China: DeHeng Advised Longzhou On Obtaining The Non-objection Letter On Asset Securitization Of Its Right To The Passenger Transport Yields
Last Updated: 5 September 2019

On July 22, 2019, Shenzhen Stock Exchange issued the Non-objection Letter for the Listing of the Special Asset-Backed Scheme of Sinolink Securities for the Right to Longzhou's Passenger Transport Yields on Shenzhen Stock Exchange (Letter No.377 of 2019 by Shenzhen Stock Exchange). The special scheme plan to issue equities worth no more than RMB 811 million, with Longzhou Group Co., Ltd. (stock code: 002682) and its subsidiary Fujian Wuyi Transportation Co., Ltd. as the joint original equity holders. The equities were divided into priority and subordinated asset-backed securities, of which priority asset-backed securities are further divided into Longzhou 01, Longzhou 02, Longzhou 03, Longzhou 04, Longzhou 05 and Longzhou 06 by maturity period. The special scheme will operate for six years.

Longzhou Group Co., Ltd. was founded on August 29, 2003, with the approval of the People's Government of Fujian Province and registered capital of RMB 562.36859 million. Its actual controller is Longyan Municipal State-owned Assets Supervision and Administration Commission. In June 2012, Longzhou Group Co., Ltd. went public on Shenzhen Stock Exchange, the first public road transportation enterprise in Fujian. Since then, the company has paid equal attention to capital and industry, and realized transformation and upgrading through a series of M&A deals. It has developed into a conglomerate supported by four pillar business units: modern logistics services, automobile R&D, manufacturing, modification and sales, automobile passenger transport and station services, and the sale of refined oil and natural gas. It is recognized as a "National First-class Enterprise for Road Passenger Transport," "National Model Logistics Company" and "National Pilot Carless Carrier Company," and has won honorary titles including the "National May First Labor Certificate" and "National Civilized Unit."

As the project legal counsel, DeHeng team, composed of partner Zhao Luo, lawyers Zhang Cuiping, Qi Xin and Xiang Wenjing and legal assistants Yang Rong and Liu Hui, provided professional, comprehensive and high-quality legal services for the client. They designed and demonstrated the deal structure, conducted legal due diligence on underlying assets, drafted and modified deal documents, issued final legal opinions and offered comprehensive solutions and opinions on relevant legal issues. The underlying assets included 676 passenger lines and 50 sample passenger lines. Faced with the heavy workload of due diligence within a tight schedule, the DeHeng team worked tirelessly day and night, and actively and effectively communicated with the client and other intermediary agencies to ensure the success of the project, winning high praises from the client.

DeHeng was also the legal counsel for Longzhou's A-share IPO, and has served as the company's retained general counsel and project counsel since then. Besides daily securities-related legal services, it also advises on its allotment of shares, issuance of medium-term bills and short-term financing securities and industrial M&A deals, including but not limited to its investment in Wuhu Zhongzhuang Logistics Co., Ltd. in 2015, and in Dongguan Winnerway Motors Co., Ltd.; issuance of shares and purchase of 100% equities of Tianjin Zhaohua Leading Company with cash in 2017; increasing investment in Dongguan Winnerway Motors Co., Ltd. in 2018; and issuance of shares and convertible bonds and purchase of 100% equities of Xiamen Huate Group Co., Ltd. with cash in 2019. DeHeng's efficient and high-quality legal services for these projects have won full recognition from the client.

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