On the evening of May 29, Prevail (300710.SZ) disclosed a major asset restructuring draft, proposing to acquire 100% of the shares of Zhongkong Information held by a total of 17 trading parties, including Huige Partnership, Zhengtai Electric, Yunyin Partnership, and Zhige Partnership, through the issuance of shares and cash payment, and to issue shares to the company's actual controller, Mr. Xiao Tong, to raise matching funds.

This transaction features differentiated innovative design in payment methods. For core shareholders Huige Partnership, Yunyin Partnership, and Zhige Partnership, who undertake performance commitments, the payment will be made through phased issuance of shares, while for the other 14 shareholders, payment will be made through a one-time issuance of shares. Additionally, accounts receivable recovery assessment clauses and impairment testing clauses have been set. This arrangement not only reflects the spirit of new regulatory rules but also takes into account the reasonable demands of all parties involved in the transaction, ensuring investor protection throughout the entire process, representing an active practice of market-oriented reform in the listed company's mergers and acquisitions.

Protecting Investor Rights through Institutional Innovation, Four Layers of Protection Strengthening Risk Defense

In May 2025, the China Securities Regulatory Commission revised the "Administrative Measures for Major Asset Restructuring of Listed Companies," officially establishing the "one-time registration, phased issuance of shares to purchase assets" mechanism, one of the core goals being to strengthen the protection of small and medium-sized investors. This plan strictly adheres to the requirements of the new regulations, aiming to minimize merger integration risks, and has constructed a four-dimensional protection system of "phased issuance + performance commitment + impairment testing + accounts receivable recovery assessment," achieving closed-loop management of the target company's value risks.

According to the restructuring draft, the payment rhythm of the transaction price is deeply bound to the completion of performance commitments, adopting a "phased issuance, performance-based unlocking" pre-constraint mechanism, changing the traditional passive situation of "one-time payment, post-recovery" in mergers and acquisitions, addressing pain points such as difficulty in compensation execution and long recovery cycles from the source, replacing result recovery with process constraints, achieving dynamic checks and balances on performance commitment parties and full-process protection of small and medium shareholders' rights. Regarding performance commitments, Prevail has agreed with the three committers, Huige Partnership, Yunyin Partnership, and Zhige Partnership, that Zhongkong Information's net profit attributable to the parent company, excluding non-recurring gains and losses, will reach 80 million yuan, 95 million yuan, and 105 million yuan in 2026, 2027, and 2028, respectively. In terms of phased issuance, the first phase of shares will be issued within 20 working days after the asset delivery announcement, accounting for 40% of the total consideration shares for the performance committers; the second phase of shares will be issued after the second year of the performance commitment period, and if the cumulative net profit in the first and second years reaches 90% of the cumulative committed net profit, 40% of the total consideration will be obtained; if not met, the number of shares will be reduced according to actual performance; the third phase of shares will be issued after the third year of the performance commitment period, using a three-year combined assessment method, and if the cumulative net profit over three years reaches 90% of the cumulative committed net profit, all remaining shares will be issued, and if not met, the corresponding shares will be reduced according to the performance completion ratio.

Regarding accounts receivable recovery assessment, Prevail has agreed with the performance committers on accounts receivable recovery assessment clauses. If the final collection does not meet the standards, the accounts receivable recovery assessment committers Huige Partnership, Yunyin Partnership, and Zhige Partnership will provide compensation; at the same time, the plan has set up a return mechanism, and if the corresponding accounts receivable are successfully recovered within three years after the compensation is completed, the listed company will return the equivalent amount to the compensators based on the actual collection Setting up accounts receivable recovery assessment clauses is beneficial for solidifying the performance quality of the target company's performance commitment period, reducing the operational risks of the listed company, and effectively protecting the interests of the listed company and small and medium-sized shareholders. At the same time, the return mechanism avoids excessive responsibility for the committing party due to temporary delays in payment, while also incentivizing them to continue assisting in collection after compensation, achieving an effective unity of risk control and interest balance, further strengthening the protection of the interests of the listed company and small and medium-sized shareholders.

Regarding impairment testing, after the performance commitment period expires, Prevail will hire a professional institution to conduct impairment testing. The draft clarifies the standardized accounting criteria for impairment amounts, comprehensively considering capital changes such as capital increases, reductions, and profit distributions during the target company's performance commitment period to adjust the calculation base accordingly; at the same time, it evaluates the value of newly added patents, software copyrights, proprietary technologies, and other R&D intangible assets during the commitment period, while excluding the impact of assets and expenses related to fundraising projects, to truly reflect the actual value of the target assets. If the impairment amount of Zhongkong Information at the end of the period exceeds the total performance compensation already paid by the committing party, the committing party will provide compensation. This mechanism sets reasonable exemption conditions; if the cumulative net profit attributable to the parent company, excluding non-recurring gains and losses, reaches 90% or more of 280 million yuan during the target company's performance commitment period, the listed company will exempt it from its impairment compensation obligations, effectively preventing asset impairment risks through a combination of constraints and incentives, and stabilizing the asset quality of the listed company.

Integrating Quality Targets to Create a Second Growth Curve

As a key enterprise in the field of broadcasting network equipment and data communication systems in China, Prevail has accumulated deep brand influence in the industry with solid R&D strength and a comprehensive market layout. In recent years, facing the slowing growth of the traditional broadcasting industry, Prevail has actively sought strategic breakthroughs, focusing on the high-prosperity infrastructure digitalization track, looking for quality merger and acquisition targets, and is committed to cultivating a second growth curve, accelerating the transformation towards new productive forces.

The acquired Zhongkong Information has been deeply engaged in the field of infrastructure digitalization for over twenty years since its establishment in 1999 and is a leading infrastructure digitalization service provider in China, with business coverage across more than 30 provinces and overseas markets. Zhongkong Information utilizes a series of technologies such as automation, the Internet of Things, artificial intelligence, big data, and cloud computing, along with its self-developed eCityOS infrastructure digitalization platform, industry digitalization applications, and digitalization equipment, to integrate smart city system integration project construction, providing digital solutions covering self-developed hardware and software products, digital systems integration, operation and maintenance services, and technical services for urban transportation, rail transportation, highway transportation, water environment, and intelligent infrastructure in buildings.

Prevail stated in the draft that after the completion of this transaction, the company will accelerate its transformation towards new productive forces, add a new infrastructure digitalization business segment, increase new profit growth points, create a second growth curve, enhance the company's profitability and asset scale, strengthen the company's risk resistance and core competitiveness, and promote high-quality development of the company.

This acquisition is not only an important step for Prevail to deepen its main business and accelerate strategic transformation and upgrading but also an important practice for the company to comply with the trend of merger and acquisition reform in the capital market, standardizing capital operations with market-oriented innovative mechanisms, and fully safeguarding the legitimate rights and interests of investors. In the future, Prevail will take this asset restructuring as an opportunity to continuously deepen the dual-wheel drive development pattern, while solidifying the basic broadcasting foundation, fully releasing the synergistic value of Zhongkong Information's infrastructure digitalization business Continuously expand the scale of corporate assets and profitability, strengthen core competitiveness, steadily promote the implementation of new productive forces, and create long-term sustainable value returns for investors with a stable operating situation and high-quality industrial layout