GCL-Poly Energy Holdings Limited (GCL-Poly) has entered into sale and purchase agreements under which it has conditionally agreed to sell its wafer production business in two tranches, for a total consideration of RMB8 billion in cash (collectively referred to as the “Proposed Transactions”). Meanwhile, the company has passed the trial production of the first phase of silane-based Fluidized Bed Reactor (FBR) polysilicon productions and projects total capacity of 25,000 metric tons.
Transactions
In terms of the transactions, the first tranche of target companies will be sold to Jiangsu Golden Concord Energy Co., Ltd., a connected person of GCL-Poly (as the "First Tranche Purchaser") for a total consideration of RMB2.1 billion in cash (approximately HK$2.6 billion). The second tranche of target companies will be sold to Shanghai Miaochang Investment Management Center (Limited Partnership) (as the "Second Tranche Purchaser") and Shanghai Zhongmin Yinfu Investment Management Co., Ltd. (as general partner of the Second Tranche Purchaser) for a total consideration of RMB5.9 billion in cash (approximately HK$7.4 billion).
Within three business days of the signing of the sale and purchase agreements on 29 November 2014, the First Tranche Purchaser and the Second Tranche Purchaser will pay two separate deposits in the amount of RMB100 million (approximately HK$126.2 million) and RMB300 million (approximately HK$378.6 million), respectively, totaling RMB400 million (approximately HK$504.8 million). Under the Listing Rules of the Hong Kong Stock Exchange, the Proposed Transactions will be subject to independent shareholders’ approval. Upon the completion of the Proposed Transactions, GCL-Poly will no longer hold any direct or indirect equity interests in the two tranches of target companies, which will cease to be GCL-Poly’s subsidiaries.
The Proposed Transactions represent a significant restructuring and repositioning of GCL-Poly to refocus on its strategy on the technology, production, and supply of polysilicon as well as diversification into silicon chemical products. While remaining as one of the leaders of global polysiliocon and wafer production business, it requires investments to sustain both organic and inorganic growth as well as for research and development. GCL-Poly believes it is more prudent to focus on the upstream polysilicon business given the relatively higher barriers to entry to produce polysilicon on a large commercial scale.
Beginning of FBR Polysilicon Production
GCL-Poly has been testing the production of FBR polysilicon production method since September and has reached operating levels in compliance with the design specifications.
The silane-based polysilicon process with the new FBR technology was developed by Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd, a subsidiary of GCL, and also involves establishing the world's largest silane gas production system. The operating FBR reactor has an annual capacity of 3,000 metric tons and is currently one of the world’s largest FBR systems using a single reactor. Each reactor has a production capacity of 400 kilograms per hour. The current trial production run has passed through the complete production flow process and the quality of the continuous flow granular silicon production has reached the electronic grade level with a total energy consumption of 25 kWh/Kg, in which energy consumption of the reactor is only of 2 kWh/Kg.
“Our business has maintained a robust growth in the fourth quarter with its Modified-Siemens polysilicon capacity reaching full utilization,” indicated Mr. Shu Hua, the President of GCL. “In the future, we plan to scale up the output of granular silicon produced by the silane-based FBR process which should further lower the production costs and energy consumption while enhancing the quality of the polysilicon product.”
The high-quality silane-based FBR process with an estimated capacity of 25,000 metric tons is expected to be completed by the end of 2015. The company will also further expand total production potential by de-bottlenecking the existing Modified-Siemens process, with a target to increase total capacity to 100,000 metric tons.