .................... III-43 3. Accountant’s Report of ASIMCO Foundry ..................... III-77 4. Accountant’s Report of ASIMCO NVH ........................ III-102 5. Accountant’s Report of ASIMCO Shanxi ...................... III-145 6. Accountant’s Report of ASIMCO Shuanghuan .................. III-178 Appendix IV — Unaudited Pro Forma Financial Information of the Enlarged Group ................................ IV-1 Appendix V — Summary of the Asset Evaluation Report 1. Summary of the Asset Evaluation Report ...................... V-1 2. Letter from the Board ...................................... V-79 3. Letter from PricewaterhouseCoopers ......................... V-80 Appendix VI — General Information ............................. VI-1 –i– DEFINITIONS In this circular, the following expressions shall have the following meanings unless the context otherwise requires. Certain other terms are explained in the section headed “Appendix I — Information about the Target Companies — 1. Glossary of Technical Terms”. “Acquisition” or “Transaction” pursuant to the Equity Transfer Agreement, the Purchaser conditionally agreed to acquire from the Sellers the Target Equity Interests, the purchase price shall be RMB2,200,000,000, payable in its USD equivalent, after applying the Applicable Exchange Rate, unless based on the appraised value set out in the Asset Evaluation Report, all parties, upon negotiation, agree in writing on price adjustment, the Purchase Price shall be the price after such adjustments “AGM” the annual general meeting of the Company to be held at the Convention Centre, Office Building of Zhengzhou Coal Mining Machinery Group Company Limited, No. 167, 9th Street, Econ-Tech Development Zone, Zhengzhou, Henan Province, PRC at 9:00 a.m. on Monday, 13 June 2016 or any adjournment thereof, the notice of which was dispatched on 29 April 2016 “Applicable Exchange Rate” the Applicable Exchange Rate shall be 6.54825, being the average of (i) 6.515, the midpoint of the buying and selling rates of RMB/USD set by the People’s Bank of China on March 24, 2016 and (ii) 6.5815, the exchange rate of RMB/USD based on the forward exchange settlement and sale arrangement made by the Purchaser and Bank of China Henan Branch on March 30, 2016 “Appraisal Reference Date” 31 December 2015 “ASIMCO Electric Motor” Hubei Super-Elec Auto Electric Motor Co. Ltd., which is principally engaged in the production and sales of motors and appliance for use in automobiles and held by CACG I of 51% –1– DEFINITIONS “Asset Evaluation Report” the asset evaluation report of each Target Company prepared by China United Assets Appraisal Group Company Limited (中聯資產評估集團有限公司), the appraiser engaged by the Purchaser in connection with the Material Asset Reorganization, and filed with the State-owned Assets Supervision and Administration Commission of Henan Province, including all the schedules thereof. Such evaluations are proposed to be conducted using the asset-based approach and income approach, while the outcome of the income approach is adopted “Articles of Association” the articles of association of the Company “A Share(s)” domestic ordinary share(s) with a par value of RMB1.00 each issued by the Company which are subscribed for by domestic investors and are listed for trading on the Shanghai Stock Exchange (stock code: 601717) “A Shareholder(s)” holder(s) of A Share(s) “Board” the board of directors of the Company “China” or “PRC” the People’s Republic of China, which for the purposes of this circular excludes Hong Kong, Macau Special Administrative Region and Taiwan “China Securities Depository China Securities Depository and Clearing and Clearing Corporation Corporation Limited and its subsidiary in Shanghai Limited” “Commerce Authorities” the Ministry of Commerce or relevant local authorities of the PRC “Company” Zhengzhou Coal Mining Machinery Group Company Limited (鄭州煤礦機械集團股份有限公司), a joint stock company incorporated in the PRC with limited liability, the Shares of which are listed on the main board of the Stock Exchange (stock code: 00564) “CSRC” China Securities Regulatory Commission “Directors” the directors of the Company –2– DEFINITIONS “Dividends” proposed distribution of 2015 final dividends to the Shareholders whose names appear on the register of members for the A Shareholders and the H Shareholders at the close of business on the record date, based on a rule of receiving RMB0.08 (inclusive of tax) in cash dividends per 10 shares held by the Shareholders payable in RMB to A Shareholders and in HK$ to H Shareholders “EIT Law” the Enterprise Income Tax “Enlarged Group” the Company together with the Target Equity