In a landscape where most fundraising projects have concluded, Lanzhou Lanshi Heavy Equipment Co., Ltdhas found itself in hot water due to violations in project disclosure related to its fundraising initiativesThe company recently announced that it had failed to adhere to the deadlines for project reviews and disclosures, which has led to regulatory scrutiny.

The background of this situation unfolds from a capital-raising initiative undertaken by Lanshi Heavy Equipment in 2021, where it successfully raised 1.33 billion yuanAfter deducting issuance expenses, the net proceeds amounted to approximately 1.3 billion yuanDespite the majority of the projects linked to this fund having been completed, several projects are eerily nearing their deadlines yet are languishing due to delays instigated by the owners’ decisions.

In terms of compliance, the announcement indicated that the company had earmarked the funds for three specific projects: the Panjin Haoye 3.6 million-ton-per-year heavy oil hydrogenation EPC project, the Xuan Dong Energy 500,000-ton-per-year hazardous waste coal tar quality improvement project, and a new intelligent management and production model for heavy pressure equipment

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These projects were initially slated to become operational by September 2021, April 2022, and June 2023 respectivelyYet, the reality has shown a clear shift in timelines, with the company failing to review and disclose these crucial delays in a timely manner.

Fast forward to November 2023, Lanshi Heavy Equipment belatedly acknowledged a near five-month delay in the intelligent projectIn a subsequent announcement involving the adjustments of certain projects, it conveyed that this project was now projected to reach completion and acceptance by December 31, 2023. However, by April 2024, the situation had not improved, and another disclosure indicated that the Panjin Haoye project remained on indefinite hold, with the intelligent project now estimated to extend into June 2024. The revelations point to the concerning reality that the announcements concerning the delays came well after the original estimated operational timelines.

Adding to the complexity, Lanshi announced that it was concluding the Xuan Dong Energy project and would channel the remaining funds of approximately 176 million yuan toward its wholly-owned subsidiary's initiative to create an advanced alloy production line

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Statements indicated that the Xuan Dong Energy project had achieved its mid-project acceptance by the end of August 2023 but still concluded later than planned, showcasing a consistent trend of delays that were not initially disclosed by Lanshi Heavy Equipment.

The Gansu Securities Regulatory Bureau has since issued a warning pertaining to Lanshi Heavy Equipment’s lack of compliance with disclosure regulationsThe regulatory body singled out the company's former chairman, Zhang Pu, and the then-company secretary, Hu Junwang, among others, citing insufficient adherence to the necessary review processes and the obligations to disclose project delaysAs a consequence of this breach, both the company and its leadership have been placed on a market integrity record.

In response to the warnings from regulatory authorities, Landsi Heavy Equipment maintained that the administrative measures would not disrupt its day-to-day operational activities

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However, with the ongoing concerns regarding the status of its projects, uncertainty weighs heavily over the trajectory of its other investments.

Among the three projects funded by the 2021 raised capital, while the Xuan Dong Energy and the intelligent projects have reached their completion, the Panjin Haoye project remains unfinishedAs of the end of August 2024, approximately 310 million yuan had been invested into the Panjin project, yet only 97% of the funding requirement has been realizedThe slow pace of investment stands in stark contrast to the promising start of this venture.

Despite the progress made up to April 2024, Lanshi Heavy Equipment reported that due to reasons directly associated with the project’s owner—the Panjin Haoye—construction on the project has ground to a halt, and no forecast for the resumption of activities was availableThe company had indicated that two components made up the overall undertaking, one of which had fulfilled its mechanical acceptance by May 2021 and was awaiting further actions, while the other had reached 95% completion

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Yet, various finishing tasks have been gridlocked, awaiting the owner's direction while Lanshi prepares for dialogue regarding renewal timelines.

As of now, there remains a vacuum regarding the timelines for the resumption of the Panjin Haoye projectCompounding the uncertainty, Lanshi had previously reduced its investment in the intelligent project, reassigning roughly 70 million yuan to another initiative focused on oxygen zinc productionBy the end of December 2024, this project had likewise experienced two postponements before ultimately concluding.

Thus, aside from the unresolved fate of the Panjin Haoye project, Lanshi Heavy Equipment still faces uncompleted fundraising initiatives, including the alloy project which has seen its investments surpass 100 million yuan, crossing the halfway point in its execution.

In light of these developments, attempts to garner remarks from Lanshi’s secretarial office about these issues through calls and letters have met with refusals due to scheduling conflicts of senior officials