Hongyuan Green Energy Plans to Transfer Stake in Inner Mongolia Xinyuan Silicon Materials Technology Company

Hongyuan Green Energy Co., Ltd. has announced plans to transfer its equity in Inner Mongolia Xinyuan Silicon Material Technology Co., Ltd. The company’s board of directors and all members guarantee that this announcement does not contain any false records, misleading statements, or significant omissions, and they take individual and joint responsibility for the authenticity, accuracy, and completeness of its content.

Key Highlights:

• Hongyuan Green Energy Co., Ltd. (hereinafter referred to as “the Company”) intends to transfer its 27.0737% equity stake (amounting to a paid-in capital of RMB 102 million) in Inner Mongolia Xinyuan for a total price of RMB 124.5 million to Jiangsu Zhongneng Silicon Industry Technology Development Co., Ltd. (hereinafter referred to as “Jiangsu Zhongneng”). Upon completion of this transaction, the Company will no longer hold any equity in Inner Mongolia Xinyuan.
• This transaction does not constitute a related party transaction.
• This transaction does not constitute a major asset restructuring.
• The transaction has been reviewed and approved by the Company’s fourth board of directors at its 29th meeting, and does not require submission to the shareholders’ meeting for approval.
• Risk Warning: The signed equity transfer agreement is based on mutually agreed terms; Jiangsu Zhongneng must fulfill payment obligations as stipulated in the agreement, and both parties need to complete the necessary business registration changes for the transfer. There is uncertainty regarding whether the transaction will be completed.

1. Overview of the Transaction

(a) Basic Transaction Information

The Company plans to sign an agreement with Jiangsu Zhongneng to transfer its 27.0737% equity in Inner Mongolia Xinyuan for RMB 124.5 million. After this transfer, the Company will no longer hold any equity in Inner Mongolia Xinyuan.

(b) Purpose and Rationale for the Transaction

On February 28, 2021, the Company signed a Strategic Cooperation Framework Agreement with Jiangsu Zhongneng to ensure the supply of single-crystal silicon raw materials and to establish a project company for investing in a granular silicon production project (as disclosed in announcement 2021-041). Since acquiring shares, the Company’s operating conditions and industry environment have changed significantly. On one hand, the Company has successfully established its own silicon material production capacity, while on the other hand, the supply-demand dynamics in the photovoltaic industry have shifted. This transaction aims to further optimize resource allocation, focus on core business areas, reduce investment risks, enhance the quality of the listed company, and protect the interests of minority investors.

(c) Review of the Transaction

On May 6, 2025, the board of directors approved the proposal to transfer the equity in Inner Mongolia Xinyuan with a voting result of 7 in favor, 0 against, and 0 abstentions. There is no need for shareholder meeting approval.

2. Introduction to the Counterparty

The Company’s board has conducted necessary due diligence regarding the basic information and performance capability of the counterparty:

• Name: Jiangsu Zhongneng Silicon Industry Technology Development Co., Ltd.
• Unified Social Credit Code: 913203017849976109
• Registered Address: No. 66 Yangshan Road, Xuzhou Economic and Technological Development Zone
• Legal Representative: Chen Hui
• Registered Capital: RMB 1,070,757,783.44
• Date of Establishment: March 7, 2006
• Company Type: Limited Liability Company (Hong Kong, Macao, Taiwan Investment, Non-Sole Proprietorship)
• Business Scope: Includes manufacturing and sales of specialized electronic materials, photovoltaic equipment and components, and other related services.
• Shareholder Information: 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. The revenue for 2024 was RMB 150.98 billion, with a net loss of RMB 47.50 billion.
• There are no other ownership, business, asset, or personnel relationships between the Company and Jiangsu Zhongneng.
• Jiangsu Zhongneng is in good standing and has not been listed as a dishonest executor.

3. Basic Information on the Transaction Target

(a) Overview of the Transaction Target

The target of this transaction is the Company’s 27.0737% equity in Inner Mongolia Xinyuan (with a paid-in capital of RMB 102 million).

(b) Ownership Status

The ownership of the target is clear, with no existing mortgages, pledges, or other restrictions on transfer. There are no pending litigations or judicial measures that could impede the transfer.

(c) Operational Status of Related Assets

Inner Mongolia Xinyuan commenced gradual production in November 2022 and is currently in normal production. However, due to significant changes in the photovoltaic industry, the market is experiencing a deep adjustment period with a sharp decline in silicon prices, leading to losses for the target assets. For the year 2024, Inner Mongolia Xinyuan reported revenue of RMB 47.92 billion and a net loss of RMB 4.77 billion.

(d) 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 Industrial Park Committee, Baotou City, Inner Mongolia
Legal Representative: Li Li
Registered Capital: RMB 376.75 million
Date of Establishment: April 2, 2021
Company Type: Other Limited Liability Company
Business Scope: Manufacturing and sales of specialized electronic materials, non-metallic mineral products, photovoltaic equipment, and other related services.

(e) Priority Transfer Rights

This equity transfer is between shareholders and does not involve any priority purchase rights.

(f) Inner Mongolia Xinyuan’s Status

Inner Mongolia Xinyuan has not been listed as a dishonest executor.

(g) Main Financial Information of the Transaction Target

As of December 31, 2024, Inner Mongolia Xinyuan had total audited assets of RMB 123.24 billion, total liabilities of RMB 88.01 billion, and net assets of RMB 35.23 billion. For the year 2024, it reported revenue of RMB 47.92 billion and a net loss of RMB 4.77 billion.

4. Pricing of the Transaction Target

The pricing for this transaction is based on Inner Mongolia Xinyuan’s audited net assets of RMB 352.31 million as of December 31, 2024, and reflects the Company’s shareholding ratio of 27.0737%. After considering Inner Mongolia Xinyuan’s financial situation through friendly negotiations, the transfer price has been set at RMB 124.5 million. This pricing is based on normal commercial practices and is deemed fair and reasonable, with no harm to the Company’s or shareholders’ legitimate rights and interests.

5. Main Content of the Transfer Agreement and Performance Arrangements

Party A (Transferee): Jiangsu Zhongneng Silicon Industry Technology Development Co., Ltd.
Party B (Transferor): Hongyuan Green Energy Co., Ltd.

Both parties agree and confirm that Party A will acquire all of Party B’s equity in Inner Mongolia Xinyuan, specifically the 27.0737% equity stake held by Party B. The agreement stipulates the following:

1. The transfer price for the equity stake held by Party B in Inner Mongolia Xinyuan is RMB 124.5 million.
2. Party A must pay RMB 100 million as a deposit for the equity transfer by June 6, 2025, with the remaining RMB 114.5 million to be paid by December 6, 2025. If the initial payment is not made as agreed, Party B has the right to recover the full amount.
3. Party B shall assist Party A in changing the equity registration to Party A’s name within 10 days after Party A has completed the payment.
4. If Party A delays payment, it will incur a penalty for each day of delay; similarly, if Party B delays in assisting with the registration change, it will incur a penalty (except in cases of force majeure).
5. Party A may designate another entity to take over the transfer of the equity, but Party A remains responsible for payment obligations as if it were the one making the payment.
6. This agreement is governed by Chinese law; any disputes will be resolved through negotiation, and if unsuccessful, either party may initiate legal action in the court where Party B is located. The losing party will bear all litigation costs, including but not limited to court fees, insurance fees, attorney fees, travel expenses, witness fees, and appraisal fees.

6. Impact of the Asset Sale on the Listed Company

Upon completion of this equity transfer, the Company expects a positive impact on its performance and asset status for the current year. This transfer will allow the Company to further optimize resource allocation, focus on its core business, mitigate investment risks, and protect the interests of the Company and its shareholders. Additionally, the transfer will facilitate capital recovery and improve the Company’s cash flow, aligning with its long-term development strategy.

This equity transfer agreement represents the cooperative terms agreed upon by both parties. The transferee must fulfill payment obligations as per the agreement, and both parties need to complete the necessary business registration changes for the equity transfer. The completion of this transaction remains uncertain, and investors are advised to be aware of the associated risks.

Hongyuan Green Energy Co., Ltd. Board of Directors
May 8, 2025