VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 11, 2013) - Huaxing Machinery Corp. (TSX VENTURE:HUA) ("Huaxing" or the "Company") is pleased to announce that a joint venture agreement (the "JV Agreement") has been reached between the Company and Shandong Huaxing Mechanical Inc. ("Shandong Mechanical") whereby the two partners have agreed to set up a joint venture company in Shandong Province, China to engage in the business of equipment financing and leasing.
The joint venture company, Shandong Minghua Financial Leasing Co., Ltd. ("Minghua"), will primarily provide financing and leasing arrangements for the customers of the Company's subsidiary Shandong Gold Rhino Huaxing Machinery Corp. ("SGRHM").
About Huaxing Machinery Corp.
Huaxing is a manufacturer of stone processing equipment and steel structure fabrication equipment. Through its wholly owned subsidiary Gold Rhino Limited ("Gold Rhino"), a Hong Kong company), Huaxing holds an 80% controlling equity interest in SGRHM, the manufacturing entity located in Boxing County, Shandong Province, China. Its main products are stone processing equipment and robotic welding system for steel structure fabrication. The processed stones and steel structures are both used in the building and infrastructure construction industry. Shandong Mechanical holds the remaining 20% equity interest in SGRHM.
Shandong Minghua Financial Leasing Co., Ltd.
Minghua is a joint venture company formed pursuant to the JV Agreement on September 13, 2013 under the Chinese Corporate Law and Chinese Sino-Foreign Joint Venture Law. The registered equity capital of Minghua is US$10,000,000. The Company, through its wholly owned subsidiary Gold Rhino, will earn a 25% equity interest in Minghua by contributing a total of US$2.5 million in Minghua, while Shandong Mechanical will earn a 75% equity interest in Minghua by contributing US$7.5 million. Shandong Mechanical and Gold Rhino shall pay their respective cash equity contributions in instalments. The first instalments to be made by Gold Rhino and Shandong Mechanical are in the amounts of US$375,000 and US$1,125,000 respectively and must be paid within three months of the date on which the business license for Minghua was issued which was September 13, 2013 (the "License Date"). The balance of the contributions, US$2,125,000 as to Gold Rhino and US$6,375,000 as to Shandong Mechanical, must be paid within two years from the License Date, at any time and in any amounts.
The term of the Minghua joint venture shall be thirty years and may be extended by mutual agreement of the two shareholders. The registered address of Minghua is Suite1801, Building 8, Shuntai Plaza, No. 2000 Shunhua Road, Gaoxin District, Jinan City, Shandong Province, People's Republic of China.
Gold Rhino's first instalment of US$375,000 will be financed by way of unsecured shareholder loans bearing an interest of 6% with no repayment term.
The main business of Minghua is the leasing and financing (lease to own) of SGRHM's robotic welding systems, and stone processing equipment for SGRHM's customers. With the leasing and financing license, Minghua can leverage its equity capital with loans from Chinese banks to finance its leasing operations.
The establishment of Minghua, said Xianhua Sun, Chairman of Huaxing, is expected to greatly facilitate the marketing of our robotic welding system, which is priced at US$2 to 3 million per set. The licensing and financing by Minghua will make the equipment more affordable to steel structure fabrication companies.
Certain information regarding Huaxing and its subsidiaries contains herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. The Company assumes no obligation to update such forward-looking statements, except as required by applicable securities laws or exchange regulations. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The Company seeks safe harbour.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.