Press Release

FCIB acted as the sole independent financial advisor and sole underwriter of the M&A transaction and its concurrent financing - Shandong Sunway Petrochemical Engineering Co., Ltd. acquiring 72.53% equity of the target company, Zibo Nalcohol Chemical Co., Ltd. with newly-issued shares and cash and issuing shares to raise supporting capital

Transaction Overview:

FCIB acted as the sole independent financial advisor and sole underwriter of the M&A transaction and its concurrent financing - Shandong Sunway Petrochemical Engineering Co., Ltd. (hereinafter referred to as “Sunway”, “the Company”) acquiring 72.53% equity of the target company, Zibo Nalcohol Chemical Co., Ltd. (hereinafter referred to as “Nalcohol”, “the Target”) with newly-issued shares and cash and issuing shares to raise supporting capital. The M&A transaction was successfully completed with a two-step structure. The asset acquisition transaction was completed in November 2020 when the Company acquired 72.53% equity of Nalcohol at RMB 616.47 million, in which RMB 308.24 million was paid by newly-issued shares with the rest RMB 308.24 million paid in cash. Then in December, the Company issued new shares to raise RMB 308.24 million supporting capital, which would be used to make cash payment for the asset acquisition transaction after deducting issuance expenses and other related expenses.

Transaction highlights:

1. FCIB innovatively designed a "Two-step" solution to solve the problem of more than 200 shareholders of the Target

The number of original shareholders of the Target was 281. FCIB adopted a two-step transaction plan of "cash acquisition” and “issuance of shares to purchase assets along with cash", reducing the number of counterparties to less than 200, thus properly removed the biggest obstacle that the Target had confronted for years in the process of securitization. FCIB effectively coordinated all parties in the transaction, promoted the transaction closure and effectively reduced the CSRC regulatory risk.

2. A classic case of vertical M&A in the downstream industry chain, significantly enhancing the sustainable profitability of Sunway

This transaction is a classic case of an SME board listed company’s vertical M&A in the downstream industry chain. The transaction will further expand the business layout of Sunway in the petrochemical industry, forming the business model of engineering technical services and basic chemical raw material production. As a chemical-raw-materials-field leading company, Nalcohol will be included in the consolidated statement of Sunway after the completion of this transaction. The asset quality and profitability of the Company will be significantly improved, as well as the anti-risk ability and sustainable operation ability, laying a solid foundation for Sunway’s development in future.

3. The transaction reflects ingenious transaction design capability, excellent execution and regulatory communication skills of FCIB

The Target was restructured and established by a state-owned enterprise with a large number of shareholders and an extremely complicated history. In addition, the early stage of the transaction involved the introduction of external strategic investors. Throughout the transaction, FCIB demonstrated ingenious transaction design capability, outstanding execution power and excellent regulatory communication skills by completing the whole process from the initial filing of the application with the CSRC to the completion of the asset transfer. It only took less than 2.5 months from the acceptance of the CSRC to the approval of CSRC M&A Committee with no condition attached at the M&A working meeting. The transaction was completed efficiently, greatly reducing the risk of regulatory uncertainty.