BEIJING, Sept. 16, 2015 /PRNewswire/ -- General Steel
Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), a
leading non-state-owned steel producer in China, today announced it has signed an
all-equity Share Exchange Agreement (the "Agreement") for the
acquisition of 84.5% equity interest in Catalon Chemical Corp.
("Catalon"), a Delaware
corporation headquartered in Virginia that develops and manufactures De-NOx
honeycomb catalysts and industrial ceramics.
Catalon's honeycomb technology is an integral part of the
selective catalytic reduction ("SCR") process widely used in steel
mills, thermal power stations, waste incinerators, stationary
diesel motors, industrial plants, and heavy-duty trucks. Catalon
designed the chemical recipe of the SCR catalytic converter, the
manufacturing process, engineering and construction methodology to
produce the SCR honeycomb catalyst. With the addition of ammonia
upstream, the catalyst breaks down the NOx in the glue gas into
nitrogen and water vapor. The honeycomb technology is designed for
use in low temperature and mid temperature applications. Catalon,
along with its honeycomb technology, was valued at approximately
$20 million by an independent third
party.
Under the terms of the Agreement, existing Catalon shareholders
will receive a total equivalent value of approximately $16.9 million or up to a maximum of 13 million
shares ("Payment Shares") of General Steel Common Stock.
Based on General Steel's closing stock price of $0.63 on September 15,
2015, the equivalent value of $1.30 per share represents a 97.0% premium to the
Company's 20-day volume weighted average price of $0.66 per share, and a 106.3% premium to its most
recent closing stock price.
The 13 million Payment Shares will be held in escrow, subject to
delivery of minimum sales and net profit targets by Catalon of
$46.6 million and $8.4 million, respectively, for calendar year
2016, and $116.1 million and
$20.9 million, respectively, for
calendar year 2017. In the event the minimum sales and net
profit targets are not achieved in a given year, the quantity of
Payment Shares delivered to the Catalon shareholders shall be
reduced proportionately, such that the Catalon shareholder shall
receive only the percentage of the Payment Shares equal to the
percentage of actual sales and actual net profit achieved in
relation to the sales and net profit targets, respectively.
Of the 13 million Payment Shares, subject to the reductions
described above, up to 4,333,333 shares are designated to be
released following 2016 and up to 8,666,667 shares are designated
to be released following 2017. The Payment Shares are also subject
to a lock-up period, expiring in April
2018, which prohibits the Catalon shareholders from directly
or indirectly transferring, offering, granting an option or right
in respect of, the disposal, or engaging in any short selling of
any consideration share issued to the Catalon shareholders by the
Company in connection with the acquisition. The Agreement, which
was approved by the General Steel's Board of Directors, is subject
to customary closing conditions and regulatory approvals and is
expected to close on or about September 30,
2015. Upon completion of the Agreement, Catalon's financials
will be consolidated into General Steel's.
Ms. Yunshan Li, Chief Executive
Officer of General Steel commented, "We are very excited about the
myriad of new business opportunities and synergies brought forth
through this acquisition. With a talented team of executives,
prominent shareholders, and proven technology and expertise,
Catalon has been an innovative leader in R&D and
commercialization of De-NOx honeycomb catalysts in the US, and we
believe Catalon's comprehensive suite of products and services is
an ideal fit for General Steel and a great leap forward for our
business transformation.
Catalon's honeycomb catalytic technology effectively reduces NOx
emissions, which is a sorely needed solution to China's currently huge industrial pollution
problems. And with General Steel's vast resources, strong market
presence and broad distribution platform, we fully expect being
able to capture a meaningful share of the large and rapidly-growing
cleantech business in China. We
believe that the annual honeycomb catalyst consumption in
China is approximately 350,000
cubic meters. Catalon has binding sales agreements with two
distributors in China with each
purchasing a monthly minimum of 600 cubic meters for three
years.
We are equally thrilled that the acquisition will bring the
addition of Catalon's talented team to our leadership. Mr.
Steven Chu, Catalon's CEO and CTO,
will greatly strengthen our team with more than 20 years experience
in engineering and environmental protection. He previously held
leadership positions at China's
Ministry of Housing and Urban-Rural Development Ministry of Science
and Technology, and Ministry of Environmental Protection, and
we were captivated with his deep knowledge and insights of the
inner-workings of China's
environmental protection industry and related market trends. In
addition, we are privileged to have Mr. Qilin Li of Lindenburg Ventures, one of
Catalon's major shareholders, providing strategic guidance to our
team. Mr. Li, a prominent member of one of China's most successful consumer brands, has
been a board director of Lead Ahead and non-executive director of
Viva Group (8032.HK). He has a wealth of experience in financial
services having worked at JP Morgan Hong Kong and Persistent Asset
Management Limited. Our Board and management team believe this
transaction is in the best interests of the Company and its
shareholders, and we look forward to welcoming the talented Catalon
team."
Mr. Steven Chu, CEO and CTO of
Catalon added, "After an extensive review of strategic alternatives
and careful considerations, we concluded that General Steel is the
ideal partner for Catalon to commercialize our honeycomb catalytic
technology in China. We were
impressed by General Steel's technical leadership in steel
manufacturing and its unique market position and access in
China's burgeoning industrial
heartland. We look forward to working closely with General Steel to
achieve a seamless post-closing integration and creating long-term
value for all of our stakeholders."
About General Steel
General Steel Holdings, Inc. is a leading non-state-owned steel
maker headquartered in Beijing,
China. With seven million metric tons of crude steel
production capacity under management and operations in Tianjin municipality and China's Shaanxi and Guangdong provinces, the Company produces a
variety of steel products including rebar and high-speed wire.
In addition to its steel business, the Company also designs,
manufactures, and integrates radio frequency identification
("RFID") systems. The Company's RFID technology provides real-time
data on supplies, inventory, and goods, thereby greatly enhancing
its customers' administration and planning processes, as well as,
asset tracking and supply chain management.
To be added to the General Steel email list to receive Company
news, or to request a hard copy of the Company's Annual Report on
Form 10-K, please send your request to
investor.relations@gshi-steel.com.
Forward-Looking Statements
This press release may contain certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on management's
current expectations or beliefs about future events and financial,
political and social trends and assumptions it has made based on
information currently available to it. The Company cannot assure
that any expectations, forecasts or assumptions made by management
in preparing these forward-looking statements will prove accurate,
or that any projections will be realized. Actual results could
differ materially from those projected in the forward-looking
statements as a result of inaccurate assumptions or a number of
risks and uncertainties. These risks and uncertainties are set
forth in the Company's filings under the Securities Act of 1933 and
the Securities Exchange Act of 1934 under "Risk Factors" and
elsewhere, including those disclosed in the Company's most recent
Annual Report on Form 10-K, filed with the United States Securities
and Exchange Commission. Forward-looking statements contained
herein speak only as of the date of this release. The Company does
not undertake any obligation to update or revise publicly any
forward-looking statements, whether to reflect new information,
future events or otherwise.
Contact Us
General Steel Holdings, Inc.
Joyce Sung
Tel: +1-347-534-1435
Email: joyce.sung@gshi-steel.com
Asia Bridge Capital Limited
Carene Toh
Tel: +1-888-957-3362
Email: generalsteel@asiabridgegroup.com
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SOURCE General Steel Holdings, Inc.