China Recycling Energy to acquire 20% of Xi'an Xinhuan Energy for $46.72M
China Recycling Energy announced that a wholly-owned subsidiary of the company, entered into an equity purchase agreement with Jihua Wang to acquire 20% of the equity interests of Xi'an Xinhuan Energy. Pursuant to the agreement, Shanghai TCH is acquiring 20% of the equity interests of Xinhuan for an aggregate purchase price of approximately $46.72M, which will be paid as follows: in cash in the amount of approximately $8.76M; in the form of 2.6M shares of the company's common stock using a value of $1.90 per share; and in the form of 17,376,950 shares of the company's preferred stock using a value of $1.90 per share, which such class of stock has not yet been authorized or designated. The preferred shares will have no voting rights but will have preferential dividend rights to participate in and receive a 15% premium on a per share basis for any dividends declared and paid by the company on its common stock. The holder of the preferred shares has the right to convert the preferred shares into shares of the company's common stock on a 1:1 basis after the 6 month anniversary of the issuance of the preferred shares, but the holder may only exercise the conversion rights to the extent that, after giving effect to the issuance of common stock after such conversion, the holder would beneficially own less than 20% of the company's issued and outstanding common stock. The payment of the purchase prices in the form of the 2.6M shares of common stock and 17,376,950 shares of preferred shares of the company is contingent on the company receiving shareholder approval at a special shareholders meeting for the share payment under the agreement, and to create the new class of preferred shares and increase the number of authorized shares of common stock.