Zhong Yang Technology : Announcement of the change of the company's capital utilization plan for 3rd domestic unsecured conversion of corporate bonds

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Provided by: Zhong Yang Technology Co.,Ltd
SEQ_NO	8	Date of announcement	2022/03/17	Time of announcement	19:51:59
Subject	Announcement of the change of the company's capital utilization plan for 3rd domestic unsecured conversion of corporate bonds
Date of events	2022/03/17	To which item it meets	paragraph 16
Statement	1.Date of the board of directors resolution for the change:2022/03/17 2.Effective registration date of the original plan:2021/12/15 3.Resolution date of additional issuance of the original plan:2022/03/17 4.Reason for the change:The raised funds were originally expected to be used to repay the first domestic secured conversion of corporate bonds and the second domestic unsecured conversion of corporate bond holders to execute the put-back rights of $652,500,000, but the corporate bond holders did not On January 2, 2011 and January 3, 2011, the sell-back reference date was exercised. Considering the gradual expansion of operations and the increase in demand for bank loans in the future, it was planned to change the original fund-raising plan to enrich working capital. to reduce reliance on financial institutions.It can increase the stability of long-term funds, improve the financial structure, reduce interest expenses, and improve the company's mid- and long-term competitiveness. 5.Content of each and every successive previously changed plan for raising of funds before and after change: Fund utilization plan before the change: Repay the funds required by the holders of the first domestic secured convertible corporate bonds and the second domestic unsecured convertible corporate bond holders to execute the put-back right, with a total raised capital of $501,500 thousands. Post-change capital utilization plan: Enhancing working capital 2022Q2 $180,000 thousands 2022Q3 $180,000 thousands 2022Q4 $141,500 thousands 6.Projected timetable for execution:After changing the operation plan, it is expected to be fully implemented in 2022Q4. 7.Projected completion date:2022Q4 8.Projected possible benefits:In order to cope with the gradual expansion of operations, the company intends to use the raised funds of $501,500 thousands to enrich its working capital instead of borrowing from financial institutions to meet its working capital needs. If all of the above capital needs are paid for by bank borrowings, calculated based on the average borrowing rate of the Company's financing from financial institutions of approximately 1.21%, it is estimated that the interest expense in 2022 and the following years can be saved to $2,392 thousands and $6,068 thousands respectively. 9.Difference from original projected benefits:The estimated capital cost saved after the change is not much different from that before the change. Considering the future operating conditions, it will help to reduce the proportion of borrowings from financial institutions and improve the company's financial structure, so as to comply with the long-term and stable operation principle. 10.Effect of the current change on shareholder equity:NA 11.Abstract of the original lead underwriter's appraisal opinion: (1)Necessity and rationality of plan changes The company's third domestic unsecured conversion of corporate bonds has raised a total of RMB 501,500,000. The funds were originally expected to be used to repay the first domestic secured conversion of corporate bonds and the second domestic unsecured conversion of corporate bonds. The capital required to execute the put-back right was $652,500 thousands. It was originally assessed that the bondholders would exercise the put-back right considering the low probability of exercising the right of conversion in the future. As of the sell-back base date (January 3, 2022), The company's share price was $54.7, which was still 49.54% and 47.90% between the conversion prices of $81.8 and $80.9 for the first domestic secured conversion of corporate bonds and the second domestic unsecured conversion of corporate bonds. The holders of the first secured convertible corporate bonds and the second domestic unsecured convertible corporate bonds did not exercise their sell-back rights on January 2, 2022 and January 3, 2022, the benchmark date for sell-back. The exercise of rights was not as expected,Considering the gradual expansion of operations and the increasing demand for borrowing from banks in the future, the company plans to change the original fundraising plan to enrich working capital in order to reduce its reliance on financial institutions. In addition to increasing long-term capital stability and improving financial structure, It can also reduce interest expenses and improve the company's medium and long-term competitiveness. To sum up, the company's change plan is mainly due to changes in the objective environment, and the company's focus is on the effective use of funds in order to reduce the company's capital cost. Therefore, its contingency measures for changing the capital plan should include: its necessity and rationality. (2)The rationality of the estimated benefit achieved after the plan change In order to cope with the gradual expansion of operations, the company used the funds raised this time to enrich its working capital of $501,500 thousands, replacing part of bank financing, in order to reduce its dependence on financial institutions, in addition to increasing long-term capital stability and sound financial In addition to the structure, it can reduce interest expenses and improve the company's medium and long-term competitiveness. If the above-mentioned capital needs are met by bank borrowings, the company's average borrowing rate for financing from financial institutions is approximately 1.21%, and it is estimated that in 20111 and subsequent years, the interest expense can be saved to $2,392 thousands and $6,068 thousands respectively. To sum up, the company's capital application plan, estimated progress and possible benefits of the change in this capital application plan are still reasonable and feasible. 12.Any other matters that need to be specified:NA