On July 11th, Gelonhui announced that in order to introduce investors, optimize shareholder structure, and better realize resource import and business development, all parties plan to adjust the equity of Chengdu Shihai and Hangzhou Shihai Xinyang Microelectronics Co., Ltd. (referred to as New Shihai), and adjust Chengdu Shihai to a subsidiary of New Shihai. New Shihai will introduce external investors in the form of capital increase as the main body of equity financing. After the completion of this equity restructuring, New Shihai will serve as the main body of follow-up business operations.
The company and Shunyu Industrial Fund respectively participate in the equity restructuring of Chengdu Shihai, a jointly-owned company, with their respective holdings of 1.4693% and 6.3267% equity. Based on the principle of substance over form and prudence, and considering that Mr. Hui Deng, the actual controller, chairman and CEO of the company, serves as a member of the investment committee of Shunyu Industrial Fund and participates in the decision-making of Shunyu Industrial Fund's project investment and other related issues, it is determined that Shunyu Industrial Fund is an affiliated party of the company. The company and Shunyu Industrial Fund's participation in the Chengdu Shihai restructuring constitutes a related party transaction.
The company's participation in this equity restructuring is to safeguard the interests of the company. Before and after the implementation of the equity restructuring, the company will maintain the original investment amount. The 1.4693% equity in Chengdu Shihai directly held by the company will be converted into 2.1000% equity in New Shihai directly held by the company, and the company will indirectly hold 1.9984% equity in Chengdu Shihai through New Shihai.