*ST威尔 Announces Major Asset Restructuring Following Stock Price Collapse

The Strategic Imperative Behind *ST威尔’s Bold Move

*ST威尔 (002058) rocked China’s capital markets when it announced a landmark 546-million-yuan ($77.6M) acquisition immediately after its shares plunged to the daily down limit on July 15th, 2025. This dramatic tactical pivot centers on acquiring a 51% controlling stake in Shanghai Zijiang New Materials Technology Co Ltd – specializing in lithium-ion battery components – as the embattled instrumentation manufacturer faces imminent delisting threats. The deal represents a high-risk transformation play that could either resurrect the company or become China’s latest high-profile restructuring failure, putting intense scrutiny on management’s turnaround strategy.

Anatomy of the Rescue Operation

Transaction Structure and Costs

*ST威尔 will acquire 30.3 million shares (51% equity) of Zijiang New Materials through an all-cash payment of ¥546 million to consortium sellers including Shanghai Zijiang Enterprise Group (紫江企业), CATL subsidiary Yangtze River PDT Fund (长江晨道), and Ningde New Energy. The purchase values Zijiang at ¥1.07 billion ($152M) – a significant premium justified by:

• Zijiang’s patented aluminum-plastic film technology protecting soft-pack lithium batteries
• Multiyear supply contracts with BYD, ATL, Sunwoda and other top battery makers
• Rapid revenue growth clocking 34% CAGR since 2021

Timetable and Regulatory Hurdles

The restructuring follows an eight-month negotiation period since initial disclosure in December 2024. Analysts highlight critical approval requirements:

• CSRC greenlight for backdoor listing elements
• Shareholder vote requiring 67% approval threshold
• Delisting suspension qualifications under Shanghai Exchange rules

The Precarious Position of *ST威尔

Mounting Delisting Pressures

*ST威尔’s April 2025 delisting risk warning underscores irreversible operational decline:

• 2024 revenue collapsed 72% YoY to ¥94 million ($13.4M)
• Three consecutive annual net losses exceeding ¥220 million ($31M)
• Negative operating cash flow since Q3 2023 (see Bloomberg financials)

Market Confidence Crisis

The July 15th limit-down triggered panic selling that erased ¥2.1 billion ($300M) in market value – the fourth such plunge in 2025 alone. Market sentiment shows notable deterioration:

• Short positions increased 150% since May
• 20-day volatility index spiking to historic highs
• Retail ownership plummeting from 63% to 41% since delisting warning

Zijiang New Materials: The Turnaround Catalyst

Technology Leadership Position

Zijiang dominates China’s domestic aluminum-plastic film supply chain – critical for flexible batteries powering wearables and EVs – through:

• 43 registered patents covering barrier coatings and thermal bonding
• ISO-17025 certified R&D center driving material innovations
• Production defect rates below 0.8% versus industry’s 3.5% average

Blue-Chip Client Roster

Contractual relationships with China’s battery elite provide revenue visibility:

• BYD accounts for 38% revenue with three-year supply agreement
• Apple battery supplier ATL contributing 19% revenue share
• Exclusive supplier status for Huawei’s wearables division since 2023

Projected Synergies and Integration Risks

Becoming a Battery Materials Pure-Play

The transaction instantly transforms *ST威尔 from industrial instrumentation to cleantech leader:

• Battery materials contributing >80% of pro forma revenue
• Cross-selling opportunities through Zijiang’s distribution network
• Debt refinancing at lower rates via emerging industry status

Management Execution Challenges

Independent analysts identify critical red flags:

• *ST威尔’s zero experience in chemical manufacturing
• Zijiang’s former CEO resigning during integration planning
• Cultural clashes between R&D-driven and compliance-focused teams

The Profitability Litmus Test

Binding Performance Guarantees

Sellers provided ironclad profit milestones (¥ thousands):

Industry Growth Tailwinds

Strategically, the acquisition rides robust market expansion:

• Global aluminum-plastic film demand projected to grow 29% annually through 2030 (GGII)
• Import substitution creating ¥12 billion ($1.7B) domestic opportunity
• Electric vehicle battery demand expanding ninefold by 2028

Make-or-Break Implications For Shareholders

With debt levels expected to reach 285% post-transaction, this restructuring forces bonds and equity into parallel dependency on Zijiang’s quick profitability. For China’s capital markets, it represents a critical test case in whether technically insolvent but restructuring-willing companies deserve survival pathways. Investors should:

• Benchmark quarterly results against secured profit guarantees
• Monitor regulator feedback and shareholder vote outcomes
• Evaluate potential share placement to alleviate leverage concerns

A Transformation Race Against Time

Funding this acquisition leaves *ST威尔 dangerously leveraged – yet presents its only viable exit from delisting oblivion. The company’s survival now hinges entirely on Zijiang’s ability to achieve contractual profit thresholds through 2027. Success would validate China’s restructuring mechanisms while failure could heighten regulatory scrutiny toward similar transactions. The board’s aggressive play merits investor scrutiny as integration milestones unfold.