Tianhong Textile (2678.HK) announced that it has acquired the entire equity interest and debt of Yizheng Chemical Fiber Changzhou Daming Company from Yihua Group and Changzhou Government for a total consideration of approximately RMB98.48 million.
According to Tianhong Textile, the acquisition consideration is divided into two parts, including the acquisition of all equity interests in Yizheng Chemical Fiber Changzhou Daming by 1 yuan and the repayment of debts to Yihua Group on behalf of it to approximately 98.58 million yuan. Yizheng Chemical Fiber Changzhou Daming had a net asset value of 133 million yuan at the end of June this year. The purchase price was 26% discount to the net asset value. The company suffered a loss of 16.93 million yuan in the first half of this year and a net debt of 28.41 million yuan.
Yizheng Chemical Fiber Changzhou Daming is owned as to 80% and 20% by Yihua Group and Changzhou Government respectively. The company is principally engaged in the manufacture and sale of yarn, ready-to-wear and bedroom products with a production capacity of 67,000 yarns and 104 jets. After the completion of the acquisition, the total production capacity of Tianhong textile yarns and grey fabrics will increase by approximately 16.8% and 14.4% respectively, reaching 467,000 yarns and 826 jet looms.
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