The capital was raised through the formation of the Low Carbon Fortune-Energy Recycling Collective Capital Trust Plan by Beijing International Trust on December 3, 2009. The amounts raised under the plan are to be loaned to Erdos TCH Energy Saving Development, a joint venture of Xi’an TCH Energy Technology, a subsidiary of the company, and Erdos Metallurgy, based upon the Capital Trust Loan Agreement entered by Erdos TCH and Beijing Trust on November 19, 2009.

Beijing Trust will lend the money to Erdos TCH for its waste heat power generation project phase II and phase III construction and operation, through which Erdos TCH will recycle heat from groups of furnaces of Erdos Metallurgy’s metal refining plants to generate power and steam, which will then be sold back to Erdos Metallurgy.

Guohua Ku, chairman and CEO of China Recycling Energy, said: “We are very pleased to have successfully raised the capital needed to continue progress on the Erdos TCH project without any dilution to our shareholders. This financing will ensure our continued strong growth in revenue and earnings while demonstrating our responsible and innovative management of investor capital.”

Erdos TCH will share the benefits from clean development mechanism (CDM) under the Kyoto Protocol equally with Beijing Trust during the term of the loan, as well as to pay a management incentive benefit to be calculated by a formula tied to Erdos TCH’s net profit and average registered capital of the fiscal year prior to the maturity date of the loan. Under the formula, the management incentive benefit will be paid at the end of Year 4 and can range between 0% and 100% of the net profit of Erdos TCH in the fiscal year prior to the maturity date of the loan depending upon the amount of average contributed capital of Erdos TCH at the time of measurement.

Erdos TCH has agreed to provide a lien on its equipment, assets and accounts receivable to guarantee the loans under the agreement. Xi’an TCH and Mr Ku will provide unconditional and irrevocable joint liability guarantees to Beijing Trust for Erdos TCH’s performance under the agreement. Erdos Metallurgy will provide a commitment letter on minimum power purchase from Edros TCH.