On the evening of August 27, 2018, Zhonghong Holding Co., Ltd. (stock code: 000979, hereinafter referred to as “Zhonghong” or the “company”) disclosed the Announcement on Signing Agreements on Debt Restructuring and Management Trusteeship. On the next morning, JDB Group released a statement in its official web to deny the signing of the aforesaid agreements, which becomes a great market concern. With regard this matter, an SZSE spokesman stressed that SZSE strictly cracks down the illegal behaviors of listed companies and interested bodies in information disclosure, endeavors to create a open and transparent market environment and protects the legitimate rights and interests of broad investors. And these are an important guarantee for the sound development of capital market. If there are any suspected illegal behaviors, SZSE has zero tolerance and will report to regulatory departments for further investigation and punishment according to law.
The SZSE spokesman said that to ensure normal trading order of the market, SZSE has taken regulatory measures at first time. For example, Zhonghong’s stock was temporarily suspended during the trading session. The company was urged to verify what influence JDB Group’s statement will have on the company and check the consistency between the said event and the announcement on August 27 to confirm if there is any illegal information disclosure. In addition, the company was required to release a clarification announcement on August 28 and resume trading on August 29.
The SZSE spokesman expressed that after Zhonghong submitted the announcement on the evening of August 27, SZSE has required the company to highlight the following risk warnings in the eye-catching part of later announcement: First, the company’s management trusteeship will not be implemented at least unless the board approves the same. Second, JDB and Yinyi Capital have not yet performed due diligence of the company, so the agreements may face the risk of being terminated once the due diligence is done. Third, in the agreements, it’s agreed that JDB and Yinyi Capital will offer the company with liquidity fund support and asset injection but the agreements didn’t state the amount of liquidity support or the specific assets to be injected; therefore, the agreements cannot serve as JDB or Yinyi Capital’s commitment to the company and there is uncertainty of performing the agreements. Furthermore, the agreements didn’t specify JDB or Yinyi Capital’s liabilities for breach of contract if they cannot offer the company the aforesaid support or injection.
In particular, the SZSE spokesman reminded that at present, the closing prices of Zhonghong’s stock have been under the par value for ten consecutive trading days. According to Clause 18 of Article 14.14.1 of the Rules Governing Share Listing on Shenzhen Stock Exchange, the company’s stock faces the risk of mandatory delisting. Investors should pay attention to the risks.
