DeHeng Advised Jiangsu Eastern Shenghong

on Obtaining CSRC Approval for Private Placement of A-Shares

2020-03-28

On March 27, 2020, Jiangsu Eastern Shenghong Co., Ltd. ("Eastern Shenghong") obtained the hearing-exempt approval from the Public Offering Review Committee of China Securities Regulatory Commission (CSRC) for its private placement of A-shares.

Eastern Shenghong’s business focuses on the R&D, production and sales of polyester filament for civilian use, supplemented by thermoelectric business. Specialized in the development and production of ultra-fine fibers and differentiated functional fibers, it effectively avoids the market competition of conventional chemical fiber products, and owns complete independent intellectual property rights and the world-leading supply chain of renewable PTT polyester and fibers. It is a world-leading manufacturer of full dull fibers and fine-denier differential fibers, and one of the world’s top two PTT fiber manufacturers.

According to the private placement plan, Eastern Shenghong will issue no more than 805,810,644 shares to no more than 35 specific investors for no more than RMB 5 billion. Among them, Shenghong (Suzhou) Group Co., Ltd., which is controlled by the actual controller of Eastern Shenghong, intends to contribute in cash no more than RMB 1.5 billion and no less than RMB 1 billion. The proceeds from this private placement, after the issuing expenses are deducted, will be used to fund the 16-million-ton refining-chemical integration project of Shenghong Refining & Chemical (Lianyungang) Co., Ltd. The project includes oil refining, aromatics, olefins and downstream derivative chemicals, and is a concrete measure for Eastern Shenghong to respond to the state call for developing high-end petrochemical products and advancing oil refining-chemical integration, and also a key step to implement its whole-supply-chain development strategy to convert "one drop of oil" to "one thread of yarn".

As the legal counsel of this private placement project, the DeHeng team was led by partners Xu Jianjun and Yang Jihong, with lawyers Wang Huakun and Li Bixin as major members. Since the private placement plan was revised after the CSRC issued a series of new regulations on refinancing in February 2020, DeHeng lawyers responded quickly, worked closely and actively with the issuer, Soochow Securities and other institutions, and issued comprehensive and professional legal opinions for the client. This was DeHeng's another service for Eastern Shenghong following its advice on the latter's restructuring and listing project and issuing corporate green bonds, fulfilling the goal of helping the capital market serve the real economy.