On 8 December 2021, China Longyuan Power Group Corporation Limited (Longyuan Power, 00916.HK)’s absorption and merger of Inner Mongolia Pingzhuang Energy Co., Ltd. (Pingzhuang Energy, 000780.SZ) through share swap, and disposal of material assets and purchase of assets through cash payment and related party transactions were approved by the Review Committee on Mergers and Acquisitions of Listed Companies of China Securities Regulatory Commission (CSRC).
This transaction consists of share swap, asset disposal and cash purchase: (1) Longyuan Power will absorb and merge Pingzhuang Energy through share swap by issuing A shares to all conversion shareholders of Pingzhuang Energy. Upon completion of the merger, Pingzhuang Energy will be delisted and finally disqualified as a legal person. Longyuan Power, as the surviving company, will apply for listing and trading of A + H shares; (2) Pingzhuang Energy will transfer all the assets and liabilities other than deferred income tax assets, taxes payable and deferred income to Inner Mongolia Pingzhuang Coal (Group) Co., Ltd. for RMB 3.437 billion; (3) Longyuan Power will acquire in cash 100% equity interests in eight subsidiaries of China Energy Investment Corporation Limited (China Energy) in the new energy sector for RMB 5.774 billion, and China Energy’s new energy business will be packaged and listed. In this transaction plan, the absorption and merger, asset disposal and cash purchase are interconditional on each other, failing any of which, the other two will not be implemented.
Founded in 1993, Longyuan Power, affiliated to China Energy, is the largest wind power operator in the world. Longyuan Power has become a large-scale comprehensive power generation conglomerate focusing on new energy. It possesses more than 300 wind farms and PV, biomass, tidal, geothermal, and coal power generation projects in China. It operates in 32 domestic provinces and municipalities, and in Canada, South Africa, Ukraine and other countries. The completion of this transaction will open up domestic and overseas financing channels for Longyuan Power. It will further promote the intensification of internal resource allocation and business development synergy, giving full play to the advantages of the whole industry chain in related fields, highlight the development of related competitive industries, improving the company’s level of value creation, and enhancing its industry leading position and international competitiveness.
King & Wood Mallesons acted as the PRC counsel for Longyuan Power, and the lead counsel in this project. The KWM team was highly recognized by the client for their efficient, professional, accurate and comprehensive legal services. The project team was led by Wang Jianping and Wang Hui, with support from counsels Liu Bingjian and Zhang Yina, and associates Zhang Xia, Chen Xianglong, Wang Chu and Shang Lijia.
