In mid-June 2019, China’s TiO2 giant Lomon Billions announced to acquire 26.18% shares of Yunnan Metallurgy Xinli Titanium Industry Co., Ltd (Yunnan Xinli) from minority shareholders in order to guarantee a swifter and better development of Yunnan Xinli. After the acquisition, Lomon Billions will hold 94.28% shares of Yunnan Xinli. In the Meanwhile, Lomon Billions plans to transfer its claim of RMB521.9 million in Yunnan Xinli into a new interest for this company.
It is reported that Lomon Billions singed an Assets and Equity Exchange Contract with Yunnan Metallurgy Group on May 24 this year to accept the transfer of 68.10% interests in Yunnan Xinli with a claim of RMB521.9 million. Lomon Billions expressed that the acquisition will be beneficial for Yunnan Xinli’s future.
Founded in 1997, Yunnan Xinli is mainly engaged in selection of ilmenite and production of high titanium slag, titanium dioxide, sponge titanium, titanium alloy, titanium material, titanium powder, titanium tetrachloride, hydrochloric acid, sulfuric acid and sodium hypochlorite. Yunnan Xinli had two wholly-owned subsidiaries, including Lufeng Xinli Titanium Industry Co., Ltd and Wuding Xinli Titanium Industry Co., Ltd.
Before the transaction, Yunnan Xinli had four shareholders, among which Lomon Billions, as the biggest shareholder, held 68.10% controlling shares. Shente Enterprise Management (Shenzhen) Co., Ltd. had 28.18% shares. Yunnan Changcheng Asset Management Co., Ltd. owned 5.00% shares while 0.72% shares were held by Kunming University of Science and Technology Asset Management Co., Ltd.
At the moment, Yunnan Xinli and its subsidiaries are out of operation. However, the company was one of the first Chinese enterprises that started producing and processing Titanium. Not only did it introduce advanced technology from abroad, but it also created production lines of high titanium slag, titanium dioxide of chloridization as well as sponge titanium. It was acknowledged that Yunnan Xinli’s technique of production was at an advanced level in China.
Lomon Billions expressed that the acquisition is beneficial to expanding more equity of the company and boosting a faster and better development of Yunnan Xinli on the other hand. The expansion of controlling shares enables Lomon Billions to control Yunnan Xinli in a more sufficient way, which helps to improve the efficiency in making strategic decisions and operating business. As a result, Yunnan Xinli can return to the normal operation as soon as possible.
Meanwhile, the transaction is also helpful for the company to integrate resources in personnel and technology. With the help of Yunnan Xinli, industry insiders predict that the company’s profitability will grow with increasing competitiveness and influence in the titanium industry.
Lomon Billions, by increasing capital of Yunnan Xinli through a debt-for-equity
swap, Yunnan Xinli will suffer from less pressure of paying the dept. With
better improvement in financial structure and optimization in financial index, its
compliance capability and borrowing capacity will be relatively strengthened.
Hence, its sustainability will be enhanced, which serves as a good financial
condition for the recovery production of titanium dioxide and sponge titanium,
as well as further development of business.
Some industry insiders thought that Lomon Billions could use its existing advantages, such as technology, quality, market and management to make renovation, technical transformation and expansion of production of 60 thousand tonnes titanium dioxide of chloridization and 10 thousand tonnes sponge titanium and high titanium slag. With the rapid expansion of production capacity, Lomon Billions is expected to become a leading company of the titanium dioxide industry.
For more information about China's titanium dioxide market, please have a look at our monthly newsletter Titanium Dioxide China Monthly Report.