Zhitong Finance App News, Dacheng Biochemical Technology (00809) issued an announcement. On May 27, 2024, Changchun Dahe (a wholly-owned subsidiary of the company) and Hyundai Agricultural Fund signed an energy management contract to implement the Changchun Dahe renovation project through energy contract management. According to the energy management contract, the Modern Agriculture Fund or its subsidiary Hyundai Agriculture SPV will invest, build, maintain and manage boiler facilities for Changchun Dahe to carry out renovation projects in its production plant area, and ownership of the boiler facilities will belong to Changchun Dahe after the energy efficiency sharing period expires.

As part of the fund-raising arrangement for the funds required under the energy management contract, according to the potential loan agreement, the Modern Agriculture Fund, which has a state-owned background, will discuss with the CDB Jilin Branch and provide a potential loan of no more than RMB 200 million. Currently, it is anticipated that the borrower will be Hyundai Agricultural SPV, and since Changchun Dahe may or may not need to join as a borrower under a potential loan agreement (subject to internal approval by the CDB Jilin Branch), the borrower may or may not include Changchun Dahe. The potential loan agreement is expected to be jointly and individually guaranteed by Agricultural Investment and Dacheng Import and Export in accordance with the potential joint guarantee.

According to the announcement, after considering the current financial situation of Changchun Dahe (including its net debt situation and the fact that all of its assets are currently subject to seizure orders), through an energy management contract, Changchun Dahe will be able to self-estimate net energy savings and pay investment costs for the construction of its renovation projects and boiler facilities in installments, thereby relieving the pressure on the Group's internal capital resources. After the energy efficiency sharing period expires, ownership of the boiler facilities will belong to Changchun Dahe, which means that the net energy savings generated thereafter will be collected by Changchun Dahe and the Group itself. Therefore, by improving the production cost efficiency of Changchun Dahe, the Group's financial situation can be further strengthened.

Considering the above benefits of energy management contracts, the company believes that entering into potential loan agreements and potential joint guarantees (the sole purpose of which is to raise funds for the execution of energy management contracts) is beneficial to the Group as a whole. Furthermore, it is expected that the potential loan (as a special loan) will be deposited into a separate bank account supervised by the CDB Jilin Branch of Modern Agriculture SPV, and the potential loan will be used with the approval of the CDB Jilin Branch. It is anticipated that the main source of funding for repayment under a potential loan agreement will come from split income. Therefore, it is expected that repayment obligations under potential loan agreements will not cause significant financial burdens and pressures on the Group.