Shenma Industrial Co., Ltd. (SHSE:600810) agreed to acquire Henan Shenma Nylon New Materials Co., Ltd from China Pingmei Shenma Energy & Chemical Group Co., Ltd. for CNY 18.6 million on January 4, 2019. Shenma Industrial Co., Ltd. entered into an agreement to acquire 37.72% stake in Henan Shenma Nylon New Materials Co., Ltd from China Pingmei Shenma Energy & Chemical Group Co., Ltd on October 10, 2019. Under the terms, 848.7 million shares will be acquired at a price of CNY 7.24 per share. Payment will be made in cash and stock. Payment will be done in one single installment within 20 days since completion of all approval procedures. The transaction will be funded through a private placement whose funds will be used to finance the cash consideration of the transaction. On May 30, 2020, Shenma Industrial Co., Ltd. agree to acquire 37.72% stake in Henan Shenma Nylon New Materials Co., Ltd from China Pingmei Shenma Energy & Chemical Group Co have revised the consideration structure. Shenma Industrial will issue issuing shares and convertible corporate bonds to China Pingmei Shenma Energy. The Board of directors approved the proposal. The transaction consideration paid to the counterparty by way of issuing shares is CNY 1,668,938,800, accounting for 80% of the transaction price; the transaction consideration paid to the counterparty by issuing convertible corporate bonds is CNY 417,234,700, accounting for 20% of the transaction price. The share issuance price will be CNY 6.58 and for the issuance of corporate bonds will be issued to not more than 35 specific investors, including investment fund management companies, securities companies, insurance institutional investors, trust investment companies, financial companies, domestic legal person investors, natural persons or other legal investment organizations, etc having the conversion price, the duration of the bond, the lock-up period arrangement, the conditional resale clause, the conditional mandatory conversion clause, the conversion price downward revision clause, the conversion price Upward revision clauses, method of determining the number of shares to be converted and the handling method for less than one share at the time of conversion, guarantee and rating and other matters. If the amount of supporting funds raised this time is insufficient, the shortage will be solved by the listed company through self-raised funds or other financing methods. The lock-up period for issuance of supporting funds will be 6 months from date of issuance.

There is no need for approval from the shareholders' meeting. The transaction is subject to approval by internal decision making body of counter party, approval by Board o Shenma Industrial, approval by state owned assets supervision and administration department and by shareholders of Shenma Industrial and approval by China Securities regulatory Commission. The transaction has been approved by the Board of Directors of Shenma Industrial. As of June 20, 2020, the shareholders of Shenma Industrial approved the transaction.

Central China Securities Co., Ltd. (SEHK:1375) acted as independent financial advisor, Grandall Law Firm acted as legal advisor and BDO China SHU LUN PAN Certified Public Accountants LLP acted as accountant to Shenma Industrial Co., Ltd.