In order to further expand financing channels and reduce financing costs, Luxi Chemical Group Co., Ltd. (hereinafter referred to as "the company" or "the company") plans to use its own bank credit advantages and Shandong Luxi Finance Leasing Co., Ltd. (hereinafter referred to as "Luxi Leasing")'s foreign debt quota, tax preferential policies, and other linkage financing measures. By providing credit lines or issuing bank guarantees, the company can apply to domestic or overseas banks to grant loans to Luxi Leasing. Luxi Leasing will then release the loan to the company or its subsidiaries in the form of financing leases.
In 2016, the company and its subsidiaries plan to engage in financing leasing business with Luxi Leasing through assets such as machinery and equipment. The total financing amount does not exceed RMB 4 billion, and the company will pay Luxi Leasing handling fees of no more than 0.5% of the financing amount.
The controlling shareholder of the company, Luxi Group Co., Ltd., holds 75% of the equity of Luxi Leasing, and its wholly-owned subsidiary, Luxi Chemical Europe Technology Research and Development Co., Ltd., holds 25% of the equity of Luxi Leasing. According to the Listing Rules of the Shenzhen Stock Exchange, Luxi Leasing is an affiliated legal person of the company, and the financing leasing business conducted by the company and Luxi Leasing constitutes a related party transaction.
This related party transaction was approved by the 21st meeting of the 6th board of directors of the company on April 23, 2016. The related directors, Mr. Zhang Jincheng, Mr. Jiao Yanbin, and Mr. Cai Yingqiang, avoided voting. The independent directors approved the transaction in advance and expressed their independent opinions. This related party transaction does not belong to the major asset restructuring stipulated in the "Management Measures for Major Asset Restructuring of Listed Companies" and does not require approval from relevant departments. It still needs to be submitted for review at the 2015 shareholders' meeting of the company.