GCL Technology Holdings Limited - Proxy Solicitation & Information Statement 2020

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in GCL-Poly Energy Holdings Limited (保利協鑫能源控股有限公司), you should at once hand this circular and the accompanying proxy form to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3800)

(1) DISCLOSEABLE TRANSACTION DISPOSAL OF SUBSIDIARIES

(2) POSSIBLE MAJOR TRANSACTION GRANT OF PUT OPTIONS

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Capitalised terms used in this cover shall have the same meanings as those defined in the section headed “Definitions” in this circular. A letter from the Board is set out on pages 9 to 27 of this circular.

A notice convening the EGM of the Company to be held at Strategy II-III, Level 8, W Hong Kong, 1 Austin Road West, Kowloon Station, Kowloon, Hong Kong on Thursday, 21 May 2020 at 11:30 a.m. is set out on pages EGM-1 to EGM-3 of this circular.

Irrespective of whether you are able to attend the EGM, please complete the accompanying proxy form in accordance with the instructions printed thereon and deposit the same at the Hong Kong branch share registrar and transfer office of the Company, Tricor Investor Services Limited, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. The address of Tricor Investor Services Limited is Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish and in such event, the proxy form shall be deemed to be revoked.

29 April 2020

PRECAUTIONARY MEASURES FOR THE EGM

Please see pages 1 to 2 of this circular for precautionary measures being taken to prevent and control the spread of COVID-19 at the EGM, including without limitation:

compulsory body temperature checks;
compulsory wearing of surgical face masks (please bring your own mask);
no refreshment will be served; and
no souvenirs will be distributed.

Any person who does not comply with the above precautionary measures may be denied entry into the EGM venue. The Company will require all attendees to wear surgical face masks before they are permitted to attend, and during their attendance of the EGM at all times, and reminds the Shareholders that they may appoint the chairman of the EGM as their proxy to vote on the relevant resolutions at the EGM as an alternative to attending the EGM in person.

	Page
PRECAUTIONARY MEASURES FOR THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . . . .	I-1
APPENDIX II – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

PRECAUTIONARY MEASURES FOR THE EGM

In view of the ongoing COVID-19 epidemic and recent guidelines for prevention and control of its spread, the Company will implement the following precautionary measures at the EGM to protect the Shareholders, staff and other stakeholders who attend the EGM from the risk of infection:

(i) compulsory body temperature checks will be conducted on every Shareholder, proxy and other attendee. Any person with a body temperature of 37 degrees Celsius or higher may be denied entry into the EGM venue or be required to leave the EGM venue;
(ii) the Company will require all attendees to wear surgical face masks before they are permitted to attend, and during their attendance of the EGM at all times, and to maintain a safe distance between seats (please bring your own mask);
(iii) no refreshment will be served at the EGM;
(iv) no souvenirs will be distributed at the EGM; and
(v) no guest will be allowed to enter the EGM venue if he/she is wearing quarantine wristband issued by the Government of Hong Kong.

Any person who does not comply with above requirements may be denied entry into the EGM venue or be required to leave the EGM venue. To the extent permitted under law, the Company reserves the right to deny entry into the EGM venue or require any person to leave the EGM venue in order to ensure the safety of other attendees at the EGM. In our case, denied entry to the EGM venue also means that person will not be allowed to attend the EGM.

In the interest of all stakeholders’ health and safety and in accordance with recent guidelines for prevention and control of the spread of COVID-19, the Company reminds all Shareholders that physical attendance in person at the EGM is not necessary for the purpose of exercising voting rights. As an alternative, the Shareholders may complete the proxy forms and appoint the chairman of the EGM as their proxy to vote on the relevant resolutions at the EGM instead of attending the EGM in person.

PRECAUTIONARY MEASURES FOR THE EGM

The proxy forms were despatched to the Shareholders together with this circular, and can otherwise be downloaded from the websites of the Company at www.gcl-poly.com.hk or the Stock Exchange at www.hkexnews.hk. If you are not a registered Shareholder (i.e. if your Shares are held via banks, brokers, custodians or Hong Kong Securities Clearing Company Limited), you should consult directly with your banks, brokers or custodians (as the case may be) to assist you in the appointment of proxy.

If you have any questions relating to the EGM, please contact the Company’s Hong Kong branch share registrar and transfer office, Tricor Investor Services Limited:

Address	:	Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong
Email	:	[email protected]
Telephone	:	+852 2980 1333
Fax	:	+852 2810 8185

Subject to the development of COVID-19, the Company may implement further precautionary measures and may issue further announcements on such measures as appropriate.

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the context requires otherwise:

“Amount Payable”
the amount payable as set out in the First Phase Share Purchase Agreements by each of the Target Companies to its affiliates (including the Sellers)
“Amount Receivable” the amount receivable as set out in the First Phase Share Purchase Agreements by each of the Target Companies from its affiliates (including the Sellers)
“Announcement” the Company’s announcement dated 21 January 2020 in relation to the Disposals and the Put Options
“Board”
the board of the Directors
“Business Day”
a day on which banks in China are open for general commercial business, other than a Saturday, Sunday or public holiday in the PRC
“China Huaneng Group” China Huaneng Group Co., Ltd.* (中國華能集團有限公司), a state-owned enterprise incorporated in the PRC with limited liability and one of the limited partners of the Purchasers
“Closing” The completion of the Transactions
“Closing Audit Report”
the closing audit report prepared by an auditing agency appointed by the Sellers and the Purchasers to audit the financial status of the Target Companies in the period from the Reference Date to the Closing Date in accordance with the First Phase Share Purchase Agreements
“Closing Date” the date of issuance as stated on the new business certificate of the Target Company(ies) upon the completion of the Registration Procedures
“CLSA Capital Markets”
CLSA Capital Markets Limited, a corporation licensed to conduct Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the exclusive financial adviser to the Purchasers, an indirectly wholly-owned subsidiary of CITIC Securities Company Limited, the shares of which are listed on the Main Board of the Stock Exchange (stock code: 6030)
3 -

DEFINITIONS

“Company”	GCL-Poly Energy Holdings Limited (保利協鑫能源控股有限公
	司), a company incorporated in the Cayman Islands with limited
	liability and the shares of which are listed on the Main Board of the
	Stock Exchange, with stock code 3800. As at the Latest Practicable
	Date, the Company is interested in approximately 62.28% of the
	issued share capital of GNE
“Conditions Precedent”	the conditions under the section “Conditions Precedent” in this
	circular
“connected persons”	has the same meaning ascribed to it under the Listing Rules
“Consideration”	the consideration for the transactions contemplated under the First
	Phase Share Purchase Agreements, being the aggregate of the Share
	Price
“Director(s)”	the director(s) of the Company
“Disposals”	the proposed disposals of the Sale Shares by the Sellers to the
	Purchasers as contemplated under the First Phase Share Purchase
	Agreements
“EGM”	the extraordinary general meeting of the Company to be convened
	to consider and, if thought fit, approve the Put Options and the
	entering into and performance of obligations under the First Phase
	Share Purchase Agreements

“First Phase Share Purchase the Suzhou Share Purchase Agreements and the Ningxia Share Agreements” Purchase Agreement
“GNE” GCL New Energy Holdings Limited (協鑫新能源控股有限公司), a company incorporated in Bermuda with limited liability and the shares of which are listed on the Main Board of the Stock Exchange, with stock code 451 As at the Latest Practicable Date, the Company is interested in approximately 62.28% of the issued share capital of GNE
“GNE Board” the board of GNE Directors
“GNE Directors” the directors of GNE
“GNE Group” GNE and its subsidiaries
“GNE Shareholders” the shareholders of GNE
“Group” the Company and its subsidiaries
4 -

DEFINITIONS

“Guarantor” GCL Group Limited* (協鑫集團有限公司), a company established in the PRC and is indirectly held under a discretionary trust under which Mr. Zhu Gongshan (an executive director and chairman of the Company) and his family (including Mr. Zhu Yufeng, an executive director of the Company and GNE and the son of Mr. Zhu Gongshan) are beneficiaries
“Hami Orui” Hami Orui Photovoltaic Power Generation Co., Ltd. (哈密歐瑞光伏發電有限公司), a company established in the PRC with limited liability, which is directly wholly-owned by Suzhou GCL New Energy and an indirect subsidiary of GNE and the Company
“Hami Yaohui” Hami Yaohui Photovoltaic Power Co., Ltd.* (哈密耀輝光伏電力有限公司), a company established in the PRC with limited liability, which is directly wholly-owned by Suzhou GCL New Energy and an indirect subsidiary of GNE and the Company
“Hong Kong” Hong Kong Special Administrative Region of the PRC
“Huaneng No. 1 Fund” Huaneng Gongrong No.1 (Tianjin) Equity Investment Fund Partnership (Limited Partnership)* (華能工融一號（天津）股權投資基金合夥企業（有限合夥）), a limited partnership established in the PRC
“Huaneng No. 2 Fund” Huaneng Gongrong No.2 (Tianjin) Equity Investment Fund Partnership (Limited Partnership)* (華能工融二號（天津）股權投資基金合夥企業（有限合夥）), a limited partnership established in the PRC
“Latest Practicable Date” 27 April 2020, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“MW” megawatt(s)
“Net Payable Amount” the amount equivalent to the difference between the Amount Payable and the Amount Receivable of each of the Target Companies in the event that the Amount Payable is more than the Amount Receivable of each of the Target Companies
“Net Receivable Amount” the amount equivalent to the difference between the Amount Payable and the Amount Receivable of each of the Target Companies in the event that the Amount Payable is less than the Amount Receivable of each of the Target Companies
5 -

DEFINITIONS

“Ningxia GCL New Energy” Ningxia GCL New Energy Investment Co., Ltd.* (寧夏協鑫新能源投資有限公司), a company established in the PRC with limited liability and an indirect subsidiary of GNE and the Company
“Ningxia Jinli” Ningxia Jinli Photovoltaic Power Co., Ltd.* (寧夏金禮光伏電力有限公司), a company established in the PRC with limited liability, which is directly wholly-owned by Ningxia GCL New Energy and an indirect subsidiary of GNE and the Company
“Ningxia Jinxin” Ningxia Jinxin Photovoltaic Power Co., Ltd.* (寧夏金信光伏電力有限公司), a company established in the PRC with limited liability, which is directly wholly-owned by Suzhou GCL New Energy and an indirect subsidiary of GNE and the Company
“Ningxia Lvhao” Ningxia Lvhao Photovoltaic Power Generation Co., Ltd.* (寧夏綠昊光伏發電有限公司), a company established in the PRC with limited liability, which is directly wholly-owned by Suzhou GCL New Energy and an indirect subsidiary of GNE and the Company
“Ningxia Share Purchase an equity transfer agreement dated 21 January 2020 entered into Agreement” between Ningxia GCL New Energy and the Purchasers in relation to the sale of the entire equity interest in Ningxia Jinli
“PRC” the People’s Republic of China, and for the purpose of this circular, excluding Hong Kong, the Macao Special Administrative Region of the People’s Republic of China and Taiwan
“Purchasers” Huaneng No. 1 Fund and Huaneng No. 2 Fund
“Put Options” the put options granted to the Purchasers under each First Phase Share Purchase Agreement, pursuant to which the Purchasers are entitled to, upon the occurrence of certain specified events in relation to a relevant Target Company, request the respective Seller to repurchase the respective Target Company’s (a) entire equity interest; and (b) the relevant unpaid shareholders’ loan at the time
“Reference Date” 30 September 2019
“Registration Procedures” the registration procedures in respect of the change of shareholder of the Target Company and other relevant filing procedures in respect of the Transactions in the PRC
“RMB” Renminbi, the lawful currency of the PRC

“Sale Shares” the entire equity interest in the Target Companies held by the Sellers

DEFINITIONS

“Seller(s)” Ningxia GCL New Energy and Suzhou GCL New Energy “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shareholders” the shareholders of the Company “Share Price” the consideration for the Sale Shares “Stock Exchange” The Stock Exchange of Hong Kong Limited “subsidiaries” has the same meaning ascribed to it under the Listing Rules

“Suzhou GCL New Energy” Suzhou GCL New Energy Investment Co., Ltd.* (蘇州協鑫新能源投資有限公司), a company established in the PRC with limited liability and an indirect subsidiary of GNE and the Company
“Suzhou Share Purchase a series of five equity transfer agreements dated 21 January 2020 Agreements” entered into between Suzhou GCL New Energy and the Purchasers in relation to the sale of the entire equity interest in the Suzhou Target Companies

“Suzhou Target Companies” Yuganxian, Ningxia Jinxin, Ningxia Lvhao, Hami Orui and Hami Yaohui

“Target Company(ies)” Ningxia Jinli and the Suzhou Target Companies, the six target companies being the subject of the Disposals, details of which can be found in the section headed “Information on the Target Companies” of this circular

“Total Net Payable Amount” the Net Payable Amount of all of the Target Companies
“Total Net Receivable Amount”
the Net Receivable Amount of all of the Target Companies
“Total Outstanding Balance” the outstanding balance of the Total Net Receivable Amount and the Total Net Payable Amount, which is equivalent to the amount after the deduction of the Total Net Payable Amount from the Total Net Receivable Amount

“Transactions”

the transactions contemplated under the First Phase Share Purchase Agreements, including the Disposals and the grant of Put Options
“Yuganxian”

Yuganxian GCL New Energy Co., Ltd.* (余干縣協鑫新能源有限責任公司), a company established in the PRC with limited liability, which is directly wholly-owned by Suzhou GCL New Energy and an indirect subsidiary of GNE and the Company

DEFINITIONS

“%”

per cent.

All of the English titles or names of the PRC entities, as well as certain items contained in this circular have been included for identification purpose only and may not necessarily be the official English translations of the corresponding Chinese titles or names. If there is any inconsistency between the English translations and the Chinese titles or names, the Chinese titles or names shall prevail.
8 -

LETTER FROM THE BOARD

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GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3800)

Executive Directors:

Mr. Zhu Gongshan Mr. Zhu Zhanjun Mr. Zhu Yufeng Ms. Sun Wei Mr. Yeung Man Chung, Charles Mr. Jiang Wenwu Mr. Zheng Xiongjiu

Independent non-executive Directors:

Ir. Dr. Ho Chung Tai, Raymond Mr. Yip Tai Him Dr. Shen Wenzhong Mr. Wong Man Chung, Francis

Registered office:

Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands

Principal place of

business in Hong Kong: Unit 1703B – 1706, Level 17 International Commerce Centre 1 Austin Road West Kowloon, Hong Kong

29 April 2020

To the Shareholders

Dear Sir or Madam,

(1) DISCLOSEABLE TRANSACTION DISPOSAL OF SUBSIDIARIES (2) POSSIBLE MAJOR TRANSACTION GRANT OF PUT OPTIONS

1. INTRODUCTION

We refer to the Announcement published on 21 January 2020. As disclosed in the Announcement, on 21 January 2020 (after trading hours), (a) Suzhou GCL New Energy (as the seller), the Guarantor (as the guarantor) and the Purchasers (as the purchasers) entered into the Suzhou Share Purchase Agreements and (b) Ningxia GCL New Energy (as the seller), the Guarantor (as the guarantor) and the Purchasers (as the purchasers) entered into the Ningxia Share Purchase Agreement. Pursuant to the First Phase Share Purchase Agreements, the Sellers agreed to, among other things, (a) sell 60% of the Sale Shares to Huaneng No. 1 Fund and 40% of the Sale Shares to Huaneng No. 2 Fund; and (b) grant the Put Options to the Purchasers.

LETTER FROM THE BOARD

2. THE FIRST PHASE SHARE PURCHASE AGREEMENTS

The principal terms of the First Phase Share Purchase Agreements are set out below:

Date

21 January 2020 (after trading hours)

Parties

(i) The Sellers: (a) Suzhou GCL New Energy Investment Co., Ltd.* (蘇州協鑫新能源投資有限公司)
(b) Ningxia GCL New Energy Investment Co., Ltd.* (寧夏協鑫新能源投資有限公司)
(ii) The Purchasers: (a) Huaneng Gongrong No.1 (Tianjin) Equity Investment Fund Partnership (Limited Partnership)* (華能工融一號
（天津）股權投資基金合夥企業（有限合夥）)
(b) Huaneng Gongrong No.2 (Tianjin) Equity Investment Fund Partnership (Limited Partnership)* (華能工融二號
（天津）股權投資基金合夥企業（有限合夥）)

(iii) The Guarantor: GCL Group Limited* (協鑫集團有限公司)

Assets to be sold

The Sale Shares will be sold by the Sellers to the Purchasers, being the entire interests in each of the Target Companies.

The Target Companies own 7 operational solar power plants in the PRC with an aggregate installed capacity of approximately 294MW.

The table below sets out the Target Companies under each of the First Phase Share Purchase Agreements:

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LETTER FROM THE BOARD

Location of the solar First Phase power plants operated Share Purchase by the Target Agreements Target Companies Companies in the PRC I Yuganxian GCL New Energy Co., Ltd. Jiangxi (余干縣協鑫新能源有限責任公司) II Ningxia Jinxin Photovoltaic Power Co., Ltd. Ningxia (寧夏金信光伏電力有限公司) III Ningxia Lvhao Photovoltaic Power Generation Co., Ltd. Ningxia (寧夏綠昊光伏發電有限公司) IV Hami Orui Photovoltaic Power Generation Co., Ltd. Xinjiang (哈密歐瑞光伏發電有限公司) V Hami Yaohui Photovoltaic Power Co., Ltd. Xinjiang (哈密耀輝光伏電力有限公司) VI Ningxia Jinli Photovoltaic Power Co., Ltd. Ningxia (寧夏金禮光伏電力有限公司)

For further information relating to the Target Companies, please refer to the section headed “Information on the Target Companies” below.

Consideration

The aggregate Consideration under the First Phase Share Purchase Agreements is RMB850,500,000.

The table below sets out the Share Price of each of the Target Companies:

First Phase Share Purchase Agreements I II III IV V VI Total	Share Price RMB 377,400,000 152,000,000 26,700,000 16,400,000 117,700,000 160,300,000
	850,500,000

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LETTER FROM THE BOARD

Basis of the Consideration

The Share Price was determined after arm’s length negotiations between the Sellers and the Purchasers, taking into account of, among other things:

(i) the location of the solar power plants owned by the Target Companies;
(ii) the net asset value of each of the Target Companies as at the Reference Date (i.e. 30 September 2019);
(iii) the profitability of the Target Companies for the financial years ended 31 December 2017 and 31 December 2018 and the nine months ended 30 September 2019, details of which can be found in the section headed “Information on the Target Companies” of this circular;
(iv) the cash flow position of the Target Companies as at the Reference Date. The aggregate net cash outflow of the Target Companies for the nine months ended 30 September 2019 amounted to approximately RMB82,473,000; and
(v) the delay in future payments of national subsidy. As explained in the 2019 interim report of GNE, substantial development of solar power installed capacities in the PRC in the past few years has widen the funding deficit of National Renewable Energy Development Fund, a fund established by the PRC government for the provision of national subsidy to renewable energy investments. Therefore, solar energy operators in the PRC which were registered in the 6th and 7th batches of National Renewable Energy Tariff Surcharge Subsidy Catalogue (可再生能源電價附加資金補助目錄) (the “ National Subsidy Catalogue ”) (including the Target Companies) have experienced a substantial delay of national subsidy being received. The balances of national subsidy receivable by the GNE Group increased from RMB4,244 million as at 31 December 2017 to RMB6,780 million as at 31 December 2018 and further increased to RMB8,236 million as at 31 December 2019. The total balance of national subsidy receivable by the Target Companies was approximately RMB473,902,000 as at the Reference Date and approximately RMB445,349,000 as at 31 December 2019. While the Target Companies are entitled to receive the national subsidy for operating the power plants registered in the National Subsidy Catalogue, there has been an overdue of the payment of such national subsidy receivable by the Target Companies for approximately 1 to 2 years and the actual payment date of such national subsidy remains to be uncertain. Although such national subsidy receivable has been recognized as revenue in its audited accounts, the cash flow position of the Target Companies has been negatively affected due to the long overdue of the payment of national subsidy. As revenue from national subsidy forms a relatively large proportion of income of the Target Companies (amounting to approximately 60% for the year ended 31 December 2019), any future delay in payment of the national subsidy will ultimately harm the future financial performance of the Target Companies, the parties have thus also taken into account of such potential delay when determining the amount of Consideration payable.
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LETTER FROM THE BOARD

The total Consideration represents an overall discount of approximately 10% of the net asset value of the Target Companies and approximately 7.2 times of the aggregated profit before tax of the Target Companies for the year ended 31 December 2019.

Some of the solar power plants in Ningxia and Xinjiang in the PRC were developed by the Target Companies in anticipation of future demands for electricity and potential development of government policies (the “ Restricted Capacity Solar Power Plants ”). However, the sale of electricity generated from the Restricted Capacity Solar Power Plants has been affected by the following factors:

(a) Severe air pollution

Air pollutants in Ningxia in the PRC act as physical barriers which will block the sunlight from reaching certain solar panels located within the area, resulting in the underperformance of such solar panels.

(b) Solar power curtailment

Electricity generated from solar power plants in Xinjiang in the PRC cannot be fully consumed locally and the excess electricity generated within the area cannot be transmitted to other areas in the PRC with higher power demand given limited power transmission capacity.

As a result, the income and profitability of the Restricted Capacity Solar Power Plants are restricted, as the actual amount of electricity being sold is less than the maximum amount of electricity expected to be generated and sold from the Restricted Capacity Solar Power Plants based on their installed capacities, the shortfall of which ranges from 3.7% and 15.3% between 2018 and 2019, which in turns lower the desirability for potential purchasers to acquire such solar power plants

As such, the Transactions involved the bundling of solar power plants developed in areas that are more desirable to potential purchasers and the Restricted Capacity Solar Power Plants, so as to increase the marketability of the Restricted Capacity Solar Power Plants and to assist the transformation of the GNE Group into an asset-light model and reduce the GNE Group’s risk exposure in its investment in the Restricted Capacity Solar Power Plants.

Considering the factors set out above, and the reasons set out in the section “Reasons and Benefits of the Transactions” set out below, the GNE Directors and the Directors are of the view that the Consideration is fair and reasonable.

Payment arrangements of the Consideration

The aggregate Consideration under the First Phase Share Purchase Agreements shall be paid by the Purchasers to the Sellers in the following manner:

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LETTER FROM THE BOARD

First instalment

The Purchasers shall pay 80% of the Share Price (the “ First Instalment ”) to the Sellers within 15 Business Days after the Closing Date. The First Instalment amounts to approximately RMB680,400,000.

Huaneng No. 1 Fund shall pay 60% of the First Instalment to the Sellers, amounting to approximately RMB408,240,000 and Huaneng No. 2 Fund shall pay 40% of the First Instalment to the Sellers, amounting to approximately RMB272,160,000.

Second instalment

The Purchasers shall pay the remaining Share Price, being 20% of the Share Price (the “ Second Instalment ”), to the Sellers within 15 Business Days after the fulfilment or waiver by the Purchasers in writing of the following conditions:

(a) the issuance of the Closing Audit Report; and (b) the delivery and/or the execution of the following documents:
(i) the relevant documents evidencing the fulfillment of conditions (b) to (h) of the Conditions Precedent and the Seller’s confirmation of the fulfillment of conditions (i) to (j) of the Conditions Precedent (assuming none of the conditions have been waived by the Purchasers);
(ii) the relevant documents evidencing the completion of the Registration Procedures; and
(iii) other documents, materials and items specified in the First Phase Share Purchase Agreements.

The Second Instalment amounts to approximately RMB170,100,000. Huaneng No. 1 Fund shall pay 60% of the Second Instalment to the Sellers, amounting to approximately RMB102,060,000 and Huaneng No. 2 Fund shall pay 40% of the Second Instalment to the Sellers, amounting to approximately RMB68,040,000.

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LETTER FROM THE BOARD

Total Outstanding Balance

The Total Outstanding Balance is the outstanding balance of the Total Net Receivable Amount receivable by the Target Companies from its affiliates (including the Sellers) and the Total Net Payable Amount payable by the Target Companies to its affiliates (including the Sellers). The Total Outstanding Balance as at the Reference Date was approximately RMB149,632,960.

The table below sets out the Amount Payable, Amount Receivable, and Net Payable Amount or Net Receivable Amount (the deduction of the Total Net Payable Amount from the Total Net Receivable Amount constitutes the Total Outstanding Balance) of each of the Target Companies under each of the First Phase Share Purchase Agreements as at the Reference Date:

			Net Payable
			Amount/(Net
First Phase	Amount Payable of	Amount Receivable	Receivable Amount)
Share Purchase	the Target	of the Target	of the Target
Agreements	Companies	Companies	Companies
	RMB	RMB	RMB
I	18,759,396	–	18,759,396
II	121,470	(33,790,121)	(33,668,651)
III	38,313,492	(200,000)	38,113,492
IV	62,921,200	–	62,921,200
V	58,853,417	(412,800)	58,440,617
VI	5,356,906	(290,000)	5,066,906
Total	184,325,881	(34,692,921)	149,632,960

The Total Outstanding Balance as set out in the above table was estimated based on the carrying amount of the Total Outstanding Balance of the Target Companies as at the Reference Date (on a dollar-for-dollar basis). The final Total Outstanding Balance will be determined in accordance to the Closing Audit Report (subject to adjustment), and will be calculated based on the carrying amount of the Total Outstanding Balance of the Target Companies as at the Closing Date (on a dollar-for-dollar basis), taking into account of the interests incurred on the interest-bearing Amount Payable of all of the Target Companies at the interest rate of 4.9% for the period from the Reference Date to the Closing Date. In the case that the original interest rate is less than 4.9%, the interest shall be calculated at the original interest rate. The interest rate of 4.9% was determined based on the current applicable benchmark lending rate promulgated by the People’s Bank of China for a term of over 5 years. The GNE Directors and the Directors believe and consider that such interest rate is fair and reasonable.

Upon completion of the Transactions, the Target Companies will continue to remain primarily liable for the Total Outstanding Balance. To simplify the repayment process of the Total Outstanding Balance, prior to the completion of the Transactions, all debts and liabilities owed by the Target Companies to its affiliates (including the Sellers and other subsidiaries of GNE), being the Amount

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LETTER FROM THE BOARD

Payable of all of the Target Companies, shall all be consolidated and classified as liabilities of the Target Companies payable to the Sellers and all debts and liabilities received by the Target Companies from its affiliates (including the Sellers and other subsidiaries of GNE), being the Amount Receivable of all of the Target Companies, shall be consolidated and classified as assets of the Target Companies receivable from the Sellers.

In addition, since the control of the Target Companies will be transferred from the Sellers to the Purchasers, the Purchasers shall also assume the obligation to procure the gradual payment of the Total Outstanding Balance and its interests by the Target Companies to the Sellers from the Closing Date onwards and the full payment of the Total Outstanding Balance and its interests by the Target Companies to the Sellers within 3 months from the Closing Date. The specific repayment timeline shall be determined by the Sellers and the Purchasers based on the financial status of the Target Companies such as cash flows and funding pressure after the Closing Date.

In the event that the Purchasers fail to procure the Target Companies to repay the Total Outstanding Balance in accordance with the First Phase Share Purchase Agreements, the Sellers shall be entitled to claim liquidated damages at a rate of 0.02% of the unpaid portion of the Total Outstanding Balance against the Purchasers for each overdue day until the day of full settlement of the Total Outstanding Balance.

Other Undertakings

The Sellers and the Purchasers agreed to be subject to the following undertakings:

(i) in the event that any of the Target Companies provides any debt guarantees to any third party prior to the Closing, the Sellers undertake to execute the relevant legal documents that are necessary to release or terminate such guarantees before the Closing. Within 6 months from the Closing Date, the Purchasers undertake to procure the Target Companies’ early repayment of their liabilities owed to financial institutions in order to release the guarantees provided by the Sellers or its affiliates in respect of such liabilities. As at the Latest Practicable Date, the Target Companies have not provided or intended to provide debt guarantees to any third parties;
(ii) the Purchasers shall be entitled to set off any amount payable by the Sellers as set out in the First Phase Share Purchase Agreements (including default payment, damages, compensation and other fees) with any of amounts payable by the Purchasers or the Target Company in relation to the Transactions (including the Share Price, the Total Outstanding Balance and the dividends); and
(iii) the Target Companies will pay the outstanding dividends as at the Reference Date of approximately RMB82,907,700 to the Sellers, subject to the progress of reimbursement of the national subsidy receivable under the National Renewable Energy Tariff Surcharge Subsidy Catalogue (可再生能源電價附加資金補助目錄) (the “ National Subsidy Catalogue ”) by the PRC government as explained in the paragraphs headed “Payment of outstanding dividends as at the Reference Date” below.
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LETTER FROM THE BOARD

Payment of outstanding dividends as at the Reference Date

As all the solar power plants of the Target Companies have fulfilled the specified conditions under the National Subsidy Catalogue and are currently registered in the 6th and 7th batches of National Subsidy Catalogue (under the Renewable Energy Law (中華人民共和國可再生能源法) promulgated on 28 February 2005 and implemented on 1 January 2006, on-grid tariff of renewable energy power generation projects shall be determined by competent pricing department of the State Council in the PRC. In August 2013, the NDRC issued the price reform (Reform [2013] No.1638) which stipulated that where the benchmark grid price of solar power plant is higher than that of the local coal-fired unit benchmark price, the national renewable energy development fund shall subsidise enterprises the difference between the benchmarked prices once they have satisfied the conditions for entering and have been registered under the National Subsidy Catalogue), all the Target Companies are expected to receive subsidy payment from the PRC government without further condition within the next twelve months. As such, the Sellers and Purchasers have agreed that (having confirmed with the auditors of the Target Companies) such national subsidies receivable can be recognized as revenue and amounts receivable in the audited accounts of the Target Companies as at the Reference Date.

However, to balance against the potential risks that the ultimate payment of the subsidy by the government may be delayed, the Purchasers and the Sellers have agreed that the payment of the outstanding dividends as at the Reference Date (which is approximately RMB82,907,700) by the Target Companies to the Sellers shall correspond with the progress of reimbursement of the national subsidy and the amount of outstanding dividends payable by the Target Companies to the Sellers each time upon the Target Companies’ receipt of the national subsidy shall be proportionate to the respective amount of outstanding national subsidy receivable by the Target Companies.

Conditions precedent

Closing under each of the First Phase Share Purchase Agreements is subject to the fulfilment or (if applicable) waiver of certain Conditions Precedent:

(a) the Sellers have duly executed and delivered to the Purchasers all the transaction documents in relation to the Transactions to which they act as parties;
(b) the Sellers have approved the Transactions;
(c) GNE and the Company have obtained board approval and shareholders’ approval in respect of the Transactions;
(d) the Target Companies have completed replacement of its directors, supervisors, senior management and legal representative;
(e) the equity pledges of the Target Companies have been released;
(f) consents from the creditors of the Target Companies have been obtained for the Transactions;
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LETTER FROM THE BOARD

(g) consolidation of debts and liabilities of affiliated parties of the Target Companies as set out in the section headed “Total Outstanding Balance” in this circular and the First Phase Share Purchase Agreements has been completed;
(h) the arrangement in respect of the personnel reorganization of the Target Companies as agreed by the Sellers and the Purchasers has been completed;
(i) there has been no event which might render the Closing impracticable or illegal, including any event which has material adverse effect on the Target Companies; and
(j) there has been no law, judgment, decision, prohibition or order made by relevant authorities restricting, prohibiting or cancelling the transfer of the Sale Shares.

The Sellers undertake to the Purchasers that all of the Conditions Precedent shall be fulfilled or waived (as the case may be) within 60 days from the date of the First Phase Share Purchase Agreements or such other date (the “ Conditions Precedent Fulfilment Date ”) as agreed by the Sellers and the Purchasers. If any of the Conditions Precedent cannot be fulfilled or waived (as the case may be) within 90 days from the date of the First Phase Share Purchase Agreements or such other date as agreed by the Sellers and the Purchasers, the Purchasers shall be entitled to terminate the First Phase Share Purchase Agreements or waive any of the Conditions Precedent that has not been fulfilled. As none of the Conditions Precedents relate to obligations of the Purchasers, none of the Conditions Precedent are waivable by the Sellers.

If any of the Conditions Precedent cannot be fulfilled before the Conditions Precedent Fulfilment Date, the Purchasers shall be entitled to require the Sellers to pay a default payment equivalent to 0.02% of the Share Price for each day of delay, subject to an accumulated cap of 0.5% of the Share Price. If the failure to fulfill conditions (e) and (f) above leads to such delay, the Purchasers agreed not to charge the Sellers the above-mentioned default payment.

As at the Latest Practicable Date, conditions (a), (b), (g) and (h) above have been satisfied.

Closing

Closing shall take place within five Business Days (or any other date as agreed by the Sellers and the Purchasers) after all of the Conditions Precedent have been fulfilled or waived (as the case may be).

The date of issuance as stated on the new business certificate of each of the Target Companies upon the completion of the Registration Procedures shall be the Closing Date for each of the transaction contemplated under each of the First Phase Share Purchase Agreements.

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Closing Audit Report

Pursuant to the First Phase Share Purchase Agreements, the Sellers and the Purchasers shall engage an auditing agency to audit the financial condition of the Target Companies for the period from the Reference Date (i.e. 30 September 2019) to the Closing Date and prepare the Closing Audit Report within 30 days after the Closing Date.

Guarantee

Pursuant to the First Phase Share Purchase Agreements, the Guarantor agreed to provide a guarantee to secure the due performance by the Sellers of their obligations under the First Phase Share Purchase Agreements.

Grant of Put Options

(a) Repurchase of Target Companies

Within five years from the Closing Date, the Sellers shall be required to repurchase the entire equity interest in the respective Target Company(ies) and any unpaid shareholders’ loan advanced to the respective Target Company(ies) by the Purchasers in accordance with each First Phase Share Purchase Agreements (the “ Repurchase ”) upon the exercise of the Put Options by the Purchasers, upon the occurrence of any of the following events in relation to the relevant Target Company(ies);

(i) failure to obtain relevant compliance documents or pay the relevant fees in accordance with the requirements of applicable laws before the Closing Date which cause the suspension of the operation of the solar power plant(s) of the relevant Target Company(ies) and the operation failing to resume within 6 months;
(ii) engineering quality matters and/or major irreparable defects or safety hazards of the main equipment of the solar power plant(s) existed before the Closing Date which cause the suspension of the operation of the solar power plant(s) of the relevant Target Company(ies) and the operation failing to resume within 6 months;
(iii) the relevant Target Company(ies) being unable to receive the national subsidy from the PRC government, the total amount of which amounts to approximately RMB473,902,000 within 4 years from the Closing Date; and
(iv) material breach of the relevant First Phase Share Purchase Agreement(s) by the Sellers which frustrates the purpose of the Transactions.
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LETTER FROM THE BOARD

(b) Repurchase price

The repurchase price for the Target Companies (the “ Repurchase Price ”) shall be calculated in the following manner (whichever is higher):

(a) the amount equivalent to the valuation of the shareholders’ rights and interests of the Target Companies as stated under the repurchase valuation report to be filed to the relevant PRC state assets regulatory authorities; or
(b) the amount equivalent to the aggregation of (i) the Share Price paid by the Purchasers and subsequent capital contribution to the Target Companies by the Purchasers (excluding the shareholders’ loan to the Target Companies by the Purchasers), plus (ii) the expected investment income of the Purchasers, less (iii) any dividend of the Target Companies actually paid to the Purchasers after the Closing Date, less (iv) any amount paid by the Sellers prior to the Repurchase to the Purchasers (including default payment, damages and compensation, but excluding any amount paid by the Sellers prior to the Repurchase to the Target Companies).

The expected investment income = the Share Price paid by the Purchasers (or the amount of capital contribution by the Purchasers to the Target Companies) x 4.9% x the number of days since the Purchasers actually paid the Share Price or the amount of capital contribution until the date of the payment of the Repurchase Price by the Sellers/ 360 days.

As the current applicable benchmark lending rate promulgated by the People’s Bank of China for a term of over 5 years is 4.9%, the GNE Directors and the Directors believe and consider that it is fair and reasonable to adopt 4.9% as the annual rate of the expected investment income under the Put Options.

3. INFORMATION ON THE GROUP, THE GNE GROUP AND THE SELLERS

The Group

The Company is an exempted company with limited liability incorporated in the Cayman Islands. The principal business of the Company is investment holding.

The Group is principally engaged in the manufacturing and sale of polysilicon and wafers products, and developing, owning and operation of solar farms. As at the Latest Practicable Date, the Company is interested in approximately 62.28% of the issue share capital of GNE.

The GNE Group

GNE is incorporated in Bermuda as exempted company with limited liability. The principal business of GNE is investment holding.

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The GNE Group is principally engaged in the sale of electricity, development, construction, operation and management of solar power plants. As at the Latest Practicable Date, GNE is owned as to approximately 62.28% by the Company.

Ningxia GCL New Energy

Ningxia GCL New Energy is a company incorporated in the PRC with limited liability and an indirect subsidiary of GNE and the Company. Ningxia GCL New Energy indirectly owns the solar power plant project of Ningxia Jinli.

Suzhou GCL New Energy

Suzhou GCL New Energy is a company incorporated in the PRC with limited liability and an indirect subsidiary of GNE and the Company. Suzhou GCL New Energy owns a majority of solar power plants of GNE in the PRC.

4. INFORMATION ON THE PURCHASERS

Huaneng No. 1 Fund

Huaneng No. 1 Fund is a limited partnership established in the PRC which was formed to invest in equities, investment instruments or vehicles related to debt-for-equity swap that are in compliance with the relevant laws, regulations and regulatory requirements.

The general partners of Huaneng No. 1 Fund are (i) Tianjin Huajing Shunhe New Energy Technology Development Co., Ltd. (天津華景順和新能源科技發展有限公司), a company established in the PRC which principally engages in technical services, development, consultation, communication, transfer and promotion etc., and is indirectly held as to (a) 50% by Huaneng Capital Services Limited (華能資本服務有限公司) (which is owned as to approximately 61% by China Huaneng Group as its ultimate beneficial owner managed by the State Council of the PRC) and (b) 50% by Invesco WLR Limited (a company established in Hong Kong and its ultimate beneficial owner is Invesco Ltd. (a company listed in New York, the United States, with New York Stock Exchange stock code IVZ)) and (ii) ICBC Capital Management Co., Ltd. (工銀資本管理有限公司), a company established in the PRC which principally engages in asset management, investment management, investment consultation and equity investment, whose ultimate beneficial owner is Industrial and Commercial Bank of China Limited (a company listed in Shanghai, the PRC and Hong Kong, with the respective stock codes being 601398 and 1398).

The limited partners of Huaneng No. 1 Fund are (i) China Huaneng Group, which owns a majority of properties in Huaneng No. 1 Fund and (ii) ICBC Financial Assets Investment Co., Ltd.* (工銀金融資產投資有限公司) (a company established in the PRC which principally engages in acquisition of debts owed by enterprises to banks for the purpose of debt-for-equity swap, so as to convert the credit rights into equities and manage such equities, and its ultimate beneficial owner is Industrial and Commercial Bank of China Limited (a company listed in Shanghai, the PRC and Hong Kong, with the respective stock codes being 601398 and 1398).

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LETTER FROM THE BOARD

Huaneng No. 1 Fund is owned as to approximately 51% by China Huaneng Group and approximately 49% by ICBC Financial Assets Investment Co., Ltd.* (工銀金融資產投資有限公司).

Huaneng No. 2 Fund

Huaneng No. 2 Fund is a limited partnership established in the PRC which was formed to invest in equities, investment instruments or vehicles related to debt-for-equity swap that are in compliance with the relevant laws, regulations and regulatory requirements.

The general partners of Huaneng No. 2 Fund are (i) Tianjin Huajing Shunhe New Energy Technology Development Co., Ltd. (天津華景順和新能源科技發展有限公司), a company established in the PRC which principally engages in technical services, development, consultation, communication, transfer and promotion etc., and is indirectly held as to (a) 50% by Huaneng Capital Services Limited (華能資本服務有限公司) (which is owned as to approximately 61% by China Huaneng Group as its ultimate beneficial owner managed by the State Council of the PRC) and (b) 50% by Invesco WLR Limited (a company established in Hong Kong and its ultimate beneficial owner is Invesco Ltd. (a company listed in New York, the United States, with New York Stock Exchange stock code IVZ)) and (ii) ICBC Capital Management Co., Ltd. (工銀資本管理有限公司), a company established in the PRC which principally engages in asset management, investment management, investment consultation and equity investment, whose ultimate beneficial owner is Industrial and Commercial Bank of China Limited (a company listed in Shanghai, the PRC and Hong Kong, with the respective stock codes being 601398 and 1398).

The limited partners of Huaneng No. 2 Fund are (i) China Huaneng Group, which owns a majority of properties in Huaneng No. 2 Fund and (ii) ICBC Financial Assets Investment Co., Ltd.* (工銀金融資產投資有限公司) (a company established in the PRC which principally engages in acquisition of debts owed by enterprises to banks for the purpose of debt-for-equity swap, so as to convert the credit rights into equities and manage such equities, and its ultimate beneficial owner is Industrial and Commercial Bank of China Limited (a company listed in Shanghai, the PRC and Hong Kong, respectively, with the respective stock codes being 601398 and 1398).

Huaneng No. 2 Fund is owned as to approximately 51% by China Huaneng Group and approximately 49% by ICBC Financial Assets Investment Co., Ltd.* (工銀金融資產投資有限公司).

CLSA Capital Markets is the exclusive financial adviser to the Purchasers.

To the best of the Directors and the GNE Directors’ knowledge, information and belief after having made all reasonable enquiries, the Purchasers, the general partners and the limited partners of the Purchasers and their ultimate beneficial owners are third parties independent of the Company and GNE and their connected persons.

5. INFORMATION ON THE TARGET COMPANIES

The table below sets out the information on the Target Companies under each of the First Phase Share Purchase Agreements:

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First Phase Share Purchase Agreements

I

II

III

IV

V

VI

Information on the Target Companies

Yuganxian is a company incorporated in the PRC with limited liability and is principally engaged in the construction, operation and providing technical advisory services of photovoltaic projects in the PRC. Yuganxian is an indirect subsidiary of GNE and the Company.

Ningxia Jinxin is a company incorporated in the PRC with limited liability and is principally engaged in the development and providing technical advisory services of photovoltaic projects in the PRC. Ningxia Jinxin is an indirect subsidiary of GNE and the Company.

Ningxia Lvhao is a company incorporated in the PRC with limited liability and is principally engaged in the development, construction and operation of photovoltaic projects in the PRC. Ningxia Lvhao is an indirect subsidiary of GNE and the Company.

Hami Orui is a company incorporated in the PRC with limited liability and is principally engaged in the development, investment, construction and operation of photovoltaic projects in the PRC. Hami Orui is an indirect subsidiary of GNE and the Company.

Hami Yaohui is a company incorporated in the PRC with limited liability and is principally engaged in the investment, construction and providing technical advisory services of photovoltaic projects in the PRC. Hami Yaohui is an indirect subsidiary of GNE and the Company.

Ningxia Jinli is a company incorporated in the PRC with limited liability and is principally engaged in the development and providing technical advisory services of photovoltaic projects in the PRC. Ningxia Jinli is an indirect subsidiary of GNE and the Company.

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Set out below is an extract of the audited financial statements prepared for the financial years ended 31 December 2017 and 31 December 2018 and the unaudited management accounts for the nine months ended 30 September 2019 and the financial year ended 31 December 2019 of the Target Companies prepared in accordance with China Accounting Standards:

		Year ended		Nine months ended	Nine months ended		Year ended		Year ended
		31 December 2019		30 September 2019			31 December 2018		31 December 2017
First Phase
Share Purchase	Target	Profit before	Profit after	Profit before	Profit after		Profit before	Profit after	Profit before	Profit after
Agreements	Companies	taxation	taxation	taxation	taxation		taxation	taxation	taxation	taxation
		RMB’000	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000	RMB’000
I	Yuganxian	51,588	45,139	39,351		34,432	76,626	76,626	50,235	50,235
II	Ningxia Jinxin	18,289	16,989	15,574		14,406	17,266	15,889	12,188	12,188
III	Ningxia Lvhao	5,459	5,060	5,326		4,926	4,025	4,025	4,631	4,631
IV	Hami Orui	6,318	6,172	5,274		4,878	2,827	2,826	1,046	1,046
V	Hami Yaohui	17,132	15,837	14,386		13,550	11,201	10,749	13,287	13,287
VI	Ningxia Jinli	18,707	17,336	16,094		14,887	15,600	14,390	10,023	10,023

As at 30 September 2019 and 31 December 2019, the aggregate net asset value of the Target Companies amounted to approximately RMB925,076,000 and RMB944,531,000, respectively. As at the Latest Practicable Date, upon a review of the unaudited management account of the Target Companies for the year ended 31 December 2019, the GNE Directors and the Directors are not aware of any material change in operating and/or financial condition of the Target Companies since the Reference Date. The GNE Directors and the Directors therefore consider that the Consideration remains to be fair and reasonable.

6. FINANCIAL IMPACT OF THE TRANSACTIONS

After the Closing Date, the Target Companies will cease to be subsidiaries of the GNE Group and the Group, and the profits and loss, as well as the assets and liabilities of the Target Companies will no longer be consolidated into the consolidated financial statements of the GNE Group and the Group.

As at the Latest Practicable Date, it is estimated that the GNE Group and the Group will realise a net loss on the Disposals of approximately RMB76,576,000, which is calculated by reference to the difference between the Share Price consideration of approximately RMB850,500,000 and the net asset value of the Target Companies of approximately RMB925,076,000 based on the unaudited financial information of the Target Companies as at 30 September 2019, after deducting related transaction costs of the Disposals of approximately RMB2,000,000. The actual gain or loss as a result of the Disposals to be recorded by the GNE Group and the Group is subject to audit and will be reassessed based on the net asset value of the Target Companies as at the Closing Date in accordance with the Closing Audit Report.

Despite the net loss on the Disposals, having taking into consideration of the reasons for the Disposals as stated under the paragraphs headed “Reasons and Benefits of the Transactions” below, the GNE Group and the Group are of the view that the Disposals will be in the interests of the GNE Group and the Group and their shareholders respectively as a whole as it will improve the cash flow position of the GNE Group and the Group in the long run.

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7. USE OF PROCEEDS FROM THE TRANSACTIONS

The net cash proceeds (net of estimated taxes and transaction costs) from the Transactions (including the Consideration, the Total Outstanding Balance and the payment of outstanding dividends from the Target Companies) is expected to be approximately RMB1,081,041,000, which GNE intends to use for repayments of its debts.

8. REASONS AND BENEFITS OF THE TRANSACTIONS

As part of its “transformation and upgrade” development objective, GNE has been taking steps towards transforming to an asset-light model. Upon completion of the Transactions, the Target Companies will no longer be subsidiaries of the GNE Group and the Group, and the profits and loss as well as the assets and liabilities of the Target Companies will no longer be consolidated into the consolidated financial statements of the GNE Group and the Group. The cash derived from the Transactions amounted to approximately RMB1,081,041,000, which will be used for repayment of debts. Accordingly, the liabilities of the GNE Group and the Group will decrease by approximately RMB2,664,679,000. The gearing ratio of the GNE Group will decrease by approximately 1%, calculated with reference to the audited financial statements of the GNE Group as at 31 December 2019, effectively reducing the financial risks.

After the completion of the Transactions, the GNE Group and China Huaneng Group will further explore other co-operation opportunities, including but not limited to, in relation to the GNE Group’s existing solar power plants in the PRC. GNE and China Huaneng Group are proactively promoting other phases of disposals, and plan to reach and execute more agreements in relation to disposals of solar power plants in the near future.

Based on the above reasons and having considered all relevant factors, the GNE Directors believe and consider that the terms of the Transactions are on normal commercial terms, are fair and reasonable and that the entering into of the First Phase Share Purchase Agreements is in the interests of GNE and the GNE Shareholders as a whole.

Based on the views of the GNE Directors and having considered all relevant factors, the Directors believe and consider that the terms of the Transactions are on normal commercial terms, are fair and reasonable and that the entering into of the First Phase Share Purchase Agreements is in the interests of the Company and the Shareholders as a whole.

9. LISTING RULES IMPLICATIONS

As the Sellers, being indirect subsidiaries of the Company, entered into the Disposals with the Purchasers within a 12-month period, the Disposals shall be aggregated as a series of transactions for the Company pursuant to Rule 14.22 of the Listing Rules.

Since the highest of the applicable percentage ratios in respect of the aggregate consideration of the Disposals is over 5% but less than 25%, the entering into of the Disposals constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements but exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules.

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As the Sellers, being indirect subsidiaries of the Company, entered into the Put Options with the Purchasers within a 12-month period, the Put Options shall be aggregated as a series of transactions for the Company pursuant to Rule 14.22 of the Listing Rules.

The Put Options are exercisable at the discretion of the Purchasers upon the occurrence of certain specified events, with the exercise price for the Put Options to be determined in accordance with the terms of the First Phase Share Purchase Agreements. As the actual monetary value of the exercise price of the Put Options are not known at the time of granting the Put Options, the grant of the Put Options shall be classified as at least a major transaction for the Company pursuant to Rule 14.76(1) of the Listing Rules. The grant of the Put Options is therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. In the event that the Put Options are to be exercised by the Purchasers in accordance with the terms of the First Phase Share Purchase Agreements, the Company shall comply with the relevant reporting, announcement and shareholders’ approval requirements (if any) under Chapter 14 of the Listing Rules.

10. THE EGM

Set out on pages EGM-1 to EGM-3 of this circular is a notice convening the EGM to be held at Strategy II-III, Level 8, W Hong Kong, 1 Austin Road West, Kowloon Station, Kowloon, Hong Kong on Thursday, 21 May 2020 at 11:30 a.m..

At the EGM, ordinary resolution(s) for approving the Transactions and the entering into and performance of obligations under the First Phase Share Purchase Agreements will be proposed for the Shareholder’s approval.

The resolutions will be voted by way of poll at the EGM. As at the Latest Practicable Date, no Shareholder has material interest in the Transactions (other than being a Shareholder) and therefore no Shareholder is required to abstain from voting on the relevant resolution(s) at the EGM.

A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, please complete the form of proxy in accordance with the instructions printed thereon and deposit the same at the Hong Kong branch share registrar and transfer office of the Company, Tricor Investor Services Limited, as soon as possible and in any event by not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. The address of Tricor Investor Services Limited is Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM should you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

11. CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 18 May 2020 to 21 May 2020, both days inclusive, during which period no transfer of Shares will be registered, in order to determine the entitlement to attend and vote at the EGM. In order to be entitled to attend and vote at the EGM, unregistered holders of Shares should ensure that all transfers of Shares accompanied by the relevant share

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LETTER FROM THE BOARD

certificates and properly completed transfer forms must be lodged for registration with the Hong Kong branch share registrar and transfer office of the Company, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, no later than 4:30 p.m. on 15 May 2020.

12. RECOMMENDATION

The Directors are of the view that the terms of the Transactions are fair and reasonable, and are on normal commercial terms and that the entering into of the First Phase Share Purchase Agreements is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution(s) to approve the Transactions and the entering into and performance of obligations under the First Phase Share Purchase Agreements as set out in the notice of the EGM.

13. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully, By order of the Board

GCL-Poly Energy Holdings Limited 保利協鑫能源控股有限公司 Zhu Gongshan Chairman

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for the years ended 31 December 2017, 31 December 2018 and 31 December 2019 together with the relevant notes thereto are disclosed in the following documents, which were published on both the Stock Exchange’s website (www.hkexnews.hk) and the Company’s website (www.gcl-poly.com.hk):

the annual report of the Company for the year ended 31 December 2017 published on 16 April 2018 (pages 108 – 276);
the annual report of the Company for the year ended 31 December 2018 published on 26 April 2019 (pages 118 – 351); and
the annual report of the Company for the year ended 31 December 2019 published on 29 April 2020 (page 162-376).

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES

At the close of business on 29 February 2020, being the latest practicable date for the purpose of this indebtedness statement, the Group had the following outstanding borrowings:

		The Group
	Secured	Unsecured	Total
	RMB’000	RMB’000	RMB’000
Carrying amount of bank and other
borrowings	42,152,800	5,264,055	47,416,855
Principal amount of notes and bonds
payable	–	3,926,733	3,926,733
Carrying amount of loans from related
companies	601,394	1,145,643	1,747,037
Lease liabilities	1,093,938	1,324,441	2,418,379
	43,848,132	11,660,872	55,509,004

The Group’s secured borrowings were secured, individually or in combination, by (i) certain property, plant and equipment, investment properties and right-of-use assets of the Group; (ii) certain pledged bank and other deposits of the Group; (iii) certain subsidiaries’ trade receivables, contract assets and fee collection rights in relation to the sales of electricity; (iv) amount due from an associate; and (v) certain equity interests in some project companies of the Group.

At 29 February 2020, certain borrowings of the Group amounting to RMB35,855,774,000 are guaranteed individually or in combination by entities within the Group. The remaining indebtedness amounting to RMB19,653,230,000 are not guaranteed.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In addition, the Group received approval letter from the National Association of Financial Market Institutional Investors in relation to the issuance of medium-term notes for a term up to 3 years in the maximum principal amount of RMB3,000 million to qualifying investors, which was outstanding for issuance as at 29 February 2020.

At 29 February 2020, the Group provided a total guarantee of RMB10,154,111,000, RMB540,000,000 and RMB1,893,034,000 to banks and financial institutions in respect of banking facilities and financing arrangements of associates, third parties and the Target Companies, respectively. The associates, third parties and Target Companies had utilised RMB7,227,510,000, RMB527,821,000 and RMB1,340,298,000 in total of such facilities at 29 February 2020, respectively.

During the year ended 31 December 2019, GNE Group discounted certain bills provided by third parties for short-term financing, and the liabilities relating to these arrangements were fully settled to these relevant third parties during the year. As at 29 February 2020, these bills were not yet matured and outstanding. In accordance with the relevant regulations in the PRC, GNE Group, being an endorser of the bills, is jointly and severally liable if the relevant bills are not settled by the issuer upon maturity. However, in the opinion of the directors of GNE, the risk of default in payment of these bills is remote because they are guaranteed by reputable PRC banks. The maximum exposure to GNE Group that may result from the default of these outstanding bills was RMB1,119,928,000 as at 29 February 2020, representing the total face value of these outstanding bills.

Save as aforesaid or otherwise disclosed herein, and apart from intra-group liabilities and normal trade payables in the ordinary course of business, as at the close of business on 29 February 2020, the Group did not have any debt securities authorised or created but unissued, or any term loans, other borrowings or indebtedness in the nature of borrowing including bank overdrafts, loans, liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchase commitments, mortgages or charges, other material contingent liabilities or guarantees outstanding.

To the best of the knowledge of the Directors, having made all reasonable enquiries, there has been no material change in the level of indebtedness of the Group since 29 February 2020.

3. WORKING CAPITAL STATEMENT

As at 29 February 2020, the Group’s total borrowings comprising bank and other borrowings, notes and bonds payable, loans from related companies and lease liabilities amounted to approximately RMB55,509 million.

The Directors have reviewed the Group’s cash flow projections which cover a period of not less than twelve months from the date of this circular. The Directors after due and careful enquiry, are of the opinion that, after taking into account the net proceeds from the Disposals and the financial resources available to the Group, including cash and cash equivalents on hand, cash flows from operating activities and available credit facilities, and based on the assumptions that the following financing plans and measures can be successfully executed, the Group will have sufficient working capital for its operating requirements and to pay its financial obligations as and when they fall due and for at least the next twelve months from the date

I-2 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

of this circular, in the absence of unforeseeable circumstances. However, if any of the following matters become unsuccessful, the Group will not have sufficient working capital for at least the next twelve months from the date of this circular.

i. Successful implementation of measures of GNE Group

GNE Group proposed to issue medium-term notes with an aggregate principal amount of not exceeding RMB3,000 million to institutional investors of the national interbank bond market in the PRC before the expiry date in June 2020. It is expected that the notes will be issued in one or more tranches and that each tranche of the notes shall have a maturity of three years. GNE Group is also negotiating with banks and other financial institutions for credit facilities.

In addition, GNE Group is implementing business strategies, among others, to transform its heavy-asset business model to a light-asset model by (i) divesting certain of its existing wholly-owned power plant projects in exchange for cash proceeds and to improve GNE Group’s indebtedness position; and (ii) striving for providing plant operation and maintenance services to those divested power plants for additional operating cash flow to GNE Group.

On 18 November 2019, GNE and China Huaneng Group entered into a cooperation framework agreement (the “Cooperation Framework Agreement”) regarding the disposal of (i) certain solar power plants of GNE Group in the PRC (the “Power Plants”) or (ii) certain project companies of GNE Group which operate the Power Plants (the “Framework Disposal”).

GNE Group and China Huaneng Group are actively working together under the Cooperation Framework Agreement to explore other solar power plant assets for the Framework Disposal and will enter into other definitive agreements in respect of and in compliance with the Measures for the Supervision and Administration of State-Owned Assets (國有資產監督管理辦法) in the PRC, the relevant laws and regulations and the Listing Rules, in due course.

On 21 January 2020, GNE Group also entered into two share purchase agreements with 中核（南京）能源發展有限公司 CNI (Nanjing) Energy Development Company Limited to sell its entire equity interest in 阜陽衡銘太陽能電力有限公司 Fuyang Hengming Solar Power Co., Ltd. and 鎮江協鑫新能源有限公司 Zhenjiang GCL New Energy Co., Ltd. for a consideration in aggregate of RMB77,476,000 (the “Divestments”). Each of them has a solar power plant project with capacity of 20MW in operation. One of the Divestments is completed in 13 March 2020, while the remaining one is expected to complete before June 2020.

GNE Group still owns 176 solar power plants with an aggregate grid connected capacity of approximately 5.2GW upon completion of the Disposals and Divestments. Those operational solar power plants are expected to generate operating cash inflows to GNE Group.

ii. Successful implementation of other measures

The sufficiency of the Group’s working capital to satisfy its requirements for at least the next twelve months from the date of this circular is also dependent on the Group’s ability to generate adequate financing and operating cash flows through successful renewal of its bank borrowings upon

I-3 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

expiry, compliance with the covenants under the borrowing agreements or obtaining waiver from the relevant banks if the Group is not able to satisfy any of the covenant requirements, successful securing of the financing from banks with repayment terms beyond twelve months from the date of this circular, other short-term or long-term financing and equity issuance.

Notwithstanding the above, significant uncertainties exist as to whether the Group can achieve the plans and measures to generate adequate cash inflow as scheduled, failing which the Group will strive to meet the working capital sufficiency by continuous negotiations with banks to renew existing loans, exploring funding channels through equity and debt markets, and obtaining waiver from the relevant banks if the Group is not able to satisfy any of the covenant requirements. In particular, the Group has negotiated with certain banks and financial institutions for providing credit facilities in both on-shore and off-shore. The Group has also obtained direct confirmation from certain banks stating that they do not foresee any reason to withdraw the existing facilities in the near future. The Group will continue to negotiate with other banks to obtain credit facilities to ensure the Group’s bank borrowings can be renewed on an on-going basis.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Company since 31 December 2019, being the date to which the latest published audited financial results of the Group were made up.

5. FINANCIAL AND TRADING PROSPECTS

For the year ended 31 December 2019, the Group recorded a total revenue of approximately RMB19,250 million, whilst the total revenue from continuing operations for the year ended 31 December 2018 (the “ Prior Year ”) was approximately RMB20,565 million. Gross profit and gross profit margin for the year ended 31 December 2019 were approximately RMB4,678 million and 24.3% respectively, whilst the gross profit and gross profit margin for Prior Year were approximately RMB5,032 million and 24.5% respectively. Loss attributable to owners of the Company for the year ended 31 December 2019 amounted to approximately RMB197 million as compared to the loss attributable to owners of the Company of RMB693 million for the Prior Year.

The Group’s solar material business belongs to the upstream of the solar supply chain, which supplies polysilicon and wafer to companies operating in the solar industry. Polysilicon is the primary raw material used in the solar wafer production. In addition, the Group also produces wafer by using polysilicon that are produced by the Group. In the solar industry supply chain, wafers are further processed by downstream manufacturers to produce solar cells and modules. As at 31 December 2019, the annual production capacity of polysilicon of the Group’s Xuzhou base remained at 70,000 MT. As at 31 December 2019, the Group’s annual wafer production capacity reached 35 GW.

The Group’s solar farm business manages and operates 371 MW solar farms. As at 31 December 2019, the Group’s solar farm business includes 18 MW of solar farms in the United States and 353 MW of solar farms in the PRC.

I-4 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group’s new energy business represents the business operations of GCL New Energy, which is principally engaged in the development, construction, operation and management of solar farms. As at 31 December 2019, the aggregated installed capacity of the grid-connected solar farms of GNE Group was 7,145 MW.

The Group will continue to upgrade its existing diamond wire sawing technology in order to improve efficiency and reduce costs. Differentiating mono wafer ingot products will be developed according to market needs and products with a high cost performance will be introduced to the market with the help of the low-cost and high-quality Xinjiang intelligent production base as well as the mono wafer joint venture with Tianjin Zhonghuan Semiconductor Co., Ltd. The Group will steadily promote asset optimization in the Xuzhou production base and reduce its electricity cost with the aim of reinforcing its competitive strengths in anticipation of grid parity. The Group will also carry out resource sharing as well as platform, technological, capital and development co-operation through wider, stronger and deeper industry chain collaborations.

The outbreak of coronavirus disease (“ COVID-19 ”) in the PRC, which subsequently spread throughout other regions, has affected many businesses to different extent in early 2020. The respective governments in the PRC and other regions had implemented different types and levels of precautionary measures in an attempt to curb the spread of the pandemic. Hence, the Group’s ability to serve customers will largely depend on (i) the effectiveness of the government measures that have been implemented, (ii) continuous availability of workforce which may be affected by the temporary travel restrictions and home quarantine requirements, and (iii) customers’ confidence and demand which may be influenced by the market sentiments and economic performances in different jurisdictions.

Based on available information up to this date of this circular, the management of the Group considers that COVID-19 has limited impact on the Group’s solar farm business and new energy business, while the Group’s solar material business in the PRC are negatively affected. Given the dynamic nature of these circumstances, the related impact on our Group’s operations and financial position could not be reasonably estimated at this stage.

I-5 -

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executives’ interests and short positions in shares and underlying shares of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, were as follows:

Long position in the shares of the Company:

Name of Director/
chief executive
Zhu Gongshan
Zhu Zhanjun
Zhu Yufeng
Sun Wei
Yeung Man Chung, Charles
Jiang Wenwu
Zheng Xiongjiu
Ho Chung Tai, Raymond
Yip Tai Him

Number of ordinary shares held
Number of
underlying
Shares held
Approximate
percentage
of issued
shares capital
(note 3)
Beneficiary
of a trust
Corporate
interests
Personal
interest
Totals
6,370,388,156
(note 1)
–
–
–
6,370,388,156
32.11%
–
–
3,400,000
2,719,359
(note 2)
6,119,359
0.03%
6,370,388,156
(note 1)
–
–
1,510,755
(note 2)
6,371,898,911
32.11%
–
–
5,723,000
1,712,189
(note 2)
7,435,189
0.04%
–
1,700,000
(note 2)
1,700,000
0.01%
–
–
9,600,000
1,712,189
(note 2)
11,312,189
0.06%
–
–
250,000
2,517,924
(note 2)
2,767,924
0.01%
–
1,007,170
(note 2)
1,007,170
0.01%
–
–
–
1,007,170
(note 2)
1,007,170
0.01%

II-1 -

GENERAL INFORMATION

APPENDIX II

Notes:

(1) An aggregate of 6,370,388,156 shares of the Company are collectively held by Highexcel Investments Limited, Happy Genius Holdings Limited and Get Famous Investments Limited, which are whollyowned by Golden Concord Group Limited, which in turn is wholly-owned by Asia Pacific Energy Holdings Limited. Asia Pacific Energy Holdings Limited is in turn wholly-owned by Asia Pacific Energy Fund Limited. Asia Pacific Energy Fund Limited is ultimately held under a discretionary trust with Credit Suisse Trust Limited as trustee and Mr. Zhu Gongshan and his family (including Mr. Zhu Yufeng, a Director and the son of Mr. Zhu Gongshan) as beneficiaries.
(2) These are share options granted by the Company to the Directors, pursuant to the share option scheme adopted by the shareholders of the Company on 22 October 2007. Such granted share options can be exercised by the Directors at various intervals during the period from 15 March 2016 to 28 March 2026 at an exercise price of HK$1.324 or HK$1.160.
(3) The total number of ordinary shares of the Company in issue as at the Latest Practicable Date is 19,841,049,207.

Long position in the shares and underlying shares of the Company’s associated corporation, namely GNE, in which the Company indirectly holds approximately 62.28% issued shares:

Name of Director/
chief executive
Zhu Gongshan
Zhu Yufeng
Sun Wei
Yeung Man Chung, Charles

Number of ordinary shares of GNE held
Number of
underlying
Shares held
Approximate
percentage of
issued share
capital of GCL
New Energy
(note 3)
Beneficiary
of a trust
Corporate
interests
Personal
interests
Totals
1,905,978,301
(note 1)
–
–
–
1,905,978,301
9.99%
1,905,978,301
(note 1)
–
–
3,523,100
(note 2)
1,909,501,401
10.01%
–
–
–
27,178,200
(note 2)
27,178,200
0.14%
–
–
–
15,099,000
(note 2)
15,099,000
0.08%

Notes:

(1) 1,905,978,301 shares in GNE are beneficially owned by Dongsheng Photovoltaic Technology (Hong Kong) Limited (“ Dongsheng PV ”). Dongsheng PV is indirectly wholly-owned by GCL System Integration Technology Co., Ltd. (“ GCL System Integration ”) and an aggregate of over 40% of the issued shares in GCL System Integration is indirectly held by the Zhu Family Trust and Mr. Zhu Yufeng, an executive director of the Company and GNE and son of Mr. Zhu Gongshan, respectively.
(2) These are share options granted by GNE. Such granted share options can be exercised by Mr. Zhu Yufeng at the interval between 24 July 2015 and 23 July 2025 at an exercise price at HK$0.606 per share of GNE, and by Ms. Sun Wei and Mr. Yeung Man Chung, Charles at the interval between 24 November 2014 and 23 July 2025 at an exercise price of HK$1.1798 or HK$0.606 per share of GNE.
(3) The total number of ordinary shares of GNE in issue as at the Latest Practicable Date is 19,073,715,441.
II-2 -

APPENDIX II

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests and short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules.

(b) Interests of substantial shareholders

As at the Latest Practicable Date, so far as is known to the Directors, the following persons (other than a Director or chief executive of the Company) had interest in the Shares of the Company as recorded in the registered required to be kept by the Company under section 336 of the Part XV of the SFO:

				Approximate
			Number of	percentage of
			shares/	issued share
		Capacity/nature	underlying	capital of the
Name	Note	of interest	shares	Company
Asia Pacific Energy	1	Interests in a controlled	6,370,388,156	32.11%
Fund Limited		corporation

Notes:

(1) An aggregate of 6,370,388,156 shares of the Company are collectively held by Highexcel Investments Limited, Happy Genius Holdings Limited and Get Famous Investments Limited, which are wholly owned by Golden Concord Group Limited, which in turn is wholly-owned by Asia Pacific Energy Holdings Limited. Asia Pacific Energy Holdings Limited is in turn wholly-owned by Asia Pacific Energy Fund Limited. Asia Pacific Energy Fund Limited is ultimately held under a discretionary trust with Credit Suisse Trust Limited as trustee for Mr. Zhu Gongshan and his family (including Mr. Zhu Yufeng, a Director and the son of Mr. Zhu Gongshan) as beneficiaries.
(2) The total number of ordinary shares of the Company in issue as at Latest Practicable Date is 19,841,049,207.

(c) Other disclosures under the SFO

Golden Concord Group Limited is indirectly wholly-owned by a discretionary trust with Credit Suisse Trust Limited as trustee for Mr. Zhu Gongshan and his family (including Mr. Zhu Yufeng as a Director of the Company) as beneficiaries. Mr. Zhu Gongshan is the settlor of the Zhu Family Trust. Mr. Yeung Man Chung, Charles is the Vice President of Golden Concord Group Limited, a company controlled by Zhu Family Trust.

II-3 -

GENERAL INFORMATION

APPENDIX II

Mr. Zhu Gongshan and Mr. Zhu Yufeng are directors of Golden Concord Group Limited, save as disclosed above, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had, or was deemed to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

Each of the Independent non-executive Directors has entered into a service contract with the Company for a fixed term of three years and will be terminated by not less than three months’ notice in writing served by either party on the other. Upon the expiry of the notice period, the appointment will be terminated.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any member of the Group which is not determinable within one year without payment of compensation other than statutory compensation.

4. DIRECTORS’ INTERESTS IN ASSETS OR CONTRACTS AND OTHER INTERESTS

Save for the entering into of the lease agreements with GCL System Integration Technology (Suzhou) Co., Ltd. (協鑫集成科技（蘇州）有限公司) and GCL Energy Engineering Co., Ltd. (協鑫能源工程有限公司) respectively, as disclosed in the announcement dated 28 February 2019, as at the Latest Practicable Date, none of the Directors or proposed Directors had, or has had, any direct or indirect interest in any assets which have been acquired, disposed of by or leased to, or which are proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2019, being the date to which the latest published and audited consolidated financial statements of the Company were made up.

Save for the transactions contemplated hereunder and transactions which were disclosed pursuant to the Listing Rules, there was no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date of which any Director is materially interested and which is significant in relation to the business of the Group.

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, save as disclosed below, so far as the Directors were aware, none of the Directors or their respective associates had interest in any business which competed or was likely to compete, either directly or indirectly, with the business of the Group.

Name of company Principal activities in which the relevant of the competing Percentage interest in Name of Director Director has interest company competing company Mr. Zhu Yufeng 錫林郭勒中能硅業有限公司 Intend to produce Mr. Zhu Yufeng, through Xilingol Zhongneng polysilicon ingot companies controlled Silicon Co., Ltd.* upon completion of by him, holds 70% (Dormant and inactive) construction interest

II-4 -

GENERAL INFORMATION

APPENDIX II

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial position or trading position of the Group since 31 December 2019, being the date to which the latest published and audited financial statements of the Group were made up.

7. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) were entered into by members of the Group within two years immediately preceding the Latest Practicable Date which are or may be material:

(i) the shareholders agreement dated 25 June 2018 entered into between GCL-Poly Investment I LP and Mitsui & Co., Ltd. in relation to the formation of a joint venture company to jointly develop investment opportunities;
(ii) the share purchase agreement dated 28 December 2018 entered into between Suzhou GCL Photovoltaic Technologies Co., Ltd. (蘇州協鑫光伏科技有限公司) and Liaoning Huajun Asset Management Co., Ltd. (遼寧華君資產管理有限公司) in relation to the sale of the entire issued share capital of Suzhou Kezhun Photovoltaic Technologies Co., Ltd.* (蘇州客准光伏科技有限公司) for a purchase price of RMB850 million;
(iii) the limited partnership agreement dated 12 April 2019 entered into between Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd.* (江蘇中能硅業科技發展有限公司) and a number of investors in relation to the establishment of an investment fund in the PRC with a total capital commitment of approximately RMB3.55 billion and the subscription of its interest therein;
(iv) the agreement dated 12 April 2019 entered into between GCL-Poly Suzhou New Energy Co., Ltd. (保利協鑫（蘇州）新能源有限公司), Leshan Municipal People’s Government (樂山市人民政府) and Shanghai Zhongping Guohao Assets Management Co., Ltd. (上海中平國瑀資產管理有限公司) to potentially set up an investment fund with an expected total capital commitment of about RMB5 billion;
(v) the series of seven share purchase agreements dated 22 May 2019 entered into between Suzhou GCL New Energy Investment Co., Ltd. (蘇州協鑫新能源投資有限公司) (“ Suzhou GCL ”) as seller and Shanghai Rongyao New Energy Co., Ltd. (上海榕耀新能源有限公司) as purchaser in relation to, among others, sale and purchases of 70% of the equity interests in Shanxi GCL New Energy Technologies Co., Ltd. (山西協鑫新能源科技有限公司), Fenxi County GCL Photovoltaic Co., Ltd. (汾西縣協鑫光伏電力有限公司), Ruicheng County GCL Photovoltaic Co., Ltd. (芮城縣協鑫光伏電力有限公司), Yu County Jinyang New Energy Power Generation Co., Ltd. (盂縣晉陽新能源發電有限公司), Yu County GCL Photovoltaic Co., Ltd. (盂縣協鑫光伏電力有限公司), Hanneng Guangping County Photovoltaic Development Co., Ltd. (邯能廣平縣光伏電力開發有限公司) and Hebei GCL New Energy Co., Ltd. (河北協鑫新能源有限公司) (the “ Disposed Companies* ”) together with 70% of the outstanding shareholder’s loan owed from the Disposed Companies to Suzhou GCL;
II-5 -

APPENDIX II

GENERAL INFORMATION

(vi) the capital increase agreement and supplemental agreement dated 30 May 2019 entered into among Suzhou GCL Technology Development Co., Ltd. (蘇州協鑫科技發展有限公司), Tianjin Zhonghuan Semiconductor Co., Ltd. (天津中環半導體股份有限公司), Inner Mongolia Zhonghuan GCL Solar Material Co., Ltd. (內蒙古中環協鑫光伏材料有限公司), Hohhot Investment Lingchuang Investment Fund (Limited Partnership) (呼和浩特市領創投資基金（有限合夥）) and Hohhot City Chengchi Phase II Industrial Development Fund Investment Center (Limited Partnership) (呼和浩特市城池二期產業發展基金投資中心（有限合夥）) in relation to the capital contribution with an aggregated total of RMB800,000,000 in the registered capital and capital reserve of Inner Mongolia Zhonghuan GCL Solar Material Co., Ltd. (內蒙古中環協鑫光伏材料有限公司);
(vii) the cooperation agreements dated 31 May 2019 entered into between Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (江蘇中能硅業科技發展有限公司) (an indirect subsidiary of the Company), and other parties: (a) Leshan Gaoxin Investment Development (Group) Limited (樂山高新投資發展（集團）有限公司), (b) Suzhou Zeye Investment Co., Ltd. (蘇州澤業投資有限公司), (c) Zeye New Energy Holdings Limited (澤業新能源控股有限公司) and (d) Shanghai Zhongping Guohao Assets Management Co., Ltd. (上海中平國瑀資產管理有限公司), in relation to the establishment of Leshan Polysilicon Photovoltaic Information Industry Investment Fund (樂山多晶硅光電信息產業基金) with the total capital commitment intended to be between RMB4 billion and RMB4.5 billion, of which Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd.* (江蘇中能硅業科技發展有限公司) intends to contribute RMB500 million;
(viii) the placement agreement dated 10 June 2019 entered into between the Company and UBS AG Hong Kong Branch, in relation to the placing of 1,511,000,000 new ordinary shares under the general mandate, with proceeds amounting to approximately HK$680 million;
(ix) the share purchase agreement dated 26 June 2019 enter into between Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. (江蘇中能硅業科技發展有限公司), an indirect non-wholly owned subsidiary of the Company, Xuzhou Zhongping GCL Industrial Upgrading Equity Investment Fund LLP (徐州中平協鑫產業升級股權投資基金（有限合夥）) and Xinjiang GCL New Energy Materials Technology Co., Ltd. (新疆協鑫新能源材料科技有限公司) (“ Xinjiang GCL* ”) in relation to the sale of the 31.5% of the equity interests in Xinjiang GCL New Energy Materials Technology Co., Ltd. to Xuzhou Zhongping GCL Industrial Upgrading Equity Investment Fund LLP; and
(x) the Nanzhao Finance Lease Agreements dated 9 August 2019 enter into between GNE Group and China Resources Leasing Co., Ltd. (華潤租賃有限公司) (“ CR Leasing ”) pursuant to which (i) CR Leasing shall purchase the Nanzhao Leased Assets from Nanzhao Xinli Photovoltaic Power Co., Ltd. (南召鑫力光伏電力有限公司) (“ Nanzhao Xinli ”) at an aggregate consideration of RMB332,000,000 payable in two instalments; and (ii) following the acquisition, CR Leasing, as the lessor, shall lease the Nanzhao Leased Assets to Nanzhao Xinli, as the lessee, for a term of 10 years at an aggregated estimated rent of RMB497,856,000. In addition, pursuant to the Nanzhao Finance Lease Agreements, Nanzhao Xinli shall pay CR Leasing a finance lease handling fee of RMB13,280,000.
II-6 -

GENERAL INFORMATION

APPENDIX II

8. CLAIMS AND LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

9. GENERAL

(i) The company secretary of the Company is Mr. Yeung Man Chung, Charles, who is a member of The Hong Kong Institute of Certified Public Accountants and The Australian Society of Certified Practising Accountants.
(ii) In case of inconsistencies, the English texts of this circular shall prevail over the Chinese texts thereof.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at Unit 1703B-1706, Level 17, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong during normal business hours on any business day for a period of 14 days from the date of this circular:

(a) the memorandum of association and bye-laws of the Company;
(b) the interim report of the Company for the six months ended 30 June 2019 and the annual reports of the Company for each of the financial years ended 31 December 2017, 2018 and 2019;
(c) the material contracts referred to in the section headed “Material Contracts” in this appendix;
(d) the First Phase Share Purchase Agreements;
(e) the circular of the Company dated 28 June 2019 in relation to, among others, sale and purchases of 70% of the equity interests in the Disposed Companies together with 70% of the outstanding shareholder’s loan owed from the Disposed Companies to Suzhou GCL;
(f) the circular of the Company dated 23 August 2019 in relation to, among others, sale and purchase of 31.5% equity interest in Xinjiang GCL; and
(g) this circular.
II-7 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

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GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3800)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ EGM ”) of GCL-Poly Energy Holdings Limited (the “ Company ”) will be held at Strategy II-III, Level 8, W Hong Kong, 1 Austin Road West, Kowloon Station, Kowloon, Hong Kong on Thursday, 21 May 2020 at 11:30 a.m. for the purpose of considering and, if thought fit, approving the following resolutions as an ordinary resolutions of the Company.

The following resolution will be considered and, if thought fit, approved by the Shareholders, with or without amendments, at the EGM:

ORDINARY RESOLUTIONS

“ THAT :

(a) the series of five share purchase agreements dated 21 January 2020 entered into between Suzhou GCL New Energy Investment Co., Ltd. (蘇州協鑫新能源投資有限公司) (“ Suzhou GCL New Energy ”), GCL Group Limited (協鑫集團有限公司) (the “ Guarantor ”), Huaneng Gongrong No.1 (Tianjin) Equity Investment Fund Partnership (Limited Partnership) (華能工融一號（天津）股權投資基金合夥企業（有限合夥）) and Huaneng Gongrong No.2 (Tianjin) Equity Investment Fund Partnership (Limited Partnership) (華能工融二號（天津）股權投資基金合夥企業（有限合夥）) (the “ Purchasers ”) and the share purchase agreement dated 21 January 2020 entered into between Ningxia GCL New Energy Investment Co., Ltd. (寧夏協鑫新能源投資有限公司) (“ Ningxia GCL New Energy ”, together with Suzhou GCL New Energy, the “ Sellers ”), the Guarantor and the Purchasers (collectively the “ First Phase Share Purchase Agreements* ”) in relation to:
(i) sale and purchases of the entire equity interests in Yuganxian GCL New Energy Co., Ltd. (余干縣協鑫新能源有限責任公司), Ningxia Jinxin Photovoltaic Power Co., Ltd. (寧夏金信光伏電力有限公司), Ningxia Lvhao Photovoltaic Power Generation Co., Ltd. (寧夏綠昊光伏發電有限公司), Hami Orui Photovoltaic Power Generation Co., Ltd. (哈密歐瑞光伏發電有限公司), Hami Yaohui Photovoltaic Power Co., Ltd. (哈密耀輝光伏電力有限公司) and Ningxia Jinli Photovoltaic Power Co., Ltd. (寧夏金禮光伏電力有限公司) (the “ Target Companies ”) (the “ Disposals ”); and
EGM-1 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

(ii) grant of put options by the Sellers to the Purchasers under the First Phase Share Purchase Agreements, pursuant to which the Purchasers are entitled to, upon the occurrence of certain specified events, request the Seller(s) to repurchase the entire equity interest in the Target Company(ies) and the relevant unpaid shareholder’s loans at the time (the “ Put Options ”), be and is hereby approved, ratified and confirmed; and
(b) any director of the Company be and is hereby authorised for and on behalf of the Company to execute (including affixing the seal of the Company in accordance with the articles of association of the Company to) all such documents and do all such acts and things as he/she may in his/her absolute discretion consider to be necessary, desirable, appropriate or expedient to implement and/or to give effect to the Disposals and the Put Options and the transactions contemplated under the First Phase Share Purchase Agreements and all matters incidental or ancillary thereto.”

By order of the Board GCL-Poly Energy Holdings Limited 保利協鑫能源控股有限公司 Zhu Gongshan Chairman

Hong Kong, 29 April 2020

For identification purpose only

Notes:

(1) Any shareholder of the Company entitled to attend and vote at the EGM is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A shareholder of the Company who is the holder of two or more shares may appoint more than one proxy to attend on the same occasion. A proxy need not be a shareholder of the Company.
(2) In order to be valid, a form of proxy and the power of attorney (if any) or other authority (if any) under which it is signed, or a certified copy of such power or authority, must be deposited with the Company’s Hong Kong branch share registrar and transfer office, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time fixed for holding the EGM or any adjournment thereof.
(3) In the case of joint registered holders of any share, any one of such joint registered holders may vote at the EGM, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint registered holders be present at the EGM, the vote of the senior who tenders a vote either personally or by proxy shall be accepted to the exclusion of the votes of the other joint registered holders and, for this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.
(4) All Shareholders, particularly Shareholders who are subject to quarantine in relation to Coronavirus Disease 2019 (COVID-19), that they may appoint any person or the chairman of the EGM as a proxy to vote on the resolution, instead of attending the EGM in person. The form of proxy can be downloaded from the website of the Company at www.gcl-poly.com.hk or HKEXnews at www.hkexnews.hk.
(5) Pursuant to Rule 13.39(4) of the Listing Rules, all resolutions set out in this notice will be decided by poll at EGM.
EGM-2 -

NOTICE OF EXTRAORDINARY GENERAL MEETING

(6) The register of members of the Company will be closed from 18 May 2020 to 21 May 2020, both days inclusive, during which period no transfer of shares will be effected and for the purpose of determining the identity of members who are entitled to attend and vote at the EGM to be held on 21 May 2020 at 11:30 a.m.. In order to be eligible to attend and vote at the EGM, all completed share transfer documents must be lodged with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, no later than 4: 30 p.m. on 15 May 2020.
(7) If Typhoon Signal No. 8 or above, or a “black” rainstorm warning is in effect any time after 8:00 a.m. on the date of the EGM, the EGM will be postponed. Shareholders may visit the website of the Company at www.gcl-poly.com.hk for details of the postponement and alternative meeting arrangement.
(8) In view of the ongoing COVID-19 epidemic and recent guidelines for prevention and control of its spread, the Company will implement the following precautionary measures at the EGM to protect the Shareholders, staff and other stakeholders who attend the EGM from the risk of infection:
(i) compulsory body temperature checks will be conducted on every Shareholder, proxy and other attendee. Any person with a body temperature of 37 degrees Celsius or higher may be denied entry into the EGM venue or be required to leave the EGM venue;
(ii) the Company will require all attendees to wear surgical face masks before they are permitted to attend, and during their attendance of the EGM at all times, and to maintain a safe distance between seats (please bring your own mask);
(iii) no refreshment will be served at the EGM;
(iv) no souvenirs will be distributed at the EGM; and
(v) no guest will be allowed to enter the EGM venue if he/she is wearing quarantine wristband issued by the Government of Hong Kong.
EGM-3 -

AI assistant

GCL Technology Holdings Limited — Proxy Solicitation & Information Statement 2020

50888_rns_2020-04-29_08528c61-2e33-42e5-b28c-cb04f96d2974.pdf

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(1) DISCLOSEABLE TRANSACTION DISPOSAL OF SUBSIDIARIES

(2) POSSIBLE MAJOR TRANSACTION GRANT OF PUT OPTIONS

AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

PRECAUTIONARY MEASURES FOR THE EGM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

GCL-POLY ENERGY HOLDINGS LIMITED 保利協鑫能源控股有限公司

(Stock Code: 3800)

Principal place of

To the Shareholders

(1) DISCLOSEABLE TRANSACTION DISPOSAL OF SUBSIDIARIES (2) POSSIBLE MAJOR TRANSACTION GRANT OF PUT OPTIONS

1. INTRODUCTION

2. THE FIRST PHASE SHARE PURCHASE AGREEMENTS

Date

Parties

Assets to be sold

Consideration

LETTER FROM THE BOARD

Basis of the Consideration

(a) Severe air pollution

(b) Solar power curtailment

Payment arrangements of the Consideration

LETTER FROM THE BOARD

Total Outstanding Balance

LETTER FROM THE BOARD

Other Undertakings

LETTER FROM THE BOARD

Payment of outstanding dividends as at the Reference Date

Conditions precedent

Closing

Closing Audit Report

Guarantee

Grant of Put Options

(a) Repurchase of Target Companies

(b) Repurchase price

3. INFORMATION ON THE GROUP, THE GNE GROUP AND THE SELLERS

The Group

The GNE Group

Ningxia GCL New Energy

Suzhou GCL New Energy

4. INFORMATION ON THE PURCHASERS

Huaneng No. 1 Fund

LETTER FROM THE BOARD

Huaneng No. 2 Fund

5. INFORMATION ON THE TARGET COMPANIES

LETTER FROM THE BOARD

First Phase Share Purchase Agreements

I

II

III

IV

V

VI

Information on the Target Companies

LETTER FROM THE BOARD

6. FINANCIAL IMPACT OF THE TRANSACTIONS

7. USE OF PROCEEDS FROM THE TRANSACTIONS

8. REASONS AND BENEFITS OF THE TRANSACTIONS

9. LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

10. THE EGM

11. CLOSURE OF REGISTER OF MEMBERS

LETTER FROM THE BOARD

12. RECOMMENDATION

13. ADDITIONAL INFORMATION

1. FINANCIAL INFORMATION OF THE GROUP

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES

3. WORKING CAPITAL STATEMENT

i. Successful implementation of measures of GNE Group

ii. Successful implementation of other measures

GCL Technology Holdings Limited Proxy Solicitation & Information Statement 2020