China Recycling Energy Corporation Transfers WHPG System to Zhong Gang for US$9.8 Million
XI'AN, China, February 6, 2015 -- China Recycling Energy Corp. (NASDAQ: CREG;"CREG" or "the Company"), a leading industrialwaste-to-energy solution provider in China, today announced that its Waste HeatPower Generation System (“WHPG System”) originallyleased to ZhongGang Group Bin Hai Industry Co., Ltd. (“Zhong Gang”) was transferred to Zhong Gang for a price of about US$9.8 million (RMB60.0million) recently.
Under the original lease contract, CREG was leasingthe WHPG System to Zhong Gang for 9 years from theday the system became operational in October 2010 until September 2019. However,Zhong Gang Group, a large Chinese steel company that is the controlling shareholderof Zhong Gang, is undertaking a restructuring of its businesses that involvesthe discontinuation of many system outsourcing arrangements, including the WHPGSystem, to operate and manage those systems in-house going forward.
After negotiations with Zhong Gang, the Company has agreed to an earlytransfer of the WHPG System for an early termination fee of approximatelyUS$9.8 million. According to Company’s estimates, this amount is fairly closeto the discounted cash flow value of the total principal repayment and interestincome on sales-type leases of US$11.3 million (RMB69.3million) receivable bythe Company during the period from January 1, 2015 to September 30, 2019.
Mr. Guohua Ku, Chairman and CEO of CREG commented, “We believe that theearly termination fee is fair, taking into account the time value of money, andthe opportunity to deploy the cash to more profitable projects in the nearfuture. We welcome this additional boost to our cash flow at a time when weneed to fund new projects already under contract. We know there is substantialdemand for our systems going forward and we remain fully confident in ourability to increase long-term value for our shareholders.”
About China Recycling Energy Corp. (NASDAQ: CREG or "the Company")is based in Xi'an,
Safe Harbor Statement This press release may contain certain "forward-lookingstatements" relating to the business of China Recycling Energy Corp. andits subsidiary companies. All statements, other than statements of historicalfact included herein are "forward-looking statements." Theseforward-looking statements are often identified by the use of forward-lookingterminology such as "believes," "expects" or similarexpressions, involve known and unknown risks and uncertainties. Although theCompany believes that the expectations reflected in these forward-lookingstatements are reasonable, they do involve assumptions, risks anduncertainties, and these expectations may prove to be incorrect. Investorsshould not place undue reliance on these forward-looking statements, whichspeak only as of the date of this press release. The Company's actual resultscould differ materially from those anticipated in these forward-lookingstatements as a result of a variety of factors, including those discussed inthe Company's periodic reports that are filed with the Securities and ExchangeCommission and available on its website at http://www.sec.gov.All forward-looking statements attributable to the Company or persons acting onits behalf are expressly qualified in their entirety by these factors. Otherthan as required under the securities laws, the Company does not assume a dutyto update these forward-looking statements.
For more information, please contact: Mr. David Chong, Chief Financial Officer Email: chongscd@creg-cn.com
Christensen
Ms. Xiaoyan Su( Vice President Tel: +86-10-59001548 Email: xsu@christensenir.com
Mr. Christian Arnell ( Vice President Phone: +86-10-59001548 E-mail: carnell@christensenir.com
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