Kangda Environmental has announced that a settlement and early termination agreement has been reached between Yuchuan Sewage, Chongqing Kangda, Beijing Changsheng Siyuan, and the Jiyuan Municipal Government.

According to the agreement, the Jiyuan Municipal Government will pay Yuchuan Sewage a total settlement amount of RMB 65 million. In return, Yuchuan Sewage is required to transfer the Jiyuan Sewage Treatment Plant and its fixed assets to the Jiyuan Municipal Government by June 30, 2026.

Upon completion of these actions, the Concession Agreement will be terminated, with the termination effective retroactively from June 30, 2025. This settlement will release the Jiyuan Municipal Government from its obligations and liabilities concerning unpaid fees and related costs up to June 30, 2025.

As of the announcement date, approximately RMB 15.8 million of the settlement has already been paid by the Jiyuan Municipal Government. The remaining balance of about RMB 49.2 million is to be paid in two installments, due by June 30, 2026, and December 31, 2026, respectively.

Key considerations for the agreement

The company's board of directors considered the current operational status and future operating costs of the Jiyuan Sewage Treatment Plant, as well as the potential costs and resources required to pursue the unpaid fees. The board concluded that the sale will allow the group to save significant operational and potential expenses associated with the plant.

The transaction will provide an immediate cash inflow and enable the company to reallocate its time and resources to other, more profitable concession projects.

Impact on the company

The board believes that, once completed, the settlement will not have a materially adverse effect on the group's other core operations or its financial position.