Review Opinion on Hubei Hendi Pharmaceutical Co., Ltd.'s Continued Use of Idle Raised Funds and Own Funds for Cash Management
Guotai Junan Securities Co., Ltd. (hereinafter referred to as "Guotai Junan" or "the Sponsor") is the sponsor for Hubei Hendi Pharmaceutical Co., Ltd. (hereinafter referred to as "Hendi Pharmaceutical" or "the Company") for its initial public offering and listing on the Growth Enterprise Market. In accordance with relevant regulations, including the "Administrative Measures for the Sponsorship of Securities Issuance and Listing," the "Self-Regulatory Guidelines for Listed Companies on the Shenzhen Stock Exchange No. 13 - Sponsorship Business," the "Listing Rules for Growth Enterprise Market Stocks of the Shenzhen Stock Exchange," and the "Self-Regulatory Guidelines for Listed Companies on the Shenzhen Stock Exchange No. 2 - Standard Operation of Growth Enterprise Market Listed Companies," as well as the "Regulations on the Supervision of Raised Funds by Listed Companies," Guotai Junan conducted a prudent due diligence investigation on Hendi Pharmaceutical's proposal to continue using part of its idle raised funds and own funds for cash management. The specific verification situation is as follows:
1. Basic Situation of Raised Funds
With the approval of the China Securities Regulatory Commission (CSRC) document [2021] No. 3639, Hendi Pharmaceutical publicly issued 60 million shares of RMB ordinary shares (A shares) at an issuance price of RMB 25.80 per share, raising a total of RMB 1,548,000,000.00. After deducting issuance expenses, the net amount of raised funds was RMB 1,400,732,340.85. The raised funds were transferred to the Company's designated account on December 16, 2021. Da Xin Accounting Firm (Special General Partnership) verified the arrival of the funds on December 16, 2021, and issued verification report No. [2021] No. 2-10059. After the raised funds arrived, the Company stored the funds in a special account and signed a supervision agreement for the special account with the sponsor and the bank holding the raised funds.
2. Explanation of the Use of Raised Funds
The Company's investment projects funded by the raised funds were approved at the second meeting of the first board of directors in 2020 and the second extraordinary general meeting of shareholders in 2020. The situation of the public offering investment projects is as follows:
| No. | Project Name | Total Investment | Proposed Use of Raised Funds |
|---|---|---|---|
| 1 | Annual production of 5,000 tons of Ibuprofen API | 57,332.66 | 57,332.66 |
| 2 | Annual production of 1,200 tons of API | 29,225.11 | 29,225.11 |
| 3 | Annual production of 12 tons of anti-tumor API | 17,472.91 | 17,472.91 |
| 4 | Supplementing working capital | 15,000.00 | 15,000.00 |
| Total | 119,030.68 | 119,030.68 |
Note: The net amount of raised funds from the IPO is RMB 140,073.23 million, with oversubscription funds of RMB 21,042.55 million. On December 30, 2022, the Company held the fifteenth meeting of the first board of directors and the tenth meeting of the first supervisory board, and on January 16, 2023, the first extraordinary general meeting of shareholders in 2023 approved the proposal to change part of the use of raised funds, using oversubscription funds and own funds for investment in high-end pharmaceutical formulation internationalization projects. This change was approved at the first extraordinary general meeting of shareholders on January 16, 2023. The situation of the changed investment projects is as follows: