Zhejiang ZL Pharmaceutical Co., Ltd. (hereinafter referred to as "ZL Pharmaceutical" or "the Company")
To meet the needs of implementing the Company's strategic development and business expansion, in accordance with the "Company Law of the People's Republic of China" (hereinafter referred to as the "Company Law"), the "Securities Law of the People's Republic of China" (hereinafter referred to as the "Securities Law"), the "Administrative Measures for the Registration of Securities Issuances by Listed Companies" (hereinafter referred to as the "Registration Measures"), and other relevant laws, regulations, and normative documents, as well as the "Articles of Association of Zhejiang ZL Pharmaceutical Co., Ltd." (hereinafter referred to as the "Articles of Association"), the Company plans to issue convertible corporate bonds to unspecified targets. The total amount of funds to be raised is expected to not exceed RMB 1,370.9297 million (including the principal amount), which, after deducting issuance expenses, will be used for the following projects: "Intelligent Traditional Chinese Medicine Health Industry Factory (Phase I)," "Wuling+X Product R&D Project," and "Supplementing Working Capital."
Unless otherwise specified in this report, related terms or abbreviations shall have the same meaning as in the "Proposal for the Issuance of Convertible Corporate Bonds to Unspecified Targets by Zhejiang ZL Pharmaceutical Co., Ltd. (Second Revision)."
I. Type of Securities to be Issued in This Offering
The type of securities to be issued in this offering is convertible corporate bonds that can be converted into the Company's shares (hereinafter referred to as "Convertible Bonds"). The Convertible Bonds and the Company's shares that will be converted from the Convertible Bonds in the future will be listed on the GEM of the Shenzhen Stock Exchange.
II. Necessity of Issuing Convertible Corporate Bonds in This Offering
Debt financing methods such as bank loans are relatively singular and have limited financing amounts. If the funds for the investment projects in this offering were entirely raised through bank loans, it would increase the Company's asset-liability ratio, thereby increasing financial risks. On the other hand, high financial expenses would affect the Company's profits, reduce the flexibility of its capital utilization, and be detrimental to its sustainable operation.
The Convertible Bonds issued in this offering can be converted into the Company's shares under certain conditions, which is equivalent to attaching an option to the issued corporate bonds, thus possessing both equity and debt characteristics. Convertible corporate bonds typically have a lower coupon rate, which can significantly reduce the Company's financing costs.
The investment projects funded by the proceeds from the issuance of Convertible Bonds to unspecified targets have been carefully evaluated by the Company. The implementation of these projects will further enhance the Company's core competitiveness and strengthen its sustainable development capabilities. For a detailed analysis, please refer to the "Feasibility Analysis Report on the Use of Proceeds from the Issuance of Convertible Corporate Bonds to Unspecified Targets by Zhejiang ZL Pharmaceutical Co., Ltd. (Second Revision)."
III. Appropriateness of the Scope, Number, and Standards of Issuance Targets for This Offering
(I) Appropriateness of the Scope of Issuance Targets for This Offering
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 (underwriter). The issuance targets for the Convertible Bonds are individuals, legal persons, securities investment funds holding securities accounts with the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited, and other investors who meet the legal requirements (excluding those prohibited by national laws and regulations).