[Haichuan Project Updates] Permit Announcement for Luxi Chemical’s High-End Fluorine Materials Integration Project
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It is understood that the high-end fluorine materials integration project of Luxi Chemical Group is located within the Liaocheng Chemical Industry Park. The total investment in this project amounts to 3.151 billion yuan. It is carried out by Liaocheng Fluorine New Materials Technology Co., Ltd., a wholly-owned subsidiary of Luxi Chemical Group Co., Ltd.; the company is mainly engaged in the production and sales of polytetrafluoroethylene, fluororesins, fluororubbers, fluoroplastic products, and hexafluoropropylene； Research and development of new chemical materials ； Import and export activities within the scope of registration (**except for goods subject to import/export restrictions). Upon completion, the project will have an annual production capacity of 160,000 tons of dichlorodifluoromethane (R22), 80,000 tons of tetrafluoroethylene (TFE), 20,000 tons of polytetrafluoroethylene (PTFE), 30,000 tons of hexafluoropropylene (HFP), 20,000 tons of perfluoroalkoxyethylene (F46), 40,000 tons of difluoromethane (R32), and 20,000 tons of pentafluoroethane (R125). The construction of these facilities will take place in phases, with each phase having the same capacity.
On the evening of October 29, Luxi Chemical (000830) issued a announcement: The company’s actual controller, the Liaocheng State-owned Assets Supervision and Administration Commission, signed a Strategic Cooperation Agreement with Sinochem Investment. The Liaocheng State-owned Assets Supervision and Administration Commission agreed in principle to carry out a strategic restructuring of Luxi Group, by transferring some of its shares in Luxi Group to Sinochem Investment free of charge, thereby enabling Sinochem Investment to become the largest shareholder in Luxi Group and gain control over it. Luxi Chemical announced that following this change in the equity structure of the company’s controlling shareholder, neither the controlling shareholder nor the actual controller of the company has changed. The company’s controlling shareholder remains Luxi Group Co., Ltd., while the actual controller is still the Liaocheng People’s **State-owned Assets Supervision and Administration Commission. However, the advisory announcement also indicated that the actual controller is planning major matters, and there may be a change in control rights. The announcement states that the significant matters planned by the actual controller of the company could lead to a change in this controller, although no formal transaction agreement has been signed yet. The signing of a formal transaction agreement is subject to further consultations, and there is uncertainty as to whether it can be signed successfully. The potential change in the actual controller of the company still requires approval from relevant departments such as the State-owned Assets Supervision and Administration Commission of the State Council and the People’s Government of Liaocheng City; there is uncertainty as to whether such approval will be granted. If this share transfer is completed, it will mean that Sinochem Investment will become the actual controller of Luxi Group. Sinochem Investment is a wholly-owned subsidiary of China National Chemical Corporation; in other words, Luxi Chemical may be integrated into Sinochem Group in the future. It is worth noting that the fluorine chemicals business under Sinochem Group falls mainly under Sinochem Blue Sky Group. The production capacity for methyl chlorides, R22, PTFE, etc., held by Luxi Chemical Research Institute complements perfectly the fluorine chemical operations of Sinochem Blue Sky Group, thereby extending the industrial chain and enhancing competitive advantages.