Chenming (HK) Limited entered into an agreement to acquire 49% stake in Jiangxi Chenming Paper Co. Ltd. from Sappi Limited (JSE:SAP), Shinmoorim Paper Manufacturing Co. Ltd. (KOSE:A009200) and International Finance Corporation for $80.9 million on August 8, 2012. Upon completion of the transaction, $19 million will be paid to International Finance Corp., $20.29 will be paid to Shinmoorim Paper Manufacturing Co. Ltd. and $41.58 million will be paid to Sappi Limited. The transaction will be funded by internal resources of Shandong Chenming Paper Holdings. Upon completion, Jiangxi Chenming Paper will be fully owned by Shandong Chenming Paper Group. An independent committee will be formed for the purpose of advising the independent shareholders.

Jiangxi Chenming Paper reported total assets of CNY 3.34 billion ($523.76 million), total debt of CNY 1.6 billion ($252.02 million), net assets of CNY 1.73 billion ($271.74 million) as of December 31, 2011. Jiangxi Chenming Paper reported revenues of CNY 1.91 billion ($300.62 million), operating profit of CNY 12.22 million ($1.92 million) and net profit of CNY 30.02 million ($4.71 million) for the year ending December 31, 2011. The implementation of the transaction is subject to various Chinese regulatory approvals, which it is anticipated will be achieved before Sappi's financial year end on September 30, 2012. The transaction is subject to approval of Board of Directors and shareholders of Chenming (HK) Limited, Jiangxi Chenming and Sappi Limited. The transaction has been approved by the Board of Directors of Shandong Chenming Paper Holdings, parent of Chenming (HK) Limited and Jiangxi Chenming Paper on August 8, 2012. The transaction does not require the approval of the shareholders of Shandong Chenming Paper. The schedule disposal date for the stake of Shinmoorim Paper Manufacturing is on September 23, 2012. The meeting of shareholders of Shandong Chenming Paper is scheduled on November 5, 2012. The independent board committee recommends the shareholders of Shandong Chenming Paper Holdings to vote in favor of the transaction.

As of September 21, 2012, the parties to the third equity interest transfer agreement entered into the supplemental agreement to the third equity interest transfer agreement and agreed to extend the equity interest closing date to November 5, 2012. As on November 5, 2012, the shareholder approved the deal. As on November 6, 2012, Chenming (HK) Limited acquired 34% stake in Jiangxi Chenming Paper Co. Ltd. from Sappi Limited and the consideration proceeds were paid to Sappi Limited on the same day.

Bridge Partners Capital Limited acted as financial advisor for independent shareholders and independent board committee of Shandong Chenming Paper Holdings Ltd. Computershare Hong Kong Investor Services Limited acted as registrar for Shandong Chenming Paper Holdings Ltd. Beijing Guoyoudazheng Assets Appraisal Company acted as valuer for Shandong Chenming Paper Holdings. The currency conversion was done through www.oanda.com on December 31, 2011.