Section 1 Necessity of This Issuance of Securities and Selection of Security Type
I. Type of Securities to be Issued
The type of securities to be issued in this offering is convertible corporate bonds that can be converted into the company's A-share stocks, issued to unspecified objects. These convertible bonds and the A-share stocks to be converted from them will be listed on the Shenzhen Stock Exchange.
II. Necessity of Selecting Convertible Bonds as the Security Type for This Issuance
Convertible bonds can be converted into the company's stocks under certain conditions, essentially adding an option to the issuance of corporate bonds, thus possessing both equity and debt characteristics. Convertible bonds typically have lower coupon rates, significantly reducing the company's financing costs.
The company is currently in a rapid development phase and has a high demand for long-term capital. Therefore, the company's issuance of A-share convertible bonds will reduce financing costs, provide shareholders with more substantial profit returns, and lay a solid foundation for the company's long-term sustainable development.
Section 2 Appropriateness of the Scope, Number, and Standards of Issuance Objects for This Issuance
I. Appropriateness of the Scope of Issuance Objects
The specific issuance method for the convertible bonds will be determined through negotiation between the company's shareholders' meeting authorized board of directors (or its authorized personnel) and the sponsor (lead underwriter). The issuance objects for these convertible bonds are individuals, legal persons, and investment funds holding securities accounts at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited, as well as other investors permitted by law (excluding those prohibited by national laws and regulations).
The convertible bonds issued will be preferentially allocated to the company's existing shareholders, who have the right to waive their preferential allocation rights. The specific proportion of preferential allocation to existing shareholders will be determined through negotiation between the company's board of directors (or its authorized personnel) and the sponsor (lead underwriter) based on market conditions before the issuance and will be disclosed in the issuance announcement.
The remaining portion after the preferential allocation to existing shareholders and the portion waived by existing shareholders will be offered to institutional investors through offline placements and/or online fixed-price issuance via the Shenzhen Stock Exchange trading system. The remaining unsubscribed portion will be underwritten by the underwriter. The specific issuance method will be determined through negotiation between the company's board of directors (or its authorized personnel) and the sponsor (lead underwriter) based on market conditions before the issuance.
In summary, the scope of issuance objects for this issuance complies with the relevant provisions of the "Registration Management Measures" and other relevant laws, regulations, and normative documents, and the scope of selection is appropriate.
II. Appropriateness of the Number of Issuance Objects
The issuance objects for the convertible bonds are individuals, legal persons, and investment funds holding securities accounts at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited, as well as other investors permitted by law (excluding those prohibited by national laws and regulations). The number of issuance objects for this issuance complies with the relevant provisions of the "Registration Management Measures" and other relevant laws, regulations, and normative documents, and the number of issuance objects is appropriate.
III. Appropriateness of the Standards for Issuance Objects
The issuance objects for the convertible bonds should possess a certain ability to identify and bear risks and have corresponding financial strength. The standards for the issuance objects of this issuance comply with the relevant provisions of the "Registration Management Measures" and other laws and regulations, and the standards for the issuance objects are appropriate.