HONG KONG – (ACN Newswire) – Harbin Electric Corporation Co., Ltd. (“HEG”) Board and Harbin Electric Company Limited (“HEC”, stock code: 1133.HK) Board jointly announced that on 24 December 2018, HEG made a voluntary conditional cash offer (“Offer”) to acquire all the issued H Shares in HEC; on the same day, HEG entered into the Merger Agreement (“Merger”) with HEC.

At the request of HEC, trading in the H Shares on the Hong Kong Stock Exchange was halted from 9:00 a.m. on 18 December 2018 pending the issue of the joint announcement. Application has been made by HEC to the Hong Kong Stock Exchange for the resumption of trading in the H Shares with effect from 9:00 a.m. on 27 December 2018.

Terms of the Offer
The Offer will be made by HEG at the price of HK$4.56 in cash for each H share.

The Offer Price represents a premium of approximately 82.40% over the closing price of HK$2.50 per H Share as quoted on the Hong Kong Stock Exchange on 17 December 2018 (being the Last Trading Day) and a premium of approximately 77.50% over HK$2.57 which is the average closing price per H Share as quoted on the Hong Kong Stock Exchange for the 30 consecutive trading days up to and including 17 December 2018.

The Offer is subject to the fulfilment or waiver, as applicable, of a number of conditions. For further information, please refer to the joint announcement (http://www3.hkexnews.hk/listedco/listconews/SEHK/2018/1227/LTN20181227013.pdf).

HEG intends to satisfy the consideration required for the Offer by a combination of cash from its internal resources and a loan facility obtained by it.

Upon the Offer becoming unconditional, HEC will make an application for the voluntary withdrawal of the listing of the H Shares on the Hong Kong Stock Exchange. The HEC Shareholders will be notified by way of an announcement of the dates of the last day for dealing in the H Shares and on which the voluntary withdrawal of the listing of the H Shares on the Hong Kong Stock Exchange will become effective.

Reasons for and Benefits on the Offer, the Delisting and the Merger
HEC, being primarily engaged in the manufacturing of thermal power and hydropower main equipment, has faced increasing pressure over its sales and profitability in the prevailing market environment, due to a combination of fierce market competition and an increasing focus on clean and renewable forms of generation at the expense of thermal generation. The Offer, the Delisting and the Merger, if successful, will reduce the costs through the simplification of the corporate structure and dispensation of costs associated with compliance and maintaining the listing status of HEC. The Merger of HEC by HEG, if successful, can fully integrate the underlying assets and liabilities of HEC by HEG, so as to optimise their corporate structure, enhance management effectiveness, and promote business integration and future development of HEG and its subsidiaries.

For shareholders, the Offer Price represents a premium of approximately 82.40% over the closing price on 17 December 2018, being the Last Trading Day. The Offer provides an attractive opportunity for the HEC H Shareholders to dispose of their H Shares expeditiously and receive cash at a price significantly above the prevailing market price.

Shareholding in HEC
As at the date of the joint announcement, HEC had 1,706,523,000 HEC Shares in issue, with 1,030,952,000 Domestic Shares and 675,571,000 H Shares. HEG owned the entirety of 1,030,952,000 Domestic Shares, representing approximately 60.41% of the issued share capital of HEC, and HEC H Shareholders were interested in 675,571,000 H Shares, representing approximately 39.59% of the issued share capital of HEC.

Information of HEG
HEG is a wholly state-owned company established on 6 October 1994, under the PRC Laws with approval from SASAC. HEG is the controlling shareholder of HEC, and is the pioneer in establishing the largest research and manufacturing base for power-generating equipment, marine engines, power-driven equipment and export base for complete set of equipment in the PRC.

Information of HEC
HEC was incorporated as a joint stock company with limited liability by way of promotion method in accordance with the PRC Company Law on 29 September 1994, and was registered with the Harbin Municipality Administration of Industry and Commerce Bureau and has obtained a business license on 6 October 1994. HEC became listed on the Main Board of the Hong Kong Stock Exchange on 16 December 1994. HEC is one of the largest manufacturers of power-generating equipment in the PRC, and is principally engaged in manufacturing of thermal power main equipment, hydropower main equipment, nuclear power main equipment, gas power equipment set and turnkey construction of power station projects, etc.

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