*ST Middle Velvet (000982): Controlling Shareholder'S Litigation Matters

Stock Code: 000982 securities short: *ST velvet notice number: 2019-130

Notice of Ningxia Bank of China cashmere Limited by Share Ltd on matters relating to litigation of controlling shareholders of the company

All members of the company and the board of directors guarantee the authenticity, accuracy and completeness of the information disclosure. There is no false record, misleading statement or major omission.

1. The basic situation of the acceptance of this litigation matter.

In December 13, 2019, the Ningxia Limited by Share Ltd (hereinafter referred to as "the company" or "Cashmere velvet industry") received the Ningxia Shenzhen Heng Tian Silk Road Industrial Investment Fund partnership (limited partnership) (hereinafter referred to as the "Heng Tian Silk Road Fund"), "Futian District people's court case acceptance notice" [2019, Guangdong No. 0304 min 3984]. The Heng Tian Silk Road Fund applied for the realization of hypothecation security interest, and requested the Shenzhen Futian District people's Court (hereinafter referred to as the "court") to auction or sell the 400 million shares of the Bank of China cashmere International Group Limited (hereinafter referred to as "Zhong Rong Group"), and pay the premium on the proceeds. The above case has been formally accepted by the court, and the case is announced as follows.

Two. The basic situation of litigation matters.

(1) litigants

Applicant: Ningxia Heng Tian Silk Road Industrial Investment Fund partnership (limited partnership)

Place of residence: north side of south 2nd Ring Road, Lingwu City, Ningxia, via two east side (ecological textile garden)

Unified social credit Code: 91640181317892350A

Executive partner: Heng Tian Jinshi Cci Capital Ltd (appointed representative: Luo Ruifeng)

Applicant: Ningxia BOC cashmere International Group Co., Ltd.

Unified social credit Code: 91640000710639845N

Place of residence: Lingwu ecological textile park (north side of south 2nd Ring Road, Lingwu City, east of two road)

Legal representative: Ma Sheng Ming, executive director and general manager.

(two) facts and reasons stated in the original statement of the case.

The signing of A and stock pledge contract in February 2016, the applicant as the pledgee and the respondent Ningxia Bank of China International Group Limited (hereinafter referred to as "Zhong Rong Group"), as the pledgee, signed the "highest stock pledge contract" as the pledgee, and agreed to pledge the 400 million shares of the Ningxia Bank of China cashmere Limited by Share Ltd (Stock Code: 000982) held by the cashmere group of the applicant to the applicant. The main creditor's right of the pledge guarantee is that the total amount of loans provided by the applicant to the main debtor Ningxia Heng Tian Si Lu trade Co., Ltd. (hereinafter referred to as "trading company") from September 18, 2015 to September 18, 2018 is the maximum amount of the pledge is 6 billion 888 million 500 thousand yuan. In March 1, 2016, the Cashmere Group registered the 400 million shares in the Shenzhen branch of China Securities Depository and Clearing Co., Ltd.

B, the signing, performance and breach of contract of the loan contract. In September 17, 2015, the applicant signed the shareholder loan agreement with the debtor trading company, and agreed that the applicant as a trading company shareholder would provide RMB 2 billion 990 million yuan loan to him for a period of two years, and from September 18, 2015 to September 17, 2017, the annual interest rate of borrowing was 15%. In September 18, 2015, the two sides signed the supplementary agreement on shareholder loan agreement, which agreed that the loan amount should be adjusted to no more than 5 billion 990 million yuan, and the annual interest rate of the loan should be adjusted to no more than 15%. For the above loan agreement, the specific performance of the two parties is as follows:

1, September 17, 2015, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide RMB 480 million yuan loan, the loan period is two years, from September 18, 2015 to September 17, 2017, the annual interest rate of borrowing is 6%. After that, the applicant lowered the annual interest rate from January 1, 2016 to December 31, 2016 to 2.6%, and the interest rate decreased from January 1, 2017 to September 17, 2017 to 0. In October 14, 2015, the applicant paid 480 million yuan loan.

In 2 and September 21, 2015, the applicant, as a borrower and a borrower trading company, signed a shareholder loan agreement. The applicant agreed to offer an interest free loan of RMB 450 million yuan as a shareholder of a trading company.

The term of loan is three years, from September 21, 2015 to September 21, 2018. In September 21, 2015, the applicant paid 450 million yuan loan.

3, September 30, 2015, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide them with RMB 239 million yuan interest free loans, borrowing for a period of three years, from September 30, 2015 to September 30, 2018. In September 30, 2015, the applicant paid 239 million yuan loan.

4, October 12, 2015, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide them with RMB 50 million yuan interest free loans, borrowing for a period of three years, from October 12, 2015 to October 12, 2018. In October 12, 2015, the applicant paid 50 million yuan loan.

5, November 29, 2015, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide them with RMB 249 million yuan interest free loans, borrowing for a period of three years, from November 29, 2015 to November 29, 2018. In November 25, 2015, the applicant paid 249 million yuan loan.

6, March 1, 2016, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide RMB 500 million yuan loan, the loan period is two years, from March 1, 2016 to December 31, 2016, the annual interest rate of borrowing is 5%. In December 31, 2016, the two sides signed the supplementary agreement on shareholder loan agreement, which stipulated that the term of loan should be adjusted to three years, from March 1, 2016 to March 1, 2019, and the annual interest rate was adjusted to 0 from January 1, 2017. In March 25, 2016, the applicant paid 500 million yuan loan.

7, April 1, 2016, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide RMB 500 million yuan loan, the loan period is one year, from April 1, 2016 to December 31, 2016, the borrowing interest rate is

2.3%. In December 31, 2016, the two sides signed the supplementary agreement on shareholder loan agreement, which stipulated that the term of loan should be adjusted to three years, from April 1, 2016 to April 1, 2019, and from 2017.

The annual interest rate was adjusted to 0 in January 1st. In April 29, 2016, the applicant paid 500 million yuan loan.

8, June 1, 2016, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide RMB 30 million 10 thousand yuan loan, the loan period is one year, from June 1, 2016 to December 31, 2016, the annual interest rate of borrowing is 5%. In December 31, 2016, the two sides signed the supplementary agreement on shareholder loan agreement, which stipulated that the term of loan should be adjusted to three years, from June 1, 2016 to June 1, 2019, and the annual interest rate was adjusted to 0 from January 1, 2017. In June 14, 2016, the applicant paid 30 million 10 thousand yuan loan.

9, June 1, 2016, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide RMB 19 million yuan loan, the loan period is one year, from June 1, 2016 to December 31, 2016, the annual interest rate of borrowing is 5%. In December 31, 2016, the two sides signed the supplementary agreement on shareholder loan agreement, which stipulated that the term of loan should be adjusted to three years, from June 1, 2016 to June 1, 2019, and the annual interest rate was adjusted to 0 from January 1, 2017. In June 16, 2016, the applicant paid 19 million yuan loan.

10, June 1, 2016, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide RMB 10 million yuan loan, the loan period is one year, from June 1, 2016 to December 31, 2016, the annual interest rate of borrowing is 5%. In December 31, 2016, the two sides signed the supplementary agreement on shareholder loan agreement, which stipulated that the term of loan should be adjusted to three years, from June 1, 2016 to June 1, 2019, and the annual interest rate was adjusted to 0 from January 1, 2017. In June 20, 2016, the applicant paid 10 million yuan loan.

11, July 20, 2016, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide them with RMB 25 million yuan interest free loans, borrowing for a period of three years, from July 20, 2016 to July 20, 2019. In July 20, 2016, the applicant paid 25 million yuan loan.

12, June 20, 2017, the applicant as a borrower and the borrower trading company signed the "loan agreement for shareholders", agreed that the applicant as a trading company shareholders, to provide them with RMB 1046151.96 yuan interest free loans, borrowing for a period of two years, from June 20, 2017 to June 19, 2019. In June 29, 2017 and June 30th, the applicant paid 1046151.96 yuan loan.

13, before the applicant put forward this application, the trading company repaid part of the loan interest or principal amount separately, namely, in April 13, 2016, repay the loan interest 32589041.10 yuan; in October 13, 2016, repay the principal amount of the loan 32589041.10 yuan; in October 28, 2016, repay the loan interest 15266015.58 yuan and the loan principal 8733984.42 yuan; in February 20, 2017, repay the loan principal 10000000 yuan; in January 1, 2018, repay the loan principal 588794520.55 yuan; in January 10, 2018, repay the loan principal 4000 yuan. In addition, in April 1, 2016, the trading company amended its articles of association to increase its registered capital. The applicant, as a shareholder of the trading company, would have converted the 490 million yuan of the loan provided by the trading company to the new paid capital contribution to the trading company.

14, the above loans of trade companies have all expired. Up to now, the principal amount of loans is still 1422934605.89 yuan (the amount of interest is being counted, which is added after the statistics are finished).

C, applying for the realization of security interests, according to the highest stock pledge contract, the maximum amount of hypothecation guarantees is formed from September 18, 2015 to September 18, 2018, and the maximum amount of creditor's rights guaranteed by pledge is 6 billion 888 million 500 thousand yuan. The actual period of borrowing between the applicant and the debtor trading company is from September 21, 2015 to June 30, 2017, and the balance of the loan is 1422934605.89 yuan.

In view of the fact that a trading company has not yet paid in due time after the loan has expired, so far, according to the second clause of the 219th article and second article of the People's Republic of China property law, "the pledgee may agree with the pledgor to make a discount on the property of the mortgagor or to pay priority to the payment of the proceeds from the sale of the mortgaged property," and to the ninth part first of the highest stock pledge contract.

Any breach of contract in the contract... " In the agreement, the applicant has the right to apply for auction, sale and priority compensation of the hypothecated shares. For this purpose, the applicant applies to the court for the realization of security interest in accordance with the provisions of the 196th and 197 articles of the Civil Procedure Law of the people's Republic of China.

(three) litigation claim

Request the court to permit the auction or sale of the Ningxia Ningxia silver cashmere international Limited by Share Ltd group (000982) 400 million shares of the circulation stock held by the Bank of China (cashmere) International Group Co., Ltd., the applicant, the applicant of Ningxia Heng Tian Si Road Industrial Investment Fund partnership (limited partnership). The price paid after the auction or sale is first paid for in the main contract creditor's right guaranteed by the Ningxia Bank of China International Group Co., Ltd., the main creditor's right includes: 1422934605.89 yuan (additional interest is to be added after the statistics are finished).

Three. Description of other related matters

As of the announcement day, the controlling shareholder of the Cashmere Group owns 481496444 shares of the company, accounting for 26.6751% of the total share capital of the company, and 481496000 shares of the company's total Pledged Shares, accounting for 26.675% of the total share capital of the company, accounting for 99.9999% of the shares held by the Cashmere Group; 481496444 of the shares held by the Cashmere Group are all frozen by the judiciary and their shares have been frozen for 11 times.

In May 2019, 14 Japanese company disclosed the announcement of "2019-51 Ningxia Bank of Shenzhen (cashmere) industry" on the progress of litigation of controlling shareholders of the company. The Heng Tian Jiye (Shenzhen) Investment Center (limited partnership) (hereinafter referred to as "Heng Tian Jiye") and Jiashi Capital Management Co., Ltd. (hereinafter referred to as "harvest capital") put forward the application for the realization of security interests to Shenzhen Futian District people's Court (referred to as the "court"). The above 81 million 496 thousand shares of the Bank of China's cashmere industry, which are applied for pledge security rights, are accounted for 16.93% of the 481496444 stake in the cashmere industry, accounting for 4.51% of the total share capital of the Bank of China. Based on the uncertainty of the auction or sale of the shares mentioned above, the Cashmere Group may lose part of the equity interest, resulting in a further reduction in the shareholding ratio of the Bank of China's cashmere industry, and a further weakening of its ability to control the cashmere industry, which may lose the position of the largest shareholder in the cashmere industry. " The Heng Tian Silk Road Fund applied to the court to auction and sell the 400 million shares of the company in accordance with the law.

If it is finally approved by the court and combined with the above-mentioned 81496000 shares of the company, the 481496000 of the 481496444 shares of the company will be auctioned and sold. Based on the uncertainty of the auction or sale of the shares mentioned above, the Cashmere Group will still lose part of the equity interest, resulting in a further reduction in the shareholding ratio of its stake in the Bank of China. The company will continue to pay attention to the follow-up progress of the above matters and urge relevant parties to fulfill their duty of disclosure in a timely manner. All information disclosed by the company is based on the information published in the China Securities Daily, the securities times, the Securities Daily, the Shanghai Securities Journal and the www.cninfo.com.cn.

Four. Reference documents

Shenzhen Futian District people's court case acceptance notice "[2019" Guangdong 0304 min te 3984]. Notice hereby.

The board of Limited by Share Ltd of Ningxia BOC cashmere industry

Two December 17th 19