Huili Res (01303.HK) announced on June 25th that, on June 25th, 2024, the buyer (the company's wholly-owned subsidiary) entered into a sale and purchase agreement with the seller Zhu Yuxin regarding the acquisition matter. According to the sale and purchase agreement, the buyer has agreed to acquire and the seller has agreed to sell the shares for sale (i.e. all the issued share capital of the target company Mouton Investment Limited), at a price of HKD 35.2 million. After the completion of the transaction, the company will issue and distribute 73,333,333 consideration shares to the seller at a price of approximately HKD 0.48 per share, based on the issue price, as payment. The consideration shares represent approximately 3.8% of the company's existing issued share capital as of the date of this announcement.
The target company is a Hong Kong registered limited company mainly engaged in investment holding operations. The company is a subsidiary of Zhuhai Mutong. Zhuhai Mutong is a Chinese limited company mainly engaged in investment holding operations. The company is a subsidiary of Luyuan New Energy. Luyuan New Energy is a Chinese limited company mainly engaged in (i) supply chain management services; and (ii) general commodity warehousing services.
In order to grasp future development opportunities, the Group needs to further expand the Group's warehousing and supply chain capabilities. The core assets of the target group are two coal sheds and the related machinery of the coal sheds. The total estimated storage capacity of the two coal sheds is 120,000 tons of coal. The coal sheds are located in Shanxi Province, China, adjacent to the Group's existing coal washing plant, about 16.7 kilometers southeast of Changzhi County, connected by a county-level tar road and a provincial road from Changzhi to Gaoping. It is 5 kilometers east of National Highway 207, 5.8 kilometers from the Jinchang Expressway, 2.5 kilometers from the Taituo Highway and Dongtianliang coal transportation station, and both highway and railway transportation are very convenient. From an operational point of view, this location is in a prime location and can provide additional supply sources for the Group's trading business.
The coal sheds and special equipment will enable the Company to meet the storage, loading and unloading, and coal blending needs of customers in Shanxi Province, China, and the acquisition will enhance the value chain of the Company's coal business. Providing additional warehousing and coal blending services to the Company's customers will enhance the Company's competitiveness. The acquisition will enable the Company to immediately acquire existing coal sheds and special equipment, thereby promoting the integration of the target group's operation into the Company's existing business, expanding the scale of operations and creating new growth momentum.
The Board of Directors believes that, given the target group's main activities described above, the acquisition is in line with the Group's development strategy, strengthening its existing coal trading business and supply chain management capabilities and providing services for the Chinese coal industry in which it operates. In addition, the acquisition will enable the Group to create long-term and strategic growth opportunities by utilizing the synergies generated by acquiring the target group.