According to the Zhitong Finance App, Qiangtai Environmental Protection (01395) issued an announcement regarding the sale of 70% of the shares of Hai'an Hengfa Sewage Treatment Co., Ltd. (target company) by Hengfa Water Development Co., Ltd. (Hengfa), an indirect wholly-owned subsidiary of the company. Hengfa and CGN Environmental Protection Industry Co., Ltd. (CGN Environmental Protection) signed a sales agreement on July 21, 2022. Hengfa conditionally agreed to sell and CGN Environmental Protection conditionally agreed to acquire 70% of the target company's shares. The total cost was approximately RMB 68.2 million. According to the sale agreement, the price will be settled in three instalments (i.e. RMB 34.083 million; RMB 204.498 million; and RMB 136.33,200).

As of the date of this announcement, the first and second installment payments have been settled. However, on the date of this announcement, although Hengfa has reached the terms of the sales agreement, the third instalment payment of RMB 136.33,200 (third instalment payment) has been overdue and CGN Environmental Protection has not made a settlement.

Hengfa has taken all necessary and appropriate steps to recover the outstanding amount in accordance with its rights under the sales agreement, and has applied to the Shenzhen International Arbitration Court to arbitrate (arbitration) against CGN Environmental Protection in the third installment; default compensation, exchange losses and legal expenses totaling approximately RMB 2.2 million; and all costs of the arbitration. On February 5, 2024, Hengfa received an arbitration acceptance notice from the Shenzhen International Arbitration Court.