Hongyuan Green Energy Announces Planned Transfer of Equity in Inner Mongolia Xinyuan Silicon Material Technology Co., Ltd.

Announcement from Hongyuan Green Energy Co., Ltd. regarding the proposed transfer of equity in Inner Mongolia Xinyuan Silicon Material Technology Co., Ltd.

On May 6, 2025, the Board of Directors of Hongyuan Green Energy Co., Ltd. approved the transfer of its 27.0737% stake in Inner Mongolia Xinyuan Silicon Material Technology Co., Ltd. (referred to as “Inner Mongolia Xinyuan”), which corresponds to a paid-in capital of RMB 102 million, to Jiangsu Zhongneng Silicon Industry Technology Development Co., Ltd. (referred to as “Jiangsu Zhongneng”) for a total price of RMB 124.5 million. After this transaction is completed, the company will no longer hold any equity in Inner Mongolia Xinyuan.

This transaction does not constitute a related party transaction or a significant asset restructuring. It was approved by the company’s Board of Directors and does not require further approval from the shareholders’ meeting.

Risk Warning: The signed equity transfer agreement represents the terms of cooperation agreed upon by both parties. Jiangsu Zhongneng will still need to pay the transfer price as stipulated in the agreement, and both parties must complete the necessary industrial and commercial registration changes for the equity transfer. Therefore, there is some uncertainty regarding the completion of this transaction.

1. Overview of the Transaction

(a) Basic Transaction Details

The company plans to sign an agreement with Jiangsu Zhongneng to transfer its entire 27.0737% equity in Inner Mongolia Xinyuan for a price of RMB 124.5 million. Upon completion of the transaction, the company will no longer hold any equity in Inner Mongolia Xinyuan.

(b) Purpose and Reason for the Transaction

On February 28, 2021, the company signed a Strategic Cooperation Framework Agreement with Jiangsu Zhongneng to ensure the supply of monocrystalline silicon raw materials and the smooth production of monocrystalline silicon projects. Since then, the company’s operational circumstances and industry environment have changed significantly. The company has completed its own silicon raw material production capacity, while the photovoltaic industry has undergone substantial shifts in supply and demand dynamics. This transaction aims to further optimize resource allocation, focus on core businesses, mitigate investment risks, enhance the quality of the listed company, and protect the rights of minority investors.

(c) Review of the Transaction

On May 6, 2025, the 29th meeting of the fourth Board of Directors of the company unanimously approved the proposal regarding the transfer of equity in Inner Mongolia Xinyuan, with a vote tally of 7 in favor, 0 against, and 0 abstentions.

(d) No Shareholder Meeting Approval Required

2. Information on the Transaction Counterparty

The Board of Directors has conducted necessary due diligence on the counterparty involved in the transaction, which is detailed below:

• Name: Jiangsu Zhongneng Silicon Industry Technology Development Co., Ltd.
• Unified Social Credit Code: 913203017849976109
• Registered Address: 66 Yangshan Road, Xuzhou Economic and Technological Development Zone
• Legal Representative: Chen Hui
• Registered Capital: RMB 1,070,757,783.44
• Establishment Date: March 7, 2006
• Company Type: Limited Liability Company (investment from Hong Kong, Macao, and Taiwan, not solely owned)
• Business Scope: Includes manufacturing and sales of electronic materials, photovoltaic equipment, and related services.
• Major Shareholder: Jiangsu Zhongneng is a subsidiary of GCL-Poly Energy Holdings Limited (HK03800).
• Financial Data: As of December 31, 2024, GCL-Poly had total assets of RMB 748.74 billion, total liabilities of RMB 325.81 billion, and net assets of RMB 422.93 billion, with a revenue of RMB 150.98 billion and a net loss of RMB 47.50 billion for the year.
• There are no other relationships between the company and Jiangsu Zhongneng, including ownership, business, assets, or personnel.

3. Basic Information on the Transaction Target

(a) Overview of the Transaction Target

1. Name and Type: The transaction target is the company’s 27.0737% equity in Inner Mongolia Xinyuan, corresponding to a paid-in capital of RMB 102 million.
2. Ownership Status: The ownership rights are clear, with no mortgages, pledges, or other restrictions on transfer. There are no ongoing litigation or judicial measures affecting the ownership transfer.
3. Operational Status: Inner Mongolia Xinyuan began gradual production in November 2022 and is currently in normal operation. However, due to changes in the photovoltaic industry and a significant drop in silicon material prices, the asset has incurred losses. For the year 2024, it reported revenues of RMB 4.792 billion and a net loss of RMB 477 million.
4. Company Information:
   • Name: Inner Mongolia Xinyuan Silicon Material Technology Co., Ltd.
   • Unified Social Credit Code: 91150203MA0R5BGB0L
   • Registered Address: Room 402, Office Building of the Baotou Metal Deep Processing Park Committee, Baotou City, Inner Mongolia
   • Legal Representative: Li Li
   • Registered Capital: RMB 376.75 million
   • Establishment Date: April 2, 2021
   • Company Type: Other limited liability company
   • Business Scope: Includes manufacturing and sales of electronic materials, photovoltaic equipment, and related services.
5. There is no priority purchase right involved in this equity transfer.
6. Inner Mongolia Xinyuan is not listed as a dishonest party.

(b) Major Financial Information for the Transaction Target

As of December 31, 2024, Inner Mongolia Xinyuan had total audited assets of RMB 12.324 billion, total liabilities of RMB 8.801 billion, and net assets of RMB 3.523 billion. The company reported revenues of RMB 4.792 billion and a net loss of RMB 477 million for the year.

4. Pricing of the Transaction Target

The pricing for this transaction is based on the audited net asset value of Inner Mongolia Xinyuan as of December 31, 2024, which is RMB 352.31 million. Considering the company’s ownership percentage and the operational condition of Inner Mongolia Xinyuan, both parties have agreed upon a transfer price of RMB 124.5 million through amicable negotiation. This pricing is based on normal commercial practices and is deemed fair and reasonable, with no detriment to the company or its shareholders.

5. Main Content of the Transaction Agreement and Performance Arrangements

Parties:

• Buyer: Jiangsu Zhongneng Silicon Industry Technology Development Co., Ltd.
• Seller: Hongyuan Green Energy Co., Ltd.

The parties agree on the following terms regarding the equity transfer:

1. The transfer price for the 27.0737% equity stake in Inner Mongolia Xinyuan is RMB 124.5 million.
2. The buyer must pay RMB 100 million as a deposit by June 6, 2025, with the remaining RMB 114.5 million to be paid by December 6, 2025. Failure to make the initial payment will result in the entire amount being due immediately.
3. The seller will assist the buyer in registering the equity transfer within 10 days after full payment is received.
4. In the event of delayed payment by the buyer, a penalty will apply for each day of delay. Similarly, if the seller delays in facilitating registration, they will incur a penalty (except for delays caused by external factors such as system failures).
5. The buyer may designate another entity for the transfer, but the payment obligations remain with the buyer.
6. This agreement is governed by Chinese law, with disputes resolved through negotiation or, failing that, through litigation in the seller’s local court. The losing party will bear all associated costs.

6. Impact of Asset Sale on the Listed Company

Completion of this equity transfer is expected to positively impact the company’s performance and asset status for the current year. This transfer will help optimize resource allocation, focus on core business areas, reduce investment risks, and safeguard the interests of both the company and its shareholders. Additionally, the sale will improve cash flow, aligning with the company’s long-term development strategy.

This announcement serves to inform investors of potential risks associated with the transaction.

Issued by the Board of Directors of Hongyuan Green Energy Co., Ltd. on May 8, 2025.