HONG KONG, CHINA--(Marketwired - Dec 14, 2016) - Yingde Gases Group Company Limited ("Yingde Gases", the "Group" or the "Company"; SEHK stock code: 02168) was shocked at an open letter (the "Open Letter") on Hong Kong Economic Journal, which was published by Mr. Zhongguo Sun ("Mr. Sun") and Mr. Trevor Raymond Strutt ("Mr. Strutt") (collectively, the "Disgruntled Directors") without the authorization of the Board on December 14, 2016. The Company is uncertain about the purpose or motive of the Disgruntled Directors behind the publishing of the Open Letter, or whether there is any ulterior motive.
Yingde Gases published announcements on 6 November 2016, 8 November 2016 and 2 December 2016, to propose issuing 378,000,000 new shares (the "Proposed Placing") to Originwater Hong Kong Environmental Protection Co., Limited ("Originwater") under a general mandate. In addition, Yingde Gases also published an announcement on 6 November 2016 to reassign Mr. Sun and Mr. Strutt from executive directors to non-executive directors of the Company and remove Mr. Sun and Mr. Strutt from the posts of chief executive officer and chief operating officer of the Company respectively (the "Management Restructuring").
The Proposed Placing and the Management Restructuring were the collective decisions of the majority of the board of directors of the Company, including the independent non-executive directors at the Board meetings on 5 November 2016, in accordance with the articles of association of the Company. The Group is convinced that the Proposed Placing and the Management Restructuring are in the interest of the Company and its shareholders as a whole. The Proposed Placing would be able to improve the financial structure of the Company, lower its financial costs, and introduce Originwater as a strategic investor, which should be helpful in improving the management, long-term business development and corporate governance of the Company. As for the Management Restructuring, it will enable the senior management to cope with the challenges the Company is facing in the current market and economic environment and to encourage the senior management to work more efficiently at a higher performance level to create more value for the shareholders of the Company.
To the best knowledge of the Group, the public shareholders, investors and creditors generally responded positively to the Proposed Placing and the Management Restructuring. Meanwhile, the employees of the Company welcomed the decisions with good morale.
However, following the announcement of the Proposed Placing and the Management Restructuring, the Disgruntled Directors have been trying to frustrate the Group's move to implement the above-mentioned decisions. After the announcement of Proposed Placing, the Disgruntled Directors engaged Anglo Chinese Corporate Finance, Limited to submit a number of complaint letters to the Securities and Futures Commission (the "SFC") alleging that Originwater is acting in concert with Mr. Zhao Xiangti ("Mr. Zhao", the chairman, an executive director and a substantial shareholder of the Company). Moreover, the Disgruntled Directors requested to convene an extraordinary general meeting to remove all the executive directors of the Company and reinstate themselves as executive directors of the Company on 12 December 2016 and published the Open Letter on 14 December 2016.