Chi Lin Electric Shares Dispute Reversal Jinyu Car City Request Each Other "Return"

Due to the fact that the counterparty did not perform the obligations of non competition according to the agreement, Jin Yu Che Cheng (000803) yesterday announced that the company had filed a counterclaim against Zhang Guoxin and others, and called for the lifting of the relevant agreement signed by Chi Lin Electric in 2017 and the return of share transfer and compensation fund occupation fee.

"Shell star" has been dragging down its performance.

In October 2017, *ST Jinyu, who was "wearing a hat", acquired 55% stake in Chi Lin Electric Company for 383 million yuan, and entered the new energy electric machinery manufacturing industry due to its consecutive two years' loss. At that time, the counterpart Zhang Guoxin and Zhang Xinmiao promised that Chi Lin Electric should not deduct the net profit from 2017 to 2019, not less than 60 million yuan, 90 million yuan and 120 million yuan.

In 2017, Chi Lin electric company achieved a net profit of 64 million 788 thousand and 600 yuan, such as the completion of performance commitments, and helped the listed companies achieve net profit of 39 million yuan, and successfully turned around the losses. However, in 2018, due to the introduction of the 531 photovoltaic policy, Chi Lin's electrical performance fell sharply. The net profit of the year was only 369 thousand and 600 yuan, far below the commitment of 90 million yuan. In those days, the net profit of Jinyu car city was only 6 million 419 thousand and 600 yuan, and the net profit after deduction was 197 million yuan.

By 2019, Chi Lin's performance had not improved. According to the China Daily, in the first half of 2019, the company's new energy and electrical equipment business achieved only 1 million 115 thousand and 100 yuan in revenue, a decrease of 99.03% over the same period last year. It is estimated that the annual net profit of the company will be 13 million 924 thousand and 200 yuan, which is much different from that of its performance pledge 120 million. On the other hand, Jinyu car city is in a state of debt and lawsuits. As of June 30th, the balance of money of listed companies was only 11 million 169 thousand and 200 yuan, and the balance of long-term loans and short-term loans reached 44 million 500 thousand yuan and 151 million yuan in one year respectively, and 34 million 500 thousand yuan of bank loans were overdue. In addition, 83 cases involving litigation amounted to 343 million yuan. Finally, Jinyu car city only achieved 11 million 272 thousand and 900 yuan in revenue in the first half of 2019 and a net profit loss of 60 million 763 thousand and 200 yuan.

Who broke the contract?

Since Jinyu car city has not yet paid the second phase of the acquisition of shares, Zhang Guoxin and other four shareholders filed a lawsuit against the court in October, requesting the court to order the cancellation of the equity transfer agreement signed by both sides, and Jinyu car city to compensate the second share transfer and interest.

In this regard, Jinyu car city announced yesterday that it submitted a counterclaim to the court on the four cases mentioned above, requesting the court to order the relevant agreements such as the equity transfer agreement and the compensation agreement signed by the two sides to be lifted in November 1, 2019. Zhang Guoxin and other shareholders returned the first share transfer price and paid the capital occupation fee to the actual refund date.

In the petition, Jin Yu Cheng said that when the listed company acquired the 55% stake in Chi Lin Electric in 2017, in order to make the new and old shareholders work together after the completion of the acquisition, they finally decided to purchase the 55% stake in Zhi Lin Electric Company from the 5 shareholders including the counterpart Zhang Guoxin. As a premise, after the completion of the purchase, the transferor shall perform the obligation of non competition. According to the letter of commitment issued by Zhang Guoxin and other parties at that time, Chi Lin Electric and Jiangsu Di Sheng quadruplex promised to turn Jiangsu's Di Sheng four main business into zero contact price to Zhi Lin electric appliance after the completion of the acquisition, and cancel the subsidiary and sun company of Jiangsu Di Sheng four company. Jinyu car city has paid the first share transfer to Zhang Guoxin. But as of November 28, 2018, the elimination of competition between the two industries has not yet been completed. Jinyu Che Cheng believes that Zhang Guoxin, the defendant of the counterpart, has seriously affected the financial authenticity of Chi Lin electric appliance because of his failure to complete the elimination of competition in the same industry. It is a serious breach of contract and should be liable for the rescission of the contract in accordance with the law. Meanwhile, he applies for the addition of Zhang Xin Miao, the original controller of Chi Lin Electric Company, to take part in the proceedings for third people.

Lawyers said that the completion of industrial and commercial changes can not be combined.

The subsidiary that was originally sent to "protect the shell" looked at the decline in performance in the second years after the merger. The counterpart thought that Jin Yu Che Cheng did not pay the transfer payment as agreed. Jin Yu Cheng said the counterparty did not fulfill the obligation to eliminate competition in the same period as scheduled, which was a serious breach of contract.

The public securities reporter called Kim Yu Che city to inquire about the situation of anti litigation. The company's secretaries general said: "in terms of the current performance, the completion of Chi Lin Electric is not ideal, and the exact data need to be formally published before it can be disclosed. At present, the company has filed a lawsuit, specific issues belong to the contents of the law, it is not convenient to answer. As for the impact of the countersuit on the company's performance in 2017 and in the future, the other side said that everything was unknown and it was necessary for the accounting firm to conduct financial treatment before the court decided.

In response, Wang Zhibin, a lawyer of Shanghai Ming Lun law firm, said in an interview with our reporter: "if the court decides that the agreement is lifted and the business change is completed, Chi Lin will no longer be incorporated into the reports of the listed companies; but if the request is lifted, the listed company is still the shareholder of Chi Lin Electric Company, and its earnings report will still be affected."