CLEANTECH SOLUTIONS INTERNATIONAL, INC. (NASDAQ:CLNT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Item 2.01 Completion of Acquisition or Disposition of
Assets
On December 26, 2016, Wuxi Huayang Dyeing Machinery Co., Ltd.
(Dyeing), a variable interest entity whose financial statements
are included in the Companys consolidated financial statements,
and Xue Miao, an unrelated individual, formed Wuxi Shengxin New
Energy Engineering Co., Ltd. (Shengxin), a limited liability
company organized under the laws of the PRC, to an agreement
dated December 23, 2016. The agreement sets forth general terms
relating to the proposed business, but does not set forth
specific funding obligations for either party. Dyeing is the
entity that operates the Companys dyeing and finishing equipment
segment.
Dyeing has agreed to invest RMB 60,000,000 (approximately
$8,640,000) and has already invested RMB 59.8 million
(approximately $8,611,000), for which it received a 30% interest,
and Mr. Xue has a commitment to invest RMB 140,000,000
(approximately $20.2 million), of which Mr. Xue has contributed
RMB 20,000,000 (approximately $2.9 million), for which Mr. Xue
received a 70% interest in Shengxin. Shengxins registered capital
is RMB 200 million (approximately $28.8 million). Mr. Xue has
advised Dyeing that he anticipates that he will fund the balance
of his RMB 140,000,000 (approximately $20.2 million) commitment
during the first half of 2017. If Mr. Xue does not make this
payment by the end of 2017, Dyeing will have the right to amend
the contract, and both parties will adjust each sides equity
interest to reflect the amount of capital each side has actually
invested.
Shengxin intends to develop, construct and maintain photovoltaic
power generation projects, known as solar farms, in China, mainly
in the provinces of GuiZhou and YunNan. At December 31, 2016,
Shengxin had not yet commenced operations.
The solar farm industry is China is subject to significant
government regulation. In order to construct and operate solar
farms in China, it is necessary to obtain a permit for a specific
location, to obtain leasehold rights to a significant amount of
contiguous land parcels in provinces where there is significant
sunlight for most of the year to support a solar farm and to have
an agreement to connect with the local grid. The development of
solar farms requires significant funding, which, if financing is
not available, would have to be provided by Dyeing and Mr. Xue.
There are no agreements relating to the funding obligations of
either Dyeing or Mr. Xue with respect to any specific project.
Shengxin anticipates that to the extent that it obtains permits
for solar farms, it will form a new subsidiary for the sole
purpose of obtaining the permit for a specific location and
constructing the solar farm at that location. The nature of the
parties respective investments and the respective equity interest
in any solar farm project will be determined on a case-by-case
basis. To the extent that Mr. Xue develops the project he may
receive an equity interest in the project greater than the
percentage of his equity investment, with the specific amount
being subject to mutual agreement of the parties.
The Companys investment in Shengxin is subject to a high degree
of risk. The Company cannot give any assurance that Shengxin will
be able to obtain any permits, raise any required funding,
develop and operate or sell any solar farms or operate profitably
or that Dyeing will have the resources to provide any funds that
may be required in order to fund any solar farm projects for
which Shengxin may obtain permits. There may be a significant
delay between the time funds are advanced for any project and the
realization of revenue or cash flow from any project.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
| 99.1 |
English translation of cooperative development agreement for solar PV farms December 23, 2016 between Wuxi Huayang Dyeing Finishing Machinery Co., Ltd. and Xue Miao. |
About CLEANTECH SOLUTIONS INTERNATIONAL, INC. (NASDAQ:CLNT)
Cleantech Solutions International, Inc., through its subsidiaries, manufactures and sells textile dyeing and finishing machines and sells forged products and fabricated products to a range of clean technology customers, including high precision forged rolled rings and related components for the wind power industry and other industries. The Company operates through three segments: dyeing and finishing equipment segment, forged rolled rings and related components segment, and petroleum and chemical equipment segment. Through its dyeing and finishing equipment segment, the Company designs, manufactures and distributes a line of high and low temperature dyeing and finishing machinery to the textile industry. Through its petroleum and chemical equipment segment, the Company produces and sells coal chemical equipment, formaldehyde plant and downstream products, a range of heat exchangers, separators, tanks, towers, reaction kettles and other products to petroleum and chemical industries. CLEANTECH SOLUTIONS INTERNATIONAL, INC. (NASDAQ:CLNT) Recent Trading Information
CLEANTECH SOLUTIONS INTERNATIONAL, INC. (NASDAQ:CLNT) closed its last trading session up +0.16 at 3.09 with 70,474 shares trading hands.