Hejia Holdings (00704) believes that the directors and management of Jinyan hejia deliberately concealed the loan incident and the litigation process

Zhitong Financial APP News, Hejia Holdings (00704) issued an announcement that regarding the Jinyan hejia lawsuit, the independent legal counsel appointed by the company's independent investigation committee - Guangdong Datong Law Firm found on the public information platform that on September 13, 2021, the Lvliang Intermediate People's Court filed the first case against Jinyan and Jia.

After the Company inquired to Jinyan Hejia, Jinyan Hejia informed the Company that on July 5, 2021, the Shanxi Provincial High People's Court issued a civil judgment (final judgment), and provided the Company with a date of November 3, 2020, the Intermediate People's Court of Lüliang City, Shanxi Province (the first instance) (the judgment), the content of which was related to (including) China Minsheng Bank Co., Ltd. Lvliang Branch as the plaintiff to Jinyan Hejia, Shanxi Qiantong New Energy Development Group Co., Ltd. (Qiantong New Energy), Xiaoyi Jinyan Power Coal Chemical Co., Ltd. (Jinyan Power), Xiaoyi Jinyan New Building Materials Co., Ltd. (Jinyan New Building Materials), Shanxi Jinyan Energy Technology Co., Ltd. (Energy Technology), Mr. Yang Ge, Mr. Wen Kezhong and Ms. Liu Yanping made a judgment on the working capital loan loan contract signed on March 29, 2017 and related mortgage contracts, guarantee contracts, guarantee contracts and irrevocable guarantees (the lawsuit).

The lawsuit was due to the signing of the Working Capital Loan Loan Contract between Minsheng Bank and Jinyan Hejia on March 29, 2017, in which Jinyan and Jia borrowed RMB99.97 million from Minsheng Bank for a one-year term and interest of 4.35%, and Qiantong New Energy provided a mortgage guarantee for the loan with the right to use 1076.19 mu of forest land, and Jinyan Power, Jinyan New Building Materials, Energy Technology, Mr. Yang Ge, Mr. Wen Kezhong and Ms. Liu Yanping provided joint and several liability guarantees for the loan. After the loan matured on March 31, 2018, Jinyan and Jia failed to pay the principal and interest due. Minsheng Bank filed a litigation request with the court, and on November 3, 2020, it was decided by the Intermediate People's Court of Luliang City, Shanxi Province, and minsheng Bank appealed against the first-instance judgment and was finally judged by the Shanxi Provincial High People's Court on July 5, 2021.

In accordance with Article 39 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Guarantee Law of the People's Republic of China, Article 144 of the Civil Procedure Law of the People's Republic of China, and Items 1 and 2 of the First Paragraph of Article 170, the final judgment is as follows:

1. Jinyan and Jia repaid the principal and interest of the loan of Minsheng Bank as of June 21, 2019 of RMB109.7 million (the debt) within one month after the judgment came into effect;

2. Jinyan and Jia repay the agreed interest and penalty interest of Minsheng Bank based on the principal amount of the loan of RMB99.97 million within one month after the judgment came into effect, from June 22, 2019 to the date of repayment of the full principal of the loan;

3. Minsheng Bank has the right of priority to be reimbursed for the right to use 1076.19 mu of forest land in Anze County, Linfen City, Shanxi Province, and after the realization of the mortgage right of Minsheng Bank, Qiantong New Energy has the right to recover from Jinyan and Jia;

4. Jinyan Electric Power, Jinyan New Building Materials, Energy Technology, Mr. Yang Ge, Mr. Wen Kezhong and Ms. Liu Yanping shall bear joint and several liquidation liability, and Jinyan Electric Power, Jinyan New Building Materials, Energy Technology, Mr. Yang Ge, Mr. Wen Kezhong and Ms. Liu Yanping shall have the right to recover from Jinyan and Jia after bearing joint and several liquidation liabilities.

The Company has convened a board meeting on the lawsuit and requested the heads of Jin Yan and Jia to explain to the directors. The person in charge of Jinyan hejia confirmed that they signed the "Working Capital Loan Loan Contract" in 2017 and did not report to the company; As at the date of this announcement, Jinyan and Jia have not repaid the debt in connection with the litigation. The person in charge of Jinyan and Jia verified that the loan was part of a potential loan that was under independent investigation in recent days.

All members of the Board confirmed that they were not aware of the loan and the litigation in advance during the above-mentioned relevant period, and believed that the individual directors of Jinyan and Jia and the management personnel of Jinyan and Jia deliberately concealed the incident and the litigation process, and concealed the board of directors and the auditor of the company for many years. The overall operating and financial impact of the litigation on the Group will be subject to confirmation of the final execution of the litigation, the investigation of potential loans and the outcome of the disposition. The Company will consult with the PRC legal counsel on the legal liabilities of Jinyan and Jia's management and all of the above-mentioned persons involved.