Zhongnan Diamond Co., Ltd. agreed to acquire Hunan Jiangnan Red Arrow Co.,Ltd. (SZSE:000519) from Jiangsu Jiangnan Industry Group Co., Ltd. and Jiangnan Machinery (Group) Co. Ltd. in a reverse merger transaction on September 24, 2012. Hunan Jiangnan Red Arrow Co., Ltd. plans to issue 410.15 million shares for the acquisition of assets through the issuance of shares at the price of CNY 9.68 per share. The shareholders of Zhongnan Diamond are China North Industries Group Corporation, Yuxi Industrial Group Co., Ltd., Shanghai Sunband Investment Co.,Ltd, Beijing Wisdom Mech. & Elec. Co., Ltd. and five individuals including Wang Siqing, Yu Guobing, Zhang Kui, Zhang Xiangfa and Lianghao. Wherein China North Industries Group Corporation will subscribe to 56.32 million shares, Yuxi Industrial Group Co., Ltd. will subscribe to 265.98 million shares, Shanghai Sunband Investment Co., Ltd. will subscribe to 21.1 million shares, Beijing Wisdom Mechanical & Electronic Co., Ltd. will subscribe to 17.95 million shares, Wang Siqing will subscribe to 31.96 million shares, Yu Guobing will subscribe to 11.5 million shares, Zhang Kui will subscribe to 3.1 million shares, Zhang Xiangfa will subscribe to 1.33 million shares and Liang Hao will subscribe to 0.9 million shares. On November 26, 2012, Yuxi Group's directorate approved for Yuxi Group to participate in the reorganization. On November 27, 2012, Shanghai Sunband's only shareholder, China Ordins Group Co., Ltd., approved for Shanghai Sunband to participate in the reorganization followed by Beijing Wisdom on November 5, 2012. Supervisory board of Hunan Jiangnan Red Arrow Co., Ltd. approved the proposal on the acquisition of asset through issuance of shares and raising of supporting funds on January 30, 2013.

As of February 18, 2013, State-owned Assets Supervision and Administration Commission of the State Council has already approved the transaction. The transaction is still subject to approval of China Securities Regulatory Commission, Zhongnan Diamond's shareholders and China North Industries Group Corporation and the others getting exemption from their tender offer obligation resulting from the transaction. As of March 27, 2013, the transaction was approved by shareholders of Hunan Jiangnan Red Arrow. As of July 10, 2013, the transaction was approved the China Securities Regulatory Commission. CITIC Securities International Co., Ltd. acted as independent financial advisor to Hunan Jiangnan Red Arrow. JunZeJun Law Offices acted as legal advisor to Hunan Jiangnan Red Arrow. Jingtian & Gongcheng acted as legal advisor to CITIC Securities International, the financial advisor to Hunan Jiangnan Red Arrow.