Beijing Zhongdi Investment Co., Ltd. Announcement on Litigation Progress of Wholly-Owned Subsidiary Chongqing Zhongmei Hengzhiye Co., Ltd.
The board of directors and all members of the board of directors guarantee the truthfulness, accuracy, and completeness of the contents of this report, and there are no false records, misleading statements or major omissions.
Special Notes:
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Stage of the litigation: Pending final judgment.
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Party involved: Chongqing Zhongmei Hengzhiye Co., Ltd. (hereinafter referred to as "Zhongmei Hengzhiye").
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Subject of the lawsuit: Loan amount of RMB 45,952.85 million and related interest.
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Impact on the company: In this litigation matter, the company's 6% equity stake in Hecheng Hecheng Investment, with a book value of RMB 30 million, is accounted for under other non-current financial assets. As of the judicial auction, the company has incurred a loss of RMB 1,467.66 million. Regarding the liability for guarantee undertaken by other defendants in this litigation matter for the company's wholly-owned subsidiary Zhongmei Hengzhiye, Zhongmei Hengzhiye will also recover the resulting subrogation claims. At the same time, the company will make corresponding accounting treatment in accordance with relevant accounting standards and actual circumstances.
Litigation Case Overview
(I) Litigation Stage
On May 24, 2024, Chongqing Zhongdi Investment Co., Ltd. (hereinafter referred to as "Zhongdi Investment" or "the Company") announced the "Announcement on the Litigation Progress of the Company's Wholly-Owned Subsidiary Zhongmei Hengzhiye Co., Ltd." (hereinafter referred to as the "Announcement"). The Company's wholly-owned subsidiary Zhongmei Hengzhiye Co., Ltd. was sued by China Three Gorges Bank Co., Ltd. (hereinafter referred to as "Three Gorges Bank") for a loan of RMB 75 million. On November 19, 2019, Zhongmei Hengzhiye borrowed RMB 45,952.85 million from Three Gorges Bank from November 2019 to January 2020. At the same time, the original shareholder Guangdong Runhong Fuchuang Technology Co., Ltd. (hereinafter referred to as "Runhong Fuchuang") and the actual controller Wu Jun provided a guarantee for the loan.
Zhongmei Hengzhiye pledged 100% of its equity in Zhongmei Hengzhiye as collateral for the loan. An Yue Qin Cheng Real Estate Co., Ltd. (hereinafter referred to as "An Yue Real Estate") provided mortgage guarantees for the loan with its subordinate properties. Subsequently, Three Gorges Bank filed a lawsuit with the Chengyu Financial Court, requesting that Zhongmei Hengzhiye repay the principal amount of RMB 45,952.85 million and the accrued interest, penalty interest, and compound interest; that Zhongmei Hengzhiye pay the legal fees, property preservation fees, preservation guarantee/insurance fees, announcement fees, and other expenses incurred in realizing the creditor's rights; that Zhongdi Investment, the original controlling shareholder Runhong Fuchuang, and the original actual controller Wu Jun bear joint and several liability for the entire debt; that Three Gorges Bank have priority claim over the land use rights of the property located in Renhe, Northern New District, Chongqing, and the buildings under construction on the land, and have the right to be compensated first from the proceeds of the sale or auction of the mortgaged property; that Three Gorges Bank have priority claim over the properties of An Yue Real Estate, and have the right to be compensated first from the proceeds of the sale or auction of the mortgaged property; that Three Gorges Bank have priority claim over the 100% equity of Zhongmei Hengzhiye held by Xizang Zhixuan, and have the right to be compensated first from the proceeds of the sale or auction of the pledged property; the litigation costs of this case shall be jointly borne by Zhongmei Hengzhiye and other parties.