THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT HISTORY AND CORPORATE STRUCTURE
HISTORY
On June 20, 1987, we were established as a sino-foreign equity joint venture in Fuzhou by Fuqing County Gaoshan Special Shaped Glass Factory (福清縣高山異形玻璃廠), Tennessee Plastic Engineering Company Limited, Fuqing Overseas Chinese Hometown Construction and Investment Co., Ltd. (福清縣僑鄉建設投資有限公司), Fuqing Honglu Real Estate Construction Materials Factory (福清縣宏路地產建材厰), Fujian Trading Automobile Repairing Factory (福 建省外貿汽車維修廠), Mr. Fang Ming Wu (方明梧, a Chinese Indonesian), and Fujian Minhui Mansion Co., Ltd. (福建省閩輝大廈有限公司), under the name of Fujian Yaohua Industrial Glass Co., Ltd. (福建省耀華玻璃工業有限公司), with a registered capital of RMB6,270,000. At the time, Fuqing County Gaoshan Special Shaped Glass Factory was managed by Mr. Cho Tak Wong under a contract operation agreement entered into in 1983 with its then owners. Fuqing County Gaoshan Special Shaped Glass Factory and Tennessee Plastic Engineering Company Limited each contributed RMB1,567,500 in cash to our registered capital and held a 25% equity interest. Each of the other five shareholders contributed RMB627,000 in cash and held a 10% equity interest.
In preparation of our conversion into a sino-foreign joint stock company and to rationalize the shareholding structure of our Company, in March 1990, Fuqing County Gaoshan Special Shaped Glass Factory transferred its 15% equity interest in our Company to Fuzhou Tenghui Decoration Material Company Limited (福州騰暉裝飾材料有限公司), an entity controlled by Mr. Cho Tak Wong at the time. Such equity interest in our Company was transferred in February 1991 to Island Mile Limited, a company controlled by Mr. Cho Tak Wong and Mr. Tso Fai.
On June 21, 1992, we converted into a sino-foreign joint stock company under the name of Fujian Yaohua Glass Industry Co., Ltd. (福建省耀華玻璃工業股份有限公司). In connection with this conversion, we issued shares to our employees, certain corporate entities and public investors, and increased our total share capital to RMB57,190,000, divided into 57,190,000 Shares. After the conversion and share issuance, Mr. Cho Tak Wong and Mr. Tso Fai together held 11.13% of our share capital through Island Mile Limited.
On June 10, 1993, we completed an initial public offering on the Shanghai Stock Exchange and became the first listed automotive glass manufacturer in China. Subsequently, Island Mile Limited transferred its interest in our Company to Sanyi (a company controlled by Mr. Cho Tak Wong and his son, Mr. Tso Fai). In early 1996, Sanyi held approximately 24.89% of our Company.
In early 1996, as part of a strategic arrangement with Compagnie De Saint Gobain, Mr. Cho Tak Wong, through Home Bridge, acquired approximately 17.28% of our share capital from Independent Third Party Shareholders, and in February 1996, sold to Compagnie De Saint Gobain the entire issued share capital of Sanyi and Home Bridge, which held an aggregate of 42.17% of our share capital after arm’s length negotiations among the parties.
At around the same time, Fuzhou Lvrong Glass Company Limited, a company whose equity interest was indirectly held by Mr. Cho Tak Wong and his spouse, Ms. Chan Fung Ying, acquired shares in our Company representing approximately 16.65% equity interest in our Company.
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In May 1999, Mr. Cho Tak Wong acquired from Compagnie De Saint Gobain the entire issued share capital of Sanyi and Home Bridge at an aggregate consideration of US$14 million, which was determined after arm’s length negotiations between the parties. Sanyi and Home Bridge in aggregate was interested in approximately 42.17% of our then issued share capital. In October of the same year, Fuzhou Lvrong Glass Company Limited transferred 16.65% equity interest in our Company to Yaohua. Yaohua is 100% indirectly owned by Ms. Chan Fung Ying (an associate of Mr. Cho Tak Wong and Mr. Tso Fai) and Mr. Cho Tak Wong. Mr. Cho Tak Wong was therefore interested, indirectly though his interest in Sanyi, Home Bridge and Yaohua, in approximately 58.82% of our Company.
Since our A Share listing, we have conducted seven bonus share issues, two rights issues and three increases in share capital through a conversion of our capital reserves.
Pursuant to the “Reply of the Ministry of Civil Affairs on the Establishment and Registration of Heren Charitable Foundation” (民政部關於河仁慈善基金會設立登記的批覆, Minhan 2010 No. 125) issued by the Ministry of Civil Affairs in June 2010, Heren Charitable Foundation was established with original funding capital of RMB20 million. On April 11, 2011, Mr. Cho Tak Wong and his associates donated 300 million A Shares to Heren Charitable Foundation through Yaohua and Sanyi, comprising 240,089,084 A Shares held by Yaohua and 59,910,916 A Shares held by Sanyi. Upon completion of the share transfer, Heren Charitable Foundation became our Substantial Shareholder and held approximately 14.98% of our then issued share capital, and the shareholding of Mr. Cho Tak Wong and his associates in our Company reduced from 35.08% to 20.1%.
Heren Charitable Foundation’s highest decision-making body is its council, which currently comprises nine members. Among these nine council members of Heren Charitable Foundation, Mr. Cao Degan (曹德淦) is the brother of Mr. Cho Tak Wong, Mr. Wu Shinong and Ms. Zhu Dezhen are the non-executive Directors of our Company, and the other six council members are Independent Third Parties.
Heren Charitable Foundation is an independent charitable foundation that operates in accordance with the PRC laws and its articles of association. Under Heren Charitable Foundation’s articles of association, a quorum for a meeting of the council is three-fourths of council members. All resolutions are passed by at least a majority of members attending the meeting, and major resolutions, such as amendment of the articles, election and removal of the council’s chairman, vice chairman and secretary-general and the dissolution of Heren Charitable Foundation require at least two-thirds of council members attending the meeting. As confirmed by Mr. Cho Tak Wong and Heren Charitable Foundation, Mr. Cho Tak Wong and his associates, including Yaohua, Home Bridge and Sanyi, do not have any control over Heren Charitable Foundation, nor are they beneficiary of the Heren Charitable Foundation. Based on the above, Heren Charitable Foundation is independent from Mr. Cho Tak Wong and his associates.
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MILESTONES
The following table sets forth the key milestones of our corporate development.
KEY MILESTONES AND ACHIEVEMENTS
June 1987 We were established as a sino-foreign equity joint venture in Fuqing, China.
May 1989 We began to export automotive glass to the ARG market in Hong Kong.
July 1989 We began to sell automotive glass to Guangzhou Peugeot, signifying our expansion into the OEM automotive glass market.
September 1991 We began to export automotive glass to TCG International Inc. in Canada (formerly known as Trans Canada Glass), signifying our expansion into the ARG market in developed countries.
June 1992 We converted into a joint stock company.
June 1993 Our A Shares were listed on the Shanghai Stock Exchange.
Between 1993 and We established a number of subsidiaries in Hong Kong 1994 including, among others:
• Fuyao Hong Kong, which principally engages in the export of automotive glass and import of raw materials; and
• Yung Tak Investment to hold office properties.
July 1994 We established Fujian Wanda in Fuqing as part of our plan to double our annual production capacity by 1996.
December 1994 We embarked on overseas expansion by establishing a subsidiary in the United States to sell automotive glass in North America.
September 2000 We established Fuyao Changchun in Changchun, Jilin Province, as our first step towards building a nationwide manufacturing network in China.
October 2002 We entered into a supply agreement with Hyundai Mobis (Hong Kong) Company (a subsidiary of Hyundai Motor Group), our first agreement to sell OEM automotive glass to an overseas automobile manufacturer.
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KEY MILESTONES AND ACHIEVEMENTS
May 2005 We entered into an agreement with Audi AG Ingolstadt in Germany to sell automotive glass used in the windshields of Audi C6.
Between 2006 and We established subsidiaries in Germany, South Korea, Japan and 2008 the United States to provide sales and customer support services to our OEM customers located in those markets.
May 2009 Mr. Cho Tak Wong was awarded the “World Entrepreneur of The Year” by Ernst & Young.
December 2009 We received the “Board of the Year” award from the Shanghai Stock Exchange.
June 2011 We entered into an investment agreement with the Government of Kaluga Oblast, Russia, in relation to the establishment of an automotive glass production project in Kaluga Oblast, Russia.
July 2012 We were ranked as one of the “Top 500 Chinese Companies” by Fortune magazine, which was the third time since 2010.
November 2012 We were awarded the “Leading Technology Innovative Enterprise” by the Chinese Ministry of Industry and Information Technology and the Chinese Ministry of Finance.
Between September The construction of Phase I of the automotive glass production 2013 and August facility in Kaluga Oblast, Russia was completed. 2014
Between July and We acquired from PPG a float glass manufacturing facility September 2014 located at Mt. Zion, Illinois, United States, certain assets and related liabilities.
MAJOR SUBSIDIARIES
As of the Latest Practicable Date, we had 46 subsidiaries and four jointly controlled entities in China, Hong Kong, Japan, Russia, South Korea, Germany and the United States. Our subsidiaries and jointly controlled entities provide a comprehensive geographic coverage of the world’s major automobile manufacturing bases, which enables us to better serve our customers in the local markets and to produce and procure raw materials in a cost-effective manner. Below we set out our major subsidiaries that made material contributions to our financial results during the Track Record Period.
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Fujian Wanda
Fujian Wanda was established on July 1, 1994 to engage in the design and manufacture of automotive glass, construction glass, curtain wall glass and decorating materials, and glass encapsulation materials. It commenced operations in January 1996. As of the Latest Practicable Date, it had a registered capital of approximately RMB535.1 million.
Fuyao Changchun
Fuyao Changchun was established on September 25, 2000 to engage in the manufacture and sale of automotive glass in Northeast China. It commenced operations in January 2002. As of the Latest Practicable Date, it had a registered capital of RMB300.0 million.
Fuyao Chongqing
Fuyao Chongqing was established on July 2, 2002 to engage in the manufacture and sale of automotive glass and architecture glass in Southwest China. It commenced operations in January 2005. As of the Latest Practicable Date, it had a registered capital of RMB80.0 million.
Shanghai Fuyao
Shanghai Fuyao was established on April 15, 2002 to engage in the deep processing of flat glass in China’s Yangtze River Delta and the research and development of related technologies and equipment. It commenced operations in July 2003. As of the Latest Practicable Date, it had a registered capital of US$68,048,800.
Beijing Futong
Beijing Futong was established on April 8, 2003 to engage in the manufacture and sale of tempered and laminated automotive glass in Northern China. It commenced operations in August 2007. As of the Latest Practicable Date, it had a registered capital of US$55.2 million.
Guangzhou Fuyao
Guangzhou Fuyao was established on June 8, 2006 to engage in the manufacture and sales of special function glass products in Southern China and overseas markets. It commenced operations in October 2007. As of the Latest Practicable Date, it had a registered capital of US$75.0 million.
Fuyao Hubei
Fuyao Hubei was established on November 23, 2007 to engage in the manufacture and sale of automotive glass and components and special function glass in Central and Southern China. It commenced operations in March 2009. As of the Latest Practicable Date, it had a registered capital of US$43.0 million.
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MAJOR ASSET ACQUISITION
In line with our international expansion strategy, Fuyao Glass America entered into an asset purchase agreement with PPG on July 17, 2014 to acquire the float glass manufacturing facility of PPG located at Mt. Zion, Illinois, United States (which was designed to manufacture float glass for the production of architectural, industrial and specialty glass products), certain assets and related liabilities, including but not limited to one float glass production line containing an on-line CVD Low-E coating system (“Line 1”), one float glass production line capable of producing automotive quality glass which has become idle in 2008 (“Line 2”), property interests, properties and leases, railroad and ancillary facilities on the manufacturing facility. Upon closing of the acquisition (which took place on August 29, 2014), we granted to PPG an operating license whereby PPG and/or its subsidiary may continue to exclusively and irrevocably operate Line 1 until August 31, 2015, and we will redesign, rebuild and restart Line 2. PPG will pay to us a license fee, comprising a base fee of US$130,800 per month with adjustments during the term of the operating license. We plan to redesign and rebuild the two production lines to produce and supply float glass to our automotive glass manufacturing facilities in Ohio, United States after we take over the possession of the production lines.
The purchase consideration of US$56 million was paid at closing and took into account the location of the facility, the costs associated with redesigning and rebuilding the production lines and was derived at through good faith negotiations. The acquisition complies with applicable regulations and laws in the United States. Since the acquisition is conducted by our overseas subsidiary, such acquisition is not subject to any regulatory approval under the PRC laws.
In addition, on the closing date of the acquisition, we appointed PPG as our exclusive sole distributor in the United States, Canada and Mexico, of the architectural, industrial and specialty glass products that we may manufacture at the facility until December 31, 2029. However, we currently do not have any plans to manufacture any architectural, industrial and specialty glass products at the facility. Further, PPG granted us a non-exclusive float glass know-how license, pursuant to which we will have non-transferable license rights to PPG’s proprietary processes and product technologies necessary to operate the facility and the related assets. We will pay to PPG a royalty comprising (i) a one-off lump sum of US$6 million; and (ii) an amount equal to 1% of the net sale value of the float glass products produced pursuant to the float glass know-how license for 12 years, commencing from the beginning of commercial production of Line 1 and Line 2, on a quarterly basis.
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OUR GROUP STRUCTURE
The following chart sets out our group structure as of the Latest Practicable Date and prior to the [REDACTED]:
100% Fuyao Glass America 100% Fuyao Glass Illinois 100% Fuyao Asset C 100% Fuyao Hong Kong 100% Fuyao Russia
100% North America Fittings 100% Fuyao Asset A
100% Fuyao Group Hong Kong 100% Fuyao Japan
100% Fuyao Korea 100% 100% Fuyao North America Yung Tak Investment 25% 75% Beijing Futong 100% 100% Fuyao Europe Baoding Fuyao 25% 75% 100% Fuyao Changchun Guangzhou Nansha 25% 75% Fuyao Shenyang
75% Changchun Bus 25% 75% Shanghai Fuyao 25% 75% 25% Shanghai Bus Heren 14.48% 80% 20% Charitable Yantai Fuyao Foundation(1) 75% Shanghai External Decoration 25% 25% 0.02% 75% Fuyao Encapsulation 25% 75% Bus Glass 75% 25% 19.50% Zhengzhou Fuyao Sanyi(1) 25% 75% Fuyao Chongqing 100% Liuzhou Fuyao Cho Tak 100% The Wong Company 75% Machinery Manufacturing 25%
75% Hainan Wenchang 25% Home 0.60% 25% Bridge(1) 75% Fuyao Tongliao 51% Benxi Fuyao(2) 75% 25% Fuyao Shuangliao(3) 25% 75% Other Chongqing Float Glass 65.42% 51% holders of Xupu Fuyao(4) A Shares 20% 80% Fuzhou Mold 75% Fujian Wanda 8.31% 75% 16.69% Guangzhou Fuyao 25% 100% Foshan Fuyao 75% Engineering Glass 25% 20% 100% 80% Fuzhou Float Glass Meadland 75% Chongqing Fittings 25% 100% Chengdu Lvrong 100% Wuhan Fuyao
75% Fuyao Hubei 25% 49% Tri-Wall Packaging(5)
49% Ningbo Fuyao(6) 24% Fuyao Automobile Part(7) 25% 100% Chongqing Automobile Part
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Notes:
(1) Heren Charitable Foundation, Sanyi and Home Bridge are holders of our A Shares.
(2) The remaining 49% of the equity interest in Benxi Fuyao is held by Benxi Tianfu Silicon Industry Co., Ltd. (本溪市天富硅業有限公司), an Independent Third Party except for being a shareholder of Benxi Fuyao.
(3) Pursuant to a letter of intent dated August 1, 2013 and a supplemental letter of intent dated September 9, 2014 entered into between the Company and Shuangliao Jinyuan, the Company shall sell its 75% equity interest in Fuyao Shuangliao to Shuangliao Jinyuan on or before April 30, 2017. Fuyao Shuangliao primarily engages in the manufacture of automotive-grade float glass. In addition, Fuyao Hong Kong shall, at the same time of the Company’s transfer its 75% equity interest in Fuyao Shuangliao, sell to Shuangliao Jinyuan the remaining 25% equity interest in Fuyao Shuangliao. The aggregate consideration for the sale of the entire equity interest in Fuyao Shuangliao shall be RMB390 million, which was determined after arm’s length negotiations between the parties by reference to the total equity interest attributable to the owners of Fuyao Shuangliao as valued by an independent valuer.
(4) The remaining 49% of the equity interest in Xupu Fuyao is held by Xupu Silicon Industry Chemical Co., Ltd. (漵浦硅業化工有限公司), an Independent Third Party except for being a shareholder of Xupu Fuyao.
(5) Tri-Wall Packaging is one of our jointly-controlled entities, with 51% and 49% of its equity interest held by Tri-Wall China Group Holding Limited and us, respectively. Tri-Wall China Group Holding Limited is an Independent Third Party except for being a shareholder of Tri-Wall Packaging.
(6) Ningbo Fuyao is one of our jointly controlled entities, with 51% and 49% of its equity interest held by Ningbo Chifei Automobile Parts Co., Ltd. (寧波馳飛汽車零部件有限公司) and us, respectively. Ningbo Chifei Automobile Parts Co., Ltd. is an Independent Third Party except for being a shareholder of Ningbo Fuyao and Fuyao Automobile Part.
(7) Fuyao Automobile Part is one of our jointly-controlled entities, with 51%, 25% and 24% of its equity interest held by Ningbo Chifei Automobile Parts Co., Ltd., Fuyao Hong Kong and us, respectively.
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The following chart sets out our group structure immediately after the completion of the [REDACTED] (assuming that the [REDACTED] is not exercised):
100% Fuyao Glass America 100% Fuyao Glass Illinois 100% Fuyao Asset C 100% Fuyao Hong Kong 100% Fuyao Russia
100% North America Fittings 100% Fuyao Asset A
100% Fuyao Group Hong Kong 100% Fuyao Japan
100% Fuyao Korea 100% 100% Fuyao North America Yung Tak Investment 25% 75% Beijing Futong 100% 100% Fuyao Europe Baoding Fuyao 25% 75% 100% Fuyao Changchun Guangzhou Nansha 25% 75% Fuyao Shenyang Heren [REDACTED] 75% 25% Charitable Changchun Bus Foundation(1) 75% Shanghai Fuyao 25% 75% 25% [REDACTED] Shanghai Bus 80% 20% Yantai Fuyao
[REDACTED] 75% Shanghai External Decoration 25% Sanyi(1) 25% 75% Fuyao Encapsulation 75% 25% Cho Tak 100% Bus Glass Wong 75% 25% Zhengzhou Fuyao 25% 75% Fuyao Chongqing Home [REDACTED] The (1) 100% Bridge Company Liuzhou Fuyao
75% Machinery Manufacturing 25%
75% Hainan Wenchang 25% 25% 75% Other Fuyao Tongliao [REDACTED] holders of 51% Benxi Fuyao(2) A Shares 75% 25% Fuyao Shuangliao(3) 25% 75% Chongqing Float Glass 51% Other (4) [REDACTED] Xupu Fuyao holders of 80% 20% H Shares Fuzhou Mold 75% Fujian Wanda 8.31% 75% 16.69% Guangzhou Fuyao 25% 100% Foshan Fuyao 75% Engineering Glass 25% 20% 100% 80% Fuzhou Float Glass Meadland 75% Chongqing Fittings 25% 100% Chengdu Lvrong 100% Wuhan Fuyao
75% Fuyao Hubei 25% 49% Tri-Wall Packaging(5)
49% Ningbo Fuyao(6) 24% Fuyao Automobile Part(7) 25% 100% Chongqing Automobile Part
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Notes:
(1) Heren Charitable Foundation, Sanyi and Home Bridge are holders of our A Shares.
(2) The remaining 49% of the equity interest in Benxi Fuyao is held by Benxi Tianfu Silicon Industry Co., Ltd. (本溪市天富硅業有限公司), an Independent Third Party except for being a shareholder of Benxi Fuyao.
(3) Pursuant to a letter of intent dated August 1, 2013 and a supplemental letter of intent dated September 9, 2014 entered into between the Company and Shuangliao Jinyuan Glass Product Co., Ltd. (雙遼市金 源玻璃製造有限公司, an Independent Third Party, “Shuangliao Jinyuan”), the Company shall sell its 75% equity interest in Fuyao Shuangliao to Shuangliao Jinyuan on or before April 30, 2017. In addition, Fuyao Hong Kong shall, at the same time of the Company’s transfer its 75% equity interest in Fuyao Shuangliao, sell to Shuangliao Jinyuan the remaining 25% equity interest in Fuyao Shuangliao. The aggregate consideration for the sale of the entire equity interest in Fuyao Shuangliao shall be RMB390 million, which was determined after arm’s length negotiations between the parties by reference to the total equity interest attributable to the owners of Fuyao Shuangliao as valued by an independent valuer.
(4) The remaining 49% of the equity interest in Xupu Fuyao is held by Xupu Silicon Industry Chemical Co., Ltd. (漵浦硅業化工有限公司), an Independent Third Party except for being a shareholder of Xupu Fuyao.
(5) Tri-Wall Fuzhou is one of our jointly controlled entities with 51% and 49% of its equity interest held by Tri-Wall China Group Holding Limited and us, respectively. Tri-Wall China Group Holding Limited is an Independent Third Party except for being a shareholder of Tri-Wall Packaging.
(6) Ningbo Fuyao is one of our jointly controlled entities, with 51% and 49% of its equity interest held by Ningbo Chifei Automobile Parts Co., Ltd. and us, respectively. Ningbo Chifei Automobile Parts Co., Ltd. is an Independent Third Party except for being a shareholder of Fuyao Automobile Part and Ningbo Fuyao.
(7) Fuyao Automobile Part is one of our jointly control entities, with 51%, 25% and 24% of its equity interest held by, Ningbo Chifei Automobile Parts Co., Ltd., Fuyao Hong Kong and us, respectively.
LISTING OF OUR A SHARES
As of the Latest Practicable Date, all our A Shares are traded on the Shanghai Stock Exchange. We have been in compliance with the applicable rules of the Shanghai Stock Exchanges since our A Share listing.
We seek to list our H Shares on the Hong Kong Stock Exchange, primarily to raise capital to fund our business expansion and to further enhance our corporate governance and competitiveness.
Our A Shares are denominated in RMB. After the [REDACTED] of the H Shares on the Hong Kong Stock Exchange, there will be no trading or settlement between the A Shares on the Shanghai Stock Exchange and the H Shares on the Hong Kong Stock Exchange, and the market prices of our A Shares and H Shares may be different.
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