According to the Zhitong Finance App, Xinda Investment Holdings (01281) issued an announcement relating to (among others) Beijing Longguang (an indirect wholly-owned subsidiary of the company) investing in the target company to acquire 40% of the target company's shares. According to the capital increase agreement, before December 31, 2031, if the target company achieves a net loss, the relevant net loss will be borne solely by Hebei Ju Lin. Therefore, in the three years 2020, 2021 and 2022, the difference between guaranteed cumulative net profit and actual cumulative net profit was RMB 54 million (same unit below), and the profit compensation that Hebei Ju Neighin needed to pay to Beijing Longguang was: 54 million yuan × 40% = 21.6 million yuan.
According to the capital increase agreement, Beijing Longguang will have the right to demand that Hebei Jilin pay compensation according to one or more of the following methods: direct deductions of the allocable profits of the target companies from the current year; or demand that Hebei Jilin receive cash compensation. The above compensation must be paid by Hebei on or before March 31 of the year immediately following the three-year period in question.
According to the company's information, the target company made a huge loss in 2022. As a result, Beijing Longguang has requested Hebei Julin and its guarantor to pay 21.6 million yuan of compensation to Beijing Longguang in cash before 5:00 p.m. on March 31, 2023. However, as of the date of this announcement, the company and Beijing Longguang have yet to receive compensation from Hebei Ju Ling and its guarantors.
The board of directors of the company (including independent non-executive directors) believes that as of the date of this announcement, Hebei Julin has not completed the profit guarantee under the aforementioned capital increase agreement and has not paid compensation in accordance with the capital increase agreement; and considering the current financial situation of the target company, Beijing Longguang's request for compensation in cash to Hebei Julin is fair and reasonable and in line with the overall interests of the company's shareholders. The company will then take further appropriate action (including but not limited to legal action) as appropriate to recover the above compensation payments to protect the company's legitimate rights and interests.