Elec-Tech International (Dehao Runda): Raised Over 1.3 Billion Yuan from Controlling Shareholder and Wu Changjiang

News on June 13th: Elec-Tech International (002005.SZ) announced on Thursday evening that, with the approval of the China Securities Regulatory Commission, the company implemented a non-public stock issuance plan in June 2014. This non-public issuance issued 230 million ordinary RMB shares to the controlling shareholder Wuhu Dehao Investment Co., Ltd. and Wu Changjiang at an issue price of 5.86 yuan per share, with total funds raised of 1.348 billion yuan, all of which were used to supplement the company's working capital.

Among them, Wuhu Dehao Investment Co., Ltd. subscribed for 100 million shares, accounting for 7.16% of the company's total share capital of 1,396.4 million shares after this non-public issuance. Mr. Wu Changjiang, a natural person, subscribed for 130 million shares, accounting for 9.31% of the company's total share capital of 1,396.4 million shares after this non-public issuance. The company's total share capital was correspondingly changed from 1,166.4 million shares before this non-public issuance to 1,396.4 million shares.

In December 2012, Elec-Tech International acquired a 20.05% stake in NVC Lighting and became its largest shareholder, purchasing an 8.24% stake in NVC Lighting on the Hong Kong Stock Exchange and acquiring an 11.81% stake in NVC Lighting held by NVC Inc., for a total of 1.343 billion yuan. This cooperation integrates Dehao's full industry chain and manufacturing advantages with NVC's brand and channel advantages, representing a win-win measure for both parties.

　　Continuing the related-party transaction of acquiring equity in NVC Lighting, on May 7, 2014, the Company proposed to acquire from Mr. Wu Changjiang and NVC Inc. 214,508,000 ordinary shares of NVC Lighting (together with dividend rights) held by them, representing 6.86% of the total issued ordinary shares of NVC Lighting.

　　The Company stated that the increase in liabilities was mainly due to the acquisition of equity in NVC Lighting, the investment in equity of Weimei Shengjing, and the needs of production and operations, resulting in increased short-term and long-term borrowings. In addition, the Company's issuance of RMB 800 million in corporate bonds in 2013 also increased the scale of the Company's liabilities.

　　After this issuance, the Company's asset scale and net assets will increase significantly, reducing the Company's asset-liability ratio, improving the financial structure, and enhancing the Company's debt financing capacity; the proceeds raised from this non-public offering of shares will be used to supplement working capital, which is conducive to expanding business scale, improving capital turnover, reducing financial expenses, and is beneficial to the improvement of the Company's operating performance and the enhancement of profitability; upon completion of this issuance, the Company's cash flow from financing activities will increase substantially.