omniture

Xiwang Special Steel Enters into Cooperation Agreement with the Institute of Metal Research, Chinese Academy of Sciences to Enjoy 10 Licensed Special Steel Production Technologies Permanently

Total cost of HK$122 million to be paid by issuing 100 million shares

HONG KONG, Jan. 7, 2015 /PRNewswire/ -- Xiwang Special Steel Company Limited ("Xiwang Special Steel" or "the Group", HKEx: 01266) announced yesterday that the Group has entered into the Technology Licence and Cooperation Agreement ("Technology Licence and Cooperation Agreement") with the Institute of Metal Research, Chinese Academy of Sciences ("IMR") and the IMR Key Personnel, the Group obtained 10 licensed special steel production technologies including some products ("Licensed Technologies") for a period of 10 years, for a consideration of HK$122,000,000. The Group shall also be authorized to use the Licensed Technologies for free after the expiration of the said period. Meanwhile, IMR will provide technological services and support related to the Licensed Technologies, to facilitate the Group to improve product quality, refine production technology and enrich product mix. Through increasing the proportion of high-end special steel products, it is expected that the Group's profitability could also be enhanced.

The 10 special steel production technologies authorized by IMR consist of metal smelting, metal casting, mould cleansing, slab and ingot production technologies which aim to give rise to higher quality steel products, more efficient production process, less production cost and wider range of special steel products for the Group. Pursuant to the Technology Licence and Cooperation Agreement, the Group is licensed to apply and further develop the Licensed Technologies and to manufacture and sell such products directly resulting from the use of the Licensed Technologies without any territorial restrictions on the terms and conditions set out in the Technology Licence and Cooperation Agreement. The Group will also have the first right to be granted the licence for the use of such improved or further developed Licensed Technologies.

In regard to the development of cooperative products, IMR and the Group shall cooperate to establish new production lines at the production plant of the Group for the production of high-end steel for use in equipment such as mid-to-high-end tool and die steel and marine steel, develop steel slab for use in various industries including the energy and electricity, petrochemical and marine engineering, and steel for kitchen cutleries. Furthermore, the Group shall establish a technology centre at the Shenyang National Laboratory for Materials Science, which will focus on the research and development of production technique of special steel; whereas IMR shall establish a technology centre at Xiwang Industrial Area in Zouping Country of Shandong Province, PRC, which will focus on the transformation of existing production techniques, development of new products and its commercialisation, training of operational technicians and the marketing of products.

The consideration for the licensing of the Licensed Technologies to the Group shall be HK$122,000,000, which will be paid by means of issuing and allotting 100,000,000 Consideration Shares to IMR Company and the IMR Key Personnel. The 100 million Consideration Shares represent 5% of the issued share capital of the Company as at the date of signing of the Technology Licence and Cooperation Agreement. (5 January 2015); and approximately 4.76% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. Each Consideration Share is priced at HK$1.22, which is the price on the last trading date immediately prior to the date of the Technology Licence and Cooperation Agreement.

Pursuant to the terms of the Technology Licence and Cooperation Agreement, an aggregate of 40,000,000 Bonus Shares will be issued to IMR Company and the IMR Key Personnel, conditional upon the Group's attainment of sales target of over 10,000 tonnes of type H13 high quality tool and die steel in the financial year of 2015, subject to conditions precedent as set out in the Technology Licence and Cooperation Agreement being satisfied and the approval of the Board and the Stock Exchange. Both the Consideration Shares and Bonus Shares are subject to a lock-up period of three years. Each of IMR and IMR Key Personnel are allowed to dispose of a maximum of 25% of the Consideration Shares and Bonus Shares held by them each year after expiration of the lock-up period.

Xiwang Special Steel is confident that through this cooperation with IMR, the Group will be able to enhance its technical capacity significantly and seize the high-end steel market to improve the profitability level, so as to bring about considerable returns for shareholders.

About Xiwang Special Steel Company Limited (stock code: 01266.HK)
Founded in 2003, Xiwang Special Steel was listed on the Main Board of the Hong Kong Stock Exchange in February 2012. As the only special steel enterprise with mass production capability of bearing steel bar and wire rods products in Shandong Province, the products of Xiwang Special Steel manufactured mainly include high-quality and high-strength building materials including bearing steel, gear steel, engineering machinery steel, with an annual output capacity of 3 million tonnes of steelmaking and steel products respectively. In December 2013, Xiwang Special Steel passed the site inspection by the Ministry of Industry and Information Technology, and has become one of the second-batch enterprises that fulfils the standard of Iron and Steel Industry. After 10 years of development, the company formed a high-quality special steel production and operation mode which mainly focused on the production of bearing steel, gear steel, steel cord, automotive steel and Engineering Machinery steel. Xiwang Special Steel gradually transformed into a high-end steel production enterprise, and strives to become a "sophisticated special steel enterprise in Shandong Province".

About Institute of Metal Research, Chinese Academy of Sciences (IMR)
IMR was founded in 1953 in China. It positions itself as a base for materials science and engineering research in China. Research at IMR focuses mainly on high performance metallic materials, new types of inorganic nonmetallic materials, and advanced composite materials. IMR's research is directed towards the understanding and characterisation of materials properties, structure and performance, as well as materials synthesis and fabrication, processing, and application, with emphasis on the transformation and commercialization of products of scientific research and development. IMR has established the Shenyang National Laboratory for Materials Science, the State Key Laboratory for Corrosion and Protection, the Shenyang R&D Center for Advanced Materials, the Environmental Corrosion Center, the National Engineering Research Center for Corrosion Control of Metals and the National Engineering Research Center for High Performance Homogenized Alloys in furtherance of its research area.

The press release is distributed by MP Finance on behalf of Xiwang Special Steel Company Limited.

For enquiry, please contact:


Mr Marcus Keung

Tel: (852) 2529 8611

Email: marcus.keung@mpfir.com

Ms Carol Kong

Tel: (852) 2529 1387

Email: carol.kong@mpfir.com

Ms Christine Chan

Tel: (852) 2529 1616

Email: christine.chan@mpfir.com

Source: Xiwang Special Steel Company Limited
Related Stocks:
HongKong:1266
collection