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GCL New Energy Entered into Share Transfer Agreements with Joint Venture Realize Asset Light Model Strategy
2017-07-02

(2 July 2017, Hong Kong) GCL New Energy Holdings Limited (“GCL New Energy” or the “Company”, Stock Code: 451.HK) is pleased to announce that the Company’s indirect wholly owned subsidiary, Suzhou GCL New Energy Investment Co.,Ltd, (“Suzhou GCL”) entered into Share Transfer Agreements with Xi’an

Zhongmin GCL New Energy Limited Company (“Zhongmin GCL”). Zhongmin GCL is a limited company incorporated in PRC with 32% equity interests held by Suzhou GCL and 68% equity interests held by Zhongmin New Energy (Shanghai) Investment Group Co., Ltd, respectively. Suzhou GCL agreed to transfer and Zhongmin GCL agreed to purchase the shares in Jinhu Zhenhui Photovoltaic Co., Ltd (“Jinhu”) and Shandong Wanhai Solar Power Co., Ltd. (“Wanhai”) for a consideration of approximately RMB185.7 million and the net profit for the month of May 2017 of Jinhu, and RMB 64.9 million and the net profit for the month of May 2017 of Wanhai, respectively.

The Transfer of power plant aims to introduce strategic partner to realize the asset light model strategy. Based on the information provided by the Company, it is expected that the Group will generate one-time profit of approximately RMB18.5 million benefiting from the Transfer. The net amount of cash received from the Transfer (deducted estimated tax and transaction costs) is expected to be approximately RMB250 million. The Company proposed to use approximately RMB240 million for the repayment of debt or loan, the remaining approximately RMB10 million will be used for general administrative expenses. The Transfer of power plant can ease cash flow pressure and is expected to save approximately RMB16.86 million annually, reduce the debt asset ratio by 0.4% based on 2016 financial report and effectively reduce financial risks.

Similar to the co-operation framework agreement between the Company and Fuyang New Energy Technology (Nanyang) Limited (“Fuyang New Energy”) signed on 31 May, 2017, the targeted 130MW projects in this transaction are part of the Company’s asset light model strategy. In the framework agreement signed with

Fuyan New Energy, the target companies will adopt the built-transfer model, and Suzhou GCL will provide operation and maintenance services after completion of the target companies, hence, generating stable return for the Company.

Please find the Transfer details in the attached Announcement.