Denon Optoelectronics’ equity transfer failed to be implemented

On the evening of June 3, Denon Optoelectronics issued an announcement that the controlling shareholder had terminated the equity transfer plan. The announcement showed that the equity transfer plan planned by the actual controller since March 3 this year was finally stopped due to multiple reasons such as the company's continuous losses and the failure of the two parties to reach an agreement on the price.

Tianlong Optoelectronics said that the counterparty of this planned equity transfer is a downstream enterprise in the photovoltaic industry that specializes in energy project investment, development, and power project investment and management. However, the name of this enterprise was not disclosed in the announcement. The main plan for the equity transfer planned by the company is: the counterparty to The company's controlling shareholder Changzhou Noah Technology Co., Ltd. (hereinafter referred to as "Changzhou Noah") increases capital and becomes the controlling shareholder of Changzhou Noah, or the counterparty makes an agreement to acquire the shares of Changzhou Noah and the company's other controlling shareholder Feng Jinsheng. The price of the capital increase or acquisition will be negotiated and determined by the three parties after auditing and due diligence.

No matter what the plan is, the intention of the company’s original controlling shareholder to withdraw from Tianlong Optoelectronics is very obvious.

However, the transfer plan was eventually stopped. As for the reason for the termination, the company said, "After this equity transfer, the counterparty will become the company's controlling shareholder. It conducted a detailed investigation of the company's assets involved, with a wide scope and many links; the 2013 annual report showed that the company failed to achieve turnaround. The company has suffered losses for two consecutive years; the counterparty and the controlling shareholder failed to reach an agreement on the transfer price; due to the above reasons and the fact that the relevant conditions are not yet mature, the two parties failed to reach an agreement, and the equity transfer could not be implemented. "

At the same time, Denon Optoelectronics said that the stock will resume trading today. The company stated that the controlling shareholder will not implement equity transfers within three months after the resumption of trading.

From the planning of the equity transfer to the present, Denon Optoelectronics has gone through three months. During these three months, with the release of the company’s 2013 performance report revision, 2013 annual report and 2014 first quarter report, Denon Optoelectronics once became a popular company in the market. Before the performance revision, the company expected a net profit of about 6.09 million yuan. However, after the revision, the performance suddenly changed, with a huge loss of about 130 million yuan. The reason for the substantial revision in performance was explained by the company as "Affected by factors such as major operational and financial difficulties of some important customers, preliminary review by the accounting firm showed that the company's bad debt provisions for accounts receivable, fixed asset impairment provisions, some product income, and costs have been significantly adjusted."

The 2013 annual report subsequently released by Denon Optoelectronics confirmed the fact that the company suffered substantial losses. Considering that the company had already suffered losses in the previous fiscal year, Denon Optoelectronics was once considered by the market to be the first company to be issued a delisting warning on the GEM.

Some market participants speculate that the controlling shareholder of Denon Optoelectronics intends to transfer its equity, perhaps hoping that the takeover party can inject fresh blood into the company to reverse the company's current decline. However, according to the announcement yesterday evening, the controlling shareholder will no longer plan for equity transfers before September 4 this year.

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Denon Optoelectronics’ equity transfer failed to be implemented

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