After more than a year of planning, Dalian Thermal Power (600719) announced the termination of its billion-yuan major asset restructuring, citing "changes in the market environment" as the reason.

With the termination of this transaction, the spin-off and reorganization listing of Kanghui New Materials by Hengli Petrochemical (600346) also came to a halt.

On June 21, 2023, Dalian Thermal Power announced a suspension of trading for the planning of significant asset restructuring. The company intended to sell all its assets and liabilities to Dalian Clean Energy Group Co., Ltd. or its designated entity. It also planned to issue shares to purchase 100% of the shares of Kanghui New Material Technology Co., Ltd. (hereinafter referred to as "Kanghui New Materials") held by Hengli Petrochemical Co., Ltd. (hereinafter referred to as "Hengli Petrochemical") and Jiangsu Hengli Chemical Fiber Co., Ltd. (hereinafter referred to as "Hengli Chemical Fiber"). In addition, the transaction planned to issue shares to specific investors to raise supporting funds.

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Subsequent disclosures of the transaction plan showed that Dalian Thermal Power intended to sell all its assets and liabilities to the Clean Energy Group, with the transaction counterparty paying in cash. According to the asset appraisal report, the appraised value of the assets to be sold was 652 million yuan, which was also the transaction price determined by all parties.

At the same time, Dalian Thermal Power intended to purchase 66.33% of Kanghui New Materials held by Hengli Petrochemical and 33.67% held by Hengli Chemical Fiber through the issuance of shares to purchase assets. The appraised value and transaction price of the assets to be purchased in this transaction were both 10.153 billion yuan.

Dalian Thermal Power planned to raise supporting funds by issuing shares to no more than 35 (including 35) specific investors through a private placement, with the total amount of funds raised not exceeding 3 billion yuan.

As a participant in this transaction, Hengli Petrochemical hoped to spin off its subsidiary Kanghui New Materials for reorganization and listing. On July 4, 2023, the board of directors of Hengli Petrochemical reviewed and passed the spin-off listing proposal.

On July 11, 2023, Dalian Thermal Power provided a detailed explanation of the reasons for implementing this major asset restructuring at a media briefing on significant asset restructuring.

Dalian Thermal Power stated that the company's main business is cogeneration and centralized heating. Affected by the rise in coal prices and adjustments in environmental protection policies, the company's main business operations face significant pressure, with weak profitability and a trend of declining year by year. After the reorganization, the company will strategically exit the thermal power industry, and its main business will be transformed into the promising new materials industry, improving the company's profitability and risk resistance, and helping to enhance the quality and long-term development of the listed company's main business.

Regarding why Kanghui New Materials was chosen as the target for restructuring, Dalian Thermal Power stated that Kanghui New Materials is one of the few manufacturers in the world with the capability to develop both BOPET functional films and lithium battery separators, covering the entire business process from upstream raw materials to midstream films, plastics, and downstream coating, modification, and other deep processing links, with a comprehensive competitive advantage of technological leadership and full industry chain integration.In October 2023, the transaction received approval from the State-owned Assets Supervision and Administration Commission of Dalian City.

During the process of promoting the reorganization, Dalian Thermal Power had responded to the exchange's review inquiries on multiple occasions. On March 31 of this year, due to the financial information recorded in the reorganization application documents having expired, supplementary submission was required, and the Shanghai Stock Exchange suspended the review of this transaction.

On June 30 of this year, because the assessment data of the declaration documents for this transaction was about to expire and supplementary submission was needed, the Shanghai Stock Exchange suspended the review of this transaction.

It was not until August 22 of this year that Dalian Thermal Power held the third meeting of the 11th Board of Directors, where it reviewed and passed a motion to terminate the major asset sale and the issuance of shares to purchase assets and raise supporting funds, as well as related transactions, and to withdraw the application documents, and to sign relevant termination agreements with the counterparties.

Regarding the reason for terminating the reorganization, Dalian Thermal Power stated that since the initiation of this reorganization, the company and all relevant parties have actively promoted various tasks. In view of the significant changes in the market environment since the planning of this reorganization, the company, after careful study and friendly consultation with all parties involved, decided to terminate the reorganization and withdraw the application documents.

On August 22, Hengli Petrochemical also announced the termination of the spin-off of its subsidiary Kanghui New Materials for reorganization and listing.