World Agrochemical Network Chinese Network Report: On August 1, 2024, Shaoxing Besmei Chemical Co., Ltd. (hereinafter referred to as "Besmei") issued an announcement that in order to improve the efficiency of the use of raised funds, the company adjusted and closed the total investment project of the initial public offering of shares to raise funds for the investment project "Hydrogenation Series, Dimethalin Series, Methoxyfenozide Series Product Technical Transformation Project" according to the needs of current business development, and used the surplus raised funds for "annual output of 6,000 tons of dimethalin technical transformation project" and "annual output of 5, 000 tons of high-purity pseudo-diaspore project".
Besmei's initial public offering of shares to raise funds for investment projects and use of funds
In November 2019, the company publicly issued 30.3 million RMB ordinary shares (A shares) to the public at an issue price of RMB 14.25 per share, and the total amount of funds to be raised was RMB 431.775 million, and the actual net amount of funds raised was RMB 392.9776 million after deducting the issuance expenses of RMB 38.7974 million in accordance with relevant regulations. As of June 30, 2024, the use of funds raised by the company's initial public offering of shares is shown in Table 1.
Table 1 Use of funds raised by BSM's initial public offering of shares (unit: 10,000 yuan)
Up to now, the company has basically achieved the core expansion goal of the original project, and has a production capacity of 12,000 tons of pendimethalin and 15,000 tons of amylamine.
As of June 30, 2024, the total committed investment of the original project is 30,000.00 yuan, and a total of 113,898,400 yuan has been invested with its own funds, 80,091,100 yuan has been invested in raised funds, 132,063,200 yuan has been changed in the initial offering of raised funds, and the balance of unused raised funds is 196,911,200 yuan (including cash management, interest income, etc.).
Due to the supply and demand environment, pesticide prices have continued to decline since the third quarter of 2022. In view of the increase in the market uncertainty of the company's original project products, in the context of the continuous decline in the price of pesticides, based on the principle of prudence, in order to ensure the quality of the raised funds investment projects, the company optimizes the allocation of resources according to the changes in market demand, intends to close the original project, terminate the investment and construction of the "hydrogenation series and methoxyfenozide series" in the original fund-raising and investment projects, and invest the surplus raised funds in the construction of the "annual output of 6,000 tons of pendimethalin technical transformation project" and "annual output of 5,000 tons of high-purity pseudo-diaspore project". Further enhance the strength of the company's main business, and at the same time complete the optimization and adjustment of industrial production capacity layout.
(1) An annual output of 6,000 tons of pendimethalin technical transformation project
The total proposed investment of the "annual output of 6,000 tons of pendimethalin technical transformation project" is 10,000.00 yuan, of which 68.00 million yuan (including cash management, interest income, etc., the same below) will be used to raise funds from the original project, accounting for 17.30% of the company's net initial fund-raising.
Project Name: Jiangsu Yongan Technological Transformation Project with an annual output of 6,000 tons of pendimethalin;
Project implementation body: Jiangsu Yongan Chemical Co., Ltd.;
Project implementation location: west side of Jingyi Road, Circular Economy Industrial Park, Lianshui Economic Development Zone, Jiangsu;
Project construction content: using the company's existing workshop three (Class A, Class II fire resistance grade, covering an area of 1,098.78 square meters, construction area of 2,968.73 square meters), without new construction area, the purchase of acid kettle, amine kettle, salt kettle, nitrification kettle, salt extraction mixer, nitrification mixer, nitrification water washing kettle, demosar kettle, hydrochloric acid recovery kettle, condenser, sub-cylinder, chiller, exhaust gas absorption device, DCS control system and other production and auxiliary equipment, construction of annual output 6, 000 tons of pendimethalin technical transformation project. There is an existing 12,000 tons/year production unit of pendimethalin in workshop 1, and after the completion of the 6,000-ton-per-year pendimethalin technical transformation project, the company's production capacity of pendimethalin will reach 18,000 tons/year.
Project investment amount: The planned construction period of the project is 1 year, the total planned investment is 10,000.00 yuan, and the raised funds to be invested are 68.00 million yuan of the surplus raised funds of the original project.
Estimated economic benefits of the project: The project has good economic benefits and is in line with the company's long-term development goals. The payback period of the project is 4.51 years after tax, and the internal rate of return on all investments is 44.92% after tax.
At present, the company has a production capacity of 12,000 tons per year of pendimethalin, and is the leading enterprise of pendimethalin in the Asia-Pacific region. After the project is completed and put into operation, the company's pendimethalin production capacity will reach 18,000 tons per year, and the production capacity will be significantly increased. The construction of this project can strengthen the company's leading advantages in the scale, output and market share of pendimethalin segments, further enhance the company's ability to undertake the production capacity of international agrochemical giants, lay the foundation for the company's pesticide strategic layout to go overseas, help enhance the company's core competitiveness, enhance the company's industrial chain advantages and market position, expand the company's business scale, and achieve the company's sustainable development.
(2) 5,000 tons of high-purity pseudo-diaspore project per year
The total planned investment of the "5,000 tons of high-purity pseudo-diaspore project" is 162.645 million yuan, of which 128.9112 million yuan is planned to be used from the surplus raised funds of the original project, accounting for 32.80% of the net funds raised by the company in the initial offering.
Project Name: 5,000 tons per year of high-purity pseudo-diaspore project;
Project implementation body: Tongling Besmei Technology Co., Ltd.;
Project implementation location: Eastern Park of Tongling Economic and Technological Development Zone;
Project construction content: The main production unit of the project is a 5,000 tons/year pseudo-diaspore production unit, and related public works and auxiliary production facilities;
Project investment amount: The planned construction period of the project is two years, the total planned investment is 162.645 million yuan, and the raised funds to be invested are 128.9112 million yuan of the surplus raised funds of the original project.
Estimated economic benefits of the project: The project has good economic benefits and is in line with the company's long-term development goals. The payback period of the project is 7.42 years after tax, and the internal rate of return on all investments is 15.35% after tax.
Among the new projects that have been changed this time, the "6,000 tons per year pendimethalin technical transformation project" has fulfilled the investment filing procedures in accordance with the relevant requirements, and has gone through the corresponding approval procedures such as environmental impact assessment and impact assessment in accordance with relevant regulations. The "5,000 tonnes per year high-purity pseudo-diaspore project" is yet to be subject to approval procedures such as investment filing, environmental impact assessment, and impact assessment.
The change and completion of the initial part of the fund-raising project and the investment of the surplus raised funds into new projects are prudent decisions made by the company according to factors such as changes in the market environment and the company's business development needs, which are closely related to the company's development strategy and existing main business, and are deeply in line with the extension of the company's industrial chain and the strategic layout of the strategic new material industry, so as to realize the coordinated development of the company's environmentally friendly pesticide and new material industry. It is conducive to improving the efficiency of the use of raised funds, optimizing the layout of fund-raising projects, thereby improving the company's sustainable development ability and profitability, which is in line with the interests of the company and all shareholders.