DGAP Post-admission Duties announcement: Haier Smart Home Co.,Ltd. / Third
country release according to Article 50 Para. 1, No. 2 of the WpHG [the
German Securities Trading Act]
Haier Smart Home Co.,Ltd.: Release according to Article 50 of the WpHG [the
German Securities Trading Act] with the objective of Europe-wide
distribution
2020-08-14 / 22:23
Dissemination of a Post-admission Duties announcement according to Article
50 Para. 1, No. 2 WpHG transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
*Announcement on the Receipt of the Inquiry Letter from Shanghai Stock
Exchange on the Information Disclosure of the Company's Material Asset
Purchase cum Related Party Transaction Report (Draft)*
The board of directors of the Company and all of its directors ensure that
the contents of this announcement do not contain any false record,
misleading statement or material omission, and bear several and joint
liability for the truthfulness, accuracy and completeness of the contents
thereof.
*Qingdao / Shanghai / Frankfurt, 14 August 2020* -Haier Smart Home Co., Ltd.
(hereinafter referred to as the 'Company' or 'HSH') held the 10th Meeting of
the Tenth Session of the Board of Directors on July 30, 2020 to review and
approve the Proposal on Material Asset Purchase cum Related Party
Transaction Report (Draft) of Haier Smart Home Co., Ltd. and its Summary.
The relevant announcements were disclosed on the Shanghai Stock Exchange
website (www.sse.com.cn) and the information disclosure media designated by
the Company including Shanghai Securities News, China Securities Journal,
Securities Times, and Securities Daily on August 1, 2020.
The Company received the Inquiry Letter Regarding Information Disclosure of
the Material Asset Purchase cum Related Party Transaction Report of Haier
Smart Home Co., Ltd. (Shang Zheng Gong Han [2020] No. 2447) (hereinafter
referred to as the 'Inquiry Letter') issued by the Shanghai Stock Exchange
on August 14, 2020. The Shanghai Stock Exchange reviewed the Material Asset
Purchase cum Related Party Transaction Report (Draft) of the Company, and
the Company shall make further description and explanation on the following
issues. The full text of the Inquiry Letter is hereby announced as follows:
'After reviewing the _Material Asset Purchase cum Related Party Transaction
Report_ _(Draft) _(hereinafter referred to as the 'Restructuring Report')
submitted by the Company, the following issues need your further statement
and explanation:
1. As disclosed in the Restructuring Report, this transaction involves the
proposed privatisation of Haier Electronics Group Co., Ltd. (hereinafter
referred to as 'HEG') by HSH and will result in the delisting of HEG from
Hong Kong Stock Exchange; and HSH intends to issue H Shares and list H
Shares on the Hong Kong Stock Exchange by way of introduction, and the
shares will be issued to HEG Scheme Shareholders except HSH and Haier
Shareholdings (Hong Kong) Limited (hereinafter referred to as 'HS (HK)').
The Company is requested to further disclose: (1) the rationality and
necessity of this transaction from the perspectives of corporate strategy,
resources allocation, business coordination, market competition and
operating results; (2) the specific effects of this transaction on the
Company's governance structure, personnel setting, related party
transactions and integration of various business segments, the specific
integration measures, plans and arrangements the Company intends to carry
out in the above areas, as well as the expected results. Please ask the
financial advisor to give opinions.
2. As disclosed in the Restructuring Report, in this transaction, HSH, as
the offeror, put forward a proposal to the Scheme Shareholders for the
privatisation of HEG. The Scheme Shareholders will obtain new HSH H Shares
as a consideration for privatisation, with a Share Exchange Ratio of 1:1.60.
Meanwhile, HEG will make a Cash Payment to the Scheme Shareholders at
HK$1.95 per share. According to the _H Share Valuation Report _issued by
Platinum, the value of HSH H Shares was estimated to be in the range of
RMB16.45 per share to RMB16.90 per share and the theoretical total value of
the H Shares and the Cash Payment that the Scheme Shareholders can obtain
was estimated to be in the range of approximately RMB42.979 billion to
RMB44.073 billion. Please make additional disclosure: (1) the main
considerations for the privatization of HEG through issuing H shares by the
Company and paying cash by HEG; (2) analyse and explain the process and
basis to determine the Share Exchange Ratio and amount of Cash Payment per
share; (3) the impact of the Cash Payment made by HEG to the Scheme
Shareholders on the Company's issuance of H shares or the overall value of
HEG, and explain its ability to pay and its impact on subsequent daily
operations based on the asset and liability structure of HEG; (4) the
valuation method of HSH value, the basis for selection of comparable
companies or valuation parameters, the evaluation results and the
determination method in the _H Share Valuation Report_, the difference
between the current market value of the Company and the reasons thereof; (5)
the difference between HEG's theoretical total value under the privatization
proposal (determined according to the estimated range of the above-mentioned
Company's issuance of H shares, Share Exchange Ratio, and Cash Payment
amount) and the HEG's current market value; and (6) quantitative analysis of
the specific impact of this transaction on the Company's basic earnings per
share and basic earnings per share after deducting non-recurring gains and
losses. Please ask the financial advisor to give opinions.
3. As disclosed in the Restructuring Report, the Company intends to proceed
with the proposal for exchangeable bonds (hereinafter referred to as EB),
namely that the exchangeable bonds issued by the Company through its
overseas subsidiary Harvest will be changed into convertible bonds
(hereinafter referred to as CB) issued by the Company through its overseas
subsidiary Harvest which are convertible into the newly issued H Shares of
the Company. The Company is requested to further disclose: (1) the
conversion price and determination basis of CB and the conversion ratio
between CB and EB, and analyze the consideration of H shares issued by the
Company obtained by relevant bondholders before and after the change of the
above proposal, respectively; (2) terms for early redemption of EB,
including but not limited to trigger conditions and time points, redemption
price, possible redemption amount, and redemption terms of CB after the
above proposal is changed; (3) if the above proposal is ultimately not
adopted or implemented, does the Company have a plan or an arrangement to
purchase EB or the shares of HEG subsequently exchanged by bondholders of
EB; (4) whether the above proposal is conducive to protecting the interests
of the Company and minority investors, please make full disclosure for the
relevant risks. Please ask the financial advisor to give opinions.
4. As disclosed in the Restructuring Report, HEG's businesses mainly include
research and development, manufacturing and sales of washing machines, water
heaters and water purifiers under the subordinate brands ('Haier', 'Casarte'
and 'Leader') of Haier Group, the distribution of electrical products of
Haier Group in the PRC and the investment in bulk logistics services
developed in China under the brand of Ririshun. The Company is requested to
further disclose: (1) the upstream and downstream conditions, production and
sales and financial data such as operating income, operating costs and gross
profit margin of different business segments of HEG, and analysis to the
position in the industry; (2) whether there will be an impact on the daily
business development given that HEG will be delisted from the Hong Kong
Stock Exchange upon completion of this transaction. Please ask the financial
advisor to give opinions.
5. As disclosed in the Reconstructing Report, during the year of 2018 and
2019, HEG realized net profit contribute to the parent company of RMB3.884
billion and RMB7.351 billion, respectively, representing an increase of
83.48%. It was mainly because HEG and its subsidiaries conducted asset
replacement with Haier Group and its subsidiaries to purchase 51% equity of
Qingdao Haishi at the early stage, with 55% equity of Bingji it held as the
consideration, resulting in profit or loss of equity settlement of RMB3.827
billion. As at the end of 2019, the long-term equity investment of HEG
amount to RMB5.719 billion, representing a year-on-year growth of 3,117.67%.
Among which, the long-term equity investment to Gooday Investment (???????)
amounted to RMB5.474 billion. Please make additional disclosure: (1) the
main businesses and products, major financial data and industry position of
Qingdao Haishi and Bingji, as well as the details of above asset replacement
scheme, and illustrate whether the major concern of HEG about the above
asset replacement will impact the normal business of HEG based on the
changes in the industry; (2) the forming background, the accounting process
of the long-term equity investment by the Company to Gooday Investment, as
well as the impact on the financial data of the Company; (3) illustrate the
specific influence of above asset replacement transaction to the valuation
of HEG. Please ask the financial advisor to give opinions.
6. As disclosed in the Restructuring Report, as at the end of 2019, HEG's
houses and buildings were RMB1.087 billion, representing a decrease of
46.34% year-on-year, and machinery and equipment were RMB2.329 billion,
representing an increase of 86.78% year-on-year. Please make additional
disclosure: whether the specific reasons, backgrounds and rationality of
above-mentioned changes in houses, buildings, machinery and equipment will
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