Recent Developments
Agreement with Guizhou Fuxiang Eco-Industrial City Investment & Development Co., Ltd.
On July 25, 2011, Deli Solar (BVI), signed a joint construction agreement with Guizhou Fuxiang Eco-Industrial City Investment & Development Co., Ltd. (the “Joint Construction Agreement”) on green eco-buildings construction projects located in Guizhou, P.R.C., pursuant to which, we will assist Guizhou Companyas a subcontractor, in constructing the green eco-buildings construction projects (the “Projects”) located in Guizhou China by applying energy-saving, low carbon ecology and integrated solar energy solutions to these constructions.
The joint construction agreement secured by Deli Solar (BVI) represents a key step in the Company’s new strategic development towards a low-carbon eco-solutions provider. Over the past ten years, the Company has gained substantial development and experience in the area of alternative energy utilization, energy saving and waste recovery. While the Company continues to operate its solar heater and industry waste heat recovery businesses, it recognizes that there is an emergence of a prosperous green industry in China that comprises of 4 sectors: alternative energy, energy saving and emission reduction, waste treatment, and eco-environment protection.
The total covered area for the Projects is over 8.0 square kilometers, or 3.089 square miles. The total estimated costs of the Projects payable from Guizhou Company to the Company are approximately RMB 4 billion (approximately $0.63 billion) and will be paid in three installments at the following three phases of the Projects:
In the first phase, the total covered area is approximately 1.5 square kilometers, or 0.58 square miles, and the total estimated costs are from RMB 750 million to RMB 900 million (approximately $116.4 million to $139.8 million) with an expected net profit rate of approx. 16-18%. The construction period will be commencing from August 2011 to December 2012. In the second phase, the total covered area is approximately 4.0 square kilometers, or 1.54 square miles, and the total estimated costs are from RMB 2 billion to 2.4 billion (approximately $0.31 billion to $0.37 billion). The construction period is expected from August 2012 to October 2014. In the third phase, the total covered area is approximately 2.5 square kilometers, or 0.97 square miles, and the total estimated costs are from RMB 4 billion to 4.8 billion (approximately $0.62 billion to $0.74 billion). The construction period is expected from August 2013 to December 2015.
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The detailed payment arrangements from Guizhou Company to the Company, including but not limited to the payment times, amounts of each installments and inspection arrangements upon completion of each phase of the Projects, will be subject to the parties’ arrangement in separate agreements.
Acquisition of Beijing Beifang Yangguang Solar Equipment Co., Ltd.
On August 31, 2011, Deli Solar (Beijing) entered into certain equity increase and transfer agreement with all and each of shareholders (“Beifang Yangguang Prior Shareholders”) of Beijing Yangguang Solar Equipment Co., Ltd. (“Beifang Yangguang”) (the “Equity Increase and Transfer Agreement”), pursuant to which Deli Solar injected RMB800,000 (approximately $125,260) to Beifang Yangguang as registered share capital and paid RMB960,000 (approximately $150,312) to acquire part of registered share capital owned by Beifang Yangguang Prior Shareholders (the “Equity Increase and Transfer ”), such that immediately after the Equity Increase and Transfer, Deli Solar (Beijing) acquired 88% of the registered share capital of Beifang Yangguang and Beifang Yangguang Prior Shareholders holds 12% of the registered share capital of Beifang Yangguang. After such Equity Increase and Transfer, the board of directors of Beifang Yangguang constitute of five directors, four of which appointed by Deli Solar (Beijing) and one of which appointed by Beifang Yangguang. Beifang Yangguang, founded in 1986 with its headquarter in Miyun District, Beijing will focus its main business on producing all-glass vacuum solar collector tubes after such Equity Increase and Transfer. The Equity Increase and Transfer Agreement was not approved by the local administrative bureau of industry and commerce until October 15, 2011, and therefore we didn’t consolidate Beifang Yangguang’s financial with our financials statements as of September 30, 2011.
