Shanghai, June 26, 2023
Cathay Biotech Inc. (688065.SH), a global leader in synthetic biology which has been listed on the STAR Market of the Shanghai Stock Exchange since 2020, has entered into a significant strategic collaboration with China Merchants Group (CMG). The transaction includes:

1.  The issue object of the shares issued to a specific object is Shanghai Yaoqin (to be established, the same below). According to the relevant agreement, the final investment structure of Shanghai Yaoqin is expected to be that Shanghai Yaojian (to be established, the same below) intends to hold 0.001% shares of Shanghai Yaoqin and is general partner and executive partner of Shanghai Yaoqin; CIB and China Merchants Group intend to hold 50.9995% and 48.9995% shares of Shanghai Yaoqin, respectively, and are both limited partners of Shanghai Yaoqin.
Note: CIB and China Merchants Group intend to hold 51% and 49% equity interest in Shanghai Yaojian respectively; Xiucai Liu family holds 100% equity in CIB.

2.  The total amount of funds raised in this issue shall not exceed RMB 6.6 billion RMB (including this amount), and the net funds raised after deducting relevant issuance expenses are intended to be used to supplement working capital and repay loans.

3.  The effectiveness and completion of the issues related to the issuance of shares to specific object have yet to be approved by the shareholders meeting of the company, to be reviewed and approved by Shanghai Stock Exchange, and to be approved by the China Securities Regulatory Commission for registration.

Information Source: Shanghai Stock Exchange ”Plan for Cathay to Issue A-shares to Specific Objects in 2023”

4.  Strategic procurement of bio-based polyamide materials:
China Merchants Group Co., Ltd. (CMG) will make its best commercial efforts to promote and implement the use of Cathay bio-based polyamide products, and ensure the implementation of the "1-8-20 target" in the first three years.
The "1-8-20 target" for the first three years: The amount of bio-based polyamide resin purchased and used by CMG shall be no less than 10,000 tons, 80,000 tons and 200,000 tons in 2023, 2024 and 2025, respectively.
Subsequent purchase volume: Starting from the end of 2024, both parties will determine the form and quantity of subsequent procurement products one year in advance.

5.  Investment and financing strategic cooperation:
CMG will coordinate its affiliated financial enterprises within the Group to provide financing services for Cathay and its investment projects at competitive financing rates. 

6.  Cooperation mode & communication and coordination mechanism:
The Parties will jointly establish a research team for the application scenarios of bio-based materials, develop bio-based polyamide fiber composite, pultrusion process and application technologies in container, construction, photovoltaic, logistics and other fields, and determine the form of product purchase by CMG (i.e. options among resins, composite materials and molding materials) and the cooperation plan for investment in intermediate processing equipment of products.

Information Source: Shanghai Stock Exchange ”Announcement of Cathay on the Signing of the Business Cooperation Agreement and Related Transactions between the Cathay and CMG”.


About China Merchants Group
Founded in 1872 as the China Merchants Steam Navigation Company in Shanghai, CMG has developed into one of China's leading SOEs since the 1980s and has expanded its role into a global player in transport infrastructures, financial, property development and industrial park operations.

About Cathay Biotech Inc.
Founded in 2000, Cathay Biotech Inc has been a global leader in the development and commercialization of synthetic biology for the production of bio-based specialty chemicals and bio-based polymers.  In 2012, Cathay Biotech Inc became the very first synthetic biology commercial platform to gain a dominant global market share from a chemically produced incumbent.  Today Cathay Biotech produces products for the polymer, pharmaceutical, corrosion inhibition, and coatings markets.  You touch Cathay products every day.  

Contact:
For further information, please contact Ms Huiqing Zang at +8621 5080 1916, or at boardsecretary@cathaybiotech.com

Risk reminder: 
The specific content is subject to the announcements of Cathay Biotech Inc published on the website of Shanghai Securities Exchange, or on Cathay Biotech’s website at https://www.cathaybiotech.com/en/singgg.aspx#content. 

This article is not intended as any investment advice.