First reduce and then increase the discount of Tianqi Lithium Industry by 40% has attracted the attention of the Shenzhen Stock Exchange.

Tianqi Lithium Industry, which plans to raise a large amount of capital from the IPO, finally received a letter of concern from the exchange.

The Shenzhen Stock Exchange requires the company to explain whether the behavior of the controlling shareholders to subscribe for the company's non-public offering shares after the reduction of their holdings constitutes a short-term transaction in essence and whether it will harm the interests of minority shareholders.

"Please check whether the disclosure of the reduction information of the controlling shareholder is in line with the provisions of relevant laws and regulations; the company's stock price has increased by 201.82% in 60 trading days, indicating whether the inside information is known in advance; explain whether the total amount of funds raised in this non-public offering is reasonable and feasible, whether there is a situation of leisurely increase, and so on." Shenzhen Stock Exchange said in a letter of concern.

Tianqi Lithium Industry plans to raise no more than 15.9 billion yuan to issue full subscription by controlling shareholders at a substantial discount.

On the evening of January 15, Tianqi Lithium Industry issued a pre-plan for the non-public offering of A-shares, which will be issued through its own funds and self-raised funds to subscribe for the non-public offering shares in cash. The issue price of non-public offering shares is 35.94 yuan per share, and the number of non-public offering shares is not more than 443 million shares.

The total amount of funds raised by the company shall not exceed 15.928 billion yuan. After deducting the issuance expenses, it will all be used for the company to repay bank loans and supplement current funds, so as to optimize the company's asset-liability structure, improve asset quality, reduce financial risks and improve financial situation. It is worth noting that the non-public offering price of Tianqi Lithium Industry is 35.94 yuan per share, which is nearly 40% lower than the price of 59.76 yuan per share in the secondary market.

Get into a debt crisis as a result of the merger and acquisition of SQM

Tianqi lithium industry needs a huge rights issue mainly due to the debt crisis caused by the merger and acquisition of SQM. SQM is engaged in the development and utilization of resources in Chile's Atacama Salt Lake. Atacama Salt Lake is an important producing area of superior salt lake resources and global lithium products due to its high lithium concentration, large reserves, mature mining conditions and low operating cost. With the development and utilization of the salt lake resources in recent years, the region has become a key development area and resource reserve base for enterprises in the global lithium industry. In order to actively grasp market opportunities from the perspective of long-term development, consolidate the company's industry position, maintain sustained market competitiveness, and obtain sustained and stable investment returns, Tianqi Lithium Industry completed the purchase of 23.77% of SQM23.77% equity in 2018.

In fact, in the acquisition of SQM23.77% shares, Tianqi Lithium Industry adopts a variety of financing methods to repay M & A loans, including corporate bonds, short-term financing bills, convertible bonds, rights issue and so on, but still can not solve the financial pressure of Tianqi Lithium Industry. It is worth mentioning that, in order to alleviate the debt pressure, Tianqi Lithium Industry raised a total of about 2.932 billion yuan through a rights issue at the end of 2019. But the money raised in the rights issue was insufficient to repay all loans arising from the acquisition of a stake in SQM.

It is worth mentioning that before the release of the fixed increase plan, Tianqi Group disclosed a plan to reduce its holdings. Tianqi Lithium Industry announced in the evening on January 6 that the controlling shareholder Tianqi Group and its concerted actors planned to reduce their holdings of no more than 4% of the company's total share capital due to the provision of financial assistance and other capital needs to the company.

The first reduction and then the fixed increase attracted the inquiry of the concern letter of the Shenzhen Stock Exchange.

Prior to the release of the increase plan, the company disclosed a plan to reduce its holdings. Tianqi Lithium Industry announced on January 6 that the controlling shareholder Tianqi Group and its concerted actors plan to reduce their holdings of no more than 4% of the company's total share capital because of providing financial assistance and other capital needs to the company.

According to Article 44 of the new Securities Law, shareholders, directors, supervisors and senior managers who hold more than 5% of the shares shall sell the shares of the company within six months after the purchase, or buy again within six months after the sale, and the proceeds thus obtained shall be owned by the company.

On January 17, Tianqi Lithium Industry received a letter of concern from the small and medium-sized Board, and the Shenzhen Stock Exchange asked the company to explain whether the behavior of the controlling shareholders to subscribe for the company's non-public offering shares after the reduction of their holdings constitutes a short-term transaction in essence and whether it will harm the interests of minority shareholders.