Jiangsu General raises funds for Cambodia factory

On 12 August, Jiangsu General stated that it would issue shares on the Shanghai Stock Exchange in a non-public funding initiative. The stock issuance plan shows that Jiangsu General is prepared to issue shares to no more than 35 specific investors. The number of shares to be issued shall not exceed 386,578,320 units, which is 30 per cent of Jiangsu General’s total share capital before the issuance of shares. The total amount of funds raised does not exceed 1.018 billion yuan (£124.42 million, 147.15 million euros). It is reported that HOdo Group, the controlling shareholder of Jiangsu General, plans to subscribe for shares in cash, with a subscription amount of not less than 30 million yuan (£3.67 million, 4.34 million euros) and not more than 200 million yuan (£24.45 million, 28.91 million euros).

Jiangsu General said the funds raised would be used for the Cambodia project and supplement working capital. Among them, the Cambodia project will receive 800 million yuan (£97.78 million, 115.64 million euros), accounting for 42 per cent of the project’s total investment. The remaining 218 million yuan (£26.64 million, 31.51 million euros) will be used as Jiangsu General’s working capital. According to reports, the Cambodia factory’s planned annual production capacity is 5 million semi-steel radial tyres and 900,000 all-steel radial tyres. The project has a construction period of 18 months and is scheduled to start production in June 2023. Jiangsu General said that after the Cambodia factory is fully put into operation, it is expected to add an average annual revenue (excluding tax) of 2.21 billion yuan (£270.11 million, 319.45 million euros) and an average annual profit of 250 million yuan (£30.56 million, 36.14 million euros).

It is worth noting that Jiangsu General’s control will not change due to the issuance of 30 per cent of the stock. Before the stock issuance, HOdo Group directly or indirectly controlled 52.09 per cent of Jiangsu General’s shares. According to the data, 82.58 per cent of HOdo Group’s shares are in the hands of the Zhou family, mainly Zhou Yaoting, Zhou Haijiang, Zhou Haiyan, Liu Lianhong and Gu Cui. The relationship between these five people is: Zhou Haijiang and Zhou Haiyan are Zhou Yaoting’s children, Liu Lianhong is Zhou Yaoting’s wife, and Gu Cui and Zhou Haiyan are husband and wife. In addition to relying on the HOdo Group, Zhou Yaoting and Gu Cui directly hold 0.15 per cent and 0.72 per cent of Jiangsu General’s shares. To sum up, the Zhou family controlled 52.96 per cent of Jiangsu General’s shares before the stock issuance. In the process of issuing shares this time, the amount that HOdo Group intends to subscribe for is not less than 30 million yuan (£3.67 million, 4.34 million euros). After the stock issuance, the equity ratio controlled by the actual controller of Jiangsu General will not be less than 40.98 per cent, which will not lead to changes in the company’s control rights.

At present, Jiangsu General’s board of directors and shareholder meeting have reviewed and approved the issues related to the issuance of shares. The proposal still needs the approval of the China Securities Regulatory Commission before it can be implemented.