Nov. 27, 2018
On November 19, Limin Chemical
announced the rescission of the share transfer agreement with Shandong Damin Chemical signed on June 27, 2017, and the supplementary agreement signed on February 17, 2018.
On June 27 last year, Limin Chemical
announced a change in the use of a raised fund initially intended for investment. The announcement was declared to terminate the use of the raised fund for the establishment of a propane diamine production line, but instead that it would acquire with the raised fund 70% equity in Shandong Damin Chemical at a cost of 109 million yuan.
Shandong Damin is one of the prime propane diamine producers in China, being Limin Chemical’s long-term supplier of basic materials, as supported by an annually 3,000-ton propane diamine production facility. Limin Chemical saw a low risk in the acquisition of a propane diamine production line, rather than building its own new propane diamine facility, and the acquisition was viewed as bringing to the company a vertically extended industry chain.
However, there had been no payment made thereafter, thus no share transfer had really taken place. Concerning the reason for the rescission of the agreements, Limin Chemical said that a provincial chemical industrial park review process has been going on in Shandong Province since the first half of this year, which has not yet been completed till date. Until the completion of the certification process and announcement of the result of the certification, Limin Chemical has to put off the acquisition for the moment to ensure careful and deliberate consideration.
In the first three quarters of this year, Limin Chemical achieved a business income of 1.078 billion yuan, which was 7.94% up year-on-year, as well as a net profit attributable to the listed mother company of 150 million yuan, which was 34.89% up year-on-year. Limin Chemical predicts a net profit for the whole year between 185 million and 206 million yuan, which will be 35%-50% up year-on-year. The company said that the achievement is mainly attributable to the increasing demand for the products of the company and the mother company, which led to a growth in sales and a price rise, thereby bringing about an increased profit.