Zhengtong Motor (01728.HK) announced that according to the judgment of first instance granted by the Ningbo Intermediate people's Court of Zhejiang Province, Beijing Guangze, which is indirectly held by the family members of the company's executive director Wang Muqing, should pay the principal amount of 420 million yuan (the same below) together with interest to the plaintiff Ningbo Yuchen Fengze equity investment partnership (this amount has not yet been finally determined). These include the repurchase amount of Beijing Zun Baocheng and Beijing Baoze equity investments held by the plaintiff in Beijing Guangze.
As the company's wholly-owned subsidiary Wuhan Zhengtong signed in March 2016 (first signed) and March 2020 (extension) in favor of the plaintiff in respect of the outstanding amount owed by Beijing Guangze to the plaintiff, the court of first instance also required that Wuhan Zhengtong should bear joint and several guarantee liability for the above-mentioned amount.
The debt of Beijing Guangze has been secured by the real estate owned by Beijing Zun Baocheng and Beijing Baoze. The collateral is also used as collateral for outstanding loans under separate actions. According to the assessment issued by du Ming Joint Real Estate Evaluation (Beijing) on March 4, 2020, the value of the collateral is about 3.218 billion yuan on December 30, 2019, and it is not clear whether or when the collateral will be realized.
The company pointed out that the judgment of the first instance has not yet come into effect, and Wuhan Zhengtong will appeal in accordance with the law. At present, there is no final judgment in the case, and there is still considerable uncertainty in the matter; the company will follow up the legal proceedings and continue to assess the impact of the lawsuit on the group.
In addition, the plaintiff's associates in mainland China also filed a lawsuit against a loan with an outstanding principal of 1.35 billion yuan, requiring Wuhan Zhengtong to bear joint and several guarantee liability, which has not yet been decided.