Attached files
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| EX-10.1 - China New Energy Group CO | v208149_ex10-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): January 11,
2011
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China
New Energy Group Company
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(Exact
name of Registrant as specified in its
charter)
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Delaware
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001-32691
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65-0972647
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(State or other jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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18/F, Block B1, TianJin Emperor
Place
No.
85 NanJing Road
HePing
District, Tianjin, 300042
People's
Republic of China
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (011)-86-22-2321 0508
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities
Act(17CFR230.425)
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Soliciting
material pursuant to Rule14a-12 under the Exchange
Act(17CFR240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17CFR240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17CFR240.13e-4(c))
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Item
2.01 Completion of Acquisition or Disposition of
Assets
Completion of Acquisition of
70% interest of Friendship Co.
As more
fully described in our Form 8-K filed with the Securities Exchange Commission
(“SEC”) on September 20, 2010 (the “8-K”), on September
14, 2010, China New Energy Investment Co., Ltd (“Buyer”), a
wholly-owned PRC subsidiary of China New Energy Group Company (the “Company”), entered
into:
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·
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an
Equity Transfer Agreement (the “Century Dadi
Acquisition Agreement”) with Beijing Fengyin Xianghe Scientific
Technology Co., Ltd. (“Seller”), a PRC
company controlled by Mr. Tang Zhixiang (“Mr. Tang”), to
acquire from the Seller a 70% equity interest in Beijing Century Dadi Gas
Engineering Co., Ltd., a PRC company (“Century Dadi”);
and
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an
Equity Transfer Agreement (the “Zhoulu Dadi
Agreement”) with Seller and Mr. Tang, to acquire from the Seller a
70% equity interest in Zhoulu Dadi Gas Co. Ltd., a PRC
company (“Zhoulu
Dadi”).
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Summaries
of the terms of the Century Dadi Acquisition Agreement and Zhoulu Dadi Agreement
(the “September
Acquisition Agreements”) are incorporated herein by reference to the
8-K.
As more
fully described in the Form 10-Q for the quarterly period ended September 30,
2010, filed by the Company with the SEC on November 22, 2010 (the
“10-Q”), on
October 28, 2010, the parties restructured the September Acquisition Agreements
such that the Buyer entered into an Equity Transfer Agreement (the “Friendship Co.
Agreement”) with Seller and Mr. Tang, to acquire a 70% equity interest in
Tianjin Dadi Friendship Co. Ltd., a PRC company (“Friendship Co.”) from
the Seller. Prior to entering into the Friendship Co. Agreement,
Seller transferred to Friendship Co. its 100% ownership in each of Century Dadi
and Zhoulu Dadi. Accordingly, on consummation of the acquisition of
the 70% interest of Friendship Co. contemplated by the Friendship Co. Agreement,
Buyer became the indirect owner of 70% of each of Century Dadi and Zhoulu Dadi
through its 70% ownership of Friendship Co., which in turn owns a 100% equity
interest in each of Century Dadi and Zhoulu Dadi.
The total
purchase price for the 70% equity interest in Friendship Co. is approximately
$39.71 million (RMB 270,000,000). The purchase price is payable in
three installments. The first installment is for $17.6 million, the
second installment is for $19.12 million and the third installment is for $2.99
million, respectively. Each payment is subject to satisfaction of
certain preconditions.
On
September 17, 2010, the Company deposited the first installment of the purchase
price into a mutually managed account which amount was released to the Seller on
December 8, 2010 following satisfaction by the Seller of the released
conditions.
Under the
terms of the Friendship Co. Agreement, the transfer of the 70% interest in
Friendship Co. was deemed to be complete on the date (following payment of the
first installment) of the delivery by the Buyer to the Seller of written
confirmation that the Seller has performed all of its closing obligations
required to be performed by the Seller under the agreement. On
January 11, 2011 the Company delivered to the Seller the written confirmation of
completion of the transfer.
The
Company plans to raise additional capital from third party investors to fund the
payment of the second and third installment payments. Under the terms
of the agreement in the event the Buyer is unable to pay the second installment
of the purchase price (after the expiration of the applicable grace periods)
then Buyer is required to transfer 42% of the Friendship Co. back to the
Seller.
The
Company has an option to acquire the remaining 30% equity interest in Friendship
Co. for a price of $19.55 million (RMB 130,000,000).
Funding
of Purchase Price
Payment
of First Installment
Sale
of Series C and D Preferred Stock
As more
fully described in the 8-K, on September 14, 2010, the Company entered into a
Series C and Series D Convertible Preferred Stock Securities Purchase Agreement
(the “Securities
Purchase Agreement”) with China Hand Fund I, LLC (“China
Hand”), providing for the sale to China Hand of (i) 18.73
shares of the Company’s Series C Convertible Preferred Stock, and (ii) 4 shares
of the Company’s Series D Convertible Preferred Stock for an aggregate purchase
price of $15,000,000. The closing occurred on September 14,
2010. Immediately following the closing, China Hand transferred its
rights to the Series C Preferred Stock and to 2 of shares of Series D Preferred
Stock to Vicis Capital Master Fund (“Vicis”). As
the beneficial owner of 79.9% of our outstanding voting securities before the
closing, Vicis is an affiliate.
The
proceeds of this financing were used to finance a portion of the first
installment of the purchase price for the acquisition of the 70% equity interest
in Friendship Co.
Notes
Offering
As more
fully described in the 8-K, on September 14, 2009, the Company entered into and
consummated the sale to certain accredited investors pursuant to the Note
Purchase Agreements (the “Note Purchase
Agreements”) of Convertible Notes which were originally due October 15,
2010 (the “Notes”) in the
aggregate principal amount of $3,000,000. The maturity date of the
Notes was extended to February 28, 2011.
The
proceeds were used to fund the payment of a portion of the first installment of
the purchase price for the acquisition of the 70% equity interest in Friendship
Co.
Payment
of Second and Third Installment
Additional
Financing
The
Company plans to raise additional capital from third party investors to fund the
payment of the second and third installment payments but there can be no
assurance that the Company will be successful in its efforts to raise additional
financing.
Backstop
Agreement
On
September 14, 2010, the Company and China Hand entered into a Backstop Agreement
pursuant to which China Hand (or its designee) agreed to provide additional
financing of up to $20,100,000 to the extent that the Company is unable to raise
capital from third party investors prior to the time the second and third
installment of the purchase price for the acquisition of the 70% equity interest
Friendship Co. become due.
Item
9.01 Financial Statements and Exhibits
(a) Financial Statements of
Business Acquired
Financial
statements of business acquired for periods will be provided no later than 71
calendar days of the due date of this report.
(d)
Exhibits
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Exhibit
No.
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Description
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10.1
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Equity
Transfer Agreement on 70% Equity of Tianjin Dadi Friendship Co. Ltd.,
dated October 28, 2010, by and among China New Energy Investment Co., Ltd,
Beijing Fengyin Xianghe Scientific Technology Co., Ltd. and Mr. Tang
Zhixiang
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this current report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date:
January 14, 2011
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CHINA
NEW ENERGY GROUP COMPANY
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(Registrant)
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By:
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/s/ Yangkan
Chong
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Yangkan
Chong
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Chief
Executive Officer
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