Guo Zhiren entered into the sale and purchase agreement to acquire Fujian Changfeng Axle Manufacturing Company Limited from Changfeng Axle (China) Company Limited (SEHK:1039) for CNY 56 million in cash on December 16, 2013. Guo Zhiren will pay CNY 5.6 million of consideration as deposit within five days upon the date of signing of the agreement, CNY 22.4 million within five days from the date of assets inspection completion, CNY 16.8 million within five days from the date of full repayment of the outstanding bank loans and release of the assets pledge and CNY 11.2 million within 5 days upon completion of the relevant registration of the transfer of the sale interests with the relevant authority. After the transaction, Fujian Changfeng Axle Manufacturing will cease to be a subsidiary of Changfeng Axle (China) Company Limited.

Upon occurrence of, among others, the following events, the non-defaulting party shall have the right to terminate the agreement by serving a written notice to the defaulting party. If the payment obligation of Guo Zhiren under the agreement has been overdue for over 15 days, it will constitute a breach of the agreement by Guo Zhiren. In such event, Chang Feng Holding shall have a right to terminate the agreement by serving a written notice to Guo Zhiren and Guo Zhiren shall not have the right to request Chang Feng Holding to return the deposit and if Chang Feng Holding fails to procure the repayment or re-assignment of the outstanding bank loans and release of the asset pledge within three months from the latest time for completion as specified in the agreement, it will constitute a breach by Chang Feng Holding. In such event, Guo Zhiren shall have a right to terminate the agreement by serving Chang Feng Holding a written notice and Chang Feng Holding shall return the deposit to Guo Zhiren and provide additional compensation in the same amount of the deposit to Guo Zhiren.

Fujian Changfeng Axle Manufacturing Company reported net asset value of CNY 39.1 million as at November 30, 2013, turnover of CNY 280.67 million, loss before and loss after taxation of CNY 55.07 million for the year ended December 31, 2012. The transaction is subject to approval of the shareholders of Changfeng Axle (China) Company Limited. Wu Ching and Wong Kwai Mo, owning approximately 50.59% of Changfeng Axle (China) Company, approved the transaction, therefore, no general meeting of Changfeng Axle (China) Company for the approval of the transaction will be held. A circular containing, among other things, further information of the transaction and valuation report on the property interest of Fujian Changfeng Axle is expected to be dispatched to the shareholders of Changfeng Axle (China) Company Limited on or before January 9, 2014. The proceeds from the sale will be used as general working capital of Changfeng Axle (China) Company Limited group, repayment of bank borrowing and to fund future business opportunities for expansion of the Changfeng Axle (China) Company Limited group.

As of March 3, 2014, the transaction was approved by the shareholders of Changfeng Axle. As on April 15, 2014, Guo Zhiren and Changfeng Axle (China) Company entered into a supplemental agreement, pursuant to which Changfeng Axle shall procure its affiliates in the China to repay or re-assign the outstanding bank loans and release of the asset pledge on or before July 31, 2014, as extended from within four months from the date of the agreement. Consequently, the closing of the transaction has been postponed.
As reported on July 31, 2013, Guo Zhiren and Changfeng Axle (China) Company Limited (SEHK:1039) entered into a second supplemental agreement, pursuant to which Changfeng Axle shall procure its affiliates in the PRC to repay or re-assign the outstanding bank loans and release of the asset pledge on or before August 31, 2014. Completion of the disposal has been further postponed accordingly.

Akron Corporate Finance Limited acted as the financial advisor for Changfeng Axle (China) Company Limited. Roma Appraisals Limited and Xiamen Shenmao Assets Appraisal Company Limited acted as the property valuer in the transaction.

Guo Zhiren cancelled the acquisition of Fujian Changfeng Axle Manufacturing Company Limited from Changfeng Axle (China) Company Limited (SEHK:1039) on January 31, 2015.