Securities code: 600237 Securities abbreviation: Tongfeng Electronic Announcement number: 2022-032
Announcement of Anhui Tongfeng Electronics Co., Ltd. on the signing of "Conditional Share Subscription Agreement" and related Transactions between the Company and the controlling shareholder

The board of directors and all the directors of the Company warrant that there is no false record, misleading statement or material omission in the content of this announcement, and assume legal responsibility for the authenticity, accuracy and completeness of the content.

Important content prompt
● Tongling Dajiang Investment Holding Co., LTD. (hereinafter referred to as "Tongfeng Electronics" or the "Company"), the controlling shareholder of Anhui Tongfeng Electronics Co., LTD. (hereinafter referred to as "Dajiang Investment"), intends to subscribe the total number of shares in cash not less than 20% of the total number of shares in the Company's non-public offering this time (including this number), and the shareholding ratio shall not exceed 30% of the total share capital of the company after the completion of this issue. The Company and Dajiang Investment have signed the Conditional Share Subscription Agreement. This private offering of shares by Dajiang Investment Subscription Company constitutes an affiliated transaction.
● The related transactions involved in the private offering of A-shares shall be approved by the competent state-owned assets examination and approval unit, reviewed and approved by the shareholders' meeting of the company, and approved by the China Securities Regulatory Commission (hereinafter referred to as the "China Securities Regulatory Commission") before implementation. The associated shareholders involved in this private offering will recuse themselves from voting at the general meeting of shareholders.
● There is uncertainty as to whether or not the relevant approvals or approvals will be obtained and when such approvals or approvals will be obtained.

I. Overview of connected transactions
As decided at the 13th meeting of the ninth Board of Directors of the Company, the Company intends to issue shares to no more than 35 (including 35) specific parties, including Dajiang Investment, the controlling shareholder (hereinafter referred to as the "Issue"). The number of shares to be issued shall not exceed 30% of the total share capital of the Company before the issue, that is, no more than 169,310,869 shares (including the number). In this issue, the total number of shares subscribed by Dajiang Investment in cash shall not be less than 20% of the total number of shares in this non-public offering (including this number), and the shareholding ratio shall not exceed 30% of the total share capital of the company after the completion of this issue. The final issue quantity will be determined by the board of directors of the Company in accordance with the authorization of the general meeting of shareholders and the sponsor (the lead underwriter) after the company obtains the approval letter of the China Securities Regulatory Commission on the issue and according to the situation of the subscription price of the issue object.
On August 30, 2022, the Company and its controlling shareholder, Dajiang Investment, signed a Conditional Share Subscription Agreement. According to the Shanghai Stock Exchange Listing Rules, the shares issued by Dajiang Investment Subscription Company constitute related transactions.
This connected transaction has been deliberated and approved at the 13th meeting of the 9th Board of Directors of the Company, and can not be implemented until it is approved by the state-owned assets examination and approval unit, the shareholders' meeting of the company, and the approval of the China Securities Regulatory Commission. This connected transaction does not constitute the material assets reorganization as stipulated in the Administrative Measures for the Material Assets Reorganization of Listed Companies.
Ii. Introduction of related parties

(I) Introduction to the relationship between related parties

Before this issue, the number of shares held by Dajiang Investment is 111,705,979 shares, holding 19.79%, as the controlling shareholder of Tongfeng Electronics. After the completion of this issue, assuming that the actual number of shares issued in this issue is the upper limit of 169,310,869 shares, and calculated according to the lower limit of the subscription of Dajiang Investment, the shareholding ratio of Dajiang Investment will be 19.84% after the completion of this issue, and Dajiang Investment will remain the controlling shareholder of the company.

(2) Basic information of the associated persons

(3) The main financial indicators of the associated person in the latest year

Unit: Ten thousand Yuan

Note: The above financial data has been audited by Yung Cheng Certified Public Accountants (Special General Partnership).

3. Basic information of the transaction object

(1) The object of the transaction

The subject of this connected transaction is the non-public offering of shares of the company to be subscribed by Dajiang Investment.

(2) Principles for determining prices of affiliated transactions

The pricing base date of the non-public offering shall be the first day of the issue period of the company, and the issue price shall not be less than 80% of the average trading price of the Company's shares in the 20 trading days prior to the pricing base. The average trading price of the company's stocks in the 20 trading days before the pricing basis = the total trading volume of the Company's A-shares in the 20 trading days before the pricing basis/The total trading volume of the company's A-shares in the 20 trading days before the pricing basis (hereinafter referred to as the "issue floor price"). If the stock price of the company is adjusted due to such ex-dividend or ex-dividend events as dividend payout, stock delivery, capital reserve conversion to increase of share capital, etc., the trading price of the trading day before the adjustment shall be calculated according to the price adjusted after the corresponding ex-dividend or ex-dividend.
In case of dividend payout, share delivery, capital reserve conversion to capital increase and other ex-dividend events occurring between the pricing base date and the issue date, the aforementioned issue floor price shall be adjusted accordingly. The adjustment mode is as follows:
Cash dividend: P1=P0-D
Transfer of shares or capital accumulation fund to increase capital stock: P1=P0/(1+N)
Cash dividend and share transfer or capital reserve conversion to increased share capital: P1=(P0-D)/(1+N)
Where P0 is the pre-adjustment issue price, D is the cash dividend paid per share, N is the share delivery per share or capital reserve conversion to increased share capital, and the adjusted issue price is P1.
After the issuance application is approved by the China Securities Regulatory Commission, the final issue price will be determined by the Board of Directors of the Company and the sponsor of the issue (lead underwriter) within the scope authorized by the general meeting of shareholders according to the quotation of investors. Dajiang Capital will not participate in the market bidding process for this offering, agrees with the bidding results and will subscribe for the shares of this offering at the same price as other investors. If the issue price is not generated through bidding in this private offering, Dajiang Investment will continue to participate in the subscription, and the subscription price will be based on the base price of the issue (80% of the average trading price of the Company's shares in the 20 trading days prior to the pricing basis).
Iv. Main contents of connected transaction contracts
The Company and Dajiang Investment entered into a Conditional Share Subscription Agreement (hereinafter referred to as "This Agreement") on August 30, 2022. The main contents of the Agreement are as follows:

(1) Subject of the Agreement and time of signing

Party A: Anhui Tongfeng Electronics Co., LTD
Party B: Tongling Dajiang Investment Holding Co., LTD
Signed: August 30, 2022

(2) The main contents of the Subscription Agreement
1. Subscription price, method, quantity and subscription amount

(1) Subscription price: The pricing base date of the non-public offering shall be the first day of the issue period of Party A, and the issue price shall not be less than 80% of the average trading price of Party A's shares in the 20 trading days prior to the pricing base. Average trading price of Party A's shares in the 20 trading days before the pricing basis = Total trading volume of Party A's A-shares in the 20 trading days before the pricing basis/Total trading volume of Party A's A-shares in the 20 trading days before the pricing basis (hereinafter referred to as the "issue floor price"). In the event that Party A's stock price is adjusted due to such ex-dividend or ex-dividend events as dividend payout, stock delivery, capital reserve conversion to share capital increase, etc., the trading price on the trading day before the adjustment shall be calculated according to the price adjusted after the corresponding ex-dividend or ex-dividend adjustment.
In the event that Party A's shares pay dividends, send shares, transfer of capital reserves to additional shares and other ex-vested and ex-dividend events occur between the pricing base date and the issuance date, the aforementioned issue base price shall be adjusted accordingly. The adjustment mode is as follows:
Cash dividend: P1=P0-D
Transfer of shares or capital accumulation fund to increase capital stock: P1=P0/(1+N)
Cash dividend and share transfer or capital reserve conversion to increased share capital: P1=(P0-D)/(1+N)
Where P0 is the pre-adjustment issue price, D is the cash dividend paid per share, N is the share delivery per share or capital reserve conversion to increased share capital, and the adjusted issue price is P1.
After the issuance application is approved by the China Securities Regulatory Commission, the final issue price will be determined by the Board of Directors of Party A and the sponsor (lead underwriter) of the issue according to the quotation of investors within the scope authorized by the general meeting of shareholders. Party B shall not participate in the market bidding process of this issue, agree with the bidding result and subscribe for the shares of this issue at the same price as other investors. If the issue price is not generated through bidding in this private offering, Party B shall continue to participate in the subscription, and the subscription price shall be the base price of this offering (80% of the average price of Party A's shares in the 20 trading days prior to the pricing basis).
(2) Subscription method: Party B shall subscribe for the non-public shares issued by Party A in cash.
(3) Subscription Quantity: The number of shares in the non-public offering shall not exceed 30% of the total share capital of Party A before the issuance, that is, no more than 169,310,869 shares (inclusive). In the issuance, the total number of shares Party B intends to subscribe for in cash shall not be less than 20% of the total number of shares in the non-public offering (inclusive), and the shareholding proportion shall not exceed 30% of the total share capital of Party A after the completion of the issuance.
If Party A's shares are subject to cash dividend, share delivery, capital reserve conversion to share capital increase and other ex-dividend events between the pricing base date and the issue date, the number of shares in this non-public offering will be adjusted accordingly. The final issue quantity shall be determined by the board of directors of Party A in accordance with the authorization of the General meeting of shareholders and the sponsor (lead underwriter) after Party A obtains the approval letter of China Securities Regulatory Commission for this issue and according to the condition of the purchase quotation of the issue object.
(4) Subscription Amount: The subscription amount shall be the agreed subscription price multiplied by the agreed subscription quantity.

2. Time and method of subscription payment and stock delivery

(1) Party B agrees to subscribe for the shares issued by Party A in accordance with this Agreement after the issuance is approved by China Securities Regulatory Commission, and pay all the subscription money in full and on time to the bank account designated by the lead underwriter in accordance with the requirements of the payment notice of the issue issued by the sponsor (lead underwriter).

(2) After Party B pays the subscription fee in accordance with the foregoing terms, Party A shall, as required, register the shares subscribed by Party B at the securities registration and clearing institution so as to make Party B the legal holder of the shares subscribed by it.

3. Limited sales period

(1) The shares subscribed by Party B shall not be transferred within 18 months after the closing date of the issue. If the aforesaid restricted period is not in conformity with the latest regulatory opinions or requirements of the regulatory authorities, Party B agrees to adjust the restricted period accordingly according to the regulatory opinions or requirements of the regulatory authorities.
(2) Upon completion of the issuance, Party B shall also comply with the aforesaid lock-up period arrangement for the shares of Party A obtained based on the issuance derived from the distribution of stock dividends by Party A and the increase of capital reserves.
(3) Party B agrees to issue relevant locking commitment for the shares subscribed in this issue and handle relevant share locking matters in accordance with relevant laws and regulations and relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange.
(4) The shares subscribed by Party B after the expiration of the restricted period shall be subject to the relevant regulations of China Securities Regulatory Commission and Shanghai Stock Exchange.

(3) The conditions and time of validity of the Contract

This Agreement shall come into force upon being signed and sealed by both parties and shall come into force if and only if the following conditions are met:
1. The Board of Directors of Party A and the general meeting of shareholders approve the issuance;
2. This issue has been approved by the authorized state-owned assets examination and approval unit;
3. China Securities Regulatory Commission approves the offering.

(4) Clauses on liability for breach of contract

If either party fails to perform or fully perform this Agreement due to breach of contract, the loss caused thereby shall be borne by the breaching party. The non-breaching party shall have the right to require the breaching party to continue to perform its obligations and to take remedial measures in time to ensure the continued performance of the Subscription Agreement. Meanwhile, the breaching Party shall indemnify the non-breaching party for the aforementioned losses.
5. Purpose of affiliated transactions and their impact on the Company

(I) The purpose of this transaction

As of the disclosure date of this announcement, the number of shares held by Dajiang Investment, the controlling shareholder of the Company, is 111,705,979 shares, with a shareholding ratio of 19.79%. The subscription objects of this private offering are no more than 35 (including) specific objects, including the controlling shareholder, Dajiang Investment. Through the subscription of this private offering of A-shares, the shareholding ratio of the company's controlling shareholder, Dajiang Investment, can be increased, which demonstrates Dajiang Investment's firm confidence in the future development prospects of the listed company. After the fund is in place, the total assets and net assets of the company will increase at the same time, the working capital will be further enriched, and the asset-liability ratio will be reduced, which is conducive to enhancing the financial strength of the company, optimizing the capital structure, reducing financial risks, and laying a solid foundation for the sustainable and steady development of the company.

(II) The impact of this transaction on the Company

After the completion of the private offering, the company's main business direction and business structure will not have significant changes, the company's controlling shareholders and actual controllers will not change, the business relationship, management relationship and industry competition between the company and the controlling shareholders, actual controllers and their associates will not change, and the company's total assets and net assets will increase at the same time. Working capital has been further enriched, and the asset-liability ratio has been reduced. Since it takes a certain period for the project construction and the embodiment of benefits, earnings per share, return on equity and other profit indicators may decline to some extent in the short term. However, as the project gradually reaches production, the company's operating income and net profit will increase correspondingly, and the profitability and return on equity will increase accordingly, and the company's overall cash flow situation will be improved.
Vi. Review procedures to be performed for this connected transaction
At the 13th meeting of the ninth Board of Directors of the Company held on August 30, 2022, the Company deliberated and passed the Motion on the Company meeting the conditions for the 2022 non-public offering of A-Shares, the Motion on the Company's 2022 non-public Offering of A-Shares, the Motion on the Company signing the Conditional Share Subscription Agreement with Dajiang Investment, etc The related directors of the non-public offering bank avoided voting on the related transaction proposal. The independent directors of the Company reviewed the above motion and expressed their concurrence.
On August 30, 2022, the 11th meeting of the ninth Board of Supervisors of the Company deliberated and approved the related related transactions of the private offering.
This connected transaction is subject to the approval of the state-owned assets examination and approval unit, deliberation and approval of the shareholders' meeting of the company, and approval of the China Securities Regulatory Commission before it can be implemented
Vii. Prior approval opinions and independent opinions of independent directors

1. The independent directors expressed their prior approval opinions on related transactions of the Company's non-public offering of shares, believing that:

The company's private offering involves related transactions, and the controlling shareholder Dajiang Investment promises to subscribe no less than 20% of the total number of shares issued in this issue (including the amount), and the shareholding ratio will not exceed 30% of the total share capital of the company after the completion of this issue. This arrangement is in line with the needs of the company's future development and strategic development, and is conducive to boosting investor confidence. The pricing of connected transaction follows the principle of fairness and rationality, and does not harm the interests of the company and other shareholders, especially minority shareholders.

The proposal procedure conforms to relevant laws and regulations and the provisions of the Articles of Association. In view of this, we agree that the company shall submit the proposal to the 13th meeting of the ninth Board of Directors of the Company for deliberation, and the related directors shall withdraw from the voting.

2. The independent director expressed his independent opinion on related transactions of the Company's non-public offering of shares, believing that:

The company's private offering involves related transactions, and the controlling shareholder Dajiang Investment promises to subscribe no less than 20% of the total number of shares issued in this issue (including the amount), and the shareholding ratio will not exceed 30% of the total share capital of the company after the completion of this issue. This arrangement is in line with the needs of the company's future development and strategic development, and is conducive to boosting investor confidence. The pricing of connected transaction follows the principle of fairness and rationality, and does not harm the interests of the company and other shareholders, especially minority shareholders.
The deliberation procedure of the motion is in accordance with relevant laws and regulations and the Articles of Association, and the related director has recused himself from voting at the board of directors. We agree with the motion and agree to submit the motion to the Company's General Meeting of Shareholders for consideration, with associated shareholders recusing themselves from voting.
8. Prepare documents for reference
(1) Resolution of the 13th meeting of the Ninth Board of Directors and resolution of the 11th meeting of the ninth Board of Supervisors;
(2) the prior approval opinions and independent opinions of the independent directors;
(3) The Conditional Share Subscription Agreement signed by the Company and Dajiang Investment.
This is to announce.