Slaughter and May, Hong Kong, is advising Honghua Group Limited (Honghua) on its issue of shares under specific mandates in relation to the two share subscriptions made by Dongfang Electric International Investment Co., Limited (Dongfang Electric) and China Chengtong Investment Company Limited (Chengtong) for an aggregate consideration of approximately HK$1.021 billion (approximately US$130 million). The deals were announced on 18 January 2023.
The firm is also advising Dongfang Electric on its application to the Securities and Futures Commission (SFC) for a whitewash waiver from the obligation to make a mandatory general offer for the shares and other securities of Honghua as a result of the subscription. The subscriptions are subject to, among other things, Honghua’s independent shareholders’ approvals for the specific mandates, subscriptions, whitewash waiver and special deal (relating to the subscription by Chengtong) and the grant of a whitewash waiver by the SFC.
If the subscriptions proceed to completion, Dongfang Electric’s shareholding in Honghua will increase from approximately 29.99% to approximately 58.52% of the enlarged share capital of Honghua and continue to be its largest shareholder. Chengtong’s shareholding in Honghua will increase from approximately 4.74% to approximately 4.98% of the enlarged share capital of Honghua.
“We are very excited to be once again assisting Honghua in its equity fund raising, having advised on its previous issue of shares to China Aerospace Science & Industry Corporation and Jianhong Capital Fund I L.P. raising approximately US$210 million. The transaction will enhance Honghua’s long-term development and growth and underlines our team’s ability to assist our long standing clients on their ongoing fund raising needs for their long term growth.” said Benita Yu, senior partner of Slaughter and May who led the transaction.
Honghua is one of the world’s largest assemblers of onshore oil and gas drilling rigs. It also engages in offshore engineering, oil exploration and provision of oil drilling engineering services. Dongfang Electric is a wholly-owned subsidiary of Dongfang Electric Corporation (中国东方电气集团有限公司), which is one of the largest energy equipment enterprises groups in the People’s Republic of China, and is mainly engaged in offshore wind power, electric motor, geothermal power generation and distributed energy application.
Chengtong is a wholly-owned subsidiary of China Chengtong Holdings Group Limited (中国诚通控股集团有限公司), which, with its subsidiaries, are principally engaged in the business of fund investment, equity investment, asset management, financial services and nurturing of emerging industries.