Caixin News Agency November 5th news (by reporter Wang Bin), Ningbo Shanshan (600884.SH) founder Zheng Yonggang passed away less than two years ago, and the company may face the risk of a change in control.

Tonight, Ningbo Shanshan released an announcement that the controlling shareholder Shanshan Group Limited (referred to as 'Shanshan Group') has had approximately 0.43 billion shares frozen by the Mianyang Intermediate People's Court of Sichuan Province, accounting for 54.97% of its holdings, and 19.08% of the total share capital of the company.

Ningbo Shanshan stated that the freezing and marking of shares by the controlling shareholder will not have a significant impact on the company's production and operation, corporate governance, etc. The controlling shareholder is actively communicating with relevant parties to reduce the freezing ratio. However, considering the high cumulative proportion of shares frozen and marked by the controlling shareholder, there is a risk of a change in control if this portion of shares is forcibly disposed of by judiciary.

In the 2024 interim report, Ningbo Shanshan stated that after the original actual controller Zheng Yonggang passed away, his shares in the company and related rights will enter the inheritance process in accordance with relevant laws and regulations. However, the company has not received any legally effective written documents or notifications confirming the new actual controller of the company.

The announcement shows that Shanshan Group holds 0.782 billion shares of Ningbo Shanshan, accounting for 34.71% of the total share capital of the company. As of now, the total shares held in custody by Shanshan Group amount to 0.633 billion shares, accounting for 80.89% of its holdings, and 28.08% of the total share capital of the company.

In addition, Shanshan Group and its concerted action parties Shanshan Holdings Limited, Ningbo Pengze Trading Co., Ltd., and Ningbo Yinzhou Jielun Investment Co., Ltd. collectively hold approximately 1.138 billion shares, with a shareholding ratio of 50.51%. The current total frozen shares amount to approximately 0.891 billion shares, accounting for 78.28% of their holdings, and 39.54% of the total share capital of the company.

The announcement also mentioned that Shanshan Group has faced debt defaults, downgrades in credit ratings of entities and debt items over the past year due to debt-related significant litigation or arbitration. Caixin News Agency reporters noted that in August of this year, Shanshan Group announced that 11.7071 million yuan of loan interest had not been paid according to the repayment plan. The company is in communication and negotiation with banks to seek a solution for overdue payments.

In February 2023, Ningbo Shanshan founder Zheng Yonggang passed away suddenly, leaving behind Ningbo Shanshan and Yongshang Lithium under the Ningbo Shanshan Group's umbrella, both of which are A-share listed companies. Shortly after, his son Zheng Ju took over as the new chairman of Ningbo Shanshan. However, subsequent issues such as high percentage of pledge in Ningbo Shanshan Group, tight cash flow, and poor operation were revealed. On November 1, there were two equity auctions of Yongshang Lithium, which were eventually taken over by Pingtan Yongrong Zhisheng Investment Co., Ltd.

In addition, the performance of Ningbo Shanshan has also raised concerns among investors. In 2023, the first annual period after Zheng Ju took over, the company's revenue and net income attributable to shareholders decreased by 12.13% and 71.56% year-on-year respectively. As we entered 2024, the company's performance has still not significantly improved. In the first three quarters of this year, the company achieved revenue of 13.284 billion yuan, a decrease of 9.69% year-on-year; net income attributable to shareholders was 23.2129 million yuan, down by 98.07% year-on-year.