Shandong Huayang's reorganization with mining company encounters resistance.

1. Shandong Huayang's Reorganization with Mining Company Encounters Resistance
June 14, 2011, CCM - After about three months' stock trading suspension for the discussion of
reorganization, Shandong Huayang Technology Co., Ltd. (Shandong Huayang), a large pesticide
company in Shandong Province, resumed its stock trading on 29 April 2011. With Shandong
Huayang changing into mining company, its stock records seven surging limits after the
resumption.
At the same time, Shandong Huayang reveals the plan of its reorganization with Zibo Hongda
Mining Co., Ltd. (Zibo Hongda), a big mining company and the biggest share holder-to-be of
Shandong Huayang. Shandong Huayang plans to set out all of its assets and liabilities aiming to
issue 254 million shares to Zibo Hongda and other investors. The price of each share is set to be
USD1.46.
Once the plan is successfully carried out, the total assets and liabilities of Zibo Hongda and some
equities of other investors will be injected into Shandong Huayang. All the related assets are iron
ore assets, worth USD414.11 million.
However, although the reorganization plan has been released, there is still some problems lying
ahead making the reorganization of Shandong Huayang unstable.
Firstly, after analyzing the asset conditions of Zibo Hongda, a big problem comes out and it may
be the main obstacle to the reorganization. According to Zibo Hongda, most of the assets in its
subsidiaries, such as the exploitation right, etc., are pledged for loans from bank and the pledge
period lasts for several years. If the pledge condition of these assets can not be removed in the
near future, the reorganization plan may be not that easy to carry out.
Secondly, mining companies who intend to launch backdoor listing may be not that easy in China
due to the special nature of mining industry with limited resource and the much complicated
procedure to get the exploitation right. In 2010, no mining companies has been approved by
China Securities Regulatory Commission (CSRC) to conduct backdoor listing.
Thirdly, on 26 Aug. 2010, Shandong Huayang was investigated by CSRC for being suspected of
violating securities laws and regulations. Although the investigation is finished, the result has not
been released by now and the reorganization will somehow be influenced.
we now can't be too early to give a prediction about the result of the reorganization of Shandong
Huayang due to unstable conditions in the progress, even though both Shandong Huayang and
Zibo Hongda show their confidence toward the reorganization plan. But we can sure that
Shandong Huayang needs the reorganization.
Global economic recession, overcapacity, chaotic pesticide industry and other factors in China
have caused the downturn of pesticide industry in recent years. Huayang Technology as one of
the famous listed pesticide enterprises in China has posted depressed performance in the last
three years. On 29 April 2011, Shandong Huayang released its Financial Report of 2010 showing
its great deficit in 2010. Its revenue and net profit in 2010 reached USD77.70 million and USD-
9.24 million, up 25.30% and down 1480.09% respectively over last year. Then in the next day, it

2. disclosed that the Q1 Financial Report of 2011 also showed deficit with Q1 net profit in 2011
reaching USD-1.46 million.
Source: Crop Protection China News 1109
Content of Crop Protection China News 1109:
Shandong Huayang’s reorganization runs aground
Nutrichem to develop pesticide technology for Huapont Pharm
Lianyungang Jindun to launch carbendazim production line
Fujian Sannong: pesticide production suspended
Zibo Wanchang to launch IPO
Imported pesticides supported more by goverment?
ChemChina's acquisition of MAI totally approved by China
An explosion happens in Guangxi Jinsui
Hunan releases Twelfth Five-year Plan for Pesticide Industry (Hunan)
Crop Protection China News, a semimonthly publication issued by CCM International on 15th
and 30th(31th) of every month, aims to gain a deep insight into Chinese market, supply the latest
market data and strategy support, analyze the newest legislation and policy and grasp the future
market trend.
Please visit http://www.cnchemicals.com for more information or contact us at
econtact@cnchemicals.com
CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou
510070, China