150 Mln Shares to Acquire Two New Subsidiaries

Following a 6-plus-month trading suspension, the company disclosed its asset restructuring scheme this week. The central feature is a plan to conduct a private placement of up to 150 mln shares in order to acquire 100% stakes in Chengdu Huarong Chemical Co. Ltd and Gansu Xinchuan Chemical Co. Ltd. Consequently, New Hope Chemical Co. Ltd will increase its stake in the company to 53.3%.

Upon completion of the asset restructuring scheme, the company will become a production centre of chlor-alkali products for New Hope Group Co. Ltd. The company is designed to sustain annual production of 500,000 tons of polyvinyl chloride (PVC) products and 200,000 tons of sodium hydroxide by 2009. Should the project be successful, the company will recalibrate its upstream chlor-alkali and sodium hydroxide businesses to downstream value-added industries. It will achieve additional industrial synergies by linking both the upstream and downstream operations of New Hope Chemical.

New Hope Chemical, the largest shareholder of the company, has pledged that should the assets to be injected into the company be insufficient, New Hope Chemical will provide cash to compensate for the shortfall within 15 days of the disclosure of the company's annual report.


Source: China Securities News

Date: 5 Jul 2008

CN01/BG/MZ/BT/MM