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Announcement on Receipt of Letter of Inquiry from Shanghai Stock Exchange and Suspension of Trading

Published:2016-12-26

Stock Code: 600485        Stock Name: Xinwei Group        Ann No.: Lin 2016-183

 

Beijing Xinwei Technology Group Co., Ltd.

Announcement on Receipt of Letter of Inquiry from Shanghai Stock Exchange and Suspension of Trading

 

(The Board of Directors and all the directors of the Company warrant that this announcement contains no false representation, misleading statement or material omission, and shall be jointly and severally liable for the truthfulness, accuracy and completeness of the contents in this announcement.)

 

On 24 December 2016, Beijing Xinwei Technology Group Co., Ltd. (the “Company”) received a Letter of Inquiry Regarding Media Report on Beijing Xinwei Technology Group Co., Ltd. (Shang Zheng Gong Han [2016] No. 2463) (the “Letter of Inquiry”) from Shanghai Stock Exchange. Content of the Letter of Inquiry is hereby disclosed as follows:

 

It has come to our notice that a report titled “Xinwei Group Conceals Massive Debts, Mysterious Investors Cash Out (澳门赌城集团隐匿巨额债务,神秘人套现离场)” published by Money 163 (http://money.163.com/) on 23 December 2016 has aroused wide concern in the market. The report raises questions over the performance of your partner “Xinwei Cambodia”, its relationship with Xinwei Group, the “Buyer's Credit model” adopted by the Company, reduction of shareholding by certain shareholders, the truthfulness of President Wang Jing’s biography, etc. In view of the situation mentioned above, your company is required to verify the following matters and make due disclosure:

 

I. As disclosed by your company, Xinwei Cambodia is not an affiliation but an important client of yours. However, as the media report indicated, Xinwei Cambodia “is an overseas subsidiary of Xinwei Group”, “the total accumulated revenue of Xinwei Cambodia is RMB102 million from 2012 to 2015, whereas its accumulated loss in the same period is RMB1.14 billion”, so on and so forth. You are therefore required to verify: (1) Information on the principal shareholders and actual controllers of Xinwei Cambodia; whether Xinwei Cambodia is an affiliation of or associated with your company in any form. (2) The actual business performance of Xinwei Cambodia, including its principal activities and CooTel operation details, shares in the local market, procurement deals with your company, as well as a combined past-three-year financial report.

 

II. The report questions that the Company using Buyer's Credit transaction model is like to “play tricks by moving money from left hand to right hand”. The Company thus needs to provide the sales ratio to overseas clients using “Buyer's Credit”, explain why use this model, give verified details on Buyer's Credit guarantees provided by your company for Xinwei Cambodia and other overseas clients, as well as the sales revenue generated therefrom. Please clarify if the report is true about the Company “has provided overseas guarantees in return of revenue”, “your overseas partners are using ‘new loans to pay off old debts’ method to settle massive debts”, and “the overseas clients are the overseas subsidiaries of your company”.

 

III. As mentioned in the report, "Xinwei Group conceals massive debts", "with Buyer's Credit model, Xinwei Group is exposed to risks for the immense debts of Xinwei Cambodia and other mismanaged overseas companies”, "on 29 November 2016, total amount of external guarantees provided by Xinwei Group and its holding subsidiaries reached RMB14.204 billion, representing 111.15% of its latest audited net assets. If a crisis exploded and reached full scale to its overseas partners, Xinwei Group could face insolvency”. Your Company needs to verify if the debt concealment reported by media is true, and clarify whether your company is facing significant financial risks based on its current financial position, which encompasses the debt-to-asset ratio, debt maturity structure, balance of external guarantee and the financial position of overseas clients.

IV. The report raises doubts on the identities of the Company’s shareholders including Yang Quanyu, Wang Qinghui, Wu Jian, Wang Anlin, Cai Changfu, and their repeated actions of decrease of shareholding and cash out. The Company is therefore required to verify whether there is any connection or shareholding entrustment between the above mentioned shareholders and the actual controller of the Company; if decrease of shareholding after the lockup period since IPO had ever violated rules and regulations; and whether the information disclosed earlier by the Company and connected persons are truthful, accurate and complete.

 

V. The report states that “Wang Jing’s personal background and source of wealth has always been a mystery”. As per the questioning raised in the report, please clarify if the biography of Mr. Wang Jing, President and actual controller of the Company is consistent with the relevant information disclosed earlier.

 

VI. Other issues questioned by the report.

 

Your Company shall appoint an external independent financial adviser to verify the above questioned issues, and make due disclosure on the professional advices obtained.
Upon receipt of this Letter of Inquiry, your Company shall disclose the content of this letter immediately and carry out verification process as soon as possible. The Company shall promptly disclose details of the verification and reply to Shanghai Stock Exchange in writing.
Considering that the media report referred to in the Letter of Enquiry contains major deviation from the facts and had caused massive adverse impact on the Company, trading of stocks and bonds of the Company was suspended for a whole day on 26 December 2016 through proper application process, in order to avoid abnormal fluctuations in its stock and bond prices.
The Company hereby undertakes to promptly fulfill the obligations of information disclosure upon completion of the verification process by the Company and the intermediary institutions as required in Letter of Inquiry.  

 

The Company has informed the competent authority of the said false report on the first day of its circulation, and has issued a lawyer’s letter in this regard. The Company hereby clarifies that its operation has always been in compliance with all laws and rules as well as regulatory documents. The Company is determined to protect its own interest and that of the shareholders with all legal means.

 

The Board of Directors
Beijing Xinwei Technology Group Co., Ltd.
26 December 2016

 

Copyright © Beijing Xinwei Technology Group. Co., Ltd. All rights reserved. Stock code: 600485

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