Latest updates on Datang’s announcement to sell its coal chemical business segment

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Latest Updates on Datang’s Announcement to Sell Its Coal Chemicals Business Unit Author/Source: Date: 2017-02-07 Clicks: 54 On February 6, 2017, Datang issued a statement regarding the progress of selling its coal chemicals business unit. According to the Agreement on the Transfer of Coal Chemicals and Related Projects signed with Zhongxin Nenghua Technology Co., Ltd. (“Zhongxin Nenghua”), Zhongxin Nenghua was required to provide various forms of guarantees for the company and its subsidiaries as part of the transaction, and to handle the necessary change procedures promptly. If these guarantee-related changes had not been fully completed by December 31, 2016, Zhongxin Nenghua was obligated to provide counter-guarantees for those unfinished changes. As of December 31, 2016, the amount of guarantees that had expired or for which changes had been made was approximately RMB 4.037 billion ； As of December 31, 2016, Sino-Singapore Energy Chemicals had issued a total of 4 counter-guarantee letters to our company, providing counter-guarantees for the aforementioned uncompleted guarantee modifications, with a total principal amount of approximately RMB 14.106 billion. On June 30, 2016, Datang International Power Generation Co., Ltd. signed a Transfer Agreement regarding coal chemical industry and related projects with Zhongxin Nenghua Technology Co., Ltd. Under this agreement, Datang International Power Generation Co., Ltd. transferred to Zhongxin Nenghua 100% of its shares in Datang Energy Chemical Co., Ltd., 100% of its shares in Inner Mongolia Datang International Xilinhot Lignite Comprehensive Development Co., Ltd., 100% of its shares in Inner Mongolia Datang International Xilinhot Power Generation Co., Ltd., 60% of its shares in Inner Mongolia Datang International Xilinhot Mining Co., Ltd., as well as the assets related to the preliminary power generation project in Inner Mongolia Khövsgöl. This transfer was carried out at a price of 1 RMB, with some of the loan obligations owed by the company to these target companies being waived. On January 14, 2017, Datang Power Generation announced that it expected to incur a loss of 2.5 billion to 2.8 billion yuan in 2016. Datang Power explained that one of the main reasons for the expected annual loss was a reduction in profits on a consolidated basis of 5.518 billion yuan, resulting from the divestiture of its coal chemical business unit. Upon completion of the transfer, the total assets of the company’s consolidated financial statements will decrease by approximately 75.492 billion yuan, while the total liabilities will drop by about 71.327 billion yuan; as a result, the debt-to-asset ratio will fall by roughly 4.87%.