SHANGHAI PECHEM (00338): The carbon fiber company plans to increase its registered capital by 600 million yuan through private agreements and public listing simultaneously.

SHANGHAI PECHEM (00338) announcement, the board of directors approved the proposal of the company's wholly owned subsidiary, Carbon Fiber Company, to simultaneously increase capital through non-public agreements and publicly list the new registered capital of RMB 600 million. The increase in capital price will be based on the evaluation value completed in accordance with relevant regulations of state-owned asset supervision and management, combined with the results of the public listing. With the approval of the competent state-owned assets supervisory authority, Sinopec plans to subscribe to the carbon fiber company at the same subscription price as determined by the public listing and other strategic investors, increasing the registered capital of the carbon fiber company by no more than RMB 300 million through non-public agreements. After the increase in capital, Sinopec's shareholding in the carbon fiber company will not exceed 25%. The remaining planned increase in the registered capital of the carbon fiber company will not exceed RMB 300 million and will be subscribed by other strategic investors through public listing. This increase in capital aims to solicit no more than 3 potential strategic investors, including up to 2 industrial investors and 1 financial investor. The potential strategic investors must be legal entities registered and validly existing in China (excluding Hong Kong, Macao, and Taiwan), have good financial conditions, payment ability, and business reputation, support the carbon fiber company's strategic planning, business philosophy, legal entity governance structure, and meet other qualifications as specified in the public listing announcement of the carbon fiber company. The carbon fiber company has the right to adjust the investment amount and shareholding ratio of the strategic investors and the final "Capital Increase Agreement" signed by all parties shall prevail. After this capital increase, the company will continue to hold no less than 50% of the shares of the carbon fiber company, which will remain its subsidiary and will continue to be consolidated into the company's financial statements. The company's carbon fiber industry has rich resources and clear development trends, with a solid foundation and conditions conducive to the construction of new quality productivity. This capital increase will combine industry cooperation and capital operations to promote the restructuring and financing of the carbon fiber business and achieve high-quality development, which is beneficial for realizing breakthroughs in high-end new materials industries and building a cooperation system centered on industry synergy. Sinopec's participation in this capital increase will fully leverage its strong financial advantage to accelerate the project scale and investment of the carbon fiber company, and expedite the integration of the industrial chain. With Sinopec's strong scientific research capabilities and engineering experience, it can effectively improve the efficiency of carbon fiber technology research and development and achieve breakthroughs in product high-end. From a market perspective, this move will help expand the application of high-performance carbon fiber in high-growth areas such as new energy and aerospace, seizing the initiative for green development. At the same time, by optimizing the equity structure of the carbon fiber company through investment, it can further enhance the company's market competitiveness and help the company build a strategic foothold in the new materials field to serve the country's long-term carbon-neutral goals. The total amount of funds raised in this capital increase will be used for the project research and development and production of the carbon fiber company, enhancing its production capacity and industrial competitiveness. The portion exceeding the new registered capital of the carbon fiber company will be included in the capital reserve of the carbon fiber company, shared by its old and new shareholders.