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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  Luoyang Glass Company Limited    1108   CNE1000003Q0

LUOYANG GLASS COMPANY LIMITED

(1108)
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Luoyang Glass : (1) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES; (2) CONNECTED TRANSACTION IN RELATION TO THE SUBSCRIPTION FOR A SHARES BY TRIUMPH GROUP; (3) SPECIFIC MANDATE; AND (4) PROVISION OF GUARANTEE BY THE COMPANY TO THE SUBSIDIARIES OF THE COMPANY IN 2021

02/23/2021 | 05:59pm EST

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Luoyang Glass Company Limited*, you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer, registered institution in securities or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of Luoyang Glass Company Limited*.

°

(1) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES;

(2) CONNECTED TRANSACTION IN RELATION TO THE SUBSCRIPTION

FOR A SHARES BY TRIUMPH GROUP;

(3) SPECIFIC MANDATE; AND

(4) PROVISION OF GUARANTEE BY THE COMPANY TO THE

SUBSIDIARIES OF THE COMPANY IN 2021

Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

Unless the context requires otherwise, capitalised terms used herein shall have the same meanings as those set out in the section headed "Definitions" of this circular.

A notice convening the EGM to be held at 9:00 a.m. on 12 March 2021 (Friday) at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC is set out on pages EGM-1 to EGM-7 of this circular.

A notice convening the H Shareholders' Class Meeting of the Company to be held at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC at 10:00 a.m. on 12 March 2021 (Friday) (or immediately after the A Shareholders' Class Meeting of the Company to be convened and held on the same date and at the same place) is set out on pages HCM-1 to HCM-6 of this circular.

The forms of proxy for use at the EGM and the H Shareholders' Class Meeting were despatched to the Shareholders and published on the website of The Stock Exchange of Hong Kong Limited (http://www.hkexnews.hk) on 22 February 2021. Whether or not you are able to attend the EGM/the H Shareholders' Class Meeting in person, you are requested to complete and return the forms of proxy in accordance with the instructions printed thereon to the Company's share registrar in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, or to the Company's registered address at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC as soon as possible and in any event not less than 24 hours before the time appointed for holding of the EGM/the H Shareholders' Class Meeting or any adjournment thereof. Completion and return of the forms of proxy will not preclude you from attending and voting in person at the EGM/the H Shareholders' Class Meeting or any adjournment thereof should you so wish.

* For identification purposes only

24 February 2021

CONTENTS

Page

DEFINITIONS ...........................................................

ii

LETTER FROM THE BOARD ..............................................

1

LETTER FROM THE INDEPENDENT BOARD COMMITTEE ....................

37

LETTER FROM VEDA CAPITAL ...........................................

39

APPENDIX I - PROPOSAL FOR THE NON-PUBLIC ISSUANCE OF A SHARES

REVISED ................................................

I-1

APPENDIX II - FEASIBILITY ANALYSIS REPORT ON THE USE OF PROCEEDS

FROM THE NON-PUBLIC ISSUANCE OF A SHARES ...........

II-1

APPENDIX III - REPORT ON UTILISATION OF THE PREVIOUSLY

RAISED PROCEEDS ......................................

III-1

APPENDIX IV - RISK ALERT ON THE DILUTION OF CURRENT RETURNS

DUE TO THE NON-PUBLIC ISSUANCE OF SHARES AND

THE RELEVANT REMEDIAL MEASURES ....................

IV-1

APPENDIX V - SHAREHOLDERS' RETURN PLAN FOR THE NEXT THREE YEARS

(2021-2023) ................................................

V-1

APPENDIX VI - GENERAL INFORMATION ..................................

VI-1

APPENDIX VII - PROVISION OF GUARANTEE BY THE COMPANY TO THE

SUBSIDIARIES OF THE COMPANY IN 2021 ..................

VII-1

NOTICE OF EGM ........................................................

EGM-1

NOTICE OF H SHAREHOLDERS' CLASS MEETING ..........................

HCM-1

-i-

In this circular, unless the context requires otherwise, the following terms shall have the following meanings:

"A Share(s)"

the ordinary share(s) issued by the Company, with a par value of RMB1.00 each, which are listed on the Shanghai Stock Exchange

"A Shareholder(s)"

holder(s) of A Share(s)

"A Shareholders' Class Meeting"

the class meeting of the A Shareholders to be convened at 9:00 a.m. on 12 March 2021 by the Company for the A Shareholders to consider and, if thought fit, approve, among other things, (i) the Non-public Issuance of A Shares; (ii) the Proposed Triumph Group Subscription; and (iii) the Specific Mandate

"Articles of Association"

the articles of association of the Company, as amended from time to time

"associate"

has the meaning ascribed to it under the Listing Rules

"Bengbu Institute"

CNBM Bengbu Design & Research Institute for Glass Industry

Co., Ltd* (ʕܔҿ঵਽ޚᆨʈุணࠇ޼Ӻ৫Ϟࠢʮ̡), a company incorporated in the PRC with limited liability, the substantial shareholder of the Company and a wholly-owned subsidiary of Triumph Group

"Board"

the board of Directors of the Company

"Class Meetings"

the A Shareholders' Class Meeting and the H Shareholders' Class Meeting

"CLFG"

China Luoyang Float Glass (Group) Company Limited* (ʕ਷ݾ ජओجޚᆨණྠϞࠢப΂ʮ̡), a company incorporated in the PRC with limited liability, and the substantial shareholder of the Company

"CNBMG"

China National Building Material Group Co., Ltd.* (ʕ਷ܔҿණ ྠϞࠢʮ̡), a wholly state-owned enterprise incorporated in the PRC and an indirect controlling shareholder of the Company

"Company"

Luoyang Glass Company Limited* (ݾජޚᆨٰ΅Ϟࠢʮ̡), a joint stock limited company incorporated in the PRC with limited liability, the H Shares and A Shares of which are listed on the main board of the Stock Exchange (stock code: 1108) and the SSE (stock code: 600876) respectively

"connected person"

has the meaning as ascribed to it under the Listing Rules

"controlling shareholder"

has the meaning as ascribed to it under the Listing Rules

"CSRC"

the China Securities Regulatory Commission (ʕ਷ᗇՎ္ຖ၍ଣ ։ࡰึ)

"Director(s)"

director(s) of the Company, including the independent non-executive director(s)

"EGM"

the extraordinary general meeting of the Company to be convened at 9:00 a.m. on 12 March 2021 for the Shareholders to consider and, if thought fit, approve, among other things, (i) the Non-public Issuance of A Shares; (ii) the Proposed Triumph Group Subscription; (iii) the Specific Mandate; and (iv) the provision of guarantee by the Company to the subsidiaries of the Company in 2021

"H Share(s)"

the ordinary share(s) issued by the Company, with a par value of RMB1.00 each, which are listed on the Stock Exchange

"H Shareholder(s)"

holder(s) of H Share(s)

"H Shareholders' Class Meeting"

the class meeting of the H Shareholders to be convened at 10:00 a.m. on 12 March 2021 (or immediately after the A Shareholders' Class Meeting) by the Company for the H Shareholders to consider and, if thought fit, approve, among other things, (i) the Non-public Issuance of A Shares; (ii) the Proposed Triumph Group Subscription; and (iii) the Specific Mandate

"HK$"

"Hong Kong"

Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC

"Huaguang Group"

Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd.* (τᏏശΈΈཥҿࣘ߅ҦණྠϞࠢʮ̡), a company incorporated in the PRC with limited liability

"Independent Board Committee"

the independent board committee of the Company comprising Mr. Jin Zhanping, Mr. Ye Shuhua, Mr. He Baofeng and Ms. Zhang Yajuan, being all the independent non-executive Directors of the Company, which is formed to advise the Independent Shareholders on the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate in accordance with the Listing Rules

"Independent Financial Adviser" or

"Veda Capital"

Veda Capital Limited, a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, and the independent financial adviser appointed in accordance with Listing Rules to the Independent Board Committee and the Independent Shareholders on the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate

"Independent Shareholders"

Shareholders other than (i) Triumph Group and its associate(s); (ii) parties acting in concert with Triumph Group; and (iii) all other parties (if any) who are materially interested or involved in the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription

"International Engineering"

China Triumph International Engineering Co., Ltd.* (ʕ਷ܔҿ਷ ყʈ೻ණྠϞࠢʮ̡), a company incorporated in the PRC with limited liability

"Issue Date"

the date on which the A Shares are issued under the Non-public Issuance of A Shares

"Issue Price"

the issue price at which the A Shares are issued under the Non-public Issuance of A Shares

"Latest Practicable Date"

18 February 2021, being the latest practicable date for the purpose of ascertaining certain information contained in this circular prior to its publication

"Listing Rules"

the Rules Governing the Listing of Securities on the Stock Exchange

"Non-public Issuance of A Shares"

the proposed non-public issuance of a maximum of 164,562,129 (inclusive) new A Shares in aggregate by the Company to not more than 35 (35 inclusive) specific target subscribers, including Triumph Group

"PRC"

the People's Republic of China, for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

"Price Determination Date"

the first day of the offering period of the Non-public Issuance of A Shares

DEFINITIONS

"Proposed Triumph Group

the subscription of A Shares to be issued under the Non-public

Subscription"

Issuance of A Shares by Triumph Group according to the Triumph

Group Subscription Agreement (as amended and supplemented by the

Supplemental Agreement), as part of the Non-public Issuance of A

Shares

"RMB"

Renminbi, the lawful currency of the PRC

"Share(s)"

ordinary share(s) of nominal value of RMB1.00 each in the

existing share capital of the Company

"Shareholder(s)"

the holder(s) of the Shares

"Specific Mandate"

according to Rule 13.36 of the Listing Rules (as amended by

Chapter 19A of the Listing Rules), the specific mandate to be

granted by the Independent Shareholders at the EGM and the

Class Meetings to issue A Shares under the Non-public Issuance

of A Shares

"SSE"

the Shanghai Stock Exchange

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

"Supplemental Agreement"

the supplemental agreement to the Triumph Group Subscription

Agreement which was entered into between Triumph Group and

the Company on 20 January 2021

"substantial shareholder(s)"

has the same meaning as ascribed to it under the Listing Rules

"trading day"

a day on which the SSE is open for dealing or trading in securities

"Triumph Group"

Triumph Technology Group Company Limited* (௱ସ߅ҦණྠϞ

ࠢʮ̡), a company incorporated in the PRC with limited liability

and an indirect controlling shareholder of the Company

"Triumph Group Subscription

the conditional subscription agreement entered into between

Agreement"

Triumph Group and the Company on 30 December 2020, pursuant

to which, Triumph Group agreed to conditionally subscribe for,

and the Company agreed to conditionally issue, not less than

13.62% (inclusive) of the A Shares to be issued under the Non-

public Issuance of A Shares, and not exceeding 70,975,646 A

Shares

"%"

percent

*For identification purposes only

°

Executive Directors:

Mr. Zhang Chong (Chairman) Mr. Xie Jun (Vice Chairman) Mr. Ma Yan (General Manager) Mr. Wang Guoqiang

Mr. Zhang Rong

Non-executive Directors: Mr. Ren Hongcan

Mr. Chen Yong

Independent Non-executive Directors: Mr. Jin Zhanping

Mr. Ye Shuhua Mr. He Baofeng

Ms. Zhang Yajuan

To the ShareholdersDear Sir or Madam,

Registered and principal office: No. 9 Tang Gong Zhong Lu Xigong District

Luoyang Municipal Henan Province The PRC

24 February 2021

(1) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES;

(2) CONNECTED TRANSACTION IN RELATION TO THE SUBSCRIPTION

FOR A SHARES BY TRIUMPH GROUP;

(3) SPECIFIC MANDATE; AND

(4) PROVISION OF GUARANTEE BY THE COMPANY TO THE

SUBSIDIARIES OF THE COMPANY IN 2021

*For identification purposes only

I. INTRODUCTION

References are made to the announcement and the relevant overseas regulatory announcements of the Company dated 30 December 2020 (the "Announcements"), and the supplemental announcement and the relevant overseas regulatory announcements dated 20 January 2021.

As disclosed in the Announcements, on 30 December 2020, the Board has approved the proposed issuance of a maximum of 164,562,129 (inclusive) new A Shares by the Company to not more than 35 (35 inclusive) specific target subscribers, including Triumph Group. It is expected that the gross proceeds to be raised from the Non-public Issuance of A Shares will not exceed RMB2 billion (inclusive).

As part of the Non-public Issuance of A Shares, on 30 December 2020, the Company entered into the Triumph Group Subscription Agreement with Triumph Group, pursuant to which Triumph Group conditionally agreed to subscribe for not less than 13.62% (inclusive) of the A Shares to be issued under the Non-public Issuance of A Shares in cash, and the number of A Shares to be subscribed for shall not exceed 70,975,646 shares, and the proportion of total shareholdings held in the Company, either directly or indirectly, by Triumph Group and parties acting in concert with it upon the completion of the Non-public Issuance of A Shares shall not exceed 36.81% of the total issued Shares of the Company upon the completion of the Non-public Issuance of A Shares.

Triumph Group will not participate in the market bidding process but has undertaken to accept the market bidding results and subscribe for the A Shares to be issued under the Non-public Issuance of A Shares at the same price as other specific investors.

On 20 January 2021, the Board has approved the amendment to the plan for the Non-public Issuance of A Shares, and the Company (as the issuer) and Triumph Group (as the subscriber) entered into the Supplemental Agreement for the amendment to the Triumph Group Subscription Agreement regarding the lock-up period of A Shares of the Company obtained by Triumph Group through the Non-public Issuance of A Shares from the original 18 months to 36 months from the date of completion of Non-public Issuance of A Shares.

The purpose of this circular is to provide you with details of, among others:

  • (a) further details of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription, the Specific Mandate and the authorization to the Board and its authorized person(s) to handle all matters (including but not limited to the amendments to the Articles of Association) relating to the Non-public Issuance of A Shares;

  • (b) further details in relation to the provision of guarantee by the Company to the subsidiaries of the Company in 2021;

  • (c) a letter from the Independent Board Committee to Independent Shareholders containing its recommendation in respect of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate;

  • (d) a letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders containing its recommendation in respect of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate; and

  • (e) the notice of EGM and the notice of H Shareholders' Class Meeting, for the purpose of considering, and if thought fit, approving (amongst others), the matters referred to in (a) and (b).

II. NON-PUBLIC ISSUANCE OF A SHARES

On 30 December 2020, the Board has approved the proposed issuance of a maximum of 164,562,129 (inclusive) new A Shares by the Company to not more than 35 (35 inclusive) specific target subscribers, including Triumph Group. It is expected that the gross proceeds to be raised from the Non-public Issuance of A Shares will not exceed RMB2 billion (inclusive).

(i) Details of the Non-Public Issuance of A Shares

Details of the Non-public Issuance of A Shares are set out below. Upon consideration and approval by the Shareholders at the EGM and Class Meetings, relevant matters in respect of the Non-public Issuance of A Shares shall be submitted to the CSRC in accordance with relevant procedures, and the final plan shall be the one as approved by the CSRC. The specific details of the Non-public Issuance of A Shares, including but not limited to the Issue Price and the final amount of gross proceeds to be raised, will be announced separately by the Company upon final determination.

Class and par value of theA Shares with a par value of RMB1.00 each.

Shares to be issued:

Method and time of issuance:

The Non-public Issuance of A Shares will be carried out by way of non-public issuance to not more than 35 (35 inclusive) specific target subscribers, including Triumph Group. The Company will choose the appropriate opportunity to issue the A Shares to specific target subscribers within the validity period of the approval documents regarding the Non-public Issuance of A

Shares from the CSRC.

Price Determination Date,

Issue Price, and pricing principles:

The Issue Price of the A Shares under the Non-public Issuance of A Shares will be determined through bidding. The Price Determination Date of the Non-public Issuance of A Shares is the first day of the offering period of the Non-public Issuance of A Shares.

The Issue Price shall not be lower than (i) 80% of the average trading price of the Company's A Shares over the 20 trading days preceding the Price Determination Date (excluding such date) (the average trading price of the A Shares over the 20 trading days preceding the Price Determination Date = the total turnover of A Shares over the 20 trading days preceding the Price Determination Date/the total trading volume of A Shares over the 20 trading days preceding the Price Determination Date) and (ii) the net asset value per Share attributable to the Shareholders of ordinary shares of the Company as set out in the latest audited consolidated financial statements of the Company before the issuance under the Non-public Issuance of A Shares, whichever is higher.

The Company's Non-public Issuance of A Shares and the pricing principle of the Issue Price were mainly based on the "Administrative Measures on Securities Issuance of Listed Companies (revised in 2020)"* ( ɪ̹ʮ̡ᗇՎ೯Б၍ଣ፬ج' (2020ϋࡌ͍)) (hereinafter referred to as the "Administrative Measures") and the "Detailed Rules for the Implementation of Non-public Issuance of Shares (revised in 2020)*( ڢʮක೯ Бٰୃྼ݄୚ۆ'(2020ϋࡌ͍)) (hereinafter referred to as the "Implementation Rules") as issued by the CSRC.

According to Article 38 of the Administrative Measures, the non-public issuance of shares by a listed company shall comply with the following requirement, among others, the issue price shall not be less than 80% of the average price of the company's shares on the 20 trading days before the price determination date. According to Article 7 of the Implementation Rules, the "price determination date" is the reference date for calculating the floor price of the issuance. The Price Determination Date for this non-public issuance of shares is the first day of the offering period. The listed company shall not issue shares at a price lower than the floor price of the issuance.

According to the Administrative Measures and the Implementation Rules, the Issue Price shall not be lower than 80% of the average trading price of the Company's A Shares over the 20 trading days preceding the Price Determination Date and the Company's latest audited net asset value per Share attributable to the Shareholders of ordinary shares of the Company before the Non-public Issuance of A Shares, whichever is higher. The Company will liaise with the sponsor of this issuance, to determine the offering period within 12 months after obtaining the approval from the CSRC and take the first day of the offering period as the Price Determination Date and to determine the floor price of the issuance. The Company and the sponsor will issue a subscription invitation letter to the specific target investors which are in compliance with the relevant requirements on the day before the start of the offering period, and organize the investors to declare the quotation of price within the time specified in the subscription invitation letter, and determine the Issue Price of the Non-public Issuance of A Shares base on the price inquiry results in accordance with the price priority principle.

Therefore, the Board is of the view that the pricing basis of the Issue Price of the Non-public Issuance of A Shares complies with requirements of relevant laws and regulations and is reasonable.

As set out in the latest audited consolidated financial statements of the Company before the issuance under the Non-public Issuance of A Shares, the net asset value per Share attributable to the Shareholders of ordinary shares of the Company as disclosed in the audited consolidated financial statements for the year of 2019 of the Company is RMB2.32, on such basis and assuming that the latest audited consolidated financial statements before the issuance under the Non-public Issuance of A Shares is the audited consolidated financial statements for the year of 2019 of the Company, it is expected that the minimum Issue Price would, subject to the approval of the CSRC, be at least RMB2.32.

As at the date of the Announcements, the closing price per A Share quoted on the SSE was RMB17.71; as at the date of the Announcements, the closing price per H Share quoted on the

Stock Exchange was HK$6.6.

In the event that during the 20 trading days prior to the Price Determination Date, there occurs ex-right or ex-dividend event, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, causing adjustment to the Share prices, the trading prices for the trading days preceding such adjustment shall be calculated as the adjusted price after such ex-right or ex-dividend event.

The aforementioned net asset value per Share will be adjusted accordingly in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in the Company during the period from the balance sheet date of the latest audited financial report before the issuance to the Issue Date.

The Issue Price shall be adjusted on ex-right or ex-dividend basis in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in the Company during the period from the Price Determination Date to the Issue Date.

Upon obtaining the approvals from the CSRC for the Non-public Issuance of A Shares by the Company, the final Issue Price shall be determined in accordance with the relevant laws and regulations and the requirements by the regulatory bodies, and having regard to the bidding results, through negotiation by the Board or other authorized person(s) of the Board under the authorization granted at the EGM, with the sponsor (the lead underwriter) of the Non-public Issuance of A Shares.

Triumph Group will not participate in the market bidding process of the Non-public Issuance of A Shares but has undertaken to accept the bidding results and agree to subscribe for the A Shares to be issued under the Non-public Issuance of A Shares at the same price as other specific investors.

Target subscribers:

The target subscribers for the Non-public Issuance of A Shares will not be more than 35 (inclusive) investors who are in compliance with the requirements of the CSRC as the specific target subscribers (including Triumph Group, an indirect controlling shareholder of the Company). The target subscribers other than Triumph Group include securities investment fund management companies, securities companies, trust investment companies, finance companies, asset management companies, insurance institution investors, trust companies, qualified foreign institutional investors (including self-operated accounts of or investment product accounts managed by the above investors), Renminbi qualified foreign institutional investors and other qualified investors. Securities investment fund management companies, securities companies, qualified foreign institutional investors, Renminbi qualified foreign institutional investors which subscribe for the A Shares with two or more of the products managed by them, shall each be taken as one single subscriber. Trust companies, as subscribers, may only subscribe for the A Shares with their own funds.

Within the above scope, the final list of the other subscribers, other than Triumph Group, will be determined by the Board within the scope of authorization at the EGM, through negotiation with the sponsor (the lead underwriter) of the Non-public Issuance of A Shares based on the bidding results and pursuant to the Specific Rules for Implementation of the Non-public Issuance of Shares by Listed Companies (as amended in 2020)* ( ɪ̹ʮ̡ڢʮක೯Бٰୃྼ݄୚ۆ'(2020ϋࡌ͍))

after the Company has obtained approvals from the CSRC for the Non-public Issuance of A Shares. If the laws, regulations and regulatory documents of the PRC have new requirements in relation to target subscribers of the Non-public Issuance of A Shares, the Company will make adjustments according to the new requirements.

All the target subscribers of the Non-public Issuance of A Shares will subscribe for A Shares under the Non-public Issuance of A Shares in cash on a one-off basis.

As at the Latest Practicable Date, apart from the Triumph Group Subscription Agreement and the Supplemental Agreement, the Company has not entered into any agreements with any potential subscribers in respect of the Non-public Issuance of A Shares. The Company currently expects that, except the Triumph Group, the A Shares to be issued under the Non-public Issuance of A Shares will be issued to subscribers who are and whose ultimate beneficial owners are third parties independent of the Company and its connected persons and none of them will become substantial Shareholders of the Company upon their respective completion of subscription for A Shares pursuant to the Non-public Issuance of A Shares.

Number of A Shares to be issued:

The number of A Shares to be issued under the Non-public Issuance of A Shares will not exceed 164,562,129 (inclusive). The maximum number of shares to be issued will not exceed 30% of the total share capital of the Company (being 548,540,432 Shares) prior to this issuance.

The number of A Shares to be issued under the Non-public Issuance of A Shares being not exceeding 164,562,129 (inclusive), represents (i) approximately 55.12% of the number of the existing issued A Shares as at the Latest Practicable Date and approximately 30% of the number of existing total issued Shares as at the Latest Practicable Date; and (ii) approximately 35.53% of the number of issued A Shares and approximately 23.08% of the number of total issued Shares upon completion of the Non-public Issuance of A Shares, in each case, the shares as enlarged by the number of A Shares to be issued.

Out of which Triumph Group intends to subscribe for not less than 13.62% (inclusive) of the A shares to be issued under the Non-public Issuance of A Shares in cash, and the number of A Shares to be subscribed for shall not exceed 70,975,646 Shares, and the proportion of total shareholdings held, directly and indirectly, by Triumph Group and parties acting in concert with it in the Company upon the completion of the Non-public Issuance of A Shares shall not exceed 36.81% of the total issued Shares of the Company upon the completion of the Non-public

Issuance of A Shares.

The number of A Shares to be issued under the Non-public Issuance of A Shares will be adjusted accordingly if there occurs any ex-right or ex-dividend event, such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves, between the date of the Announcement and the Issue Date.

The final number of A Shares to be issued will be determined by the Board or authorized person(s) of the Board under the authorization granted at the EGM through negotiation with the sponsor (the lead underwriter) of the Non-public Issuance of A Shares in accordance with the price offered by the target subscribers after the Company has obtained approvals from the CSRC in relation to the Non-public Issuance of A Shares.

Use of proceeds:

The gross proceeds to be raised from the Non-public Issuance of A Shares are expected to be not more than RMB2,000,000,000 (inclusive) and the net proceeds after deducting issuance costs are intended to be used for investment in the following projects:

Proposed

Total amount of amount of proceeds to

No. Project name

investment be utilized (RMB0'000) (RMB0'000)

1 Project of Photovoltaic Cell Encapsulating

179,457.00

140,000.00

77,968.00

60,000.00

101,489.00

80,000.00

Repayment of interest-bearing liabilities and

-

60,000.00

replenishment of working capital

Total

179,457.00

200,000.00

Material for Solar Equipment

  • 1.1 CNBM (Hefei) New Energy Company

    Limited* (ʕܔҿ€Υ٭อঐ๕Ϟࠢʮ̡)

    Project of Photovoltaic Cell Encapsulating

    Material for Solar Equipment

  • 1.2 CNBM (Tongcheng) New Energy Materials Company Limited* (ʕ਷ܔҿࣶ۬อঐ๕ ҿࣘϞࠢʮ̡) Phase I of the Project of Photovoltaic Cell Encapsulating Material for Solar Equipment

2

If the net proceeds to be raised from the Non-public Issuance of A Shares are lower than proposed amount to be used from the proceeds for the above projects, the shortfall will be covered by the Company through self-raised funds. Meanwhile, under the premise of not changing the projects to be invested in with the proceeds, the Board may make appropriate adjustment to the order and the amount to be used from the proceeds for the above projects according to the actual condition of the projects to be invested in with the proceeds.

In particular, in the event that the amount of the net proceeds to be raised from the Non-public Issuance of A Shares is less than the amount to be used for the projects above, the Company will, based on the actual fund raised, adjust and decide the application arrangement such as the order of priority of the projects to be invested and the specific investment amount to each project in accordance with the importance and urgency of the projects. In such case, the Company shall make further announcement(s) when the net proceeds raised from the Non-public Issuance of A Shares and the use of proceeds is determined upon the completion of the Non-public Issuance of A Shares.

Before the proceeds to be raised from the Non-public Issuance of A Shares are available to be used, the Company may invest in advance with self-owned funds or self-raised funds according to the progress of the projects to be invested in with the proceeds, which will be subsequently replaced according to the relevant procedures as stipulated after the proceeds are available to be used.

Lock-up Period arrangement:

In compliance with the requirements of relevant laws, regulations and regulatory documents, Triumph Group shall not transfer the A Shares which it subscribed for under the Non-public Issuance of A Shares within 36 months from the date of completion of the Non-public Issuance of A Shares.

All the other target subscribers shall not transfer the A Shares which they subscribed for under the Non-public Issuance of A Shares within 6 months from the date of completion of the Non-public Issuance of A Shares.

Relevant requirements by the CSRC and the SSE shall be followed upon expiry of the above lock-up period. If there are subsequent changes in relevant laws, regulations, and regulatory documents of securities regulatory authorities, the lock-up period will be adjusted accordingly.

Place of listing of the A

Shares to be issued:The Company will make an application to the SSE for the granting of the listing and trading of all the new A Shares to be issued under the Non-public Issuance of A Shares. Upon expiry of the above lock-up period, the new A Shares will be listed and traded on the SSE.

Conditions for the Non-public Issuance of A Shares:

Specific Mandate of the issuance of A Shares:

The Non-public Issuance of A Shares is subject to:

  • (1) the approvals for the plan of Non-public Issuance of A Shares by the Shareholders at the EGM, A Shareholders' Class Meeting and H Shareholders' Class Meeting;

  • (2) the approval for the application for Non-public Issuance of A Shares by the CSRC; and

  • (3) the issuance of the approval for the plan of Non-public Issuance of A Shares by CNBMG.

The Company will issue the A Shares under the Specific Mandate to be sought from the Independent Shareholders at the EGM and the A Shareholders and H Shareholders in the Class Meetings.

Arrangement relating to the accumulated undistributed profits of

All the existing and new Shareholders upon completion of the Non-public Issuance of A Shares will be entitled to the accumulated undistributed profits of the Company before the

the Company prior to the Non-public Issuance of A Shares in accordance with theirNon-public Issuance of A Shares:

respective shareholding proportion at that time.

Validity period of the resolution:

The resolution with respect to the Non-public Issuance of A Shares shall be valid for 12 months from the date of the consideration and passing of such resolutions at the EGM and the Class Meetings.

Rights of A Shares to be issued:

The A Shares to be issued under the Non-public Issuance of A Shares, when fully paid and issued, will rank pari passu in all respects amongst themselves and with the A Shares in issue at the time of the issuance of such A Shares.

  • (ii) The resolution in relation to the satisfaction of the criteria for the 2020 Non-public Issuance of A Shares by the Company

    Pursuant to the requirements of relevant laws, regulations and regulatory documents in the PRC, the Board, by taking into account the actual situation of the Company, considers that the Company satisfies all the requirements under the relevant laws, regulations and regulatory documents in relation to the Non-public Issuance of A Shares, and the criteria for the Non-public Issuance of A Shares.

    The resolution in relation to the satisfaction of the criteria for the 2020 Non-public Issuance of A Shares of the Company will be submitted, by way of special resolution, for the Shareholders' consideration and approval at the EGM.

  • (iii) The resolution in relation to the plan for the 2020 Non-public Issuance of A Shares of the Company

    Pursuant to the requirements of relevant laws, regulations and regulatory documents in the PRC and based on the actual situation of the Company, the Company intends to implement the plan for the Non-public Issuance of A Shares with a total capital to be raised not exceeding RMB2 billion (inclusive). Each of the following 10 resolutions under the plan for the Non-public Issuance of A Shares will be submitted, by way of special resolution, for the Independent Shareholders' consideration and approval at the EGM, the A Shareholders' Class Meeting, and the H Shareholders' Class Meeting:

    • (i) Class and par value of shares to be issued;

    • (ii) Method and time of issuance;

    • (iii) Price determination date, issue price, and pricing principles;

    • (iv) Target subscribers and method of subscription;

    • (v) Number of Shares to be issued;

    • (vi) Use of proceeds;

    • (vii) Lock-up period arrangements;

    • (vii) Place of listing;

    • (ix) Arrangement relating to the accumulated undistributed profits; and

(x) Validity period of the resolution in relation to the Non-public Issuance of A Shares.

Each of the above 10 resolutions under the resolution in relation to the plan for the 2020 Non-public Issuance of A Shares of the Company will be submitted, by way of separate special resolution, for the Independent Shareholders' consideration and approval at the EGM, the A Shareholders' Class Meeting and the H Shareholders' Class Meeting.

  • (iv) The resolution in relation to the proposal for the 2020 Non-public Issuance of A Shares of the Company (Revised)

    Pursuant to the requirements under relevant laws, regulations and regulatory documents in the PRC, the Company has prepared the "Proposal for the 2020 Non-public Issuance of A Shares of Luoyang Glass Company Limited* (Revised)" (the "Proposal for the Non-public Issuance of A Shares (Revised)") in respect of the 2020 Non-public Issuance of A Shares. The "Proposal for the Non-public Issuance of A Shares (Revised)", which was prepared in Chinese language, was disclosed in the overseas regulatory announcement of the Company dated 20 January 2021, and the full text of its English translation is set out in Appendix I to this circular. In the event of any discrepancy between the Chinese version and the English translation of the "Proposal for the Non-public Issuance of A Shares (Revised)", the Chinese version shall prevail.

    The resolution in relation to the "Proposal for the Non-public Issuance of A Shares (Revised)" will be submitted by way of special resolution for the Independent Shareholders' consideration and approval at the EGM, the A Shareholders' Class Meeting, and the H Shareholders' Class Meeting.

  • (v) The resolution in relation to the feasibility analysis report on the use of proceeds from the 2020 Non-public Issuance of A Shares of the Company

    For the purpose of implementing the Non-public Issuance of A Shares, the Company has formulated the "Feasibility Analysis Report on the Use of Proceeds from the 2020 Non-public Issuance of A Shares of Luoyang Glass Company Limited*" (the "Feasibility

    Analysis Report on the Use of Proceeds from the Non-public Issuance of A Shares") in

    accordance with the requirements under relevant laws, regulations and regulatory documents in the PRC. The "Feasibility Analysis Report on the Use of Proceeds from the Non-public Issuance of A Shares", which was prepared in Chinese, was disclosed in the overseas regulatory announcement of the Company dated 30 December 2020, and the full text of its English translation is set out in Appendix II to this circular. In the event of any discrepancy between the Chinese version and the English translation of the "Feasibility Analysis Report on the Use of Proceeds from the Non-public Issuance of A Shares", the Chinese version shall prevail.

The resolution in relation to the feasibility analysis report on the use of proceeds from the Non-public Issuance of A Shares will be submitted, by way of special resolution, for the Independent Shareholders' consideration and approval at the EGM.

  • (vi) The resolution in relation to the report on the utilisation of previously raised proceeds

    In accordance with the requirements under relevant laws, regulations and regulatory documents in the PRC, the Company has prepared the "Special Report on Utilisation of Previously Raised Proceeds of Luoyang Glass Company Limited*" (the "Report on Utilisation of Previously Raised Proceeds"). WUYIGE Certified Public Accountants LLP has conducted a review on the report and issued the "Review Report on the Utilisation of Previously Raised Proceeds of Luoyang Glass Company Limited*" (the "Review Report

    on Utilisation of Previously Raised Proceeds"). The "Report on Utilisation of Previously

    Raised Proceeds" and the "Review Report on Utilisation of Previously Raised Proceeds", which were prepared in Chinese, were disclosed in the overseas regulatory announcements of the Company dated 30 December 2020. The full text of the English translation of the "Report on Utilisation of Previously Raised Proceeds" is set out in Appendix III to this circular. In the event of any discrepancy between the Chinese version and the English translation of the "Report on Utilisation of Previously Raised Proceeds", the Chinese version shall prevail.

    The resolution in relation to the "Report on Utilisation of Previously Raised Proceeds" will be submitted, by way of ordinary resolution, for the Shareholders' consideration and approval at the EGM.

  • (vii) The resolution in relation to the conditional subscription agreement and the Supplemental Agreement in respect of the Non-public Issuance of A Shares entered into between Triumph Group and the Company

    As part of the Non-public Issuance of A Shares, on 30 December 2020, the Company entered into the Triumph Group Subscription Agreement with Triumph Group, pursuant to which Triumph Group agreed to conditionally subscribe for not less than 13.62% (inclusive) of the A Shares to be issued under the Non-public Issuance of A Shares in cash, and the number of A Shares to be subscribed for shall not exceed 70,975,646 shares, and the proportion of total shareholdings held in the Company, either directly or indirectly, by Triumph Group and parties acting in concert with it upon the completion of the Non-public Issuance of A Shares shall not exceed 36.81% of the total issued Shares of the Company upon the completion of the Non-public Issuance of A Shares. Triumph Group will not participate in the market bidding process but has undertaken to accept the market bidding results and subscribe for the A Shares to be issued under the Non-public Issuance of A Shares at the same price as other specific investors.

On 20 January 2021, the Company and Triumph Group entered into the Supplemental Agreement for the amendment to the Triumph Group Subscription Agreement regarding the lock-up period of A Shares of the Company obtained by Triumph Group through the Non-public Issuance of A Shares from the original 18 months to 36 months from the date of completion of Non-public Issuance of A shares. Save and except for the changes set out in the Supplemental Agreement, all the other terms and conditions set out in the Triumph Group Subscription Agreement shall remain in full force and effect.

1. Principal terms of the Triumph Group Subscription Agreement (as amended and supplemented by the Supplemental Agreement)

Parties:

  • (1) the Company (as the issuer); and

  • (2) Triumph Group (as the subscriber)

Subscription price and pricing principles:

The subscription price and pricing principles are consistent with Issue Price and pricing principles of the above-mentioned Non-Public Issuance of A Shares.

In the event that during the 20 trading days prior to the Price Determination Date, there occurs ex-right or ex-dividend event, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, causing adjustment to the Share prices, the trading prices for the trading days preceding such adjustment shall be calculated as the adjusted price after such ex-right or ex-dividend event.

The aforementioned net asset value per Share will be adjusted accordingly in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in the Company during the period from the balance sheet date of the latest audited financial report before the issuance to the Issue Date.

The Issue Price shall be subject to ex-right or ex-dividend

in the event that any ex-right or ex-dividend event of the

Company, such as dividend distribution, bonus issue,

rights issue and capitalisation of capital reserves, occurs

during the period from Price Determination Date to the

Issue Date.

The final Issue Price shall be determined based on the principle of price priority according to the price offered by investors after the Company has obtained approvals from the CSRC for the Non-public Issuance of A Shares.

Triumph Group will not participate in the market bidding process of the Non-public Issuance of A Shares but has undertaken to accept the bidding results and subscribe for A Shares under the Non- public Issuance of A Shares at the same price as other specific investors.

Number of subscription and subscription amount:

Triumph Group intends to subscribe for not less than 13.62% (inclusive) of the A Shares to be issued under the Non-public Issuance of A Shares in cash, and the number of A Shares to be subscribed shall not exceed 70,975,646 shares, and the proportion of total shareholdings held in the Company, directly and indirectly, by Triumph Group and parties acting in concert with it upon the completion of the Non-public Issuance of A Shares shall not exceed 36.81% of the total issued Shares of the Company upon the completion of the Non-public Issuance of A Shares.

The total amount of the final subscription price payable by the Triumph Group will equal to the Issue Price per share multiplied by the number of shares ultimately determined to be issued to the Triumph Group.

The maximum number of A Shares to be issued under

the Non-public Issuance of A Shares will be adjusted

accordingly in cases of occurrence of ex-rights or ex-

dividend matters such as dividend distribution, bonus

issue, rights issue and capitalization of capital reserves

in the Company during the period from the date of the

Announcements to the Issue Date. The final number of A

Shares to be issued will be determined by the Board under

the authorization granted at the EGM through negotiation

with the sponsor (the lead underwriter) of the Non-public

Issuance of A Shares in accordance with the price offered

by the target subscribers after the Company has obtained

approvals from the CSRC for the Non-public Issuance of

A Shares.

Time of Payment and

Payment Method of Subscription Price:

Triumph Group agrees to subscribe for A Shares under this Non-public Issuance of A Shares in cash. After all the conditions precedent of the Triumph Group Subscription Agreement have been fulfilled and upon the receipt of the payment notice for the subscription, Triumph Group will transfer the entire amount of the final subscription price payable by Triumph Group to the special account for this Non-public Issuance of A Shares opened by the sponsor (the lead underwriter) by one-off payment in cash within five (5) working days from the date of receipt of the payment notice and in accordance with the requirements (including the payment time and other matters) as specified in the payment notice, which will then be transferred into the Company's special deposit account for raised funds after the completion of capital verification and deduction of relevant expenses.

Share Delivery:

Within 15 working days from the date of receipt of the subscription price paid by Triumph Group for the Non-public Issuance of A Shares, the Company shall engage an accounting firm with securities-related business qualifications to verify Triumph Group's payment for the subscription price and go through the corresponding industrial and commercial change registration procedures and the share registration procedures with China Securities Depository and Clearing Corporation Limited promptly so that Triumph Group will become the legal holder of the Shares subscribed by it.

Conditions precedent:

Unless the Company and Triumph Group otherwise agree to expressly waive and within the permission of the applicable laws and regulations, Triumph Group Subscription Agreement will come into existence after the legal representative of the Company or its authorized representative have signed and sealed and the legal representative of Triumph Group or its authorized representative have signed and sealed the Triumph Group Subscription Agreement, and take effect after all the following conditions precedent are fulfilled:

  • (1) the Non-public Issuance of A Shares and other relevant matters are approved by the Board, at the EGM and Class Meetings of the Company;

  • (2) Triumph Group (as a subscriber) approves the relevant matters of the Non-public Issuance of A Shares, including the Proposed Triumph Group Subscription through its internal decision-making;

  • (3) the relevant matters of the Non-public Issuance of A Shares are approved by the state-owned assets supervision and administration authority (or its authorized agencies);

  • (4) the non-connected Shareholders (as defined under the Rules Governing the Listing of Stocks on the SSE) resolve at the EGM of the Company to agree that Triumph Group is exempted from increasing its holding in A Shares by way of offer (as defined under the Rules Governing the Listing of Stocks on the SSE); and

  • (5) the relevant matters of the Non-public Issuance of A Shares are approved by the CSRC.

As at the Latest Practicable Date, the Company has submitted the application for the approval of the proposed Non-public Issuance of A Shares to the state-owned assets supervision and administration authority or its authorized agencies, but has not submitted the application for the approval of the proposed Non-public Issuance of A Shares to the CSRC. According to applicable laws and regulations in the PRC, the Company shall submit application for approval (i) to the state-owned assets supervision and administration authority or its authorized agencies after the Board approves the proposed Non-public Issuance of A Shares, and (ii) to the CSRC after Independent Shareholders approve the proposed Non-public Issuance of A Shares at the EGM and Class

Meetings.

Lock-up period and future exit arrangement:

Triumph Group intends to hold the Shares of the Company for a long term. According to the Supplemental Agreement, Triumph Group shall not transfer the A Shares subscribed under the Triumph Group Subscription Agreement within 36 months from the date of completion of the Non-public Issuance of A Shares.

If the aforementioned lock-up arrangement does not conform to the latest regulatory opinions or regulatory requirements of the securities regulatory authorities of the PRC, the arrangement will be adjusted accordingly in accordance with the regulatory opinions or regulatory requirements of the relevant securities regulatory authorities.

The additional Shares of the Company being obtained

from bonus issue, capitalisation of capital reserves and

otherwise upon completion of the Non-public Issuance

of A Shares shall also be subject to the aforementioned

lock-up period arrangement. Such Shares shall comply

with the relevant requirements of regulatory authorities

such as the CSRC and the SSE upon expiry of the lock-up

period.

2. Information on the Parties to the Triumph Group Subscription Agreement

The Company

The principal activities of the Company are production and sales of information display glass and new energy glass. The scope of business includes development, production, manufacture and installation of information display glass, new energy glass, photoelectric material for functional-glass category and its processed products and components, relevant materials, mechanical equipment and its electric appliances and accessories, relevant technical consultancy and technical services, as well as sales and after-sales services of self-produced products.

Triumph Group

As at the Latest Practicable Date, Triumph Group is an indirect controlling shareholder of the Company and a company incorporated in the PRC with limited liability. Triumph Group is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector. As at the Latest Practicable Date, Triumph Group is a direct wholly-owned subsidiary of CNBMG, which is principally engaged in production and manufacturing of construction materials and relevant raw materials, research, development and sales of production technologies and equipment; sale of decorative materials; design and construction of building engineering; investment and assets operations relating to building materials and related sectors, etc.

3. Connected Transaction

As at the Latest Practicable Date, Triumph Group directly and indirectly holds 191,133,987 A Shares of the Company, representing approximately 34.84% of the Company's total issued share capital. Accordingly, Triumph Group is an indirect controlling shareholder of the Company and thus a connected person of the Company. According to Chapter 14A of the Listing Rules, the Proposed Triumph Group Subscription constitutes a connected transaction of the Company, therefore the Company shall comply with the relevant reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

The resolution in relation to the Triumph Group Subscription Agreement and the Supplemental Agreement will be submitted, by way of special resolution, for the Independent Shareholders' consideration and approval at the EGM, the A Shareholders' Class Meeting and the H Shareholders' Class Meeting.

(viii) The resolution in relation to the connected transaction (as defined under the Rules

Governing the Listing of Stocks on the Shanghai Stock Exchange (the "Shanghai Listing Rules")) related to the Non-public Issuance of A Shares of the Company

As at the Latest Practicable Date, Triumph Group, an indirect controlling shareholder of the Company, directly holds approximately 1.12% of the Shares of the Company, and indirectly holds (i) approximately 20.27% of the Shares of the Company through CLFG, its direct controlled subsidiary; (ii) approximately 12.81% of the Shares of the Company through Bengbu Institute, its direct wholly-owned subsidiary; (iii) approximately 0.63% of the Shares of the Company through Huaguang Group, its wholly-owned subsidiary; (iv) approximately 0.07% of the Shares of the Company through International Engineering, an indirect controlled subsidiary of CNBMG, therefore, Triumph Group and parties acting in concert with it directly and indirectly hold approximately 34.91% of the Shares of the Company in aggregate. Upon the completion of the issue, Triumph Group will directly and indirectly hold not less than 30% of the Shares of the Company and will remain as an indirect controlling shareholder of the Company, and therefore a connected person (as defined under the Shanghai Listing Rules) of the Company. Accordingly, the Proposed Triumph Group Subscription constitutes a connected transaction (as defined under the Shanghai Listing Rules) of the Company.

The resolution in relation to the connected transaction (as defined under the Shanghai Listing Rules) related to the Non-public Issuance of A Shares of the Company will be submitted, by way of special resolution, for the Independent Shareholders' consideration and approval at the EGM.

Effects of the Non-public Issuance of A Shares on the Shareholding Structure of the Company

As at the Latest Practicable Date, the total issued share capital of the Company is 548,540,432 Shares, which comprises of 298,540,432 A Shares and 250,000,000 H Shares.

The following table sets out the shareholding structure of the Company (a) as at the Latest Practicable Date and (b) immediately after the completion of the Non-public Issuance of A Shares, (assuming that (i) 164,562,129 A Shares will be issued under the Non-public Issuance of A Shares; (ii) Triumph Group subscribes for a maximum of 70,975,646 A Shares; (iii) the other specific target subscribers (other than Triumph Group) subscribe for a maximumof 93,586,483 A Shares; and (iv) there is no other change in the shareholding structure of the Company since the Latest Practicable Date save for the issue of the A Shares under the Non-public Issuance of A Shares):

ShareholdersA Shares

Triumph Group and parties acting in concert with it (Note 1)

(i) Shareholding as at the Latest Practicable Date

Approximate percentage of

Number of the total shares issued shares

(ii) Shareholding immediately after the

completion of the Non-public

Issuance of A Shares

Approximate percentage of

Number of the total shares issued shares

(%)

(%)

Triumph Group

6,170,699

1.12

77,146,345

10.82

CLFG

111,195,912

20.27

111,195,912

15.59

Bengbu Institute

70,290,049

12.81

70,290,049

9.86

Huaguang Group

3,477,327

0.63

3,477,327

0.49

International Engineering

386,370

0.07

386,370

0.05

Sub-total of Triumph Group and

parties acting in concert with it

191,520,357

34.91

262,496,003

36.81

Other specific target subscribers

(not more than 34)

-

-

93,586,483

13.12

Other A Shareholders

107,020,075

19.51

107,020,075

15.01

Sub-total of A Shares

298,540,432

54.42

463,102,561

64.94

H Shares

Public H Shareholders

250,000,000

45.48

250,000,000

35.06

Total issued Shares

548,540,432

100

713,102,561

100

- 23 -

The following table sets out the shareholding structure of the Company immediately after the completion of the Non-public Issuance of A Shares, (assuming that (i) 164,562,129 A Shares will be issued under the Non-public Issuance of A Shares; (ii) Triumph Group subscribes for 13.62% of the A Shares (being 22,413,362 A Shares) under the Non-public Issuance of A Shares; (iii) the other target subscribers (other than Triumph Group) subscribe for 142,148,767 A Shares; and (iv) there is no other change in the shareholding structure of the Company since the Latest Practicable Date save for the issue of the A Shares under the

Non-public Issuance of A Shares):

Shareholders

(iii) Shareholding immediately after completion of the

Non-public Issuance of A Shares

Approximate

Number of percentage of the shares total issued shares

(%)

A Shares

Triumph Group and parties acting

in concert with it (Note 1)

Triumph Group

28,584,061

4.01

CLFG

111,195,912

15.59

Bengbu Institute

70,290,049

9.86

Huaguang Group

3,477,327

0.49

International Engineering

386,370

0.05

Sub-total of Triumph Group and parties

acting in concert with it

213,933,719

30

Other specific target subscribers

(not more than 34)

142,148,767

19.93

Other A Shareholders

107,020,075

15.01

Sub-total of A Shares

463,102,561

64.94

H Shares

Public H Shareholders

250,000,000

35.06

Total issued Shares

713,102,561

100

Note:

(1) As at the Latest Practicable Date, Triumph Group, an indirect controlling shareholder of the

Company, directly holds approximately 1.12% of the Shares of the Company, and indirectly holds (i) approximately 20.27% of the Shares of the Company through CLFG, its direct controlled subsidiary; (ii) approximately 12.81% of the Shares of the Company through Bengbu Institute, its direct wholly-owned subsidiary; (iii) approximately 0.63% of the Shares of the Company through Huaguang Group, its wholly-owned subsidiary; (iv) approximately 0.07% of the Shares of the Company through International Engineering, an indirect controlled subsidiary of CNBMG, therefore, Triumph Group and parties acting in concert with it directly and indirectly hold approximately 34.91% of the Shares of the Company in aggregate.

FUNDRAISING ACTIVITIES FOR THE PAST 12 MONTHS

The Company did not conduct any fundraising activities involving the issuance of equity securities in the 12 months preceding the Latest Practicable Date.

In particular, the Company has not conducted any rights issue, open offer or specific mandate placing within the 12-month period immediately preceding the date of the Announcements, or prior to such 12-month period where dealing in respect of the Shares issued pursuant thereto commenced within such 12-month period, nor has it issued any bonus securities, warrants or other convertible securities as part of such rights issue, open offer and/or specific mandate placing within such 12-month period. Since the Non-public Issuance of A Shares does not result in a theoretical dilution effect of 25% or more on its own, the theoretical dilution effect of the Non-public Issuance of A Shares is in compliance with the requirements under Rule 7.27B of the Listing Rules.

REASONS FOR AND BENEFITS OF THE NON-PUBLIC ISSUANCE OF A SHARES AND THE ENTERING INTO OF THE TRIUMPH GROUP SUBSCRIPTION AGREEMENT (INCLUDING THE SUPPLEMENTAL AGREEMENT)

(1) The Non-public Issuance of A Shares is conducive for the Company to capture the market opportunities and improve its industrial position

The Board considers that the proposed Non-public Issuance of A Shares is conducive for the Company to capture the market opportunities and improve its industrial position. According to the estimate from the China Photovoltaic Industry Association, the penetration rate of double-panel glass module market is expected to increase by 2025. As an essential key material of double-panel glass modules, the packaging materials for photovoltaic cells have a broad market space. With the steady development of the photovoltaic industry and the continuous increase in the penetration rate of double-panel glass module market, the market demand for cell packaging materials in the photovoltaic glass segment will rise rapidly. Therefore,the Company will firmly seize this market opportunity to construct the new energy photovoltaic cell packaging materials projects, so as to quickly seize the photovoltaic backplane glass market segment, and continuously expand the Company's leading edge in the photovoltaic glass field to achieve the Company's stable and rapid development. After the proceeds have been raised, with the smooth implementation of investment projects, the Company will effectively enhance its product competitiveness through economies of scale, and further enhance the dominant position of the Company in the photovoltaic glass industry, which is consistent with the needs of the industrial development strategy of the Company.

  • (2) To optimize capital structure to alleviate working capital pressure

    Raising proceeds through the Non-public Issuance of A Shares is beneficial for the Company to further optimize the structure of assets and liabilities, reduce financial risks, and enhance the Company's ability to resist risks. In addition, after the capital strength of the Company has been dramatically improved, the Company will lay a solid foundation for the sustainable development in numerous aspects, such as business layout, financial capacity and long-term strategy, creating a sound condition for the improvement of the Company's core competitiveness and the realization of leap-forward development.

  • (3) A more firm confidence and support of Triumph Group to the Company

    The entering into the Triumph Group Subscription Agreement and Supplemental Agreement between the Triumph Group and the Company fully demonstrates a more firm confidence and support to the Company from the Triumph Group as the indirect controlling shareholder of the Company, and the continuous support of the Triumph Group to the Company's future development, which is beneficial to boosting the confidence of the Shareholders and potential investors in the Company, at the same time, it is beneficial for the Company to promote the Non-public Issuance of A Shares in a timely, compliant and orderly manner to realize a great leap forward development. The terms and conditions of the Proposed Triumph Group Subscription were agreed after arm's length negotiations between the Company and Triumph Group.

    The Directors consider that the terms of the Non-public Issuance of A Shares and the Triumph Group Subscription Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Independent Board Committee, after considering the aforementioned reasons and the advice from Veda Capital, is of the view that the Company's Non-public Issuance of A Shares complies with the relevant laws, regulations, regulatory documents and the Articles of Association, and the price and pricing method in relation to connected transaction in respect of the Proposed Triumph Group Subscription are reasonable and fair, in the interests of the Company and the Shareholders as a whole, and there is no situation that harms the interests of the Company and all Shareholders.

(ix) The resolution in relation to the dilution of current returns, remedial measures and relevant parties' undertaking with respect to the Non-public Issuance of A Shares of the Company

In accordance with the requirements under relevant laws, regulations and regulatory documents in the PRC, in order to guarantee the right to know of the minority investors and protect their interests, the Company has conducted a careful, cautious and objective analysis regarding the impact of the Non-public Issuance of A Shares on the dilution of current returns, and analysed and explained the impact of the dilution of current returns on the Company's major financial indicators and the remedial measures.

The Directors and senior executives of the Company have made the following undertakings to ensure the implementation of the remedial measures for the dilution of current returns resulting from the Non-public Issuance of A Shares:

  • 1. Commit not to deliver benefits to other units or individuals with no consideration or under unfair conditions, or to harm the interests of the Company or Shareholders in other ways;

  • 2. Commit to restrain the behavior of personal consumption in relation to their duty;

  • 3. Commit not to use the Company's assets to engage in investment and consumption activities that are not related to their duty performance;

  • 4. Commit that the remuneration system established by the Board or the remuneration and evaluation committee will be combined with the implementation of measures of compensating for the current return dilution of the Company; and

  • 5. Commit that the exercise conditions of the proposed equity incentive plan will be combined with the implementation of measures of compensating for the current return dilution of the Company if the Company implements equity incentives in the future.

In accordance with the relevant requirements by CSRC, CLFG (the controlling shareholder of the Company), Triumph Group (an indirect controlling shareholder of the Company) and CNBMG (the de facto controller of the Company) have undertaken not to interfere with the operation and management activities of the Company beyond their authority, and not to encroach on the interests of the Company, to ensure the implementation of the remedial measures.

The "Risk Alert on the Dilution of Current Returns Due to the Non-public Issuance of Shares and the Remedial Measures", which was prepared in Chinese, was disclosed in the overseas regulatory announcement of the Company dated 30 December 2020, and the full text of its English translation is set out in Appendix IV to this circular.

The resolution in relation to the dilution of current returns, remedial measures and relevant parties' undertaking with respect to the Non-public Issuance of A Shares of the Company will be submitted, by way of special resolution, for the Independent Shareholders' consideration and approval at the EGM.

(x) The resolution in relation to the proposal to the Company to consider and approve the application for the waiver in respect of the general offer obligation (as defined under the Shanghai Listing Rules) over the A Shares by Triumph Group and parties acting in concert with it to be triggered as a result of the Proposed Triumph Group Subscription and the proposed Non-public Issuance of A Shares under the relevant laws and regulations in the PRC

The proportion of total shareholdings held by Triumph Group and parties acting in concert with it in the Company before the Non-public Issuance of A Shares has exceeded 30%. Triumph Group intends to subscribe for not less than 13.62% (inclusive) of the A shares under the Non-public Issuance of A Shares in cash, and the number of Shares to be subscribed for shall not exceed 70,975,646 shares, and the proportion of shareholdings held by Triumph Group and parties acting in concert with it upon the completion of the Non-public Issuance of A Shares shall not exceed 36.81%. Triumph Group has provided an undertaking regarding the lock-up period, and the shares to be subscribed for by it will not be transferred in any way within the 36 months from the completion of the Non-public Issuance, which meets the conditions for exemption from offer as stipulated in Article 63 under the "Administrative Measures for the Acquisition by Listed Companies"* ( ɪ̹ʮ̡ϗᒅ၍ ଣ፬ج') promulgated by CSRC, and therefore the proposal to the shareholders' meeting to approve the waiver from an offer (as defined under the Shanghai Listing Rules) made by Triumph Group (an indirect controlling shareholder of the Company) and parties acting in concert with it has been approved.

For details, please refer to the overseas regulatory announcement of the Company dated 30 December 2020, which is titled "Announcement of Luoyang Glass Company Limited* on the Proposal to the General Meeting to Approve the Waiver from an Offer made by Triumph Group (an Indirect Controlling Shareholder of the Company) and Parties Acting in Concert with it to Increase its Shareholding in the Company".

The resolution in relation to the proposal to the Company to consider and approve the application for the waiver in respect of the general offer obligation (as defined under the Shanghai Listing Rules) over the A Shares by Triumph Group and parties acting in concert with it to be triggered as a result of the Proposed Triumph Group Subscription and the proposed Non-public Issuance of A Shares under the relevant laws and regulations in the PRC will be submitted, by way of special resolution, for the Independent Shareholders' consideration and approval at the EGM.

(xi) The resolution in relation to the shareholders' return plan for the next three years (2021-2023) of the Company

To improve the scientificity, sustainability, stability of the dividend distribution policy and the monitoring mechanism of the Company, and provide proactively the investors with returns, by taking into overall consideration such factors as the Company's profitability, development planning, shareholders' request for returns and their wills, social capital costs and external financing environment, according to the requirements under relevant laws, regulations, departmental regulations in the PRC, the Company agrees to formulate the Shareholders' Return Plan for the Next Three Years (2021-2023) of Luoyang Glass Company Limited*.

The "Shareholders' Return Plan for the Next Three Years (2021-2023)", which was prepared in Chinese, was disclosed in the overseas regulatory announcement of the Company dated 30 December 2020, and the full text of its English translation is set out in Appendix V to this circular. In the event of any discrepancy between the Chinese version and the English translation of the "Shareholders' Return Plan for the Next Three Years (2021-2023)", the Chinese version shall prevail.

The resolution in relation to the shareholders' return plan for the next three years (2021-2023) will be submitted, by way of special resolution, for the Shareholders' consideration and approval at the EGM.

(xii) The resolution in relation to proposing to the EGM, A Shareholders' Class Meeting and

H Shareholders' Class Meeting of the Company to grant to the Board of the Company the specific mandate in relation to the issuance of additional A shares and authorize the Board and its authorized representative(s) to handle specific matters relating to the Non-public Issuance of A Shares

The Board intends to propose to the EGM and the Class Meetings to authorize the Board and its authorized representative(s) to handle all matters relating to the Non-public Issuance of A Shares to the extent permitted under relevant laws and regulations, including but not limited to:

  • 1. To agree to propose to the general meeting of the Company to grant to the Board the following Specific Mandate in relation to the issuance of shares under the Company's proposal of Non-public Issuance of A Shares in accordance with the relevant provisions of the Company Law of the PRC, the Listing Rules and the Articles of Association: to issue not more than 164,562,129 A Shares (inclusive) to not more than 35 (inclusive) target subscribers (including Triumph Group) in the Non-public Issuance of A Shares, representing not more than 30% of the total share capital of the Company prior to the non-public issuance, at the Issue Price not lower than 80% of the average trading price of the Company's A Shares for the 20 trading days preceding the Price Determination Date (excluding such date) and the Company's latest audited net asset value per Share attributable to the Shareholders of ordinary shares of the Company before the issuance, whichever is higher;

  • 2. To determine specific terms of the issuance and formulate and implement the detailed proposal of the Non-public Issuance of A Shares to specific target subscribers before issuance based on the actual circumstances of the Company as well as the opinions from the regulatory authorities, and subject to the requirements under laws, regulations and regulatory documents, including but not limited to determining the time of issuance, number of shares to be issued, issue period, pricing principles and Price Determination Date (subject to changes of the pricing principles and Price Determination Date arising from amendment to or newly enacted relevant laws, regulations and regulatory documents), Issue Price, method of issuance, target subscribers, use of proceeds, specific methods of subscription, proportion of subscription, method of pricing and other matters related to the proposal of the Non-public Issuance of A Shares;

  • 3. To amend the proposal (other than matters subject to re-voting at the general meeting according to the requirements of relevant laws and regulations and the Articles of Association) in compliance with the requirements of relevant laws, regulations, regulatory documents or relevant securities regulatory authorities, and make corresponding adjustments to the detailed proposal for the issuance according to the opinions from the securities regulatory authorities, including but not limited to adjustment to, postponement, suspension or termination of the plan of the Non-public Issuance of A Shares;

  • 4. To handle the tasks with respect to the investment projects to be funded by the proceeds from the Non-public Issuance of A Shares, and to sign major contracts and other relevant legal documents in the course of implementation of the investment projects to be funded by the proceeds from the Non-public Issuance of A Shares; to adjust or determine the detailed arrangements for the use of proceeds according to the actual progress and the actual capital needs of the investment projects to be funded by the proceeds from the Non-public Issuance of A Shares, to the extent considered and approved at the general meeting; to implement the investment projects to be funded by the proceeds from the Non-public Issuance of A Shares with self-raised funds before the proceeds are available, according to the actual progress and operational needs of the projects, and replace the self-raised funds with the proceeds from the Non-public Issuance of A Shares after the proceeds are available; and to make necessary adjustments to the investment projects to be funded by the proceeds according to the requirements of relevant laws, regulations and regulatory authorities and the market condition;

  • 5. To handle the reporting matters in relation to the issuance, including but not limited to preparing, amending, signing, reporting, supplementing, submitting, executing and announcing the proposal of the issuance and the reporting materials in relation to the issuance and listing according to the requirements by the relevant governmental departments and regulatory institutions, to handle relevant procedures and implement the lock-up and other process in relation to the issuance and listing, and to handle information disclosure matter in relation to the issuance according to the regulatory requirements;

  • 6. To sign, amend, supplement, complete, submit and execute all agreements, contracts and documents in relation to the Non-public Issuance of A Shares (including but not limited to sponsor agreement, engagement agreements of intermediary institutions, agreements relating to the issuance proceeds, subscription agreements entered into with investors, circulars, announcements and other disclosure documents);

  • 7. To amend the relevant provisions in the Articles of Association, handle the increase of registered capital, handle the changes of the industrial and commercial registration and handle other filing matters related to the Non-public Issuance of A Shares in accordance with the result of the Non-public Issuance of A Shares;

  • 8. To handle the registration, lock-up and listing of shares issued and other relevant matters with the SSE and the Shanghai Branch of China Securities Depository and Clearing Corporation Limited upon completion of the issuance;

  • 9. To deal with other matters in relation to the Non-public Issuance of A Shares subject to laws, regulations, relevant regulatory documents and the Articles of Association;

  • 10. To authorize the chairman of the Company and other persons authorized by him/ her to specifically handle relevant matters and sign relevant documents within the scope of the above authorization, and to propose a resolution at the general meeting of the Company for approval for delegation of the above authorization by the Board to the chairman of the Company, on condition that the Board has obtained the above authorization, unless otherwise provided by relevant laws and regulations, and such authorization shall be effective from the date of the consideration and approval of the same at the general meeting of the Company;

  • 11. Items 7 and 8 of the above authorizations shall be effective from the date of approval at the general meeting of the Company to the date on which the subsisting period of the relevant matters expires, and other authorizations shall be effective within 12 months since the date of the consideration and approval at the general meeting of the Company.

The proposal in relation to the grant to the Board of the Company the specific mandate in relation to the issuance of additional A shares and authorizing the Board and its authorized representative(s) to handle all matters relating to the Non-public Issuance of A Shares to the extent permitted under relevant laws and regulations will be submitted, by way of special resolution, for the Independent Shareholders' consideration and approval at the EGM, the A Shareholders' Class Meeting and the H Shareholders' Class Meeting.

III. Specific Mandate

The A Shares under the Non-public Issuance of A Shares will be issued under the Specific Mandate. The Non-public Issuance of A Shares and the Triumph Group Subscription Agreement are subject to the approvals from the relevant state-owned assets supervision and administration authority or its authorized agencies and the CSRC, and the approvals by the Shareholders at the EGM, the A

Shareholders' Class Meeting and the H Shareholders' Class Meeting.

  • IV. IMPLICATIONS UNDER THE LISTING RULES

    As at the Latest Practicable Date, Triumph Group directly and indirectly holds 191,133,987 A Shares of the Company, representing approximately 34.84% of the Company's total issued share capital. Accordingly, Triumph Group is an indirect controlling shareholder of the Company and therefore a connected person of the Company. According to Chapter 14A of the Listing Rules, the Proposed Triumph Group Subscription constitutes a connected transaction of the Company, therefore the Company shall comply with the relevant reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

    Mr. Zhang Chong, the chairman of the Board, Mr. Xie Jun, an executive Director, Mr. Chen Yong and Mr. Ren Hongcan, non-executive Directors of the Company, have abstained from voting in respect of the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription at the Board meeting(s) due to the fact that they have connected relationship with Triumph Group and parties acting in concert with it and are therefore not regarded as independent to make any recommendation to the Board in respect thereof. Save as aforementioned, none of the other Directors has a material interest in the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription and hence no other Director has abstained from voting on such Board resolutions.

    The Specific Mandate is sought from the Independent Shareholders of the Company as required under Rule 13.36 of the Listing Rules, as modified by Chapter 19A of the Listing Rules.

  • V. PROVISION OF THE GUARANTEE BY THE COMPANY TO THE SUBSIDIARIES OF THE COMPANY IN 2021

    An ordinary resolution will be proposed at the EGM for the Shareholders' consideration and approval of the provision of guarantee by the Company to its subsidiaries. For details of the resolution, please refer to Appendix VII to this circular.

  • VI. EGM AND CLASS MEETINGS

    The EGM and Class Meetings will be convened to consider and approve, as appropriate, (among others) (i) the Non-public Issuance of A Shares; (ii) the Proposed Triumph Group Subscription; (iii) the Specific Mandate; and (iv) the provision of guarantee by the Company to the subsidiaries of the Company in 2021. The EGM and Class Meetings will be convened to consider and approve, as appropriate, the authorization to the Board and its authorized representative(s) to handle all matters relating to the Non-public Issuance of A Shares, including but not limited to, the amendments to the Company's Articles of Association.

The EGM will be held at 9:00 a.m. on 12 March 2021 (Friday), at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC. Notice of the EGM is set out on pages EGM-1 to EGM-7 of this circular. Voting at the EGM will be taken by poll.

The H Shareholders' Class Meeting will be held at 10:00 a.m. on 12 March 2021 (Friday) (or immediately after the conclusion of A Shareholders' Class Meeting of the Company to be convened and held on the same date and at the same place), at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC. Notice of the H Shareholders' Class Meeting is set out on pages HCM-1 to HCM-6 of this circular. Voting at the H Shareholders' Class Meeting will be taken by poll.

Whether or not you are able to attend the EGM/H Shareholders' Class Meeting in person, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company's share registrar in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, or to the Company's registered address at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC as soon as possible and in any event not less than 24 hours before the time appointed for holding of the EGM/H Shareholders' Class Meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM/H Shareholders' Class Meeting or any adjournment thereof should you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, all votes of the Shareholders at the general meetings must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. Announcement of the poll results will be made by the Company after the EGM and the H Shareholders' Class Meeting in the manner prescribed under Rule 13.39(5) of the Listing Rules.

Triumph Group and its associates, the parties acting in concert with it and the Shareholders having material interest in the Non-public Issuance of A Shares, Proposed Triumph Group Subscription and/or Specific Mandate or involved therein will be required to abstain from voting on the corresponding resolutions to be proposed at the EGM and/or Class Meetings. Save as aforementioned, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, no other Shareholders have a material interest in the corresponding resolutions and therefore no other Shareholders are required to abstain from voting at the EGM and/or the Class

Meetings.

  • VII. RECOMMENDATION

    Your attention is drawn to (i) the letter from the Independent Board Committee contained on pages 37 to 38 of this circular, containing its recommendation on the Proposed Non-public issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate; and (ii) letter from the Independent Financial Adviser to the Independent Board Committee and Independent Shareholders contained on pages 39 to 58 of this circular, containing its recommendation on the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate. The Independent Board Committee, after considering the advice from Independent Financial Adviser, is of the view that while the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription, though not in the ordinary and usual course of business of the Company, the terms of the Non-public Issuance of A Shares, Proposed Triumph Group Subscription and the Specific Mandate are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of all the resolutions to be proposed at the EGM and the Class Meetings to approve the proposed Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate.

    In addition, the Board is of the view that since (1) the provision of guarantee by the Company for its wholly-owned subsidiaries is in line with the needs of the operation and development of the Company and will offer timely and effective support for the capital needs of the guaranteed subsidiaries; (2) all the guaranteed subsidiaries are subsidiaries of the Company with stable production and operation, and the risk under the guarantees is within control and will not prejudice the interests of the Company and all of its Shareholders; and (3) the resolution in relation to the provision of guarantees by the Company to the guaranteed subsidiaries is fair and reasonable, and is in the interests of the Company and its Shareholders as a whole, the Board recommends the Shareholders to vote in favour of the resolution in relation to the provision of guarantee by the Company to its subsidiaries in 2021 at the EGM.

  • VIII. RESPONSIBILITY STATEMENT

    This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein misleading.

IX.

*

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

Yours faithfully,

By order of the Board

Luoyang Glass Company Limited*

Zhang Chong

Chairman

For identification purposes only

°

24 February 2021

To the Independent Shareholders

Dear Sir or Madam,

(1) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES;

(2) CONNECTED TRANSACTION IN RELATION

TO THE PROPOSED TRIUMPH GROUP SUBSCRIPTION; AND

(3) SPECIFIC MANDATE

We refer to the circular of the Company dated 24 February 2021 (the "Circular"), of which this letter forms part. Unless otherwise defined, capitalized terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders in respect of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate, details of which are set out in the "Letter from the Board" in the Circular. Veda Capital Limited has been appointed as the Independent Financial Adviser with our approval to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the "Letter from the Board" set out on pages 1 to 36 of the Circular, the "Letter from Veda Capital" set out on pages 39 to 58 of the Circular and the additional information set out in the appendices of the Circular.

Having taken into account, among other things, the principal factors and reasons considered by, and the advice of, the Independent Financial Adviser as set out in the "Letter from Veda Capital" in the Circular, we concur with the view of Veda Capital and consider that the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription, though not in the ordinary and usual course of business of the Company, are in the interests of the Company and the Shareholders as a whole, and the terms of theNon-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate are on normal commercial terms, and are fair and reasonable so far as the Independent Shareholders are concerned.

Accordingly, we recommend you to vote in favour of all the resolutions to be proposed at the EGM and the Class Meetings for approving the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate.

Yours faithfully,

For and on behalf of Independent Board Committee

Mr. Jin Zhanping, Mr. Ye Shuhua, Mr. He Baofeng, Ms. Zhang Yajuan

Independent Non-executive Directors

* For identification purposes only

The following is the full text of the letter from the Independent Financial Adviser setting out the advice to the Independent Board Committee and the Independent Shareholders in respect of the entering into of the Non-public Issuance of A Shares, Triumph Group Subscription Agreement and the Specific Mandate, which has been prepared for the purpose of inclusion in the Circular.

Suites 1001-1002, 10/F., 299 QRC 299 Queen's Road Central, Hong Kong

24 February 2021

To: Independent Board Committee and the Independent Shareholders of Luoyang Glass Company Limited

Dear Sirs or Madam,

(i) PROPOSED NON-PUBLIC ISSUANCE OF A SHARES;

(ii) CONNECTED TRANSACTION IN RELATION TO THE SUBSCRIPTION

FOR A SHARES BY TRIUMPH GROUP; AND

(iii) SPECIFIC MANDATE

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in respect of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate, details of which are set out in the letter from the Board (the "Board Letter") contained in the circular to the Shareholders dated 24 February 2021 (the "Circular"), of which this letter forms part. Terms used in this letter have the same meanings as defined in the Circular unless the context requires otherwise.

As set out in the Board Letter, among other matters, (i) the Board has approved the proposed issuance of a maximum of 164,562,129 (inclusive) new A Shares by the Company to not more than 35 (35 inclusive) specific target subscribers, including Triumph Group; and (ii) the Company entered into the Triumph Group Subscription Agreement with Triumph Group, pursuant to which Triumph Group conditionally agreed to subscribe for not less than 13.62% of the A Shares to be issued under the proposed Non-public Issuance of A Shares in cash, and the number of A Shares to be subscribed shall not exceed 70,975,646 Shares, and the proportion of total equity interests held, either directly or indirectly, by Triumph Group and parties acting in concert with it in the Company upon the completion of the proposed Non-public Issuance of A Shares shall not exceed 36.81% of the total issued Shares of the Company upon the completion of the proposed Non-public Issuance of A Shares;

As at the Latest Practicable Date, Triumph Group directly and indirectly holds 191,133,987 A Shares of the Company, representing approximately 34.84% of the Company's total issued share capital. Accordingly, Triumph Group is an indirect controlling shareholder of the Company and thus a connected person of the Company. According to Chapter 14A of the Listing Rules, the Proposed Triumph Group Subscription constitutes a connected transaction of the Company, therefore the Company shall comply with the relevant reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

Mr. Zhang Chong, the chairman of the Board, Mr. Xie Jun, an executive Director, Mr. Chen Yong and Mr. Ren Hongcan, non-executive Directors, have abstained from voting in respect of the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription at the Board meeting(s) due to the fact that they have connected relationship with Triumph Group and parties acting in concert with it and are therefore not regarded as independent to make any recommendation to the Board in respect thereof. Save as aforementioned, none of the other Directors has a material interest in the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription and hence no other Director has abstained from voting on such Board resolutions.

The Specific Mandate is sought from the Independent Shareholders of the Company as required under Rule 13.36 of the Listing Rules, as modified by Chapter 19A of the Listing Rules.

The Independent Board Committee comprising all independent non-executive Directors has been formed by the Company in accordance with the Listing Rules to advise the Independent Shareholders on the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate.

We have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms and conditions of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to our independence. Save for this appointment as the Independent Financial Adviser in respect of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate and the transactions contemplated thereunder, there were no other engagements between us and the Group in the past two years. Apart from normal professional fees paid or payable to us in connection with this transaction, no other arrangement exists whereby we had received or would receive any fees or benefits from the Company or any parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider ourselves independent in accordance with Rule 13.84 of the Listing Rules.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied upon the accuracy of the information and representations contained in the Circular and information provided to us by the Company, the Directors and the management of the Company (the "Management"). We have assumed that all statements, information and representations made or referred to in the Circular and all information and representations which have been provided by the Company, the Directors and the Management, for which they are solely and wholly responsible, were true at the time when they were made and continue to be true as at the Latest Practicable Date.

We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration and there are no other facts not contained in the Circular, the omission of which make any such statement contained in the Circular misleading. The Shareholders will be notified of material changes as soon as possible, if any, to the information and representations provided and made to us after the Latest Practicable Date and up to and including the date of the EGM.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries that, to the best of their knowledge and belief, there are no omission of other facts that would make any statements in the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have no reason to believe that any information and representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any omission of any material facts that would render the information provided and the representations made to us untrue, inaccurate or misleading. We have not, however, conducted any independent in-depth investigation into the business affairs, financial position or future prospects of the Group, nor have we carried out any independent verification of the information provided by the Directors and/or the Management.

This letter is issued to Independent Board Committee and the Independent Shareholders, solely in connection for their consideration of the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate, and except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In assessing the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate and in giving our recommendations to the Independent Board Committee and the Independent Shareholders, we have taken into consideration of the following principal factors and reasons:

1. Information on the Company

The Company is principally engaged in the (i) information display glass segment which mainly produces and sells ultra-thin electronic glass substrate (the "Ultra-thin Glass Segment"); and (ii) new energy glass segment which mainly produces and sells photovoltaic original glass and its further processed products (the "Photovoltaic Glass Segment").

Set out below is a summary of the Group's unaudited consolidated financial information for the six months ended 30 June 2019 and 2020 as extracted from the Company's interim report for the six months ended 30 June 2020.

For the six months ended

30 June 2020

30 June 2019

Changes

RMB'000

RMB'000

%

(unaudited)

(unaudited)

Revenue

957,734

859,386

11.44

- the Ultra-thin Glass Segment

135,307

131,323

3.0

- the Photovoltaic Glass Segment

821,826

728,063

12.9

Profit for the period attributable to

Shareholders

16,145

15,631

3.3

As at

30 June 2020

30 June 2019

Changes

RMB'000

RMB'000

%

(unaudited)

(unaudited)

Total assets

5,506,588

4,875,724

12.94

Net assets

1,437,007

1,363,922

5.36

Net assets attributable to Shareholders

1,315,361

1,260,848

4.32

For the six months ended 30 June 2020, the Group recorded a revenue in the amount of approximately RMB957.7 million, representing an increase of approximately 11.4% as compared to that for the six months ended 30 June 2019 in the amount of approximately RMB859.4 million. As advised by the Company, the increase in revenue was mainly due to the increase in revenue generated from the Photovoltaic Glass Segment of approximately RMB93.8 million due to the release of the Group's production capacity of photovoltaic glass during the six months ended 30 June 2020.

For the six months ended 30 June 2020, the Group recorded a profit attributable to Shareholders in the amount of approximately RMB16.1 million, representing an increase of approximately 3.3% as compared to that for the six months ended 30 June 2019 in the amount of approximately RMB15.6 million. As advised by the Company, the increase was mainly due to the increase in revenue of the Photovoltaic Glass Segment as mentioned in the above.

The Group's unaudited total assets and net assets as at 30 June 2020 amounted to approximately RMB5,506.6 million and approximately RMB1,437.0 million respectively. The Group's unaudited net assets attributable to Shareholders increased by approximately 4.3% to approximately RMB1,315.4 million as at 30 June 2020 from approximately RMB1,260.8 million as at 30 June 2019.

Set out below is a summary of the Group's audited consolidated financial information for the financial years ended 31 December 2018 and 2019 as extracted from the Company's annual report for the financial year ended 31 December 2019.

For the financial years ended

31 December

31 December

2019

2018

Changes

RMB'000

RMB'000

%

(audited)

(audited)

Revenue

1,854,842

1,402,748

32.2

- the Ultra-thin Glass Segment

280,258

343,891

(18.5)

- the Photovoltaic Glass Segment

1,574,207

1,081,897

45.5

Profit/(loss) for the year attributable

to Shareholders

54,000

15,645

245.2

As at

31 December

31 December

2019

2018

Changes

RMB'000

RMB'000

%

(audited)

(audited)

Total assets

5,241,040

4,504,182

16.36

Net assets

1,413,943

1,345,341

5.10

Net assets attributable to Shareholders

1,299,216

1,245,216

4.34

For the year ended 31 December 2019, the Group recorded a revenue of approximately RMB1,854.8 million, representing an increase of approximately 32.2% as compared to that of the year ended 31 December 2018 of approximately RMB1,402.7 million. As advised by the Company, the increase in revenue was mainly attributable to the increase in revenue generated from the Photovoltaic Glass Segment of approximately RMB492.3 million, which is due to the increased sales volume and product price as a result of the recovery in photovoltaic glass market in 2019.

The Group recorded a profit attributable to Shareholders for the year ended 31 December 2019 in the amount of approximately RMB54.0 million, representing an increase of approximately 246.2% as compared to that for the year ended 31 December 2018 in the amount of approximately RMB15.6 million. As advised by the Company, the increase was mainly due to the increase in revenue of the Photovoltaic Glass Segment as mentioned in the above.

2. Information on Triumph Group

As at the Latest Practicable Date, Triumph Group is an indirect controlling shareholder of the Company and a company incorporated in the PRC with limited liability. Triumph Group is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector. As at the Latest Practicable Date, Triumph Group is a direct wholly-owned subsidiary of CNBMG, which is principally engaged in production and manufacturing of construction materials and relevant raw materials, research, development and sales of production technologies and equipment; sale of decorative materials; design and construction of building engineering; investment and assets operations relating to building materials and related sectors, etc.

3. Reasons for and benefits of the proposed Non-Public Issuance of A Shares and the entering into the Proposed Triumph Group Subscription Agreement

As mentioned in the Board Letter, (i) the proposed Non-public Issuance of A Shares is conducive for the Company to capture the market opportunities and improve its industrial position; (ii) raising proceeds through the Non-public Issuance of A Shares is beneficial for the Company to further optimize the structure of assets and liabilities, reduce financial risks, and enhance the Company's ability to resist risks; and (iii) the entering into the Triumph Group Subscription Agreement and Supplemental Agreement between the Triumph Group and the Company fully demonstrates a more firm confidence and support to the Company from the Triumph Group in the capacity of an indirect controlling shareholder of the Company. The continuous support of the Triumph Group to the Company's future development is beneficial in boosting the confidence of the Shareholders and potential investors of the Company, and thus, it is beneficial for the Company to promote the Non-public Issuance of A Shares in a timely, compliant and orderly manner to realize a great leap forward development.

We were given to understand from the Company that the net proceeds to be raised from the Non-public Issuance of A Shares are intended to be used for (i) investment in the Group's major production projects located in the cities of Hefei and Tongcheng, which are principally engaged in producing glass products that will be processed into photovoltaic glass products of the Group's Photovoltaic Glass Segment; and (ii) repayment of interest-bearing liabilities and replenishment of working capital of the Group.

With references to the annual financial report of the Company for the year ended 31 December 2019, the Company has a diversified photovoltaic glass product portfolio including but not limited to double-glass components and high transparent photovoltaic original glass. It's development strategy is to, centering on new glass, new material and new energy market, expand application fields and optimizes product mix and it aims to achieve production volume of 109 million square meters. The main photovoltaic glass products of the Group belong to key basic materials in the upstream of the photovoltaic glass and solar power industry chain and are ultimately used for, including but not limited to, the generation of electricity with solar power.

According to our research, we noted that the Central Committee of Communist Party of China* (ʕ਷΍ପᙣʕ̯։ࡰึ) in October 2020 proposed "Proposals of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and the Long-term Goals for 2035*" (ʕ΍ʕ̯ᗫ׵Փ֛਷͏຾᏶ձٟ ึ೯࢝ୋɤ̬ࡈʞϋ஝ྌձɚ㖼ɧʞϋჃ౻ͦᅺٙܔᙄ) and stated that the PRC government will continue to focus on the development of new energy industry, including but not limited to, the solar energy and photovoltaic glass industry. We also noticed from the "2050 Roadmap of China Solar Power Development*" (ʕ਷˄ජঐ೯࢝༩ᇞྡ2050) published by, among others, the PRC National Development and Reform Commission Research Centre* (਷࢕೯࢝ҷࠧ։ঐ๕޼Ӻה)

(http://www.cvig.org.cn/), the PRC government have long and sustainable plans to leverage on the trend of renewable and environmentally friendly energy, including the use of photovoltaic glasses for solar power which targets to generate approximately 40% of all the electricity demand of the PRC by 2050.

Apart from the Non-public Issuance of A Shares, we were also given to understand that the Company has considered other sources of financing, including debt financings and other equity financings. As mentioned in the interim report of the Company for the six months ended 30 June 2020, the monetary funds of the Group amounted to approximately RMB563.4 million as at 30 June 2020 while the aggregate amount of the Group's short term borrowings and non-current liabilities due within one year was approximately RMB1,528.9 million as at 30 June 2020. Accordingly, further debt financing will result in additional interest burden and higher gearing ratio of the Group. Whereas, as compared to the other equity financing such as Open Offer or Right Issues, which in general are more time-consuming in administrative and reviewing procedures given the Company's dual listing status, the Non-public Issuance of A Shares is a more desirable solution for the Group to improve its financial position and enlarge its capital base for business development.

Having considered that (i) the entering into the Triumph Group Subscription Agreement and Supplemental Agreement between the Triumph Group and the Company fully demonstrates a firm confidence and continuous support to the Company's future development from the Triumph Group which is beneficial in boosting the confidence of the Shareholders and potential investors of the Company; (ii) the main photovoltaic glass products of the Group belong to key basic materials in the upstream of the photovoltaic glass and solar power industry which is expected to prosper in the future; (iii) the PRC government has implemented various favourable policies to promote the usage of photovoltaic glass products and photovoltaic technology to develop the solar power industry in the coming years; and (iv) the Non-public Issuance of A Shares is a more desirable fund-raising solution for the Group as compared to other alternatives such as debt financings and other equity financings, we consider that the Non-public Issuance of A Shares including the Proposed Triumph Group Subscription and the use of proceed of the Non-public Issuance of A Shares are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

4. Principal terms of the Non-public Issuance of A Shares and the Triumph Group Subscription Agreement (as amended and supplemented by the Supplemental Agreement)

As extracted from the Board Letter, the major terms and conditions of the Triumph Group Subscription Agreement are summarised as follows:

Parties

  • (1) the Company (as the issuer); and

  • (2) Triumph Group (as the subscriber)

Subscription price and pricing principles

The subscription price and pricing principles are consistent with Issue Price and pricing principles of the Non-Public Issuance of A Shares.

The Issue Price of the A Shares under the Non-public Issuance of A Shares will be determined through bidding. The Price Determination Date of the Non-public Issuance of A Shares is the first day of the offering period of the Non-public Issuance of A Shares.

The Issue Price shall not be lower than (i) 80% of the average trading price of the Company's A Shares over the 20 trading days preceding the Price Determination Date (excluding such date) (the average trading price of the A Shares over the 20 trading days preceding the Price Determination Date = the total turnover of A Shares over the 20 trading days preceding the Price Determination Date/the total trading volume of A Shares over the 20 trading days preceding the Price Determination Date) (the "80% Pricing Criteria"); and (ii) the net asset value per Share attributable to the Shareholders of ordinary shares of the Company as set out in the latest audited consolidated financial statements of the Company before the issuance under the Non-public Issuance of A Shares (the "NAV Pricing Criteria"), whichever is higher.

Please refer to the sub-sections headed under "Details of the Non-Public Issuance of A Shares" and "Principal terms of the Triumph Group Subscription Agreement (as amended and supplemented by the Supplemental Agreement)"of the Board Letter in this Circular for the full details of the terms in relation to the Non-public Issuance of A Shares and the Triumph Group Subscription Agreement.

As set out in the latest audited consolidated financial statements of the Company before the issuance under the Non-public Issuance of A Shares, the net asset value per Share attributable to the Shareholders of ordinary shares of the Company as disclosed in the audited consolidated financial statements for the year of 2019 of the Company is RMB2.32 per Share, on such basis and assuming that the latest audited consolidated financial statements before the issuance under the Non-public Issuance of A Shares is the audited consolidated financial statements for the year of 2019 of the Company, it is expected that the minimum Issue Price would, subject to the approval of the CSRC, be at least RMB2.32 per A Share.

As at the date of the Announcements, the closing price per A Share quoted on the SSE was RMB17.71 per A Share and the closing price per H Share quoted on the Stock Exchange was

HK$6.6 per H Share.

In the event that during the 20 trading days prior to the Price Determination Date, there occurs ex-right or ex-dividend event, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, causing adjustment to the Share prices, the trading prices for the trading days preceding such adjustment shall be calculated as the adjusted price after such ex- right or ex-dividend event.

The aforementioned net asset value per Share will be adjusted accordingly in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in the Company during the period from the balance sheet date of the latest audited financial report before the issuance to the Issue Date.

The Issue Price shall be adjusted on ex-right or ex-dividend basis in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in the Company during the period from the Price Determination Date to the Issue Date.

Upon obtaining the approvals from the CSRC for the Non-public Issuance of A Shares by the Company, the final Issue Price shall be determined in accordance with the relevant laws and regulations and the requirements by the regulatory bodies, and having regard to the bidding results, through negotiation by the Board or other authorized person(s) of the Board under the authorization granted at the EGM, with the sponsor (the lead underwriter) of the Non-public Issuance of A Shares.

Triumph Group will not participate in the market bidding process of the Non-public Issuance of A Shares but has undertaken to accept the bidding results and agree to subscribe for the A Shares to be issued under the Non-public Issuance of A Shares at the same price as other specific investors.

We noted that the Issue Price was not fixed as at the date of the Triumph Group Subscription Agreement, which is complied with the "Implementation Rules for Non-public Issuance of Shares by Listed Companies" ( ɪ̹ʮ̡ڢʮක೯Бٰୃྼ݄୚ۆ') promulgated by the CSRC. In light of this, we have discussed with the Management and understood that the pricing principles are in compliance with the "Decision on Amending Implementing Rules on Non-Public Issuance of Shares by Listed Companies" ( ᗫ׵ࡌҷ"ɪ̹ʮ̡ڢʮක೯Бٰୃྼ݄୚ۆ•ٙӔ֛') published by CSRC and the Issuance Regulatory Questions and Answers - Regulatory Requirements regarding Guiding and Regulating Listed Companies' Financing Activities ( ೯Б္၍ਪഈÑᗫ׵ˏኬ஝ᇍ ɪ̹ʮ̡ፄ༟Бމ္ٙ၍ࠅӋ') published by the CSRC on 14 February 2020 and the Management acknowledged that the pricing principles are in compliance with the regulations of the PRC.

In light of the above, to further assess the reasonableness and fairness of the non-fixed Subscription Price under the Triumph Group Subscription Agreement, we have searched over the Stock Exchange's website to identify new non-public new A shares issuance proposal or revised non-public new A shares issuance proposal as announced by companies listed on the Stock Exchange since 31 December 2019 up to and including the date of the Triumph Group Subscription Agreement (the "Comparable Transactions"), for comparison purpose. Based on the above criteria, we have identified an exhaustive list of 13 Comparable Transactions of which we considered as fair and representative because (i) the purpose of the comparison is to examine the prevailing market practice in pricing mechanism of non-public A shares issuance of companies listed on the Stock Exchange; (ii) the Comparable Transactions are selected from transactions in the past one year are sufficient to show the recent the prevailing market practice in pricing mechanism; and (iii) the Comparable Transactions represented exhaustive list of samples available under the current selection criteria. Despite that the businesses, operations and prospects of the Group are not exactly the same as the subject companies of the Comparable Transactions, the Comparable Transactions are adequate and appropriate to demonstrate the market practices regarding issuance of new A-shares after the implementation of the relevant regulations since their effective date.

Summarised below is our relevant findings:

Involving non-public issuance ofCompany name (stock code)Date of announcementBasis for

A share issue priceOther basis to determine issue priceA shares to connected person?

Weichai Power Co.,

Ltd. (2338)

24 December 2020

not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

N/A

NoChina Suntien Green

Energy Corporation Limited (956)

21 December 2020

Postal Savings Bank of

China Co., Ltd (1658)

30 November 2020

not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

Last audited net asset Yes value per share, whichever is higher

Last audited net asset value per share, whichever is higher

Yes

Company name (stock code)Date of announcementBasis for

A share issue price

Other basis to determine issue priceInvolving non-public issuance of A shares to connected person?

Shanghai Fosun

Pharmaceutical (Group)

Co., Ltd. (2196)

25 November 2020

not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

N/A

No

ZTE Corporation (763)

28 October 2020 not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

N/A

NoTianjin Capital

Environmental Protection Group Company Limited (1065)

13 July 2020

  • not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

    N/A

    Yes

    First Tractor Company

    Limited (38)

    7 July 2020

  • not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

    N/A

    YesZoomlion Heavy Industry

    Science and Technology Co., Ltd. (1157)

    5 July 2020

  • not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

    N/A

    NoFlat Glass Group Co., Ltd.

    (6865)

    12 June 2020

  • not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

    N/A

    NoRed Star Macalline Group

    Corporation Ltd. (1528)

    3 June 2020

  • not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

    N/A

    NoDynagreen Environmental

    Protection Group Co., Ltd. (1330)

    29 May 2020

  • not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

Last audited net asset No value per share, whichever is higher

Company name (stock code)Date of announcementBasis for

A share issue priceOther basis to determine issue priceInvolving non-public issuance of A shares to connected person?

Bank of Zhengzhou Co.,30 March 2020

Ltd. (6196)

not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

N/A

NoWuXi AppTec Co., Ltd.

24 March 2020

(2359)

not less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date

N/A

No

As shown in the above table, the pricing principles of all of the 13 Comparable Transactions included that the issue price shall not be less than 80% of the average trading price of the A shares for the 20 trading days preceding the pricing benchmark date, which is identical to the 80% Pricing Criteria. In addition to the above, we noticed that the pricing principle of 3 of the Comparable Transactions included last audited net asset value per share which is identical to the NAV Pricing Criteria, representing a floor price of issue price in the event that the trading price of A shares trades below their respective net asset value per share. In addition, 4 of the Comparable Transactions involved the non-public issuance of A shares to connected person and we noted that their respective pricing mechanism of the issue of A shares to connected person were the same as the pricing mechanism of their respective non-public issuance of A shares as a whole. Given the above (i) and that the pricing principle of the Triumph Group Subscription Agreement includes both the 80% Pricing Criteria and the NAV Pricing Criteria; and (ii) the pricing mechanism of the Triumph Group Subscription Agreement and the Non-public Issuance of A Shares are the same, we consider that the basis in determining the Issue Price is not less favourable than those of the Comparable Transactions, is on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

Lock-up period and future exit arrangement

Triumph Group intends to hold the Shares for a long term. According to the Supplemental Agreement, Triumph Group shall not transfer the A Shares subscribed under the Triumph Group Subscription Agreement within 36 months from the date of completion of the Non-public Issuance of A Shares.

If the aforementioned lock-up arrangement does not conform to the latest regulatory opinions or regulatory requirements of the securities regulatory authorities of the PRC, the arrangement will be adjusted accordingly in accordance with the regulatory opinions or regulatory requirements of the relevant securities regulatory authorities.

The additional Shares being obtained from bonus issue, capitalisation of capital reserves and otherwise upon completion of the Non-public Issuance of A Shares shall also be subject to the aforementioned lock-up period arrangement. Such Shares shall comply with the relevant requirements of regulatory authorities such as the CSRC and the SSE upon expiry of the lock-up period.

5. Dilution effect on the shareholding interests of the existing public Shareholders

As at the Latest Practicable Date, the total issued share capital of the Company is 548,540,432 Shares, which comprises of 298,540,432 A Shares and 250,000,000 H Shares.

The following table sets out the shareholding structure of the Company (a) as at the Latest Practicable Date; and (b) immediately after the completion of the Non-public Issuance of A Shares, (assuming that (i) 164,562,129 A Shares will be issued under the Non-public Issuance of A Shares; (ii) Triumph Group subscribes for a maximum of 70,975,646 A Shares; (iii) the other specific target subscribers (other than Triumph Group) subscribe for a maximum of 93,586,483 A Shares; and (iv) there is no other change in the shareholding structure of the Company since the Latest Practicable

Date save for the issue of the A Shares under the Non-public Issuance of A Shares):

(ii) Shareholding immediately

(i) Shareholding as at

after the completion of the Non-

the Latest Practicable Date

public Issuance of A Shares

Approximate

Approximate

percentage of

percentage of

Number the total issued

Number of the total issued

Shareholders

of Shares

Shares

Shares

Shares

(%)

(%)

A Shares

Triumph Group and parties acting in concert

with it (Note 1)

Triumph Group

6,170,699

1.12

77,146,345

10.82

CLFG

111,195,912

20.27

111,195,912

15.59

Bengbu Institute

70,290,049

12.81

70,290,049

9.86

Huaguang Group

3,477,327

0.63

3,477,327

0.49

International Engineering

386,370

0.07

386,370

0.05

Sub-total of Triumph Group and parties

acting in concert with it

191,520,357

34.91

262,496,003

36.81

- 52 -

LETTER FROM VEDA CAPITAL

(ii) Shareholding immediately

after the completion of the Non-

the Latest Practicable Date

public Issuance of A Shares

Approximate

Approximate

percentage of

percentage of

Number the total issued

Number of the total issued

(i) Shareholding as at

Shareholders

of Shares

Shares

Shares

Shares

(%)

(%)

Other specific target subscribers (not more than 34)

-

-

93,586,483

13.12

Other A Shareholders

107,020,075

19.51

107,020,075

15.01

Sub-total of A Shares

298,540,432

54.42

463,102,561

64.94

H Shares

Public H Shareholders

250,000,000

45.48

250,000,000

35.06

Total issued Shares

548,540,432

100

713,102,561

100

The following table sets out the shareholding structure of the Company immediately after the completion of the Non-public Issuance of A Shares, (assuming that (i) 164,562,129 A Shares will be issued under the Non-public Issuance of A Shares; (ii) Triumph Group subscribes for 13.62% of the A Shares (being 22,413,362 A Shares) under the Non-public Issuance of A Shares; (iii) the other target subscribers (other than Triumph Group) subscribe for 142,148,767 A Shares; and (iv) there is no other change in the shareholding structure of the Company since the Latest Practicable Date save for the issuance of the A Shares under the Non-public Issuance of A Shares):

(iii) Shareholding immediately after completion

of the Non-public Issuance of A Shares

Approximate

percentage ofShareholders

Number of Shares the total issued Shares

(%)

A Shares

Triumph Group and parties acting in concert with it

(Note)

Triumph Group

28,584,061

4.01

CLFG

111,195,912

15.59

Bengbu Institute

70,290,049

9.86

Huaguang Group

3,477,327

0.49

International Engineering

386,370

0.05

Sub-total of Triumph Group and parties acting in

concert with it

213,933,719

30

Other specific target subscribers (not more than 34)

142,148,767

19.93

Other A Shareholders

107,020,075

15.01

Sub-total of A Shares

463,102,561

64.94

H Shares

Public H Shareholders

250,000,000

35.06

Total issued Shares

713,102,561

100

Note:

As at the Latest Practicable Date, Triumph Group, an indirect controlling shareholder of the Company, directly holds approximately 1.12% of the Shares of the Company, and indirectly holds (i) approximately 20.27% of the Shares of the Company through CLFG, its direct controlled subsidiary; (ii) approximately 12.81% of the Shares of the Company through Bengbu Institute, its direct wholly-owned subsidiary; (iii) approximately 0.63% of the Shares of the Company through Huaguang Group, its wholly-owned subsidiary; (iv) approximately 0.07% of the Shares of the Company through International Engineering, an indirect controlled subsidiary of CNBMG, therefore, Triumph Group and parties acting in concert with it directly and indirectly hold approximately 34.91% of the Shares of the Company in aggregate.

Based on publicly available information and to the best knowledge of the Directors, assuming that a total of 164,562,129 A Shares will be issued pursuant to the Non-public Issuance of A Shares and that there are no other changes to the share capital of the Company prior to the completion of the Non-public Issuance of A Shares, the public float percentage of the Company upon the completion of the Non-public Issuance of A Shares will continue to satisfy the requirements under Rule 8.08 of the Listing Rules.

The number of A Shares to be issued under the Non-public Issuance of A Shares, being not exceeding 164,562,129 (inclusive), represents (i) approximately 55.12% of the number of the existing issued A Shares as at the Latest Practicable Date and approximately 30.00% of the number of existing total issued Shares as at the Latest Practicable Date; and (ii) approximately 35.53% of the number of issued A Shares and approximately 23.08% of the number of total issued Shares upon completion of the Non-public Issuance of A Shares, in each case, the shares as enlarged by the number of A Shares to be issued. The Company will issue the A Shares under the Specific Mandate to be sought from the Independent Shareholders at the EGM and the Class Meetings.

The shareholding of public H Shareholders will also be decreased from approximately 45.48% to approximately 35.06% immediately after the completion of the Non-public Issuance of A Shares, representing a possible maximum dilution effect of approximately 22.91%.

In light of the above, to further assess whether the dilution effect on the shareholding of public H Shareholders under the Non-public Issuance of A Shares are acceptable, we have obtained the shareholdings of public H shareholders of the 13 Comparable Transactions and compute their respective maximum dilution effect for comparison purpose. Set out below is our finding:

Shareholding of public H shareholders immediately prior to after completion non-public of non-public

possibleissuance of issuance of

maximum

Company name (stock code)

A shares

A shares

dilution effect

(%)

(%)

(%)

Weichai Power Co., Ltd. (2338)

24.49

22.26

9.11

China Suntien Green Energy

Corporation Limited (956)

47.77

36.74

23.09

Postal Savings Bank of China Co.,

Ltd (1658)

22.28

20.97

5.88

Shanghai Fosun Pharmaceutical

(Group) Co., Ltd. (2196)

19.52

18.59

4.76

ZTE Corporation (763)

16.33

15.75

3.55

Shareholding of public H shareholders immediately prior to after completion non-public of non-public

possibleissuance of issuance of

maximum

Company name (stock code)

A shares

A shares

dilution effect

(%)

(%)

(%)

Tianjin Capital Environmental

Protection Group Company

Limited (1065)

23.82

19.42

18.47

First Tractor Company Limited (38)

39.76

34.88

12.27

Zoomlion Heavy Industry Science

and Technology Co., Ltd. (1157)

17.57

15.17

13.66

Flat Glass Group Co., Ltd. (6865)

23.05

18.73

18.74

Red Star Macalline Group

Corporation Ltd. (1528)

18.98

15.10

20.44

Dynagreen Environmental Protection

Group Co., Ltd. (1330)

32.68

27.23

16.68

Bank of Zhengzhou Co., Ltd. (6196)

25.63

21.93

14.44

WuXi AppTec Co., Ltd. (2359)

10.33

10.33

0.00

Maximum

23.09

Minimum

0.00

Average

12.39

The Company

45.48

35.06

22.91

As shown in the above table, the possible maximum dilution effect on the shareholding of public H shareholders of the Comparable Transactions ranged from approximately 0.00% to approximately 23.09% with an average of approximately 12.39%. Therefore, the possible maximum dilution effect on the shareholding of public H Shareholders of approximately 22.91% is within the range of the Comparable Transactions but above the average of the Comparable Transactions.

Despite that the possible maximum dilution effect on the shareholding of public H Shareholders under the Non-public Issuance of A Shares is close to the upper range of the dilution effect on the shareholding of public H shareholders of the Comparable Transactions, the dilution effect of the

Non-public Issuance of A Shares in exchange (i) will allow the Group to develop and expand itsphotovoltaic glass products portfolio which belong to key basic materials in the upstream of the photovoltaic glass and solar power industry with prosperous future, and (ii) fully demonstrates a firm confidence and continuous support to the Company's future development from the Triumph Group which is beneficial in boosting the confidence of the Shareholders and potential investors of the Company. Having also considered (i) the shortcomings of other alternative fund-raising methods such as debt financings and other equity financings and that the Non-public Issuance of A Shares is a more desirable fund-raising solution for the Group as mentioned; and (ii) that the principal terms of the Triumph Group Subscription Agreement being fair and reasonable so far as the Independent Shareholders are concerned, we are of the view that the aforementioned level of dilution to the shareholding interests of the existing public Shareholders is acceptable and justifiable.

6. Financial effects of the Issuance on the Group

Cash position

According to interim report of the Company for the six months ended 30 June 2020, the Group had monetary funds as at 30 June 2020 of approximately RMB563.4 million. Upon completion of the Proposed Non-Public Issuance of A Shares and save for the expenses in relation to the Proposed Non-Public Issuance of A Shares, the cash position of the Group will be improved as the Proposed Non-Public Issuance of A Shares will increase the cash and cash equivalents by approximately RMB2,000 million. Accordingly, the cash position, net current assets and current ratio of the Company are expected to be improved upon Completion.

Earnings

Save for the expenses in relation to the Proposed Non-Public Issuance of A Shares, the Proposed Non-Public Issuance of A Shares will not have any immediate material impact on the earnings of the Company.

Net Asset Value

According to the interim report of the Company for the six months ended 30 June 2020, the net asset attributable to the Company was approximately RMB1,315.4 million. Upon completion of the Proposed Non-Public Issuance of A Shares and save for the expenses in relation to the Proposed Non-Public Issuance of A Shares, the net asset attributable to the Company will increase as the

Proposed Non-Public Issuance of A Shares will increase the cash balance of the Company.

Gearing

According to the interim report of the Company for the six months ended 30 June 2020, the gearing ratio of the Group as at 30 June 2020, as derived by total liabilities over the total assets of the Group as at 31 December 2019, was approximately 73.90%. Upon completion of the Proposed Non-Public Issuance of A Shares, the total debt of the Group will decrease, while the total assets of the Group will increase. Thus, the gearing level of the Group will decrease upon completion of the Proposed Non-Public Issuance of A Shares.

Based on the above, the Proposed Non-public Issuance of A Shares would have an overall positive effect on the financial position of the Group in terms of cash position, net asset value, and gearing upon completion of the Proposed Non-Public Issuance of A Shares. On such basis, we are of the view that the Proposed Non-public Issuance of A Shares is in the interests of the Company and the Independent Shareholders as a whole.

RECOMMENDATIONS

Having considered the above principal factors and reasons, we are of the view that (i) the Non-public Issuance of A Shares and the Proposed Triumph Group Subscription were on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders, and we also recommend Independent Shareholders to vote in favor of the relevant resolution for approving Non-public Issuance of A Shares, the Proposed Triumph Group Subscription and the Specific Mandate at the EGM and the Class Meetings.

Yours faithfully, For and on behalf of

Veda Capital Limited

Julisa Fong Managing Director

Ms. Julisa Fong is a licensed person registered with the SFC and a responsible officer of Veda Capital which is licensed under the SFO to carry out type 6 (advising on corporate finance) regulated activity and has over 24 years of experience in corporate finance industry.

Stock Code of A Shares : 600876

Stock Code of H Shares: 1108

Abbreviation of A Shares: Luoyang Glass Abbreviation of H Shares: Luoyang Glass

°°

PROPOSAL FOR THE 2020 NON-PUBLIC

ISSUANCE OF A SHARES

(REVISED VERSION)

JANUARY 2021

COMPANY STATEMENT

  • 1. The Company and all members of the Board warrant that the contents of the Proposal are true, accurate and complete and do not contain false information, misleading statements or material omissions, and accept several and joint responsibilities for the truthfulness, accuracy and completeness of its contents.

  • 2. Upon the completion of the Non-public Issuance of A Shares, the Company shall be responsible for any changes in its operation and revenue, while the investment risks arising from the Non-public Issuance of A Shares shall be borne by the investors.

  • 3. The Proposal is the description of the Board of the Company on the Non-public Issuance of A Shares, and any other statements to the contrary shall be misrepresentation.

  • 4. Investors should consult their own stockbrokers, lawyers, professional accountants or other professional advisers if in doubt.

  • 5. The matters mentioned in the Proposal do not represent the substantive judgment, confirmation or approval of the approving authorities on the matters related to the Non-public Issuance of A Shares. The effectiveness and completion of the matters related to the Non-public Issuance of A Shares mentioned in the Proposal shall be subject to the approval or verification of the relevant approving authorities.

IMPORTANT NOTICE

  • 1. The Non-public Issuance of A Shares is in compliance with the provisions under the Company Law, the Securities Law, the Administrative Measures for the Issuance, the Implementation Rules and other laws, administrative regulations, departmental rules and normative documents. The Company satisfies various conditions on the non-public issuance of A Shares.

  • 2. The plan for the Non-public Issuance of A Shares has been considered and approved at the twenty-third meeting of the ninth session of the Board and the twenty-fifth meeting of the ninth session of the Board of the Company. According to the provisions of the relevant laws and regulations, the Non-public Issuance of A Shares is subject to the implementation of the regulatory approval procedures in relation to the state-owned assets, the consideration and approval at the general meeting of the Company and the approval by the CSRC.

  • 3. The Price Determination Date of the Issuance is the first day of the offering period. The Issue Price shall not be lower than 80% of the average price of the shares of the Company over the 20 trading days preceding the Price Determination Date and the latest audited net asset value per share attributable to the shareholders of ordinary shares of the parent company before the Issuance, whichever is higher.

    The average trading price of the shares over the 20 trading days preceding the Price Determination Date = the total turnover of the shares over the 20 trading days preceding the Price Determination Date/the total trading volume of the shares over the 20 trading days preceding the Price Determination Date. In the event that during the 20 trading days, there occurs ex-right or ex-dividend event, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, causing adjustment to the share prices, the trading prices for the trading days preceding such adjustment shall be calculated at the adjusted price after such ex-right or ex-dividend event.

    The net asset value per share mentioned above will be adjusted in the event that any ex-right or ex-dividend event, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, occurs during the period from the balance sheet date of the Company's latest audited financial report before the Issuance to the Issue Date.

The Issue Price shall be subject to ex-right or ex-dividend in the event that any ex-right or ex-dividend event of the Company, such as dividend distribution, bonus issue, rights issue and capitalisation of capital reserves, occurs during the period from Price Determination Date to the Issue Date of the Issuance.

The final Issue Price shall be determined based on the principle of price priority according to the price offered by investors after the approval for Issuance has been obtained from the CSRC. Triumph Group will not participate in the market bidding process of the Issuance but has undertaken to accept the bidding results and subscribe for the shares under the Issuance at the same price as other investors.

  • 4. The target subscribers for the Non-public Issuance of A Shares will not be more than 35 (inclusive) investors (including Triumph Group, an indirect controlling shareholder of the Company). The target subscribers other than Triumph Group are no more than 34 specific target subscribers, including securities investment fund management companies who are in compliance with the requirements of the CSRC, securities companies, trust investment companies, finance companies, asset management companies, insurance institution investors, qualified foreign institutional investors (including self-operated accounts of or investment product accounts managed by the above investors) and other institutional investors, and other legal persons, natural persons or other qualified investors who are in compliance with the requirements of the CSRC. Securities investment fund management companies, which subscribe for the A Shares with two or more of the funds managed by them, shall each be taken as one single subscriber. Trust investment companies, as subscribers, may only subscribe for the A Shares with their own funds.

  • 5. The number of A Shares under the Non-public Issuance shall not exceed 30% of the total capital of the Company prior to the Non-Public Issuance, that is, no more than 164,562,129 shares (inclusive). In the Issuance, Triumph Group intends to subscribe for not less than 13.62% of the shares to be issued under the Issuance in cash (inclusive), the number of subscribed shares shall not exceed 70,975,646 shares, and the proportion of shareholdings held by Triumph Group and parties acting in concert with it upon the completion of the Issuance shall not exceed 36.81%.

    The maximum number of shares to be issued under the Issuance will be adjusted accordingly in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in the Company during the period from the date of the board resolutions to the Issue Date. The final number of shares to be issued will be determined by the Board of the Company under the authorization granted at the general meeting through negotiation with the sponsor (the lead underwriter) in accordance with the price offered by the target subscribers after the Company has obtained approvals from the CSRC for the Issuance.

  • 6. The proceeds to be raised by the Non-Public Issuance of A Shares will not exceed RMB2 billion (inclusive). After deducting issuance costs, all of the net proceeds will be used for the following projects:

    Unit: RMB0'000

    No.

    Project name

    Total amount of investment

    Proposed amount to be used from the proceeds

    1

    Project of Photovoltaic Cell Packaging Material for Solar Equipment

    179,457.00

    140,000.00

    1.1

    CNBM (Hefei) New Energy Company Limited*

    (ʕܔҿ€Υ٭อঐ๕Ϟࠢʮ̡) Project of

    Photovoltaic Cell Packaging Material for Solar Equipment

    77,968.00

    60,000.00

    1.2

    CNBM (Tongcheng) New Energy Materials

    Company Limited* (ʕ਷ܔҿࣶ۬อঐ๕ҿࣘ Ϟࠢʮ̡) Phase I of the Project of Photovoltaic Cell Packaging Material for Solar Equipment

    101,489.00

    80,000.00

    2

    Repayment of interest-bearing liabilities and replenishment of working capital

    -

    60,000.00

    Project of Photovoltaic Cell Packaging Material for Solar Equipment has been filed by Hefei High-tech Industrial Development Zone and Tongcheng Development and Reform Commission, respectively, and the relevant Environmental Impact Assessment procedure is in process.

  • 7. In compliance with the requirements of relevant laws, regulations and regulatory documents, Triumph Group shall not transfer the shares which it subscribed for within 36 months from the date of completion of the Non-public Issuance of A Shares. The other target subscribers shall not transfer the shares which they subscribed for within 6 months from the date of completion of the Issuance. Relevant requirements by the CSRC and the Shanghai Stock Exchange shall be followed upon expiry of the lock-up period.

  • 8. According to the provisions of the Notice on Further Implementation of Matters in Relation to the Cash Dividends of Listed Companies (Zheng Jian Fa [2012] No. 37)ᗫ׵ආɓӉໝྼɪ̹ʮ̡ତ ږʱߎϞᗫԫධٙஷٝ'€ᗇ္೯[2012]37and the Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies (CSRC Announcement [2013] No. 43)ɪ̹ʮ္̡ ၍ܸˏୋ3໮Ñɪ̹ʮ̡ତږʱߎ'€ᗇ္ึʮѓ[2013]43issued by the CSRC, the Company has formulated the Shareholders' Return Plan for the Next Three Years (2021-2023) of Luoyang Glass Company Limited* to further improve the profit distribution policy. For the profit distribution policy and dividends of the Company in the recent three years, please refer to "Chapter 6 Profit Distribution Policy of the Company and Its Implementation" of the Proposal.

  • 9. According to the relevant requirements of the Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market issued by the State Council (Guo Fa

    [2014] No. 17)€਷ਕ৫ᗫ׵ආɓӉڮආ༟͉̹ఙ਄ੰ೯࢝ٙ߰ʍจԈ'€਷೯[2014]17, the

    Opinion of General Office of the State Council on Further Enhancing Protection of Rights and Interests of Minority Investors in the Capital Market (Guo Ban Fa [2013] No. 110)€਷ਕ৫፬ʮ ᝂᗫ׵ආɓӉ̋੶༟͉̹ఙʕʃҳ༟٫ΥجᛆूڭᚐʈЪٙจԈ'€਷፬೯[2013]110 and the

    Guiding Opinion on Matters concerning the Dilution of Current Return in Initial Public Offering, Refinancing and Major Asset Restructuring (CSRC Announcement [2015] No. 31)€ᗫ׵࠯೯ʿΎ ፄ༟eࠠɽ༟ପࠠଡ଼ᛅᑛуಂΫజϞᗫԫධܸٙኬจԈ'€ᗇ္ึʮѓ[2015]31, the Company has developed the mitigation and remedial measures for the current return dilution resulting from the Non-Public Issuance of A Shares. In addition, the controlling shareholder, indirect controlling shareholder, beneficial controller, directors and senior executives of the Company have made corresponding undertakings for the implementation of the relevant mitigation and remedial measures. For details of the relevant measures and undertakings, please refer to "Chapter 7 Description of the Dilution of Current Return Resulting from This Issuance and the Mitigation and Remedial Measures" of the Proposal.

  • 10. The Controlling Shareholder and De Facto Controller of the Company will not be changed, and the shareholding structure of the Company will remain in compliance with the listing requirements upon the completion of the Non-Public Issuance of A Shares.

CONTENTS

COMPANY STATEMENT .......................................................

I-2

IMPORTANT NOTICE .........................................................

I-3

CONTENTS ...................................................................

I-7

DEFINITIONS ................................................................

I-12

CHAPTER 1 OVERVIEW OF THE PLAN FOR THE NON-PUBLIC ISSUANCE

OF A SHARES ..............................................................

I-14

  • I. BASIC INFORMATION ON THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-14

  • II. BACKGROUND AND PURPOSE OF THE NON-PUBLIC ISSUANCE OF

    A SHARES OF THE LISTED COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-15

  • III. RELATIONSHIP BETWEEN THE TARGET SUBSCRIBERS

    AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-17

  • IV. OVERVIEW OF THE PLAN FOR THE NON-PUBLIC ISSUANCE

    OF A SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-18

  • V. WHETHER THE ISSUANCE CONSTITUTES A CONNECTED TRANSACTION . . .

    I-22

  • VI. WHETHER THE ISSUANCE WILL CAUSE ANY CHANGE TO

    THE CONTROL OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-22

  • VII. THE APPROVALS FROM THE RELEVANT AUTHORITIES THAT HAVE BEEN

OBTAINED AND THE SUBMISSION AND APPROVAL PROCEDURES THAT NEED TO BE IMPLEMENTED FOR THE ISSUANCE PLAN . . . . . . . . . . . . . . . .

I-22

CHAPTER 2 PROFILE OF THE TARGET SUBSCRIBERS ............................

I-23

  • I. BASIC INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-23

  • II. SHAREHOLDING AND CONTROLLING RELATIONSHIP . . . . . . . . . . . . . . . . . . .

    I-25

  • III. MAIN BUSINESSES IN THE LAST THREE YEARS . . . . . . . . . . . . . . . . . . . . . . . . .

I-25

IV. A SUMMARY OF THE FINANCIAL DATE IN THE LAST YEAR . . . . . . . . . . . . . .

  • V. ADMINISTRATIVE PUNISHMENT (EXCEPT FOR THOSE APPARENTLY

    UNRELATED TO THE SECURITIES MARKET), CRIMINAL PUNISHMENT AND MAJOR CIVIL LITIGATION OR ARBITRATION RELATED TO ECONOMIC DISPUTES IN THE RECENT FIVE YEARS . . . . . . . . . . . . . . . . . . .

  • VI. HORIZONTAL COMPETITION AND CONNECTED TRANSACTIONS AFTER

    THE COMPLETION OF THE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • VII. THE MAJOR TRANSACTIONS BETWEEN THE TARGET SUBSCRIBERS, THEIR

    CONTROLLING SHAREHOLDERS AND DE FACTO CONTROLLERS AND THE COMPANY IN 24 MONTHS PRIOR TO THE ANNOUNCEMENT OF THE

    PROPOSAL OF THE NON-PUBLIC ISSUANCE OF A SHARES . . . . . . . . . . . . .

    I-26

    I-26

    I-27

    I-27

  • VIII. SOURCE OF FUNDS OF THIS SUBSCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-28

CHAPTER 3 SUMMARY OF THE AGREEMENTS FOR THE NON-PUBLIC ISSUANCE

OF A SHARES ..............................................................

I-29

  • I. CONTRACTING PARTIES AND SIGNING TIME . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-29

  • II. SUBSCRIPTION PRICE, SUBSCRIPTION AMOUNT AND NUMBER OF SHARES

    TO BE SUBSCRIBED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-29

  • III. PAYMENT METHOD AND ARRANGEMENT FOR ACCUMULATED

    UNDISTRIBUTED PROFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-31

  • IV. REGISTRATION AND LOCK-UP OF THE SHARES ISSUED AND SUBSCRIBED

    FOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-31

  • V. EFFECTIVENESS CONDITIONS OF THE AGREEMENTS . . . . . . . . . . . . . . . . . . . .

    I-32

  • VI. LIABILITY FOR BREACH OF THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .

I-32

CHAPTER 4 FEASIBILITY ANALYSIS OF THE BOARD OF DIRECTORS ON USE

OF PROCEEDS .............................................................

I-33

  • I. PLAN FOR USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    I-33

  • II. NECESSITY AND FEASIBILITY ANALYSIS ON USE OF PROCEEDS . . . . . . . . . .

    I-34

  • III. IMPACT OF THE ISSUANCE ON THE OPERATION STATUS AND FINANCIAL

POSITION OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-48

CHAPTER 5 DISCUSSION AND ANALYSIS BY THE BOARD OF DIRECTORS ON THE

IMPACT OF THE ISSUANCE ON THE COMPANY ...............................

I-50

  • I. CHANGES IN THE BUSINESS AND ASSETS, ARTICLES OF ASSOCIATION,

    SHAREHOLDING STRUCTURE, SENIOR MANAGEMENT STRUCTURE AND BUSINESS STRUCTURE OF THE COMPANY CAUSED BY THE ISSUANCE. .

    I-50

  • II. CHANGES IN THE FINANCIAL CONDITION, PROFITABILITY AND CASH

    FLOW OF THE COMPANY AFTER THE ISSUANCE . . . . . . . . . . . . . . . . . . . . .

    I-51

  • III. CHANGES IN THE BUSINESS RELATIONSHIP, MANAGEMENT

    RELATIONSHIP, CONNECTED TRANSACTIONS AND HORIZONTAL COMPETITION BETWEEN THE COMPANY AND THE CONTROLLING SHAREHOLDER AND ITS CONNECTED PERSONS . . . . . . . . . . . . . . . . . . . . . .

    I-52

  • IV. AFTER THE COMPLETION OF THE NON-PUBLIC ISSUANCE OF A SHARES,

    WHETHER THE COMPANY's CAPITAL AND ASSETS ARE OCCUPIED BY THE CONTROLLING SHAREHOLDER, THE DE FACTO CONTROLLER AND THEIR CONNECTED PERSONS, OR WHETHER THE COMPANY PROVIDES GUARANTEE FOR THE CONTROLLING SHAREHOLDER, THE DE FACTO CONTROLLER AND THEIR CONNECTED PERSONS . . . . . . . . . . . . . . . . . . . .

    I-52

  • V. IMPACT OF THE ISSUANCE ON THE DEBTS OF THE COMPANY . . . . . . . . . . . .

    I-52

  • VI. RISKS RELATED TO THE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-53

CHAPTER 6 PROFIT DISTRIBUTION POLICY OF THE COMPANY AND

ITS IMPLEMENTATION .....................................................

I-57

  • I. PROFIT DISTRIBUTION POLICY OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . .

    I-57

  • II. CASH DIVIDENDS AND USE OF UNDISTRIBUTED PROFITS OF

    THE COMPANY IN THE LAST THREE YEARS . . . . . . . . . . . . . . . . . . . . . . . . .

    I-60

  • III. SHAREHOLDERS' RETURN PLAN OF THE COMPANY FOR

THE NEXT THREE YEARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-61

CHAPTER 7 DESCRIPTION OF THE DILUTION OF CURRENT RETURN RESULTING

FROM THIS ISSUANCE AND THE MITIGATION AND REMEDIAL MEASURES ......

  • I. IMPACT OF DILUTION OF CURRENT RETURN RESULTING FROM THE NON-

    PUBLIC ISSUANCE ON THE KEY FINANCIAL INDEXES OF THE COMPANY

  • II. SPECIAL RISK REMINDER FOR THE DILUTION OF CURRENT RETURN

    RESULTING FROM THE NON-PUBLIC ISSUANCE . . . . . . . . . . . . . . . . . . . . . .

    I-65

    I-65

    I-68

  • III. NECESSITY AND RATIONALITY OF THE NON-PUBLIC ISSUANCE . . . . . . . . . .

  • IV. THE RELATIONSHIP BETWEEN THE PROJECTS FUNDED BY THE PROCEEDS

RAISED AND THE EXISTING BUSINESSES OF THE COMPANY, AS WELL AS THE TALENT, TECHNOLOGY AND MARKET RESERVE OF THE COMPANY FOR SUCH PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • V. THE MEASURES OF THE COMPANY WITH RESPECT TO THE DILUTION OF

    CURRENT RETURN RESULTING FROM THE ISSUANCE . . . . . . . . . . . . . . . . .

  • VI. UNDERTAKINGS MADE BY ALL DIRECTORS AND SENIOR EXECUTIVES

    TO ENSURE THE IMPLEMENTATION OF MITIGATION AND REMEDIAL MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • VII. UNDERTAKINGS MADE BY THE CONTROLLING SHAREHOLDER, INDIRECT

    CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • VIII. THE DISPOSAL MACHANISM FOR DISHONEST CONDUCT BY PARTIES WHO

    MADE UNDERTAKINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • IX. PROCEDURE FOR THE CONSIDERATION OF THE MITIGATION AND

REMEDIAL MEASURES FOR THE DILUTION OF CURRENT RETURN RESULTING FROM THIS ISSUANCE AND RELEVANT UNDERTAKING . . . .

I-69

I-69

I-69

I-72

I-73

I-73

I-73

CHAPTER 8 OTHER MATTERS THAT NEED TO BE DISCLOSED ....................

I-74

APPENDIX I

PROPOSAL FOR THE NON-PUBLIC

ISSUANCE OF A SHARES (REVISED)

DEFINITIONS

Luoyang Glass/Listed Company/

Luoyang Glass Company Limited* (ݾජޚᆨٰ΅Ϟࠢʮ̡)

Company

CLFG/Controlling Shareholder

China Luoyang Float Glass (Group) Company Limited* (ʕ਷ݾ

ජओجޚᆨණྠϞࠢப΂ʮ̡)

CNBMG/De Facto Controller

China National Building Material Group Co., Ltd.*(ʕ਷ܔҿණྠ

Ϟࠢʮ̡)

Triumph Group

Triumph Technology Group Co., Ltd.* (௱ସ߅ҦණྠϞࠢʮ̡),

an indirect controlling shareholder of the Company

Tongcheng New Energy

CNBM (Tongcheng) New Energy Materials Company Limited*

(ʕ਷ܔҿࣶ۬อঐ๕ҿࣘϞࠢʮ̡)

Hefei New Energy

CNBM (Hefei) New Energy Company Limited* (ʕܔҿ€Υ٭อ

ঐ๕Ϟࠢʮ̡)

Bengbu Institute

CNBM Bengbu Design & Research Institute for Glass Industry

Co., Ltd* (ʕܔҿ঵਽ޚᆨʈุணࠇ޼Ӻ৫Ϟࠢʮ̡)

Issuance/Non-public Issuance

the non-public issuance of A Shares by Luoyang Glass Company

Limited* (ݾජޚᆨٰ΅Ϟࠢʮ̡)

Proposal

the proposal for the Non-public Issuance of A Shares by Luoyang

Glass Company Limited* (ݾජޚᆨٰ΅Ϟࠢʮ̡)

Conditional Subscription Agreement

the Conditional Subscription Agreement on the Non-public

on the Non-public Issuance of

Issuance of A Shares between Luoyang Glass Company Limited*

A Shares

(ݾජޚᆨٰ΅Ϟࠢʮ̡) and Triumph Technology Group Co.,

Ltd.* (௱ସ߅ҦණྠϞࠢʮ̡)

Price Determination Date

the first day of the offering period of the Non-public Issuance

Company Law

the Company Law of the People's Republic of China

Securities Law

the Securities Law of the People's Republic of China

Administrative Measures

the Administrative Measures for the Issuance of Securities by

for the Issuance

Listed Companies (revised in 2020)

APPENDIX I

PROPOSAL FOR THE NON-PUBLIC

ISSUANCE OF A SHARES (REVISED)

Implementation Rules

the Implementation Rules for Non-public Issuance of Shares by

Listed Companies (revised in 2020)

Listing Rules

the Rules Governing the Listing of Stocks on the Shanghai Stock

Exchange

Articles of Association

the articles of association of Luoyang Glass Company Limited* (ݾ

ජޚᆨٰ΅Ϟࠢʮ̡)

CSRC

China Securities Regulatory Commission

SSE

Shanghai Stock Exchange

RMB/RMB0'000/

RMB, RMB0'000, RMB100 million

RMB100 million

Note:In the Proposal, two decimal places are reserved for the key values. There may be a discrepancy between the total and the sum of the breakdowns due to rounding.

CHAPTER 1 OVERVIEW OF THE PLAN FOR THE

NON-PUBLIC ISSUANCE OF A SHARES

I. BASIC INFORMATION ON THE ISSUER

1

Company name:

ݾජޚᆨٰ΅Ϟࠢʮ̡

English name:

Luoyang Glass Company Limited*

Listing places:

Shanghai Stock Exchange and Hong Kong Stock Exchange

A-share abbreviation:

Luoyang Glass

A-share stock code:

600876

H-share abbreviation:

Luoyang Glass

H-share stock code:

1108

Legal representative:

Zhang Chong

Registered office:

No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang, Henan

Province

Postal code:

471009

Registered capital:

RMB552,396,509

Share capital:

548,540,432 Shares

Tel.:

0379-63908833

Fax:

0379-63251984

Website:

www.zhglb.com

Business scope:

Development, production, manufacture and installation of information

display glass, new energy glass, photoelectric material for functional-

glass category and its processed products and components, relevant

materials, mechanical equipment and its electric appliances and

accessories, relevant technical consultancy and technical services, as

well as sales and after-sales services of self-produced products.

As the Company completed the cancellation of the repurchased Shares on 6 November 2020, the total share capital of the Company has been changed from 552,396,509 Shares to 548,540,432 Shares. The Company is in the process of the industrial and commercial registration for the change of the registered capital from

RMB552,396,509 to RMB548,540,432.

II. BACKGROUND AND PURPOSE OF THE NON-PUBLIC ISSUANCE OF A SHARES OF THE LISTED COMPANY

(I) Background of the Non-public Issuance

  • 1. During the period of "14th Five-Year Plan", the proportion of non-fossil energy will increase significantly, and photovoltaic glass will have important market development opportunities

    On 9 April 2020, the National Energy Administration issued the Notice on the Preparation of the "14th Five-Year" Plan for Renewable Energy Development ( ᗫ ׵ਂλ̙Ύ͛ঐ๕೯࢝"ɤ̬ʞ"஝ྌᇜႡʈЪϞᗫԫධٙஷٝ'), which clarified the development strategy of "marketization, low cost and prioritized development of renewable energy". In 2020, the consumption of the non-fossil energy accounts for approximately 15% of the total energy consumption in China. It is estimated that the proportion of the consumption of the non-fossil energy in the total energy consumption will be not less than 50% in China by 2050. Among various non-fossil energy resources, photovoltaic energy is expected to gain broad market space due to the advantage of abundant resources and relatively low cost. As an essential raw material for photovoltaic modules, photovoltaic glass will have important market development opportunities accordingly.

  • 2. The production capacity and output in photovoltaic glass of China lead the world

    Due to the great capital needs of the photovoltaic glass industry and the high industry threshold, the early global photovoltaic industry was monopolized by foreign companies from France, Japan and other countries. In recent years, with the rapid development of the photovoltaic module industry in China, the photovoltaic glass industry in China has seen a significant increase in production capacity after undergoing the technological improvements and expansion of production scale, and has basically completed the transformation from relying on imports to replacing imports. Since 2011, China has become the largest producer of photovoltaic glass worldwide. In 2019, the production capacity and output of photovoltaic glass of China accounted for more than 90% of that of the world. Meanwhile, it is also the largest exporter of photovoltaic glass worldwide.

3. Photovoltaic cell packaging materials for solar equipment ushers in an opportunity period

On the one hand, the growth of photovoltaic installations promotes the demand for photovoltaic cell packaging materials for solar equipment. On the other hand, the increase in the penetration rate of double-glass components will also drive the rapid growth of the demand for photovoltaic cell packaging materials for solar equipment. According to calculations, as compared with conventional modules, double-glass components drive an increase of 56% in the unit demand for photovoltaic cell packaging materials for solar equipment in the unit installed capacity. As the market share of double-glass components increases, the demand for photovoltaic cell packaging materials for solar equipment will further enhance. Therefore, driven by dual demand, photovoltaic cell packaging materials are expected to usher in a market opportunity period.

(II) Purpose of the Non-public Issuance

1. The Non-public Issuance is conducive for the Company to capture the market opportunities and improve the industrial position

According to the estimate from the China Photovoltaic Industry Association, the market penetration rate of double-glass components is expected to reach 60% by 2025. As a key material essential for double-glass components, the photovoltaic cell packaging materials have a broad market space.

With the steady development of the photovoltaic industry and the continuous increase in the market penetration rate of double-glass components, the market demand for cell packaging materials in the photovoltaic glass segment will rise rapidly. Therefore, the Company will firmly seize this market opportunity to construct the projects of new energy photovoltaic cell packaging materials, so as to quickly seize the photovoltaic backplane glass market segment, and continuously expand the Company's leading edge in the photovoltaic glass field to achieve the Company's stable and rapid development. After the proceeds have been raised, with the smooth implementation of investment projects, the Company will effectively enhance its product competitiveness through economies of scale, and further enhance the dominant position of the Company in the photovoltaic glass industry, which is consistent with the needs of the industrial development strategy of the Company.

2. Optimize capital structure to alleviate working capital pressure

Raising proceeds through the Non-public Issuance of A Shares is beneficial to the Company to further optimize the structure of assets and liabilities, reduce financial risks, and enhance the Company's ability to resist risks. In addition, after the capital strength of the Company has been dramatically improved, the Company will lay a solid foundation for the sustainable development in numerous aspects, such as business layout, financial capacity and long-term strategy, creating a sound condition for the improvement of the Company's core competitiveness and the realization of leap-forward development.

III. RELATIONSHIP BETWEEN THE TARGET SUBSCRIBERS AND THE COMPANY

The target subscribers for the Non-public Issuance of A Shares will not be more than 35 (inclusive) investors, including Triumph Group, an indirect controlling shareholder of the Company. In particular, Triumph Group intends to subscribe for not less than 13.62% (inclusive) of the actual number of A Shares to be issued under the Non-public Issuance of A Shares in cash, and the remaining Shares will be subscribed by other target subscribers in cash. Triumph Group will not participate in the market bidding process but has undertaken to accept the market bidding results and subscribe for the A Shares to be issued under the Non-public Issuance of A Shares at the same price as other specific investors.

The target subscribers other than Triumph Group include not more than 34 specific investors, namely securities investment fund management companies, securities companies, trust investment companies, finance companies, asset management companies, insurance institution investors, qualified foreign institutional investors (including self-operated accounts of or investment product accounts managed by the above investors) and other institutional investors who are in compliance with the requirements of the CSRC as well as other legal persons, natural persons or other qualified investors who are in compliance with the requirements of the CSRC. Securities investment fund management companies which subscribe for the A Shares with two or more of the funds managed by them, shall each be taken as one single subscriber. Trust investment companies, as target subscribers, may only subscribe for the A Shares with their own funds.

IV. OVERVIEW OF THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES

  • (I) Type and nominal value of shares to be issued

    The shares to be issued under the Non-public Issuance are domestic listed RMB ordinary shares (A Shares) with a nominal value of RMB1.00 per share.

  • (II) Issuance method and issuance time

    All the A Shares under the Non-public Issuance will be issued to the target subscribers through non-public issuance, which will be implemented in good time within the validity period of the approval on the Non-public Issuance by the CSRC.

  • (III) Pricing Benchmark Date, issue price, and pricing principles

    The Price Determination Date for the Non-public Issuance is the first day of the offering period of the Non-public Issuance of A Shares. The Issue Price shall not be lower than 80% of the average trading price of the Company's A Shares over the 20 trading days preceding the Price Determination Date and the latest audited net asset value per Share attributable to the shareholders of ordinary shares of the parent company before the Issuance, whichever is higher.

    The average trading price of A Shares over the 20 trading days preceding the Price Determination Date = total turnover of A Shares over the 20 trading days preceding the Price Determination Date/the total trading volume of A Shares over the 20 trading days preceding the Price Determination Date. In the event that during the 20 trading days, there occurs ex-right or ex-dividend event to the Company, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, causing adjustment to the Share prices, the trading prices for the trading days preceding such adjustment shall be calculated as the adjusted price after such ex-right or ex-dividend event.

    The net asset value per Share mentioned above will be adjusted in the event that any ex-right or ex-dividend event to the Company, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, occurs during the period from the balance sheet date of the Company's latest audited financial report before the Issuance to the Issue Date.

    The Issue Price shall be subject to ex-right or ex-dividend in the event that any ex-right or ex-dividend event of the Company, such as dividend distribution, bonus issue, rights issue and capitalisation of capital reserves, occurs during the period from Price Determination Date of the Issuance to the Issue Date.

The final Issue Price shall be determined in accordance with the relevant laws and regulations and the requirements by the regulatory bodies, and by the Board or other authorized person(s) of the Board under the authorization granted at the general meeting, through negotiation with the sponsor (the lead underwriter) of the Non-public Issuance of A Shares having regard to the bidding results after the Company has obtained approvals from the CSRC for the Non-public Issuance of A Shares. Triumph Group will not participate in the market bidding process of the Issuance, but it undertakes to accept the bidding results and participates in the subscription at the same price as other investors does.

(IV) Target subscribers and subscription method

The target subscribers for the Non-public Issuance of A Shares will not be more than 35 (inclusive) investors (including Triumph Group, an indirect controlling shareholder of the Company). The target subscribers other than Triumph Group are no more than 34 specific target subscribers, including securities investment fund management companies who are in compliance with the requirements of the CSRC, securities companies, trust investment companies, finance companies, asset management companies, insurance institution investors, qualified foreign institutional investors (including self-operated accounts of or investment product accounts managed by the above investors) and other institutional investors, and other legal persons, natural persons or other qualified investors who are in compliance with the requirements of the CSRC. Securities investment fund management companies, which subscribe for the A Shares with two or more of the funds managed by them, shall each be taken as one single subscriber. Trust investment companies, as subscribers, may only subscribe for the A Shares with their own funds.

Within the above scope, the final list of the other subscribers, other than Triumph Group, will be determined by the Board within the scope of authorization at the general meeting, through negotiation with the sponsor (the lead underwriter) of the Issuance based on the bidding results and pursuant to the Specific Rules for Implementation of the Non-public Issuance of Shares by Listed Companies (as amended in 2020) ( ɪ̹ʮ̡ڢʮක೯Бٰୃ ྼ݄୚ۆ'(2020ϋࡌ͍)) after the Company has obtained approvals from the CSRC for the Issuance. If relevant laws, regulations and normative documents have new requirements in relation to target subscribers of the Non-public Issuance of A Shares, the Company will make adjustments according to the new requirements.

All the target subscribers of the Non-public Issuance of A Shares will make one-off subscription for A Shares in cash.

(V) Number of Shares to be issued

The number of A Shares under the Non-public Issuance shall not exceed 30% of the total capital of the Company prior to the Non-Public Issuance, that is, no more than 164,562,129 shares (inclusive). In the Issuance, Triumph Group intends to subscribe for not less than 13.62% (inclusive) of the shares to be issued under the Issuance in cash, the number of subscribed shares shall not exceed 70,975,646 shares, and the proportion of shareholdings held by Triumph Group and parties acting in concert with it upon the completion of the Issuance shall not exceed 36.81%.

The maximum number of Shares to be issued under the Issuance will be adjusted accordingly in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in the Company during the period from the date of the board resolutions to the Issue Date. The final number of Shares to be issued will be determined by the Board of the Company under the authorization granted at the general meeting through negotiation with the sponsor (the lead underwriter) in accordance with the price offered by the target subscribers after the Company has obtained approvals from the CSRC for the Issuance.

(VI) Use of proceeds

The gross proceeds to be raised from the Non-public Issuance are not more than RMB2,000,000,000 (inclusive) and the net proceeds after deducting issuance costs are intended to be used for investment in the following projects:

Unit: RMB0,000

No.

Project name

Total amount of investment

Proposed amount to be used from the proceeds

1

Project of Photovoltaic Cell Encapsulating Material for Solar

Equipment

179,457.00

140,000.00

1.1

CNBM (Hefei) New Energy Company Limited* (ʕܔҿ€Υ٭ อঐ๕Ϟࠢʮ̡) Project of Photovoltaic Cell Encapsulating Material for Solar Equipment

77,968.00

60,000.00

1.2

CNBM (Tongcheng) New Energy Materials Company Limited*

(ʕ਷ܔҿࣶ۬อঐ๕ҿࣘϞࠢʮ̡) Phase I of the Project of Photovoltaic Cell Encapsulating Material for Solar Equipment

101,489.00

80,000.00

2

Repayment of interest-bearing liabilities and replenishment of working capital

-

60,000.00

If the net proceeds to be raised from the Non-public Issuance are lower than proposed amount to be used from the proceeds for the above projects, the shortfall will be covered by the Company through self-raised funds. Meanwhile, under the premise of not changing the projects to be invested in with the proceeds, the Board of the Company may make appropriate adjustment to the order and the amount to be used from the proceeds for the above projects according to the actual condition of the projects to be invested in with the proceeds.

Before the proceeds to be raised from the Non-public Issuance are available to be used, the Company may invest in advance with self-owned funds or self-raised funds according to the progress of the projects to be invested in with the proceeds, which will be subsequently replaced according to the relevant procedures as stipulated after the proceeds are available to be used.

(VII)

Lock-up period arrangement

In compliance with the requirements of relevant laws, regulations and regulatory documents, Triumph Group shall not transfer the Shares which it subscribed for within 36 months from the date of completion of the Non-public Issuance of A Shares. The other target subscribers shall not transfer the Shares which they subscribed for within 6 months from the date of completion of the Issuance. Relevant requirements by the CSRC and the SSE shall be followed upon expiry of the lock-up period.

(VIII) Listing place

The Shares will be listed and traded on the SSE upon expiry of the lock-up period of the Issuance.

  • (IX) Arrangement for accumulated undistributed profits

    All the existing and new shareholders upon completion of the Issuance will be entitled to the accumulated undistributed profits before the Issuance in accordance with their respective shareholding proportion at that time.

  • (X) Validity period of the resolution of this Issuance

    The resolution with respect to the Issuance shall be valid for 12 months from the date of the consideration and passing of the issuance plan at the general meeting and the class meetings of the Company.

  • V. WHETHER THE ISSUANCE CONSTITUTES A CONNECTED TRANSACTION

    Triumph Group, one of the target subscribers, is an indirect controlling shareholder of the Company, and thus the Issuance constitutes a connected transaction. The Company will perform the approval procedures for connected transactions in strict compliance with laws and regulations as well as the internal regulations of the Company.

    When the Board considered the proposals related to the connected transaction of the Non-public Issuance at the Board of the Company, the connected directors abstained from voting, and the independent directors expressed prior approval and independent opinions on this connected transaction. When the general meeting and the shareholders' class meeting considers the relevant proposals, the connected shareholders will abstain from voting.

  • VI. WHETHER THE ISSUANCE WILL CAUSE ANY CHANGE TO THE CONTROL OF THE COMPANY

    Up till now, CLFG, the Controlling Shareholder of the Company, and its concert parties hold 191,520,357 Shares of the Company in total, representing 34.91% equity interest of the Company. Triumph Group is an indirect controlling shareholder of the Company and CNBMG is the De Facto Controller of the Company. CNBMG will remain as the De Facto Controller of the Company upon the completion of the Non-public Issuance. In conclusion, the Non-public Issuance will not cause any change to the control of the Company.

  • VII. THE APPROVALS FROM THE RELEVANT AUTHORITIES THAT HAVE BEEN OBTAINED AND THE SUBMISSION AND APPROVAL PROCEDURES THAT NEED TO BE IMPLEMENTED FOR THE ISSUANCE PLAN

    The plan for Non-public Issuance has been considered and approved at the twenty-third meeting of the ninth session of Board and the twenty-fifth meeting of the ninth session of the Board of the Company, and the approval procedures that need to be implemented are as follows:

    • 1. To have the approval for the plan for Non-public Issuance of A Shares issued by CNBMG;

    • 2. To have the plan for Non-public Issuance of A Shares approved by the general meeting and the shareholders' class meeting of the Company;

    • 3. To have the application for Non-public Issuance of A Shares approved by the CSRC.

CHAPTER 2 PROFILE OF THE TARGET SUBSCRIBERS

The target subscribers for the Non-public Issuance of A Shares will not be more than 35 (inclusive) specific target subscribers (including Triumph Group, an indirect controlling shareholder of the Company) who are in compliance with the requirements of the CSRC. The target subscribers other than Triumph Group include securities investment fund management companies, securities companies, finance companies, asset management companies, insurance institution investors, trust companies, qualified foreign institutional investors, Renminbi qualified foreign institutional investors and other qualified investors. Securities investment fund management companies, securities companies, qualified foreign institutional investors, Renminbi qualified foreign institutional investors which subscribe for the A Shares with two or more of the products managed by them, shall each be taken as one single subscriber. Trust companies, as subscribers, may only subscribe for the A Shares with their own funds.

The final target subscribers shall be determined by the Board under the authorization by the general meeting based on the principle of price priority according to the price offered by investors through negotiation with the sponsor (the lead underwriter) after approvals from the CSRC for the Non-public

Issuance have been obtained.

I.

BASIC INFORMATION

Company name:

Triumph Technology Group Co., Ltd.*

Legal representative:

Peng Shou

Registered capital:

RMB4,725,129,793

Date of establishment:

9 May 1988

Type of company:

limited liability company

(sole proprietorship of legal person)

Registered address:

No. 2 Zizhuyuan South Road, Haidian District, Beijing

Office address:

Floor 11, Tower B, Guohai Plaza, No. 17 Fuxing Road,

Haidian District, Beijing

Postal code:

100036

Unified Social

91110000101923517F

Credit Code:

- I-23 -

Equity structure:

Held as to 100% by China National Building Material Group Co., Ltd.*

Business scope:

Research, manufacture and sales of building materials and complete equipment for light industry; development, transfer, consultation and service of new technology for light industry and the relevant import and export businesses; engineering design and consultation; tendering agency business; applied research and production of green energy technology products; consultation, design, assessment for energy saving and overall contract for construction of green energy projects; development, transfer, consultation and service of technology within the field of new energy; development, promotion, application and installation of new energy and energy saving products; technological development, production, assembly, sales and installation of components of solar energy and building integration houses, integrated houses and new-type houses; research and development, manufacture and sales of glass, raw materials and complete equipment; deep processing, manufacture and sales of glass products; processing and sales of nonmetallic mineral resources and products; development of computer software, technology consultation, physical and chemical analysis, and heat determination; and research and development, manufacture, sales and technology service of electromechanical equipment for building materials, coal mines, electricity, chemical engineering, metallurgy and municipal engineering. (The market entity shall legally and independently select business items and carry out business activities. For items subject to approval according to law, the business activities shall be carried out according to the approved content after the approval of the relevant authorities has been obtained. Business activities prohibited and restricted by the state and local industrial policies shall not be engaged in.)

  • II. SHAREHOLDING AND CONTROLLING RELATIONSHIP

    As of the date of announcement of this Proposal, the controlling shareholder and the de facto controller of Triumph Group are CNBMG and SASAC of the State Council, respectively. The equity controlling relationship between Triumph Group and its controlling shareholder as well as the de facto controller is as follows:

    SASAC

    100%

    China National Building Material Group Co., Ltd.*

    100%

    Triumph Technology Group Co., Ltd.*

  • III. MAIN BUSINESSES IN THE LAST THREE YEARS

    Triumph Technology Group Co., Ltd.* is a wholly-owned subsidiary of China National Building Material Group Co., Ltd.* and its main businesses include: information display, new energy material, powder material, float glass, equipment, engineering and other relevant businesses.

IV.

A SUMMARY OF THE FINANCIAL DATE IN THE LAST YEAR

Unit: RMB100 million

31 December

Items

2019

Current assets

197.08

Non-current assets

257.28

Total assets

454.36

Current liabilities

249.68

Non-current liabilities

80.80

Total liabilities

330.47

Total owners' equity

123.89

Items

Year of 2019

Revenue

144.00

Operating profit

0.18

Total profit

6.87

Net profit

3.34

V.

ADMINISTRATIVE PUNISHMENT (EXCEPT FOR THOSE APPARENTLY UNRELATED TO THE SECURITIES MARKET), CRIMINAL PUNISHMENT AND MAJOR CIVIL LITIGATION OR ARBITRATION RELATED TO ECONOMIC DISPUTES IN THE RECENT FIVE YEARS

On 24 May 2018, the CSRC issued the Administrative Penalty Decision [2018] No. 41 ( Б݁ஈ ၮӔ֛ࣣ'[2018] 41), according to which, Tang Liwei, a deputy general manager and the chief accountant of Triumph Group, was found an insider, who had contacted and disclosed the inside information to Guo Wei and Tang Yiwei, both of whom conducted insider trading of shares of Triumph Technology after their contact. Tang Liwei had acted in breach of Paragraph 1 of Article 76 under the Securities Law, which constituted the act of disclosure of inside information as set out in Article 202 under the Securities Law, thus being imposed a fine of RMB200,000.

Save as stated above, Triumph Group and its directors, supervisors and senior management personnel (or key persons in charge) have not been subject to administrative punishment (except for those apparently unrelated to the securities market) or criminal punishment and have not been involved in major civil litigation or arbitration related to economic disputes in the recent five years.

  • VI. HORIZONTAL COMPETITION AND CONNECTED TRANSACTIONS AFTER THE COMPLETION OF THE ISSUANCE

    The issuer is a business platform on which Triumph Group engages in the new energy photovoltaic glass. The proceeds to be raised from the Non-public Issuance of A Shares will mainly be used for expansion of production capacity of the new energy photovoltaic glass business, which will not result in horizontal competition between the businesses operation of the Listed Company and those of the target subscribers and their controlling shareholders and de facto controllers.

    Triumph Group, a target subscriber under this Non-public Issuance of A Shares, is another enterprise controlled by the De Facto Controller of the Listed Company, thus being a connected person under the Listing Rules. Triumph Group's participation in the Non-public Issuance is a transaction between the Listed Company and the connected person, which constitutes a connected transaction. After the completion of this Non-public Issuance of A Shares, the Company will carry out the examination and approval procedures for connected transactions in strict accordance with laws and regulations and the internal regulations of the Company, continue to sign connected transaction agreements according to law based on the principles of justice, fairness and openness of the market, fulfil the information disclosure obligation and handle relevant procedures for report and approval according to the relevant laws, regulations, Listing Rules and other provisions, and carry out the transactions in strict accordance with pricing principles under laws and regulations and the related management systems of connected transactions, without prejudice to the interests of the Company and all its Shareholders.

  • VII. THE MAJOR TRANSACTIONS BETWEEN THE TARGET SUBSCRIBERS, THEIR CONTROLLING SHAREHOLDERS AND DE FACTO CONTROLLERS AND THE COMPANY IN 24 MONTHS PRIOR TO THE ANNOUNCEMENT OF THE PROPOSAL OF THE NON-PUBLIC ISSUANCE OF A SHARES

    For details about the connected transactions in 24 months prior to the disclosure of the Proposal, please refer to the periodic reports and provisional announcements disclosed by the Company. Save for the connected transactions as disclosed in the periodic reports or provisional announcements by the Company, there was no other major transaction between Triumph Group, its controlling shareholder and de facto controller and the Company.

VIII.

SOURCE OF FUNDS OF THIS SUBSCRIPTION

Triumph Group has issued the Undertaking Letter in Relation to the Source of Subscription Funds ( ᗫ׵Ⴉᒅ༟ږԸ๕ٙוፕՌ'), promising that:

  • "1. The funds used by Triumph Group to subscribe for shares under the Non-public Issuance of Luoyang Glass are self-owed or self-raised funds, from legitimate sources, and not held on behalf of others, in trust or entrusted as capital contributions. Triumph Group has made no structuring arrangements such as hierarchical income, funding by leverage or other structuring methods, appropriation of funds of the Listed Company and its subsidiaries, or request guarantees from the Listed Company and its subsidiaries. The funds are not derived from asset exchange with the Listed Company or from other transactions.

  • 2. The funds used to subscribe for shares under the Non-public Issuance of Luoyang Glass are not derived, directly or indirectly, from the Listed Company, shareholders of the Listed Company who hold more than 5% equity interest in the Company, directors, supervisors and senior management of the Listed Company, or connected persons of the aforesaid entities. There is no other interest arrangement between the aforesaid entities and their related parties, nor will the aforesaid entities directly or indirectly provide financial support or compensation to Triumph Group.

  • 3. In case Luoyang Glass or other shareholders suffer from losses arising from Triumph Group's violation of its undertakings under this undertaking letter, Triumph Group is willing to assume the corresponding liability for compensation according to law."

CHAPTER 3 SUMMARY OF THE AGREEMENTS FOR

THE NON-PUBLIC ISSUANCE OF A SHARES

On 30 December 2020 and 20 January 2021, the Company signed the Conditional Subscription Agreement on the Non-public Issuance of A Shares and Supplemental Agreement with Triumph Group. The main contents of the agreement are as follows:

  • I. CONTRACTING PARTIES AND SIGNING TIME

    Party A (the issuer):

    Luoyang Glass

    Party B (the target subscriber/ subscriber):

    Triumph Group

    Signing time:

    30 December 2020, 20 January 2021

  • II. SUBSCRIPTION PRICE, SUBSCRIPTION AMOUNT AND NUMBER OF SHARES TO BE SUBSCRIBED

    1. Subscription price

The Price Determination Date of the Issuance is the first date in the period of the Non-public Issuance of A Shares of Party A. The Issue Price shall not be lower than 80% of the average trading price of A Shares of Party A over the 20 trading days preceding the Price Determination Date and the latest audited net asset per Share attributable to the shareholders of ordinary shares of the parent company before the Issuance, whichever is higher.

The average trading price of A Shares of Party A over the 20 trading days preceding the Price Determination Date = total turnover of A Shares of Party A over the 20 trading days preceding the Price Determination Date/the total trading volume of A Shares of Party A over the 20 trading days preceding the Price Determination Date. In the event that during the 20 trading days, there occurs ex-right or ex-dividend event to Party A, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, causing adjustment to the Share prices, the trading prices for the trading days preceding such adjustment shall be calculated as the adjusted price after such ex-right or ex-dividend event.

The net asset value per Share mentioned above will be adjusted in the event that any ex-right or ex-dividend event to Party A, such as dividends distribution, bonus issue, rights issue and capitalisation of capital reserves, occurs during the period from the balance sheet date of the Company's latest audited financial report before the Issuance to the Issue Date.

The Issue Price shall be subject to ex-right or ex-dividend in the event that any ex-right or ex-dividend event of Party A, such as dividend distribution, bonus issue, rights issue and capitalisation of capital reserves, occurs during the period from Price Determination Date of the Issuance to the Issue Date.

The final Issue Price shall be determined based on the principle of price priority according to the price offered by investors after the approvals from the CSRC for this Issuance have been obtained. Party B will not participate in the market bidding process of the Issuance but has undertaken to accept the bidding results and subscribe for Shares to be issued at the same price as other investors.

2. Number of Shares to be subscribed and subscription amount

The number of Shares under the Non-public Issuance of A Shares shall not exceed 30% of the total share capital of Party A prior to the Issuance, i.e. not more than 164,562,129 Shares (inclusive). In this Issuance, Party B intends to subscribe for not less than 13.62% (inclusive) of the Shares to be issued in cash, and the number of Shares to be subscribed shall not exceed 70,975,646 Shares, and the proportion of total equity interests held by Party B and parties acting in concert with it upon the completion of the Issuance hall not exceed 36.81% of the total issued Shares of the Company.

The total amount of the final subscription price by Party B will equal to the Issue Price per Share multiplied by the number of Shares ultimately determined to be issued to Party B.

The maximum number of Shares to be issued will be adjusted accordingly in cases of occurrence of ex-rights or ex-dividend matters such as dividend distribution, bonus issue, rights issue and capitalization of capital reserves in Party A during the period from the date of Board resolution of Party A to the Issue Date. The final number of A Shares to be issued will be determined by the Board of Party A under the authorization granted at the general meeting through negotiation with the sponsor (the lead underwriter) in accordance with the price offered by the target subscribers after Party A has obtained approvals from the CSRC for the Issuance.

  • III. PAYMENT METHOD AND ARRANGEMENT FOR ACCUMULATED UNDISTRIBUTED PROFITS

    • 1. Party B agrees to subscribe for A Shares under this Non-public Issuance of A Shares in cash.

      After all the conditions precedent of the agreement are fulfilled and upon the receipt of the payment notice for the subscription issued by Party A, Party B will transfer the entire amount to the special account for this Non-public Issuance of A Shares opened by the sponsor (the lead underwriter) at one-off payment in cash within five (5) working days from the date of receipt of the payment notice and in accordance with the requirements (including the payment time and other matters) as specified in the payment notice, which will then be transferred into the special deposit account of Party A for raising funds after the capital verification is completed and relevant expenses are deducted.

    • 2. All the existing and new shareholders upon completion of the Issuance will be entitled to the accumulated undistributed profits of Party A before the Non-public Issuance of A Shares in accordance with their respective shareholding proportion at that time.

  • IV. REGISTRATION AND LOCK-UP OF THE SHARES ISSUED AND SUBSCRIBED FOR

    • 1. Within fifteen (15) working days from the date of receipt of the subscription price paid by Party B for the Non-public Issuance of A Shares, an accounting firm with securities-related business qualifications should be engaged by Party A to conduct capital verification, and the corresponding industrial and commercial change registration procedures and the share registration procedures with China Securities Depository and Clearing Corporation Limited shall be completed promptly so that Party B can be the legal holder of the shares it subscribed for.

    • 2. From the registration date of the shares subscribed for, Party B shall have legal ownership of the shares it subscribed for and enjoy the corresponding shareholder's rights.

    • 3. Party B shall not transfer the A Shares under the Non-public Issuance of A Shares which it subscribed for within 36 months from the date of completion of the Issuance. If the aforementioned lock-up arrangement does not conform to the latest regulatory opinions or regulatory requirements of the securities regulatory authorities, the arrangement will be adjusted accordingly in accordance with the regulatory opinions or regulatory requirements of the relevant securities regulatory authorities.

The additional shares of Party A being obtained from bonus issue or capitalisation of capital reserves by Party A or otherwise upon completion of the Issuance shall also be subject to the aforementioned lock-up period arrangement. Such shares shall also conform to the relevant requirements of regulatory authorities such as the CSRC and the SSE upon expiry of the lock-up period.

  • V. EFFECTIVENESS CONDITIONS OF THE AGREEMENT

    Both parties agree and confirm that, unless both parties otherwise agree to express waiver and the applicable laws and regulations permit, this agreement will come into existence after the legal representative of Party A or its authorized representative signs and affixes its seal and the legal representative of Party B or its authorized representative signs and affixes its seal, and take effect after all the following conditions precedent are fulfilled:

    • (1) the relevant matters of the Non-public Issuance of A Shares are approved by the Board and at the general meeting and Class Meetings of Party A;

    • (2) the relevant matters of the subscription under the Non-public Issuance of A Shares of Party A are approved by Party B through its internal decision-making;

    • (3) the relevant matters of the Non-public Issuance of A Shares are approved by the state-owned assets supervision and administration authority or its authorized agencies;

    • (4) the non-connected shareholders resolve at the general meeting of Party A to agree that Party B is exempted from increasing its holding in A Shares by way of offer;

    • (5) the relevant matters of the Non-public Issuance are approved by the CSRC.

    Unless the relevant effectiveness conditions of the agreement listed above are exempt, the date on which all effectiveness conditions of the agreement listed above are fulfilled shall be the effective date of the agreement.

  • VI. LIABILITY FOR BREACH OF THE AGREEMENT

    Save for force majeure stated in the agreement and termination of the agreement due to circumstances stipulated in the agreement, if any party fails to perform its obligations or undertakings under the agreement or the statements or warranties made are untrue or materially inaccurate, the party shall be deemed to be in breach of the agreement. The breaching party shall rectify its behaviors by itself immediately or rectify its behaviors within 15 days from the date on which the notice for rectification is served to the observant party. If the breaching party fails to make rectification in time, the observant party shall have the right to request the breaching party to compensate it for the direct losses suffered by the observant party.

CHAPTER 4 FEASIBILITY ANALYSIS OF

THE BOARD OF DIRECTORS ON USE OF PROCEEDS

I. PLAN FOR USE OF PROCEEDS

The gross proceeds will not exceed RMB2 billion (inclusive). After deducting issuance costs, all of the net proceeds will be used for the following projects:

Unit: RMB0'000

No.

Project name

Total amount of investment

Proposed amount to be used from the proceeds

1

Project of Photovoltaic Cell Packaging Material for Solar

Equipment

179,457.00

140,000.00

1.1

CNBM (Hefei) New Energy Company Limited* (ʕܔҿ €Υ٭อঐ๕Ϟࠢʮ̡) Project of Photovoltaic Cell Packaging Material for Solar Equipment

77,968.00

60,000.00

1.2

CNBM (Tongcheng) New Energy Materials Company

Limited* (ʕ਷ܔҿࣶ۬อঐ๕ҿࣘϞࠢʮ̡) Phase I of the Project of Photovoltaic Cell Packaging Material for Solar Equipment

101,489.00

80,000.00

2

Repayment of interest-bearing liabilities and replenishment of working capital

-

60,000.00

Before the proceeds are available to be used, the Company shall invest in advance with self-owned funds or self-raised funds according to the actual progress of the projects to be invested in with the proceeds, which will be subsequently replaced according to the procedures as stipulated under the relevant laws and regulations after the proceeds are available to be used. If the net proceeds are lower than the proposed amount to be used from the proceeds for the above projects, the shortfall will be covered by the Company through self-raised funds. Subject to compliance with the relevant laws and regulations and base on the condition of the projects, the board of the Company and its authorized persons will adjust and ultimately determine the specific projects to be invested in with the proceeds, the priority and the specific investment amount for each project according to the actual net proceeds.

II. NECESSITY AND FEASIBILITY ANALYSIS ON USE OF PROCEEDS (I) Project of Photovoltaic Cell Packaging Materials for Solar Equipment

  • 1. Project overview

    Driven by the domestic photovoltaic installation demand and the overseas market, the photovoltaic industry shows a stable growing trend. In particular, with the excellent performance such as high generating capacity, strong resistance to PID (potential induced decay) and high reliability, double-glass photovoltaic modules are more suitable for rooftop distributed power plants with higher load capacity and fire prevention requirements, which is an important development direction of crystalline silicon photovoltaic modules. As a key material essential for double-glass photovoltaic modules, there will be a promising market for photovoltaic cell packaging materials.

    The Company intends to use the proceeds from the Non-public Issuance of A shares of RMB1,400 million to invest in the project of photovoltaic cell packaging materials for solar equipment.

  • 2. Necessity and feasibility analysis on the project

    (1) Necessity analysis 1) Active response to the requirements of the national "13th Five-Year"

Plan

In the Outline of the 13th Five-Year Plan for the National Economic and Social Development of the People's Republic of China, it is stated that "by targeting cutting-edge technologies, adhering to industrial development trends, focusing on key areas and optimizing the integration of policies, we will create space for the growth of emerging industries and gain a competitive advantage in the future, so as to ensure that the added value of strategic emerging industries reaches 15% of China's GDP" and "we will continue to promote the development of wind power and photovoltaic power generation and actively support solar thermal power generation". This project aims to produce ultra-thin photovoltaic cell packaging materials, which is a key link in the new energy photovoltaic power generation industry chain, and positively responds to the requirements of the 13th Five-Year Plan for the national economic and social development.

2) Inevitable requirement for sustainable development under the background of the tight global energy supply and the aggravation of greenhouse effect

With the aggravation of global greenhouse effect, the increasingly tight energy supply and the increasingly stringent requirements on environmental protection in China and abroad, the development and utilization of renewable energy is the only way to cope with the increasingly serious energy and environmental problems, and also the only way to realize sustainable development of human society. The ultra-thin photovoltaic cell packaging materials to be produced in this project are the key materials of the solar double-glass modules, which can convert solar energy into electric energy to reduce human consumption of traditional fossil energy, alleviate the contradiction between energy supply and demand, and realize the harmonious development of human and nature. Therefore, the implementation of this project is in line with the requirements of national sustainable development.

(2) Feasibility analysis

1) Packaging materials for lightweight double-glass photovoltaic modules with outstanding performance and promising market

With the successive running of the photovoltaic power stations, the issue on the quality of the traditional power stations is exposed accordingly.

The double-glass modules have unique advantages in the practical application of photovoltaic power stations, which can better address the issues such as the outbreak of snail pattern, PID attenuation and low power generation, and extend the lifecycle of the modules. The double-glass modules lead the future development direction with outstanding advantages. The lightweight feature is the key development trend of the double-glass modules, in which, the most effective way for achieving the thinner double-glass modules is to reduce the thickness of the packaging materials. The thinner packaging materials for photovoltaic cells not only can reduce the packaging costs and transportation costs of modules, but also can be used in roofs, parking lots, agricultural greenhouses and other projects with limited load-bearing capacity, the application scope of which is wider. Meanwhile, it can also significantly reduce the work intensity of installation and improve the installation efficiency, which is adapted to the development direction of the future photovoltaic market.

In combination with the industry prospect of the packaging materials for ultra-thin photovoltaic cells, the implementation of the project is conductive to grasp the future market demand accurately by the listed company, realize the replacement and upgrading of production capacity, so as to increase the market share and the profitability under the increasingly competitive market.

2) Industrial policies in compliance with the requirements under the governments at national and local levels with strong support

In recent years, various industrial policies supporting photovoltaic cell materials have been promulgated by the State Council, major national ministries and commissions, the government of Anhui Province and other government sectors, which principally include:

No.

Policy document

Document-issuing agency

Release date

Major content

1

Outline of the National Program for Long- and Medium-Term Scientific and Technological Development (2006-2020) (਷ ࢕ʕڗಂ߅ኪձҦஔ೯࢝஝ྌ ၤࠅ€2006-2020ϋ)

The State Council

December 2005

Major research on the relevant materials for solar cell and its key technology, the key technology of materials for fuel cell, the technology for hydrogen storage materials in high capacity, materials for efficient secondary cell and its key technology, and develop the system of efficient energy transformation and energy storage materials

2

Action Plan for Energy Technical Reform and Innovation (2016-2030) (Fa Gai Neng Yuan [2016] No. 513) (ঐ๕Ҧ ஔࠧն௴อБਗࠇྌ€2016-2030ϋ€೯ҷঐ๕[2016]513

National Development and Reform Commission and National Energy Administration

June 2016

Deep research on the key technology for the industrialization of the crystalline silicon cell in a more efficient way and with lower cost, develop the key supporting materials

Key technology for the industrialization of the crystalline silicon cell in high efficiency and with low cost

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Luoyang Glass Company Limited published this content on 24 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 February 2021 22:59:07 UTC.


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