Baoshuo to Purchase Chemical Business from New Hope Chemical     

Hebei Baoshuo Co., Ltd. (Baoshuo, SH: 600155) announced on July 2nd that it intends to issue up to 150 million domestic shares to specific targets. The issuing price is RMB6.0 per share. Funds to be raised will be used to purchase 100% equity in Huarong Chemical Co., Ltd. and 100% equity in Xinchuan Chemical Co., Ltd., with an estimated consideration of RMB900 million. Upon completion of the deal, New Hope Chemical Investment Co., Ltd. and its related parties will hold a 53.3% stake in Baoshuo.
   Huarong Chemical is located in Pengzhou of Sichuan province. The capacity of leading products potassium hydroxide and PVC is 70 000 t/a and 80 000 t/a respectively. The company holds a leading position in the high-purity potassium hydroxide market in China. Its PVC business has regional advantages in resources, technology, sales and management.
   As of March 31st, 2008 the total asset value of Huarong Chemical was RMB618 million and the net asset value was RMB294 million. The company has seen good performance for eight consecutive years since its establishment. The net profit was RMB31.78 million in 2005, RMB36.73 million in 2006 and RMB62.65 million in 2007. The 140 000 t/a PVC renovation project being executed is scheduled for startup in June 2009. Huarong Chemical will further expand the PVC production, modernize the process and raise its profit-earning ability.
   Xinchuan Chemical is located in Jinchang of Gansu province. The company plans to construct a 200 000 t/a PVC project partnering with Gansu Jinchuan Group Co., Ltd., with a total investment of RMB605.72 million. The project has passed an examination and environmental impact assessment. The construction period is from July 2007 to December 2008. Xinchuan Chemical plans to further expand the production of PVC according to the strategy of New Hope Chemical.
   Baoshuo says that after completion of the deal, its production capacity and operation capacity will have remarkable upgrading. Baoshuo expects the output of PVC to reach around 500 000 t/a and the output of caustic soda to be around 200 000 tons a year by 2010. (CCR2008 No. 8)