HARBIN, China, May 8, 2020 /PRNewswire/ -- China XD Plastics
Company Limited (NASDAQ: CXDC) (the "Company"), one of China's leading specialty chemical companies
engaged in the development, manufacture and sale of polymer
composite materials primarily for automotive applications, today
announced that its board of directors (the "Board") has received a
preliminary and non-binding proposal letter, dated May 7, 2020, from (i) Mr. Jie Han ("Mr. Han"), the Company's Chairman and
Chief Executive Officer, and (ii) XD. Engineering Plastics Company
Limited (together with Mr. Han, the "Buyer Group"), a company
incorporated in the British Virgin
Islands and wholly owned by Mr. Han, proposing to acquire
all of the outstanding shares of common stock (the "Shares") of the
Company not currently owned by the Buyer Group in a "going-private"
transaction for US$1.1 per Share in
cash, subject to certain conditions. The US$1.1 per Share price represents a premium of
approximately 19.6% to the closing price of the Company's Shares on
May 6, 2020, a premium of
approximately 19.5% to the average closing price of the Company's
Shares during the last 30 trading days, and a premium of
approximately 4.9% to the average closing price of the Company's
Shares during the last 60 trading days.
The Buyer Group currently beneficially owns the Shares
representing approximately 70% of the voting power and
approximately 50.1% of the share capital of the Company. The Buyer
Group has engaged O'Melveny & Myers LLP as its U.S. legal
advisor for the proposed transaction. According to the
proposal letter, the Buyer Group plans to finance the acquisition
with a combination of debt and equity capital. The proposal letter
states that the equity portion of the financing would be provided
by the Buyer Group in the form of cash and rollover equity in the
Company and through available cash at the Company, and that the
debt portion of the financing would be provided by loans from third
party financial institutions, if required. A copy of the proposal
letter is attached hereto as Annex A.
The Company has retained Wilson Sonsini
Goodrich & Rosati, Professional Corporation as its U.S.
legal counsel in connection with the potential "going-private"
transaction contemplated by the proposal letter. Additionally, the
Board intends to form a special committee of independent directors
(the "Special Committee") to consider this proposal. The Board
expects that the Special Committee will retain independent
advisors, including an independent legal and financial advisor, to
assist it in its review of the proposed transaction.
The Board cautions the Company's shareholders and others
considering trading the Company's securities that the Board has
just received the proposal letter and has not had an opportunity to
carefully review and evaluate the proposal or make any decision
with respect to the Company's response to the proposal. There can
be no assurance that any definitive offer will be made, that any
agreement will be executed or that this or any other transaction
will be approved or consummated. The Company does not undertake any
obligation to provide any updates with respect to this or any other
transaction, except as required under applicable law.
About China XD Plastics Company Limited
China XD Plastics Company Limited, through its wholly-owned
subsidiaries, develops, manufactures and sells polymer composites
materials, primarily for automotive applications. The Company's
products are used in the exterior and interior trim and in the
functional components of 31 automobile brands manufactured in
China, including without
limitation, Audi, Mercedes Benz,
BMW, Toyota, Buick, Chevrolet, Mazda, Volvo, Ford, Citroen, Jinbei
and VW Passat, Golf, Jetta, etc. The Company's wholly-owned
research center is dedicated to the research and development of
polymer composites materials and benefits from its cooperation with
well-known scientists from prestigious universities in China. As of September
30, 2019, 595 of the Company's products have been certified
for use by one or more of the automobile manufacturers in
China. For more information,
please visit the Company's English website at
http://chinaxd.irpass.com/, and the Chinese website at
http://www.xdholding.com.
Safe Harbor Statement
This announcement contains forward-looking statements within the
meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact in this announcement are
forward-looking statements, including but not limited to, the
approval and the consummation of the potential transaction
contemplated by the proposal letter or any alternative transaction.
These forward-looking statements can be identified by terminology
such as "will," "expect," "project," "anticipate," "forecast,"
"plan," "believe," "estimate" and similar statements.
Forward-looking statements involve inherent risks and uncertainties
and are based on current expectations, assumptions, estimates and
projections about the Company and the industry. A number of
important factors could cause actual results to differ materially
from those contained in any forward-looking statement. Potential
risks and uncertainties include, but are not limited to, the global
economic uncertainty, the fluctuation in automotive sales and
productions, the development of Company's expansion plans, the
slowdown of China's automotive
industry, the concentration of the Company's distributors,
customers and suppliers, and other risks detailed in the Company's
filings with the U.S Securities and Exchange Commission and
available on its website at http://www.sec.gov. The Company
undertakes no obligation to update forward-looking statements to
reflect subsequent occurring events or circumstances, or to changes
in its expectations, except as may be required by law. Although the
Company believes that the expectations expressed in these
forward-looking statements are reasonable, it cannot assure you
that its expectations will turn out to be correct, and investors
are cautioned that actual results may differ materially from the
anticipated results.
Annex A
May 7, 2020
The Board of Directors
China XD Plastics Company Limited
No.9, Nancheng 1st Road,
Pingfang District, Harbin,
Heilongjiang Province,
P. R. China
Dear Sirs:
Mr. Jie Han ("Mr. Han"), Chief
Executive Officer and Chairman of China XD Plastics Company Limited
(the "Company"), XD. Engineering Plastics Company Limited, a
company incorporated in the British
Virgin Islands and wholly owned by Mr. Han, ("XD
Engineering", together with Mr. Han, "we" or "us"), are pleased to
submit this preliminary and non-binding proposal to acquire all
outstanding shares of common stock ("Shares") of the Company not
currently owned by us at a purchase price of US$1.1 per Share in cash.
The US$1.1 per Share price
represents a 19.6% premium over Company's closing price on
May 6, 2020, a premium of
approximately 19.5% to its average closing price during the last 30
trading days, and a premium of approximately 4.9% to its average
closing price during the last 60 trading days.
As you know, we currently beneficially own the Shares
representing approximately 70% of the voting power and
approximately 50.1% of the share capital of the Company. We agree
that the Company's board of directors should appoint a special
committee of independent and disinterested directors to consider
our proposed transaction and make a recommendation to the board of
directors. We further agree that the special committee shall retain
its own independent legal and financial advisors to assist in its
review of our proposed transaction. We will not move forward with
the transaction unless it is approved by such special
committee.
We currently intend that following completion of the proposed
transaction, the Company's business will continue to be run in a
manner that is generally consistent with its current operations and
we do not currently contemplate making any significant changes in
the Company's strategic or operating philosophy or its
business.
Given our knowledge of the Company, we are in a position to
complete the transaction in an expedited manner and to promptly
enter into discussions regarding a merger agreement with the
special committee and its advisors providing for the acquisition of
the remaining Shares that are not currently owned by us. We expect
that the merger agreement will provide for representations,
warranties, covenants and conditions that are typical, customary
and appropriate for transactions of this type.
We intend to finance the proposed transaction with a combination
of debt and equity capital. Equity financing is expected to be
provided by us in the form of cash and rollover equity in the
Company and through available cash at the Company. Debt financing
is expected to be provided by loans from third party financial
institutions, if required. We are confident that we can timely
secure adequate financing to consummate the proposed
transaction.
In considering our proposal, you should know that in our
capacity as a shareholder of the Company we are interested only in
acquiring the Shares not already owned by us and that in such
capacity we have no interest in selling any of the Shares owned by
us nor would we expect, in our capacity as a shareholder, to vote
in favor of any alternative sale, merger or similar transaction
involving the Company.
We have engaged O'Melveny & Myers LLP as our legal advisor
for the proposed transaction.
Due to our obligations under the securities laws, we intend to
timely file a Schedule 13D amendment with the Securities and
Exchange Commission to disclose this proposal. However, we are sure
that you will agree with us that it is in all of our interests to
ensure that we otherwise proceed in a strictly confidential manner,
unless otherwise required by law, until we have executed a
definitive merger agreement relating to the proposed transaction or
terminated our discussions.
This letter constitutes only a preliminary indication of our
interest and does not constitute any binding commitment with
respect to the transactions proposed in this letter or any other
transaction. No agreement, arrangement or understanding between us
and the Company relating to any proposed transaction will be
created until such time as definitive documentation has been
executed and delivered by us and the Company and all other
appropriate parties.
We believe that our proposal represents an attractive
opportunity for the Company's shareholders to receive a significant
premium to the current and recent Share prices. We welcome the
opportunity to meet with the special committee and/or its advisors
to discuss our proposal.
Should you have any questions regarding this proposal, please do
not hesitate to contact us. We look forward to hearing from
you.
* * * * *
[Signature Page to Follow]
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SOURCE China XD Plastics Company Limited