Huscoke Holdings Limited (00704.HK) announced that the Company has entered into the M&A Framework Agreement with the JV Subsidiary and the Target Company on 16 September 2020, pursuant to which the Company and/or the Company may through direct investment and/or establishment of a merger and acquisition fund may acquire and subscribe for more than 50% of the enlarged share capital of the Target Company.
The JV Subsidiary is principally engaged in coke production business with a production capacity of 600,000 tons coke per year whereas the Target Company is committed to a coke production project with capacity of 5 million tons coke per year. At present, the Phase 1 Project has all been put into production, and the Phase 2 Project has completed the infrastructure construction and is expected to be put into production in the first quarter of 2022.
The Board considers that the merger between the JV Subsidiary and the Target Company and acquisition of the Target Company by the Group could provide synergies and enlarge the existing coke production business of the Company. The Board considers the establishment of a M&A Fund to reduce capital expenditures of the Group in early stage of its investment into the Target Company. Overall, the possible merger and acquisition could provide an opportunity to expand production scale, production technology enhancement, improvements of the environmental standard of the Company so as to strengthen profitability and maintain sustainable development of the Group.