Sanan Optoelectronics shareholders received another 7 billion yuan in additional capital, significantly increasing cash flow

Recently, Sanan Optoelectronics issued an announcement stating that the company received a notice from its shareholder Fujian Sanan Group Co., Ltd. (hereinafter referred to as "Sanan Group") on October 25, 2019 that Sanan Group and Changsha Jianxin Development Electronic Technology Co., Ltd. (hereinafter referred to as "Changsha Jianxin") signed the "Capital Increase Agreement on Xiamen Sanan Electronics Co., Ltd."

The agreement stipulates that Changsha Jianxin will increase its capital in Sanan Electronics by RMB 700,000, of which RMB 10,416.2847 will be included in Sanan Electronics' registered capital, and the remaining RMB 689,583.7153 will be included in Sanan Electronics' capital reserve. After the completion of this capital increase, Changsha Jianxin will hold 27.8369% of Sanan Electronics' equity. The equity changes of Sanan Electronics before and after this capital increase are as follows:

It was disclosed that before this change, the control relationship between Sanan Optoelectronics and its controlling shareholder was as follows:

After this change, the control relationship between Sanan Optoelectronics and its controlling shareholder is as follows:

       As of the date of this announcement, Sanan Group holds 243,618,660 shares of Sanan Optoelectronics, and Sanan Electronics holds 1,213,823,341 shares of Sanan Optoelectronics. Sanan Electronics is a holding subsidiary of Sanan Group. The two companies hold a total of 1,457,442,001 shares of Sanan Optoelectronics, accounting for approximately 35.74% of the company's total share capital. Sanan Group is actually the controlling shareholder of Sanan Optoelectronics, and Mr. Lin Xiucheng is the actual controller of Sanan Optoelectronics. After this equity change, the controlling shareholder of Sanan Optoelectronics will not change, and Mr. Lin Xiucheng will still be the actual controller of the company.

       According to the disclosure, the legal representative of Changsha Jianxin is Pan Dong, with a registered capital of 1 billion yuan. The business period is from October 22, 2019 to October 22, 2069. The business scope includes electronic technology research and development; power electronic components, electronic components and electromechanical assembly equipment manufacturing; machinery equipment, hardware products and electronic products wholesale. The main shareholders and investment ratios of Changsha Jianxin are as follows

      The announcement shows that Changsha Jianxin, based on its optimism about San'an Optoelectronics' future development prospects, will indirectly hold San'an Optoelectronics shares by increasing its capital in San'an Electronics. The two parties will make full use of each other's resources, support and promote each other, seek common development, achieve mutual benefit and win-win results, focus on long-term and stable cooperation, and establish a close strategic partnership.

       Sanan Optoelectronics said that through this capital increase, Sanan Electronics can significantly increase cash flow and improve the structure of its financial statements.

It is understood that Sanan Optoelectronics' main LED chip business experienced a sharp decline in the market environment in 2018, falling into oversupply, and many large and medium-sized LED chip manufacturers fell into a survival crisis.

       In addition, at the end of 2018, Sanan Optoelectronics was caught up in a financial fraud scandal. At the same time, the company had serious problems with both high deposits and loans, and its controlling shareholder's equity pledge ratio remained high, causing Sanan Optoelectronics and its shareholders to introduce strategic investors many times to obtain capital increases and improve cash flow.

      As early as January 22, San'an Optoelectronics' controlling shareholder San'an Group signed a "Strategic Cooperation Framework Agreement" with Industrial Bank International Trust Co., Ltd., Quanzhou Financial Holding Group Co., Ltd., and Fujian Anxin Industrial Investment Fund Partnership (Limited Partnership). Industrial Bank International Trust Co., Ltd., Quanzhou Financial Holding Group Co., Ltd., and Fujian Anxin Industrial Investment Fund Partnership (Limited Partnership) plan to increase San'an Group's capital by no less than 5.4 billion yuan and provide liquidity support of 600 million yuan. The four parties will promote follow-up work as soon as possible from the date of signing this agreement and coordinate to resolve relevant issues.

      On October 1, Sanan Optoelectronics announced that on September 29, 2019, Sanan Group and Hubei Changjiang Anxin Industrial Investment Fund Partnership (Limited Partnership) signed a "Capital Increase Agreement". The agreement stipulates that Changjiang Anxin will increase its capital in Sanan Group with RMB 5.96 billion in monetary funds. After the completion of this capital increase, Changjiang Anxin will hold approximately 22.28% of Sanan Group's equity.