Jan 16 2008
China Solar & Clean Energy Solutions, Inc., a premier manufacturer and distributor of solar water heaters, space heating devices and renewable energy solutions in the People's Republic of China, today announced that it has entered into a definitive agreement to acquire Shenzhen PengSangPu Solar Industrial Products Corporation. The acquisition of Shenzhen PengSangPu will enable China Solar to immediately begin leveraging its technology and engineering capabilities and expertise, and will significantly expand China Solar's customer base and presents a commercial and industrial market opportunity for solar water heaters in southern China.
Under the terms of the agreement, China Solar's subsidiary, Beijing Deli Solar Technology Development Co., Ltd., will acquire 100% of the equity interest of Shenzhen PengSangPu Solar Industrial Products Corporation including its net assets and trademarks for approximately $2.8 million in China Solar common stock plus the audited net asset value of PengSangPu in cash. The cash paid to the owners of PengSangPu will be re-deposited into the Company as a shareholder loan for working capital. Fifty percent of the loan will be repaid after one year and the rest will be repaid after the second year by the Company.
For the first nine months of 2007, Shenzhen PengSangPu's revenue was $7.7 million and net income was $0.7 million. Under the terms of the agreement, if Shenzhen PengSangPu's sales revenue is less than $13.6 million, with an after-tax net profit less than $1.3 million for the year ended December 31, 2008; or if in the year ended December 31, 2009, it doesn't reach the targeted sales revenue of $19.8 million or the after-tax net profit of $1.7 million, Shenzhen PengSangPu will pay the difference between the actual revenue and the targeted revenue of the year by reducing the amount payable on the shareholders' cash loan. If the shareholders' loan is not sufficient to pay the difference, the common shares held by the Shenzhen PengSangPu owners will be returned to China Solar to the extent necessary for the remaining balance owed.
Shenzhen PengSangPu was formed in 1993 in Shenzhen, China. It specializes in manufacturing and selling flat plate solar water heaters, and installation and engineering of central solar hot water systems for business users including schools, hotels, hospitals, and factories. Shenzhen PengSangPu holds 7 patents and a very strong brand name in China. Its annual production capacity of flat plate solar power collector is 400,000 square meters which are sold in China, the EU, and North America. The Company is ISO9001 certified and AAA+ standard company authorized by Institute of Chinese Product Quality Association.
"We are very excited to announce the acquisition of Shenzhen PengSangPu, an important milestone in complementing our core business strategy of becoming a fully integrated clean technology and renewable energy solutions provider," said Mr. Deli Du, Chief Executive Officer of China Solar. "The acquisition of Shenzhen PengSangPu extends our strategic footprint and opens new markets in Southern China where local government strongly support using solar water heaters in residential buildings. This transaction brings us additional proprietary products and complements our Clean Technology Energy product portfolio."
"In addition, Shenzhen PengSangPu offers a variety of experience in installing and engineering central solar water heater system. We are delighted that PengSangPu's senior management and its over 200 engineers and technicians will be joining our Company. By integrating their proprietary technologies and engineering expertise, we expect to both improve our competitive advantage and overall profit margins. The acquisition is expected to be accretive to China Solar's 2008 earnings," Mr. Du concluded.