Following the 20 million yuan capital increase in 2021, Jiangxi Shenghua, a subsidiary of Fulin Seiko, which is vigorously promoting the expansion of lithium iron phosphate production, recently received an additional investment of 144 million yuan from CATL.
On the evening of February 16, Fulin Seiko issued the "Progress Announcement on the Introduction of Strategic Investors by subsidiaries and the signing of supplementary agreements" (hereinafter referred to as the "supplementary agreement"), saying that the company and its subsidiary Jiangxi Shenghua recently signed supplementary agreements with Ningde Times and Changjiang Chendao. According to the supplementary agreement, CATL intends to further increase the capital of Jiangxi Shenghua by subscribing to the target company for the same amount of registered capital of RMB144 million, after the completion of this capital increase, CATL will hold 20% of the equity of Jiangxi Shenghua, and the registered capital of Jiangxi Shenghua will increase to RMB 820 million.
Image source: Screenshot of supplementary agreement announcement
It should be pointed out that the capital increase of catheter times has exceeded the expectations of the outside world in terms of progress.
In January 2021, Fulin Seiko reached an agreement with Ningde Times and Changjiang Chendao on jointly increasing the capital of Jiangxi Sublimation. According to the original agreement, Fulin Seiko increased its capital by 272 million yuan, CATL directly increased its capital by 20 million yuan and had the right to choose to increase its capital by itself or a designated third party by another 44 million yuan. In addition, CATL also has the right to choose, that is, within 18 months from the date of the first capital increase, it has the right to choose to further increase the capital of Jiangxi Shenghua by 100 million yuan.
In August 2021, after the first batch of capital increase of 20 million yuan was in place and the industrial and commercial changes were completed, CATL directly held 2.96% of the equity of Jiangxi Shenghua. A few months later, the CATL era began to exercise the right of choice.
According to the newly signed Supplementary Agreement, the capital increase of 44 million yuan by the designated party of CATL in the original agreement will be implemented by CATL itself. In addition, coupled with the exercise of the optional capital increase right of 100 million yuan, the CATL will add a total of 144 million yuan.
Jiangxi Shenghua's shareholding structure before and after the capital increase; image source: Screenshot of the supplementary agreement announcement
After completing the additional investment of 144 million yuan, CATL will become the second largest shareholder of Jiangxi Shenghua, with a shareholding ratio of 20%. However, Fulin Seiko will still have an absolute controlling stake in Jiangxi Shenghua, with a shareholding ratio of 60%.
Fulin Seiko said that the joint capital increase and the introduction of strategic investors aims to further strengthen the long-term cooperation between the company and the Ningde era, give full play to and integrate their respective resource advantages, in line with the relevant policies of the national new energy industry and the company's strategic development plan, which is conducive to promoting product technology upgrading, expanding business scale, enhancing the company's position in the industry of new energy lithium battery cathode materials, and improving the company's overall competitiveness and sustained profitability.
The Supplementary Agreement also mentions that the additional investment of 144 million yuan in CATL will be mainly used to further accelerate the construction of Jiangxi Shenghua's lithium iron phosphate project in Shehong, Sichuan.
In July 2021, Fulin Seiko announced its plans to invest in a new project with an annual output of 250,000 tons of lithium iron phosphate cathode materials. One of the first phase of the project is a 60,000-ton lithium iron phosphate cathode material project, and Jiangxi Shenghua intends to invest 1.06 billion yuan in Shehong, Sichuan Province to build the first phase of the project. In mid-January this year, Fulin Seiko said in response to investors' questions that the company's 50,000-ton lithium iron phosphate cathode material project located in Sichuan Shehong Base has been officially put into production, and the production capacity has been released in an orderly manner and has begun to supply in batches.
In the industry's view, the additional investment of cataline times in Jiangxi Sublimation can accelerate the construction progress of the latter's new capacity project on the one hand; on the other hand, it is also to prepare for ensuring the supply of its own lithium resources.
At present, the price of battery-grade lithium carbonate has been rising, Ningde times mentioned in the recent investor research activities that the short-term cost of raw materials has a certain impact on it after the rise, the company will ensure the supply of lithium resources through long-term cooperation, investment cooperation, recycling, self-mining and other major ways, and this additional investment in Jiangxi sublimation is one of the ways.
In fact, in the field of lithium iron phosphate, the Ningde era has been shot many times. CATL said that in addition to actively carrying out investment cooperation at home and abroad, it also invests in lithium resources in Yichun and other places, mining lithium ore on its own, in order to hedge the adverse impact of the rise of raw materials on the company in a variety of ways.