Stock：WazhouB Code：200706 No.：2018-23 Wafangdian Bearing Company Limited
Announcement Relating to Debt Reorganizations During Normal Operation of Business Involving Partial Related Transactions
The Company, all the members of the Board of Directors, supervisors and top management hereby guarantee the truth, accuracy and completeness of the information disclosure, no any false records, misleading statements and major missing contents.
I. Overview of debt restructuring
1. In order to optimize the corporate debt structure and improve the efficiency of fund use, Wafangdian Bearing Company Limited (hereinafter referred to as “the Company”) carried out clean-up work on the payables of the daily operations of the company from January to June 2018. During this period, the Company signed the “Debt Restructuring Agreement” with 17 suppliers including ZWZ Bearing Precision Forging Co., Ltd. and Dalian Haokun Construction Engineering Co., Ltd. After friendly negotiation, the suppliers of this part agreed to make concessions on theCompany’s daily operating debt, and the above-mentioned business achieved debt restructuring income of 1,456,952.01 Yuan for the Company; 2. The Company and Guodian United Power Technology (Baotou) Co., Ltd. signed the Debt Restructuring Agreement. After friendly negotiation, the company made concessions to the bearing receivables owed by United Power to the Company, and the above-mentioned business made debt restructuring losses of 85,383.59 Yuan for the Company.
The above business has affected thecompany’s current profit and loss for the year 2018 of 1,371,568.42 Yuan.
3. As the seven suppliers including ZWZ Bearing Precision Forging Co., Ltd. are the wholly-owned subsidiaries of theCompany’s largest shareholder, the transactions involving this part constitute the related transactions.
4. The proposal was reviewed and unanimously approved by the 7th meeting of the seventh board of directors of the company. When the consideration involving related transactions, the related directors, Meng Wei, Sun Maolin, Zhao Yang, Zhang Xinghai, Chen Jiajun and Sun Najuan, avoided the consideration, other directors all voted yes for this matter, there was no negative vote nor abstention vote. The independent directors of the company issued an independentdirectors’ opinion on this matter.
5. According to Article 9.3 (5) of the Stock Listing Rules of the Shenzhen Stock Exchange: the provision
Stock：WazhouB Code：200706 No.：2018-23 that if “the profit generated by the transaction accounts for more than50% of the audited net profit of the listed company in the most recent fiscal year, and the absolute amount exceeds 5 million Yuan”, it is necessary to submit to theshareholders’ meeting for consideration. This debt restructuring does not constitute a “transaction that should be submitted to theshareholders’ meeting for consideration”, nor does it constitute a major asset restructuring as stipulated in the Administrative Measures for the Major Reorganization of Listed Companies.
6. This debt restructuring is a debt restructuring of the nature of daily operation, there is no major legal obstacles in the implementation of each party.
II The basic situation of the debt restructuring party
1. There are a total of 17 suppliers and one customer involved in this debt restructuring. The debt restructuring that the company agreed with the related parties and the debt restructuring that the company agreed with the third-party suppliers are independent and are not eachother’s premise, and do not constitute one package deal.
2. There is no possibility that the debt restructuring party has other relationships with the company and the top ten shareholders of the company in the property rights, business, assets, credit and debt, personnel, etc. which may or may have caused the company to incline to its interests or caused it to incline to thecompany’s interests. The company carries through all the debt restructuring in a fair, just and non-discriminatory manner. Among them, the basic situation of the top two suppliers involving the larger amount is as follows:
(i) ZWZ Precision Forging Co., Ltd.
1. Type of Enterprise: Limited Liability Company
2. Enterprise Address: No.1, Section 1, Beigongji Street, Wafangdian City, Liaoning Province
3. Legal Representative: Wang Longjie
4. Registered Capital: 24.45 million Yuan
5. Date of Establishment: June 16, 2004
6. Business Scope: forging products processing, mechanical parts processing; forging equipment maintenance; forging annealing; forging process design; sales of metal materials
7. Main financial indicators as of December 31, 2017: total assets of 401,671,000 Yuan, total liabilities of
Stock：WazhouB Code：200706 No.：2018-23 241,560,300 Yuan, net assets of 160,110,700 Yuan; on December 31, 2017, accumulated operating income of 546,231,300 Yuan, and net profit of 3,948,700 Yuan.
8. Not the dishonest person subjected to execution
(ii) Wafangdian Bearing Group Windpower Bearing Co., Ltd.
1. Type of Enterprise: Limited Liability Company
2. Enterprise Address: No.1, Section 1, Beigongji Street, Wafangdian City, Liaoning Province
3. Legal Representative: Zhang Xinghai
4. Registered Capital: 200 million Yuan
5. Date of Establishment: June 13, 2007
6. Business Scope: bearing manufacturing and sales; housing and mechanical equipment leasing; import and export of goods and technology; research and development and information of windpower bearing technology; operation and maintenance of wind turbines (except for projects prohibited by laws and administrative regulations; projects restricted by laws and administrative regulations can be operated after obtaining the license) (Projects subject to approval according to law can be carried out after approval by relevant departments)
7. Main financial indicators as of December 31, 2017: total assets of 892,254,200 Yuan, total liabilities of 473,463,600 Yuan, net assets of 418,790,500 Yuan; on December 31, 2017, accumulated operating income of 335,259,700 Yuan, and net profit of 12,768,300 Yuan.
8. Not the dishonest person subjected to execution
III Debt restructuring plan and the main contents of debt restructuring agreement
1. Debt formation
Accounting by the company and the financial personnel of 17 suppliers, the Company should pay the purchase payments and project funds for a total of RMB 37,122,528.07 to the above-mentioned suppliers. Among them, ZWZ Precision Forging Co., Ltd. and Wafangdian Bearing Group Windpower Bearing Co., Ltd. should be paid a total of RMB 24,856,000, and the remaining 12 suppliers should be paid a total of RMB 12,266,528.07.
After accounting with the financial staff of one customer, the Company shall receive the bearing payment
Stock：WazhouB Code：200706 No.：2018-23 of RMB 142,305.99 from the above-mentioned customer.
2. Main contents of the debt restructuring plan
After communicating and negotiating with the creditors, according to the Debt Restructuring Agreement respectively signed by the Company and 17 suppliers, in line with the principle of mutually beneficial cooperation, the creditors agreed to abandon thecreditor’s rights of part of the payment for goods, and the remaining payment could be paid to the creditors by the company in the form of commercial papers and bank deposits. After the creditors received the payment, the credit and debt of both parties involved in the contract are settled, and there are no other economic disputes.
From January to June 2018, the company completed debt restructuring of 37,122,528.07 Yuan, actually paid 35,665,576.06 Yuan for payment for goods, and realized debt restructuring income of 1,456,952.01 Yuan, of which ZWZ Precision Forging Co., Ltd. and Wafangdian Bearing Group Windpower Bearing Co., Ltd. realized debt restructuring income of 856,000.00 Yuan, and the remaining 15 suppliers realized a total debt restructuring income of 600,952.01 Yuan.
After the debtors communicated and negotiated with the Company, according to the Debt Restructuring Agreement signed by the Company with one customer, the company agreed to abandon thecreditor’s rights of part of the bearing payments in accordance with the principle of cooperation and reciprocity. From January to June 2018, the company completed debt restructuring of 142,305.99 Yuan, actually received payment of 56,922.40 Yuan, and debt restructuring losses were 85,383.59 Yuan.
3. There is no case involving underlying assets such as repaying debts with non-cash assets in this debt restructuring.
IV Other arrangements for debt restructuring
This debt restructuring does not involve follow-up arrangements such as personnel placement, land lease, related transactions, horizontal competition and so on.
V The purpose of debt restructuring and its impact on the company
Through debt restructuring, the company further sorted out its credit and debt relationship, relieved the capital pressure, eased thecompany’s debt burden, optimized the debt structure, improved thecompany’s financial status, and helped thecompany’s business development.
According to the relevant provisions of the Accounting Standards for Business Enterprises, the income of RMB 1,371,568.42 from this debt restructuring will be included in non-operating income.
Stock：WazhouB Code：200706 No.：2018-23 VI Documents for reference
1. Board Resolution.
2. Resolution of the Board of Supervisors.
3. Independentdirector’s opinion.
4. Other documents required by the Shenzhen Stock Exchange.
Hereby notified
Board of director of Wafangdian bearing
Company limited
Aug 20. 2018