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Extraordinary Announcement

Huaxin Cement Co., Ltd.Announcement on Resolutions of the Nineteenth Meeting of

2010-11-1517356次
Stock Codes: 600801, 900933  Stock Abbreviations: Huaxin Cement, Huaxin B Share  Ref: Lin 2010-020
 
Huaxin Cement Co., Ltd.
Announcement on Resolutions of the Nineteenth Meeting of the Sixth Board of Directors
 
The Board of Directors of the Company and its members guarantee that there is no false or misleading statement or material omission in this announcement and shall be severally and jointly liable for the truthfulness, accuracy and completeness of its contents.
 
The Nineteenth Meeting of the Sixth Board of Directors of Huaxin Cement Co., Ltd. (hereinafter referred to as “the Company”) was convened on November 10-11, 2010 at the Business Centre of the Company in Wuhan City, Hubei Province.  In principle, there should be nine Directors attended the Meeting, actually eight attended.  Independent Director Mr. Xu Yongmo did not attend this Board Meeting due to other commitments and authorized Independent Director Mr. Huang Jinhui to attend and exercise voting rights on his behalf.  All Supervisors and Senior Management also attended the meeting.  The Company sent the Meeting Notification by personal courier service or by fax to all the Directors on November 1, 2010.  The Meeting was in compliance with the provisions contained in relevant laws, rules and regulations, and the Articles of Association of the Company, so it was legitimate and valid.
 
I. Through reviewing and voting, this Board Meeting adopted the following important resolutions:
 
I. Proposal in Respect of Accepting Mr. Paul O'Callaghan to Resign from the Position of Director (Voting result: Affirmative: 9; Negative: 0; Abstention: 0);
 
2. Proposal in Respect of Nominating Mr. Roland Kohler as the Director of the Sixth Board of Directors (Voting result: Affirmative: 9; Negative: 0; Abstention: 0);
 
Mr. Paul O'Callaghan has expressed to the Chairman of the Board his request to resign from the position of Director of the Company; at the same time, shareholder Holchin B.V. recommends Mr. Roland Kohler to be a new director of the Company.
 
After studying, the Nominating Committee of the Board of Directors proposes that Mr. Roland Kohler become a new Director of the Company, and the term of office shall be the same with the current Board of Director.
 
Mr. Roland Kohler’s resume is as follows:
 
Roland Kohler, 57 years old, Swiss national, a graduate in business administration from the University of Zurich, joined building materials group Hunziker (Switzerland) in 1988 as Head of Finance and Administration and has transferred to Holcim as a management consultant in 1994. From 1995 to 1998, he was Head of Corporate Controlling and from 1999 to end 2001 Head of Business Risk Management. Since 2002, he has headed Corporate Strategy & Risk Management.  Effective January 1, 2005, Roland Kohler has been promoted to Corporate Strategy & Risk Manager. Roland Kohler became a member of the EXCO of Holcim since March 1, 2010 and was in charge of the service and support functions of the Holcim Group Support Ltd. organization.
 
3. Proposal in Respect of External Guarantees Provided by the Company (Voting result: Affirmative: 9; Negative: 0; Abstention: 0);
 
The Third Meeting of the Sixth Board of Directors convened in 2009 has approved the Company providing guarantee (joint liability assurance) for the190 million Yuan fixed assets borrowing of Wanyuan Project.  Due to industrial restriction, Wanyuan Project borrowing failed to get approval from the Bank.  In order to solve its capital problem as soon as possible, Huaxin Cement (Wanyuan) Ltd. proposes to raise fund through finance leasing with a total amount of no more than 200 million Yuan and a term of 5-8 years.  The Management hereby asks the Board to approve the Company providing guarantee (joint liability assurance) for the finance leasing of Huaxin Cement (Wanyuan) Ltd. with the total amount of no more than 200 million Yuan, and to authorize the Company to sign the relevant guarantee contract before December 31, 2012.
 
Approved by the Thirty Third Meeting of the Fifth Board of Directors convened in 2009, the Company provided guarantee for the 18 million Yuan loan of Xinyang Shihe Road Engineering Company – the contractor of Liu Tan road reconstruction project, which is one of the important supporting projects of Xinyang 4500T/D clinker and cement production line project.  Such loan will expire on March 9, 2011, Xinyang Shihe Road Engineering Company plans to renew the borrowing after the expiration and the guarantee is still provided by the Company.  In order to create a good production and operation environment for Xinyang Company, and fully embody the spirit of mutual support and win-win cooperation among the Company, Xinyang City and Shihe District, the Management of the Company hereby asks the Board to approve the Company continuously providing guarantee (joint liability assurance) for the 18 million Yuan loan of the Xinyang Shihe Road Engineering Company, and to authorize the Company to sign the relevant guarantee contract before December 31, 2012.
 
As of October 28, 2010, the Company has already provided external guarantees of 3280.93 million Yuan and 13.5 million USD.  If plus the newly added external guarantee of no more than 218 million Yuan, the total external guarantee amount will exceed 50% of the most recent audited net assets.  According to the provisions stipulated in the Stock Listing Rules of Shanghai Stock Exchange and Articles of Association of the Company, the proposal shall be approved by the Shareholders’ General Meeting.
 
4. Proposal in Respect of Replacing the Placement Scheme of Short-term Financing Bonds with Mid-term Notes (Voting result: Affirmative: 9; Negative: 0; Abstention: 0);
 
The Eleventh Meeting of the Sixth Board of Directors in 2010 and Annual Shareholders’ General Meeting 2009 approved the Proposal in Respect of Applying for Placement of Mid-term Notes and Renewal of Short-term Financing Bonds.  The Company issued the first tranche of 600 million Yuan mid-term notes, with a term of 3 years with floating interest rate, the coupon rate is 1 year savings rate plus interest margin of 1.7%; the second tranche of 600 million Yuan issued on October 25th of 2010 with a term of 5 years, the coupon rate is 1 year savings rate plus interest margin of 2.3%.  The issuance not only expands financing channels but also secures the Company’s liquidity by lowering capital cost.
 
The Company plans to cancel the issuance of the following 600 million Yuan of short-term financing bonds based on current situation of capital and financial structure.
 
For further development and improvement of debt structure, the Company plans to issue no more than 800 million Yuan mid-term notes, with a term of 3-8 years, of which the main purpose is to improve debt structure and fulfill working capital gap or the financing gap of some projects.
 
5. Proposal in Respect of Acquiring Equity of Fangxian Zuanshi Cement Co., Ltd. (Voting result: Affirmative: 9; Negative: 0; Abstention: 0);
 
Fangxian Zuanshi Cement Co., Ltd. (Zuanshi Company) locates in Shiyan City, which was established by Hanjiang Water Conservancy and Electricity (Group) Co., Ltd. (Hanjiang Group). and other 3 shareholders with registered capital of 80 million Yuan.  It has a 2500t/d new dry process clinker cement production line and a supporting 600 kt/a grinding station (the production line was put into operation in April 2009).  As of August 31, 2010, book value of its assets totalled 360 million Yuan, including about 319 million Yuan non-current assets.
 
Based on its market integration strategy, the Company proposes to acquire 70% equity of Zuanshi Company. The stock acquisition price shall be determined according to the final assets appraisal report and financial audit result of Zuanshi Company, as of the handover/takeover day issued by the designated asset appraisal agency and accounting agency.
 
The company shall keep prompt announcement on the latest M&A progress. The company shall remind the general investors pay attention to investment risk.
 
6. Proposal in Respect of Acquiring Equity of Hubei Sanyuan Cement Co., Ltd. (Voting result: Affirmative: 9; Negative: 0; Abstention: 0).
 
Hubei Sanyuan Cement Co., Ltd. (Hubei Sanyuan), locates in Changyang County, Yichang City, Hubei Province, was established in 2003 with registered capital of 80 million Yuan (Hubei Jinglan Cement Group Co., Ltd. covers 57.5% and natural person Lv Youfu covers 42.5%).  It has two new dry process cement production lines, the phase I 1500t/d production line was put into operation in August 2004; the phase II 4000t/d production line was put into operation in October 2008.
 
Based on its market integration strategy, the Company proposes to acquire 100% equity of Hubei Sanyuan. The stock acquisition price shall be determined according to the final assets appraisal report and financial audit result of Sanyuan Company, as of the handover/takeover day issued by the designated asset appraisal agency and accounting agency.
 
The company shall keep prompt announcement on the latest M&A progress. The company shall remind the general investors pay attention to investment risk.
 
It is herewith announced.
 
Huaxin Cement Co., Ltd.
Board of Directors
 
November 13, 2010
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