Yuntianhua to Increase Stake in CPIC      

Yuntianhua Group Co., Ltd. (Yuntianhua, SH: 600096) announced on April 23rd its Board of Directors have agreed to purchase a total stake of 6.4799% in Chongqing Polycomp International Corporation (CPIC), from Amiantit Co. of Saudi Arabia, PC International Co., Ltd. and Boris Company of the United States, for a consideration of around RMB380 million.
   Upon completion of the acquisition, Yuntianhua will hold a total stake of 63.6164% in CPIC and will further enhance its profitability.
    As of December 31st, 2007 the audited total assets and net assets of CPIC reached approximately RMB5.2 billion and RMB2.5 billion respectively, with a net profit of RMB390 million in 2007.
   CPIC, located in Chongqing, is a leading E-glass and ECR-glass manufacturer in China. In recent years the company has expanded its production capacity to meet the growing demand for fiberglass in China. It has set a target of expanding its fiberglass capacity to 380 thousand t/a by 2010.
   CPIC, set up in 1991, has become a joint venture since its majority shareholder sold equity in CPIC to Yuntianhua in 1997, and its some shares were sold to other three international strategy investors - Amiantit Co. of Saudi Arabia, PC International Co., Ltd. and Boris Company of the United States, aiming to get list on USA stock market. Early December 2006, Yuntianhua had increased US$30 million fund in CPIC, while Carlyle Group spent US$65 million in acquiring CPIC's 28.39% equity, becoming CPIC's second largest shareholder. (CCR2006 No. 36)
   As a majority shareholder, Yuntianhua expects CPIC's sales revenue will account for 40% of Yuntianhua's sales revenue for fiscal 2008. Therefore shareholders of Yuntianhua will not agree to list CPIC on international stock market. For this, Amiantit Co. of Saudi Arabia, PC International Co., Ltd. and Boris Company of the United States decrease CPIC's stake today.  As a financial investor, it is necessary for Carlyle Group to make money from selling equity in CPIC through pushing CPIC to list oversea. There is a rumor that Carlyle will draw back from CPIC, but no comments from both Yuntianhua and Carlyle Group.