Suzhou Victory Precision Manufacture Co.Ltd(002426) : Announcement on the reply of Shenzhen Stock Exchange to the letter of concern of the company

Securities code: 002426 securities abbreviation: Suzhou Victory Precision Manufacture Co.Ltd(002426) Announcement No.: 2022-022 Suzhou Victory Precision Manufacture Co.Ltd(002426)

Announcement on the reply of Shenzhen Stock Exchange to the letter of concern of the company

The company and all members of the board of directors guarantee that the information disclosed is true, accurate and complete without false records, misleading statements or major omissions.

Suzhou Victory Precision Manufacture Co.Ltd(002426) (hereinafter referred to as “the company”) received the attention letter on Suzhou Victory Precision Manufacture Co.Ltd(002426) from Shenzhen Stock Exchange on February 9, 2022 [the attention letter of the company department (2022) No. 133] (hereinafter referred to as “the attention letter”). After receiving the attention letter, the company attached great importance to it and immediately organized relevant personnel to carry out work and implement and communicate the issues involved in the attention letter one by one, The reply to the inquiry is as follows:

On January 29, 2022, your company disclosed the announcement on the progress of the company’s sale of equity of wholly-owned subsidiaries and the signing of supplementary agreement (III) to the equity transfer agreement, Because the counterparties Nanjing Dele Business Management Co., Ltd. (hereinafter referred to as “Dele business”) and Nanjing Xingyue business management partnership (hereinafter referred to as “Xingyue business”) failed to pay the second phase transfer of 100% equity of Nanjing Dele Technology Co., Ltd. (hereinafter referred to as “Nanjing Dele”) on schedule before December 31, 2021, Your company signed a supplementary agreement with relevant parties on January 28, 2022, extending the payment time of the second phase of transfer payment to March 31, 2022, and agreed to change the payment method of the remaining unpaid transfer payment from pure cash to the combination of physical assets and cash.

Our department is concerned about this. Please check and explain the following matters:

1. According to the equity transfer agreement signed in May 2020, the equity transfer price of Nanjing Dele is 1.036 billion yuan. Up to now, the unpaid remaining equity transfer amount is 906 million yuan. Previously, your company has signed supplementary agreements with the counterparty twice to adjust the payment time. According to this supplementary agreement, your company has basically reached an agreement with the counterparty on the equity transfer price of 320 million yuan in the second phase, of which the cash payment part is not less than 20 million yuan, and the physical assets are to be paid at the price of the real estate held by the counterparty and its actual controller. Please explain whether there is uncertainty in the recovery of equity transfer funds and whether your company has accrued impairment and specific amount of equity transfer funds in this year in combination with the capital holding and payment capacity of Dele business and Xingyue business.

reply:

According to the description of the counterparty and its actual controller, the delay in the payment of the second phase share transfer of 320 million yuan is mainly due to the fact that the financing progress of its assets (company equity, real estate financing, etc.) is less than expected. Although De Le commerce and Xingyue commerce failed to pay the equity transfer price in time due to objective factors, However, the parties to the transaction have a strong willingness to deal and have been actively seeking feasible solutions. Finally, the parties to the transaction reached an agreement at the end of January 2022, and the counterparty will complete all payments in the form of assets and cash by the end of March 2022. Among them, the cash part is no less than 20 million yuan, which will be raised by De Le commerce, Xingyue commerce and their actual controller Chen Zhu; The physical assets are two sets of real estate held by Chen Zhu and his related parties (both parties have confirmed the specific subject matter, and the real estate certificate numbers are [Su (2019) ningxuan real estate property right No. 0015 * * * and su (2019) ningxuan real estate property right No. 0008 * * *]). The transaction value of the real estate will be determined with reference to the appraisal report issued by a qualified appraisal institution. At present, the two sides are promoting relevant work in accordance with the supplementary agreement, and it is expected to complete the recovery of 320 million yuan of equity transfer funds by the end of March 2022.

According to the equity transfer agreement and supplementary agreement signed by all parties to the transaction, the counterparty and its actual controller will pay the subsequent equity transfer funds through their own funds and funds obtained through financing. Dele commerce, one of the counterparties of this transaction, is a one-man limited liability company, established in March 2018. Chen Zhu holds 100% of its equity and has a registered capital of 1 billion yuan, mainly from technology development, consulting, service and business management consulting in the field of Internet of things technology. According to the financial statements of De Le commerce, as of December 31, 2021, the balance of monetary capital was 15 million yuan, and the short-term liabilities and long-term liabilities were 620000 yuan. The monetary capital was abundant and there was no large debt. The asset liability ratio of De Le commerce was 0.23% and the current ratio was 2900%. The financial structure was reasonable. The other counterparty of this transaction, Xingyue business, is a limited partnership, which was established in November 2019. At present, it has no main business. Chen Zhu holds 90% of its equity and is its general partner, bearing unlimited joint and several liability for the debts of the partnership; Chen Zhu, the actual controller, has a good reputation and does not have large overdue debts. According to the information provided by the counterparty, the actual controller Chen Zhu and the company under his control have strong financing ability, including but not limited to the company’s equity and asset projects held by him, and the total amount of financing is expected to be 530-800 million yuan.

Combined with the financial situation of De Le business and the property situation of Chen Zhu, the joint actual controller of the two counterparties, the company judges that the counterparties have good long-term and short-term solvency, have corresponding performance ability, and can meet the payment of the remaining equity transfer of RMB 586 million. The company expects that the remaining equity transfer can be recovered on schedule, Therefore, relevant impairment was not accrued in 2021. The company will pay close attention to the operation of the company and the progress of financing projects controlled by the counterparty and its actual controller. If the above situation changes greatly, the company will take countermeasures in time to protect the interests of the company.

2. According to the agreement, the precondition for your company to complete the first 51% equity delivery of Nanjing Dele with Dele commerce and Xingyue commerce is that Dele commerce and Xingyue commerce will pay the initial equity transfer price of 130 million yuan to the jointly managed account within 50 natural days from the effective date of the equity transfer agreement, Within 55 natural days from the effective date of the equity transfer agreement, provide Suzhou trust with collateral assets evaluated by relevant evaluation institutions and no less than RMB 220 million, and complete the mortgage / pledge registration procedures. Please explain whether the preconditions agreed in the agreement have been met at the time of the first equity delivery in combination with the effectiveness of the equity transfer agreement, the payment of the first equity transfer, the completion of relevant procedures for the secured assets and the completion date of the first equity delivery. If not, please explain the reason and rationality of the delivery.

reply:

Since 2019, the company has actively disposed of various non core assets and focused on the core main business. Since May 2020, the company has started the sale of 100% equity of Nanjing dele. The company, the counterparty and Suzhou Trust Co., Ltd. (hereinafter referred to as “Suzhou trust”) have negotiated the terms of the equity transfer agreement for many times, and held the board of directors / supervisors and shareholders’ meeting on May 20 and June 5, 2020, And signed the equity transfer agreement on Nanjing Dele Technology Co., Ltd. (hereinafter referred to as “equity transfer agreement”); The board of directors / supervisors was convened on June 19, 2020 and signed the supplementary agreement I on the equity transfer agreement of Nanjing Dele Technology Co., Ltd. (“supplementary agreement I”).

The equity transfer agreement will come into force after being deliberated and approved by the general meeting of shareholders held on June 5, 2020. According to the supplementary agreement I, the counterparty will pay the initial equity transfer price of RMB 130 million within 50 natural days from the effective date, and provide Suzhou trust with secured assets evaluated by relevant evaluation institutions and no less than RMB 220 million within 55 natural days from the effective date, And complete the mortgage / pledge registration procedures. After receiving the first phase of equity transfer and completing the mortgage registration procedures of the collateral, both parties will complete the first equity delivery.

As the financing plan of the counterparty is less than expected and the assets to be used as collateral are taken preservation measures by Beijing No. 3 intermediate people’s Court (hereinafter referred to as “Beijing No. 3 people’s court”) due to the litigation involving Citic Securities Company Limited(600030) (hereinafter referred to as “Beijing No. 3 people’s court”), the ownership is limited and the progress of lifting the restrictions does not meet the expectation, Failed to complete the cash payment and mortgage / pledge procedures within the agreed time, but based on the strong willingness of all parties to the transaction and the equity transfer payment received in the Nanjing Dele transaction is the source of funds for returning the relief of Suzhou trust, all parties to the transaction communicate, negotiate and actively promote all matters in the process of the transaction. With the joint promotion of all parties, The counterparty paid 30 million yuan at the end of August 2020, 100 million yuan on December 25, 2020, and completed the payment of 130 million yuan of the first phase of equity transfer; After several consultations and communications between Chen Zhu, the actual controller of the counterparty, and Citic Securities Company Limited(600030) and Beijing Third People’s court, Chen Zhu and Citic Securities Company Limited(600030) reached a settlement of the case and completed the withdrawal procedures by the end of 2020. Beijing Third People’s Court issued a ruling approving the withdrawal of the lawsuit on December 31, 2020.

Due to the complicated process and long time of Beijing Third People’s court for the release of asset restrictions, covid-19 epidemic control, new year’s day and Spring Festival holidays, the counterparty failed to complete the procedures for the release of preservation and subsequent mortgage / pledge of relevant 220 million collateral assets before December 31, 2020, However, considering: ① the limited ownership of the encumbered assets has been settled and the withdrawal of the litigation document has been approved by the third people’s Court of Beijing; ② The subject matter of the secured assets has been clarified, and the relevant procedures for handling mortgage and pledge registration have been started; ③ Chen Zhu, the actual controller of the counterparty, also issued a letter of commitment at the end of December 2020, promising to cooperate to complete the mortgage / pledge procedures as soon as the relevant collateral assets are released. The company believes that there are no substantive obstacles to the mortgage / pledge of relevant collateral and the overall risk is controllable. In order to ensure the smooth progress of this transaction, Suzhou trust lifted the 51% equity pledge of Nanjing dele.

With the joint efforts of all parties, the company successfully lifted the pledge of 51% equity of Nanjing Dele on December 30, 2020, completed the industrial and commercial procedures of 51% equity transfer and 49% equity pledge of Nanjing Dele on December 31, 2020, and completed the registration of pledge of 220 million collateral assets on March 12, 2021.

3. In combination with the reply to question 2, the recovery of equity transfer funds, the counterparty’s ability to pay the remaining price, and the transfer of equity risk return of Nanjing Dele, please explain the time point when Nanjing Dele is no longer included in the scope of your company’s consolidated statements, the basis and rationality for determining the time point.

reply:

According to the relevant provisions of the accounting standards for Business Enterprises No. 20 – business combination: ① the transaction agreement has been deliberated and approved by the general meeting of shareholders of the company, and the transaction does not need to be approved by the relevant national competent authorities; ② This equity transfer is a one-time transaction. According to the agreement, the transaction price is collected in four installments, and the first installment of RMB 130 million has been paid before December 25, 2020; The counterparty provided the list of collateral assets of RMB 220 million at the end of 2020, completed the evaluation report of assets of RMB 180 million of the collateral of RMB 220 million agreed in the agreement, and started the mortgage / pledge of collateral (the mortgage / pledge registration procedure of collateral of RMB 220 million was completed on March 12, 2021); At the same time, the company analyzed the financial situation of the counterparty at that time and believed that its financial structure was reasonable. The asset projects originally expected to be completed in the next year also had strong financing ability and good long-term and short-term solvency; At the same time, it evaluates the solvency of Chen Zhu, the actual controller of the counterparty, and believes that the assets (real estate, equity, etc.) held under his name have high value and strong financing ability. Therefore, the company believes that the counterparty and its controller have the ability to perform subsequent payments on the balance sheet date; ③ Suzhou trust lifted the pledge procedures of 51% equity of Nanjing Dele on December 30, 2020; On December 31, 2020, the company completed the delivery of 51% equity of Nanjing Dele, handled the necessary property right transfer procedures with the counterparty, and completed the industrial and commercial change of 51% equity of Nanjing Dele; ④ The counterparty actually controlled the finance and operation of Nanjing Dele on December 31, 2020. The company no longer enjoys and bears the residual income right and risk of Nanjing Dele, and the control right of Nanjing Dele has been transferred.

In view of this transaction meeting the above conditions, Nanjing Dele will no longer be included in the scope of the company’s consolidated statements from January 1, 2021. At the same time, according to the agreement, the remaining 49% equity will be used as the performance guarantee for subsequent transactions. The industrial and commercial change procedures of the remaining equity will be carried out after receiving the subsequent transaction funds.

4. According to the supplementary agreement previously signed, De Le commerce and Xingyue commerce shall pay liquidated damages for overdue payment to your company at the interest rate of 1 / 10000 per day from the next day of overdue payment. This supplementary agreement extended the payment period of the second equity transfer payment, and did not specify the starting point of liquidated damages. Please specify the specific time point, calculation method and payment method for the overdue payment of liquidated damages for the second equity transfer. reply:

Since the third supplementary agreement is a feasible solution reached on the premise that all parties to the transaction have strong transaction will and agree to continue to perform the agreement, taking into account the actual financing progress of the counterparty, the company agrees to extend the payment time of the second equity transfer of RMB 320 million from December 31, 2021 to March 31, 2022, and the grace period is not considered as breach of contract. If the counterparty fails to complete the payment within the grace period (i.e. before March 31, 2022), it shall pay overdue liquidated damages to the company at the interest rate of one ten thousandth per day according to the actual overdue amount from the next day of overdue payment (i.e. January 1, 2022) to the actual payment completion date. If the counterparty actually breaches the contract, the company will collect the subsequent equity transfer and the early overdue liquidated damages in cash. 5. On December 31, 2021, the payment of the second equity transfer of RMB 320 million was overdue, but your company made disclosure until January 29, 2022. Please check whether there is any situation that the information disclosure is not timely.

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