Gelonghui, May 21, 丨 Yili Holdings (00076.HK) announced that on May 21, 2024, EGL, an indirect wholly-owned subsidiary of the company, signed the agreement with AGL. According to this, EGL has agreed to sell it conditionally, and AGL has agreed to buy the asset at a cost of US$21.05 million. Under the agreement, the costs will be settled through EGL in exchange for 30,109 tons of graphite products produced by AGL in exchange for this asset.
The assets to be sold include: 1. The entire production line in Madagascar is owned by EGL, which mainly includes machinery and equipment. 2. 390,000 tons of graphite ore stocks in Antsitakambo and Marovintsy, Madagascar.
The main reasons for selling the entire production line in exchange for graphite products are: 1. It is difficult for companies to hire local technicians in Madagascar, and it is expensive to hire foreign companies or professionals. 2. The main production line has been in use for 6 years, and new investment is needed to upgrade to improve production efficiency. 3. Starting and stopping production intermittently increases costs, and continuous production requires in-stock products. After selling the production line, the company can request AGL to produce the products required by the customer at any time.
The main reasons for selling graphite ore in exchange for graphite products are: 1. Save storage space and security costs for storing graphite ore. 2. The price of graphite products purchased using ore as payment is lower than the cost generated by EGL when produced by itself. As the price of graphite products is on the rise, the company can use the asset as cash to buy graphite products according to customer needs and lock the price of graphite products at $699 per ton to ensure that the company can earn more profit. The directors make decisions after referring to opinions from various parties, such as production costs and sales conditions, and adopt a balanced management method that is most beneficial to the company. The directors believe that the terms of this agreement are fair and reasonable and conform to the overall interests of the company and its shareholders.