Donghua Technology and Yulin Chemical intend to participate in the bankruptcy reorganization of Inner Mongolia Cornell Chemical Industry Co., Ltd. (“Cornell Company”)

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Donghua Technology and Yulin Chemical intend to participate in the bankruptcy reorganization of Inner Mongolia Cornell Chemical Industry Co., Ltd. (“Cornell Company”). Author/Source: Huahua Net Coal Chemicals. Date: December 14, 2022. Clicks: 24. Recently, Donghua Engineering Technology Co., Ltd. (“Donghua Technology”) and Shaanxi Coal Group Yulin Chemical Co., Ltd. (“Yulin Chemical”) have formed a consortium with the aim of participating in the bankruptcy reorganization of Inner Mongolia Cornell Chemical Industry Co., Ltd. (“Cornell Company”). Donghua Technology, Yulin Chemical, Cornell Company, and the administrator of Cornell Company signed an Intent to Invest Agreement. According to the Letter of Intent for Investment, the value of the assets associated with this investment is estimated at RMB 1.39 billion. Assuming that Donghua Technology is the only option for settling debts through retention, the liabilities of Cornell Company after its restructuring would amount to 1,071,725,328 million yuan. Under the above conditions, Donghua Technology and Yulin Chemical Consortium are expected to pay a total of 318,274,672 yuan in cash, of which Donghua Technology is expected to pay 190,964,800 yuan. Cornell Company is the entity responsible for the investment, construction, and operation of the 300,000 tons per year coal-to-ethylene glycol project in Inner Mongolia. The shareholders of Cornell Company are 4 enterprises: Fude Life Insurance Co., Ltd. (“Fude Life”) holds a 44% stake, Shenzhen Fude Qianhai Infrastructure Investment Holding Co., Ltd. (“Fude Qianhai”) holds a 41% stake, Cornell Chemical Industry Co., Ltd. holds a 10% stake, and Jilin Province Energy Investment Group Co., Ltd. holds a 5% stake. In March 2014, Donghua Technology signed an EPC/turnkey project contract for the Inner Mongolia Cornell 300,000 tons per year coal-based ethylene glycol project with Cornell Company; the contract value was 4.311 billion yuan. In June 2015, this amount was adjusted to 369.6 billion yuan. Since October 2014, due to financial issues at Cornell Company, the project has been operating abnormally. In a spirit of cooperation and mutual trust between the two parties, Donghua Technology maintained low-intensity construction on the project until the end of 2016. The project has obtained the necessary approvals; its construction procedures are legal and compliant. Approximately 75% of the total construction progress has been completed, and the integrity of the built structures as well as their protection during periods of suspension are in good condition. The Cornell Project was initially planned to require an investment of 58.8 billion yuan, with construction set to begin at the end of 2013. Due to various factors, the project progressed to about three-quarters of completion before work came to a halt at the end of 2016. It is reported that the Cornell Project will be constructed in three phases, with a total planned investment of 28 billion yuan. The project development follows the principles of upgrading the industrial structure, reducing energy consumption, and promoting circular resource utilization, with the goal of becoming a well-known coal chemical industry hub in China within 10 years. According to the Plan for Continued Construction and Commissioning, Cornell Company’s 300,000 tons per year ethylene glycol production facility is set to be completed and put into operation by the end of 2023, meaning that the facility will be able to operate at full capacity and produce qualified ethylene glycol products.