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Item 1.01.
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Entry into a Material Definitive Agreement.
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On March 21,2016, General Steel Holdings, Inc’s. (“General
Steel” or the “Company”), wholly-owned subsidiary, Tongyong Shengyuan (Tianjin) Technology Development Co., Ltd.
(“Tongyong Shengyuan”), entered into an Equity Transfer Agreement of Maoming Hengda Steel Co., Ltd. (the “Agreement”),
to sell and transfer its 99% equity interest in Maoming Hengda Steel Co., Ltd. (“Maoming Hengda”) to Tianwu Tongyong
(Tianjin) International Trade Co., Ltd. (“Tianwu JV”). Tongyong Shenguan owns 32% of the equity interests in Tianwu
JV. Additional parties to the Agreement include, Mr. Zuyong Zhang, the General Manager and legal representative of Maoming Hengda,
who owns 1% of the equity interests in Maoming Hengda, as well as Tianjin Qiugang Investment Co., Ltd. (“Tianjin Qiugang”),
which was previously a majority-owned subsidiary of the Company.
In December 2015, Tianjin Qiugang transferred its 99% equity
interest in Maoming Hengda to Tongyong Shengyuan; however, the registration of the share transfer has not yet been completed with
the State Administration for Industry and Commerce (the “SAIC”). As a result, under the Agreement, Tianjin Qiugang
has agreed with Tongyong Shengyuan to arrange a direct transfer of the 99% equity interest in Maoming Hengda from Tianjin Qiugang
to Tianwu JV.
The aggregate purchase price for 100% of the equity interests
in Maoming Hengda is RMB331,280,980.97 (approximately USD 50,966,304), of which RMB327,968,171.16 (approximately USD 50, 456,641)
is payable to Tongyong Shengyuan and RMB3,312,809.91 (approximately USD509,663) is payable to Mr. Zhang. The payment of the purchase
price will be made in two installments. The first installment in the aggregate amount of RMB264,890,990.57 (approximately USD40,752,460)
shall be paid five days after the effective date of the Agreement (the “First Installment”) and the second installment
in the aggregate amount of RMB66,389,990.40 (USD10,213,844) shall be paid within one year of the effective date of the Agreement.
The books and records, certificates, licenses and permits, as
well as accounting records and other financial data and other documents, materials and agreements with respect to Maoming Hengda’s
business and operations, will be delivered to Tianwu JV within three days after the payment of the First Installment. Tianwu JV
shall not be responsible for any financial claims, debts or obligations of Maoming Hengda until the completion of the transfer
of the equity interests in Maoming Hengda into the name of Tianwu JV.
The transfer of the equity interests in Maoming Hengda to Tianwu
JV shall be completed upon the registration of such transfer with the SAIC (the “Equity Transfer”). The Agreement provides
that after Tongyong Shengyuan and Mr. Zhang receive the First Installment they shall assist Tianwu JV to complete the Equity Transfer
procedures with the SAIC.
