Zhitong Finance App News, Hongguang Semiconductor (06908) announced that on September 28, 2023, the target company (Shenzhen Galiahong Semiconductor, an indirect wholly-owned subsidiary of the company) signed a capital increase agreement with the project company Jiangsu Giahong Semiconductor, Swift Power, Join Gain, and the investor Taizhou Huirong Jianneng Youchuang Equity Investment Partnership (limited partnership). Based on this (among others), the investors have conditionally agreed to pay a total of RMB 0.1 billion to the target company to subscribe for the target company's new registered capital. The investors paid the initial investment amount of RMB 55 million, which was completed after meeting all prerequisites. After completion, as of the date of this announcement, the target company will have approximately 59.09%, 19.10%, 8.17%, 4.55% and 9.09% of the interests of Swift Power, Employee Stock Ownership Platform, Join Gain, Red Mont, and investors, respectively.

The payment terms for the second investment amount stipulated in the capital increase agreement have been met. However, the investors were unable to complete the payment of the second investment amount within the extended period. According to the extension memorandum, the target company, project company, investor, employee shareholding platform, Swift Power, Join Gain and Red Mont signed a termination agreement, which will take effect from January 1, 2025. The contracting parties also agreed that the investors will not need to pay a second investment amount.

The contracting party agreed to calculate and adjust the registered capital of the target company after the capital increase based on the actual amount paid by the contracting party (including the initial investment amount of 55 million yuan paid by the investor). Following the completion of the adjustments, Swift Power, employee shareholding platforms, Join Gain, Red Mont and investors will hold 61.6114%, 19.9147%, 8.5213%, 4.7393%, and 5.2132% of the target company's shares, respectively.

Furthermore, after fair negotiations with investors and in accordance with the new shareholder agreement, the target company's qualifying listing deadline has been extended from June 30, 2030 to June 30, 2032. This move will enhance the flexibility of the target group's listing plan. Furthermore, the simple return on the calculated return on the repurchase price has been reduced from 8% to 6%, which is beneficial to the target company and SwiftPower (repurchase obligor).

As of the date of this announcement, the project company is wholly owned by the target company. The group has developed its GaN business through Target Group and set up a new plant in the Xuzhou Economic and Technological Development Zone, including a 7,000-square-meter ultra-clean room and an 850-square-meter office area (Xuzhou plant). The Xuzhou plant will install a production line for GaN related products, and its facilities will be further upgraded to fully automated in the future.

As far as the first investment amount of RMB 55 million paid by investors to accelerate the implementation of GaN production capacity is concerned, the Xuzhou plant completed production and commissioning of nitrogen and gallium epitaxial film equipment in early 2024, and the Xuzhou plant met the requirements for 6 inch epitaxial film production. The Xuzhou plant has also completed the purchase, installation and commissioning of core equipment for the chip production line, and the chip production line has already taken shape. The Xuzhou plant is currently developing an 8-inch epitaxial film (a new product line), which is expected to be mass-produced in the first half of 2025. The products in the Xuzhou plant are positioned as medium and high power chips. In the last quarter of 2024, GaN chip products have entered the streaming stage and are expected to pass reliability tests and be marketed in 2025.