Global New Material International (06616) has announced that the involved parties have entered into a share transfer agreement. Junheng Limited Partnership conditionally agrees to purchase, and the sellers (Hangzhou Jinhui and Mr. Shao Hui) conditionally agree to sell, the Jihua sale shares, pending the fulfillment of certain conditions. Junheng Limited Partnership was established specifically for the acquisition under the Junheng Limited Partnership Agreement, with Shenzhen Qise (a wholly-owned subsidiary of the company) acting as the general partner and Hongzun Limited Partnership acting as the limited partner.
Junheng Limited Partnership is funded by its partners, Shenzhen Qise and Hongzun Limited Partnership, according to their initial contribution percentages: Shenzhen Qise contributes 40% and Hongzun Limited Partnership contributes 60%. Under the partnership agreement, the total capital commitment from the partners to Junheng Limited Partnership is RMB 700 million.
The Jihua shares for sale consist of a total of 202 million issued shares of Zhejiang Jihua Group Co.,Ltd. (603980.SH), representing 29.89% of its issued share capital. Hangzhou Jinhui will conditionally sell 196 million shares, and Mr. Shao will conditionally sell 6.3087 million shares. The purchase price stipulated in the share transfer agreement is RMB 1.4945 billion.
Furthermore, the company may grant a put option, allowing the group to potentially increase its involvement in the acquisition. This option gives Hongzun Limited Partnership the right to sell up to 60% of its interest in Junheng Limited Partnership to Shenzhen Qise (or its holding company or a fellow subsidiary) at the put option price, which Shenzhen Qise (or its designated entity) will acquire.
By contributing to the establishment of Junheng Limited Partnership at the initial ratio, the company is only required to provide partial funding for the purchase price payable for the acquisition. Specifically, as Shenzhen Qise holds only a 40% interest in the partnership, this corresponds to the proportion of capital the group must contribute. Therefore, establishing this entity effectively disperses the risk that would be borne by the group as the sole investor/buyer of the Jihua sale shares, as the other partner in Junheng Limited Partnership will share part of the risks involved in the acquisition.
A core function of Junheng Limited Partnership is to achieve risk isolation. By holding specific assets or projects, including the Jihua sale shares, within the partnership, its assets and liabilities are entirely separate from the company or other related parties. Specific risks inherent to Junheng Limited Partnership itself, such as project failure or debt default, will not impact the company. This isolation mechanism effectively safeguards the company's financial stability and protects shareholder interests.
Junheng Limited Partnership can also serve as an independent financing platform, borrowing from financial institutions or issuing bonds based on its own assets and cash flow. Given that the partnership's asset quality is relatively transparent and risks are isolated from the company, its financing costs may be lower than those the company would incur through direct financing.
For the acquisition, in addition to utilizing the funds to be contributed by the partners of Junheng Limited Partnership, the partnership will also secure bank financing to pay the full purchase price. The acquisition is based on Junheng Limited Partnership's recognition of the intrinsic value of Jihua Group and its confidence in its future prospects, intending to gain control of Zhejiang Jihua Group Co.,Ltd. through the transaction.
Upon completion, the acquisition will expand the company's market share in the coatings and chemical industry. It is expected to have a positive impact on the company's market capitalization management in both the A-share market and global markets, thereby benefiting the company's long-term development.
The company has applied to the Stock Exchange for the resumption of trading in its shares, effective from 9:00 a.m. on Thursday, February 12, 2026.