Section 1 Necessity of Issuing Securities and Choosing the Type of Security
I. Type of Securities to be Issued
The type of securities to be issued is corporate bonds convertible into the company's A-shares. The convertible bonds and the company's A-shares to be converted from these bonds will be listed on the Growth Enterprise Market of the Shenzhen Stock Exchange.
II. Necessity of Issuing Convertible Corporate Bonds
(I) Convertible Corporate Bonds are a Suitable Financing Instrument for the Company at its Current Stage
The convertible corporate bonds to be issued can be converted into the company's shares under certain conditions, possessing both equity and debt characteristics. Compared to ordinary debt financing, convertible bonds typically have a lower coupon rate, which helps reduce the company's phased financing costs and optimize its financing structure. If convertible bondholders convert their bonds into shares in the future, the company's capital strength will be further enhanced, and its asset-liability structure is expected to be optimized.
(II) The Broad Scope of Issuance Targets is Conducive to Improving Issuance Success Rate
The company's selection of issuing convertible bonds to unspecified targets means that the issuance targets include natural persons, legal persons, and证券投资基金 holders who hold securities accounts with China Securities Depository and Clearing Corporation Limited Shenzhen Branch, as well as other investors that comply with legal regulations (excluding those prohibited by national laws and regulations). Concurrently, this issuance grants the company's existing shareholders priority subscription rights, with the option to waive these rights. The issuance targets for convertible bonds to unspecified targets can include both existing shareholders and other unspecified investors, offering a broad scope that is conducive to improving the issuance success rate.
III. Necessity of Implementing this Issuance
The investment projects for the funds to be raised through the issuance of convertible bonds to unspecified targets are centered around the company's main business. These projects have been determined through deliberation based on industry development trends, business layout, and capital needs. 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 "Analysis Report on the Feasibility of Using Raised Funds for the Issuance of Convertible Corporate Bonds to Unspecified Targets by Zhejiang Zhongke Magnetic Industry Co., Ltd." announced on the same day.
Section 2 Appropriateness of the Scope, Number, and Standards of Issuance Targets
I. Appropriateness of the Scope of Issuance Targets
The specific issuance method for the convertible bonds will be determined through negotiation between the shareholders' meeting authorized board of directors (or authorized personnel) and the sponsor (underwriter) in accordance with relevant laws and regulations. The issuance targets for the convertible bonds are natural persons, legal persons, and证券投资基金 holders who hold securities accounts with China Securities Depository and Clearing Corporation Limited Shenzhen Branch, as well as other investors that comply with legal regulations (excluding those prohibited by national laws and regulations).
The issuance of convertible bonds will implement priority subscription for the company's existing shareholders, who have the right to waive their subscription. The specific proportion of priority subscription for existing shareholders will be determined through negotiation between the board of directors (or authorized personnel) and the sponsor (underwriter) based on market conditions prior to the issuance, and will be disclosed in the issuance announcement. The balance after the priority subscription for existing shareholders and the portion waived by existing shareholders will be offered to institutional investors through offline placement and/or online pricing through the Shenzhen Stock Exchange trading system. The remaining balance will be underwritten by the sponsor. The specific issuance method will be determined through negotiation between the shareholders' meeting authorized board of directors (or authorized personnel) and the sponsor (underwriter) prior to the issuance.