On November 1, 2019, the CSRC issued a reply numbered Zheng Jian Xu Ke  No. 2149, approving Huizhou China Eagle Electronic Technology Co., Ltd. Company (“CEE” or the “Company”, Stock Code: 002579) to acquire 23.88% of the shares in Zhuhai Topsun Electronic Technology Co., Ltd. ( “Topsun Electronics”) and 45% of the equity interest in Zhuhai Yisheng Technology Co., Ltd. (“Zhuhai Yisheng”) by issuance of convertible corporate bonds and shares and payment of cash, and at the same time, to issue convertible corporate bonds to no more than ten targeted investors to raise supporting funds. By February 21, 2020, CEE has completed the registration of supporting funds raised from the non-public issuance of shares, purchase of assets by convertible corporate bonds and non-public issuance of convertible corporate bonds. Previously in May 2018, CEE has already acquired 29.18% of the shares in Topsun Electronics and 55% of the equity interest in Zhuhai Yisheng by cash has been completed. After the completion of this transaction, CEE has completed the acquisition of 100% ownership of Topsun Electronics and Zhuhai Yisheng.
CEE is a high-tech enterprise receiving special support from the state whose primary business is research and development, production and sales of new types of electronic components and parts (including high-density and high-density interconnection (HDI) printed circuit boards). Through years of development, the company had accumulated rich practical experience in the PCB industry and established a sound system for research and development, technology, production, sales and management. CEE’s products are mainly used in consumer electronics, network communications, computer peripherals, automotive electronics, etc.
In November 2017, CEE through its buyout fund initiated the cash acquisition of 29.18% of the shares in Topsun Electronics, which is a company failing two IPO attempts, as well as 55% of the equity interest in Zhuhai Yisheng, the controlling shareholder of Topsun Electronics. The cash acquisition constituted purchase of significant assets. CEE disclosed a restructuring plan in December 2017, and obtained approval of the shareholder’s general meeting in March 2018; and the closing took place in May 2018. Upon the completion of the closing, CEE acquired control over Topsun Electronics and Zhuhai Yisheng (the “Previous Transaction”). In March 2019, CEE disclosed the preliminary plan for the acquisition of 23.88% shares of Topsun Electronics and 45% equity interest in Zhuhai Yisheng by way of issuance of convertible corporate bonds and shares and cash payment together with the issuance of convertible corporate bonds to raise supporting funds, and obtained approval of the shareholder’s general meeting in in May 2019, and the approval of the CSRC in November 2019.
As the legal counsel, JunHe has provided CEE with legal services throughout the project: (1) in the Previous Transaction, JunHe has assisted CEE to design the transaction structure as a two-step buyout and establish the buyout fund as the acquirer, conducted legal due diligence, drafted and negotiate transaction documents and notification documents and replied to feedback from the stock exchange; (2) in the present transaction, JunHe assisted CEE to demonstrate the feasibility of using privately placed convertible bonds as a financing tool for the buyout, proving that the equity investment of the overseas counterparty in a listed company in this transaction did not involve the examination and approval of strategic investment of foreign investors in the listed company, drafted and negotiating transaction documents, assisted in replying to feedback questions from the China Securities Regulatory Commission and the stock exchange, etc. The rigorous work style and extremely high work efficiency implemented by JunHe have won the unanimous appreciation of the clients and other intermediaries.
The transaction was beneficial for CEE to realize the horizontal integration in the PCB industry, to realize its coverage of the entire series of products include high-density interconnected board (HDI), flexible printed circuit (FPC), rigid and flexible combination board (R-F) and flexible printed circuit assembly (FPCA), to become one of the few manufacturers in China producing both rigid and flexible printed circuit boards, and to eventually realize the integration and sharing of potential customer resources, mutual penetration of business and collaborative development.