Section 1 Necessity of Issuing Securities and Choosing the Bond Type
Anhui Fulede Technology Development Co., Ltd. (hereinafter referred to as "Fulede" or "the Company" or "the Issuer") is listed on the Growth Enterprise Market of the Shenzhen Stock Exchange. To meet the capital needs for the Company's business development, enhance its capital strength and market competitiveness, and promote its long-term development, in accordance with the "Company Law of the People's Republic of China" (hereinafter referred to as "Company Law"), the "Securities Law of the People's Republic of China" (hereinafter referred to as "Securities Law"), the "Administrative Measures for the Issuance and Registration of Securities by Listed Companies" (hereinafter referred to as "Administrative Measures"), and "Opinions on the Application of Securities and Futures Laws No. 18," and other relevant laws, regulations, and normative documents, the Company plans to raise funds by issuing convertible corporate bonds to unspecified targets.
I. Type of Securities to be Issued
The type of securities to be issued is convertible corporate bonds that can be converted into the Company's shares. The convertible corporate bonds to be issued and the Company's shares to be converted from them will be listed on the Shenzhen Stock Exchange.
II. Necessity of Choosing the Bond Type for Issuance
1. Meeting the Capital Needs of the Fundraising Investment Projects
The investment projects funded by the proceeds from this issuance of convertible corporate 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 Funds Raised from the Issuance of Convertible Corporate Bonds to Unspecified Targets by Anhui Fulede Technology Development Co., Ltd." published by the Company on the same day.
2. Limitations of Traditional Debt Financing Methods Such as Bank Loans
The Company focuses on sustainable development. Traditional debt financing methods such as bank loans have relatively high financing costs and limited financing amounts. If the funds for the proposed investment projects were entirely obtained through bank loans, it would significantly increase the Company's asset-liability ratio. Moreover, all debts would need to be repaid in cash upon maturity, potentially leading to a mismatch between short-term debt and long-term assets, affecting the Company's stable financial structure, increasing operational and financial risks, and hindering the Company's long-term sustainable development. Additionally, bank loan financing would incur high financial expenses such as interest, potentially reducing the Company's profitability and shareholder returns.
3. Convertible Bonds Offer Dual Equity and Debt Features, Helping to Reduce Financing Costs
Compared to traditional debt financing methods such as bank loans, convertible bonds typically have a lower coupon rate, which helps reduce the Company's financing costs. Convertible bonds possess dual characteristics of equity and debt financing. When holders convert them into shares, it helps reduce the Company's debt repayment pressure. The Company's decision to issue convertible corporate bonds to unspecified targets to meet the capital needs of its fundraising investment projects is necessary for optimizing its capital structure, reducing financing costs, enhancing shareholder returns, and aligning with the Company's long-term stable development needs.
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 corporate bonds will be determined through negotiation between the shareholders' meeting (or its authorized representatives) and the sponsor (underwriter). The issuance targets for the convertible corporate bonds are individuals, legal entities, securities investment funds, and other investors that meet legal requirements and hold securities accounts with the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited (excluding those prohibited by national laws and regulations).