YCI Yangtze China

TIDMYCI

RNS Number : 3639D

Yangtze China Investment Limited

16 May 2012

 
 Press Release   16 May 2012 
 

Yangtze China Investment Limited

("Yangtze" or the "Company")

Investment Update

Yangtze China Investment Limited (AIM: YCI), a provider of expansion capital to China-based enterprises, today announces an update in relation to Arigata Holdings Inc. ("Onbest"), an investment made by Yangtze for an equity interest of 30 per cent. upon full conversion of a convertible note.

Owing to the previously-announced litigation, all the operations of Onbest continue to be suspended and a majority of its employees have resigned. Since there is a high level of uncertainty that Onbest can operate as a going concern in the foreseeable future, the carrying value of Yangtze's investment in Onbest, amounting to US$4.1 million, was fully written down on 30 September 2011. The litigation, so far, has no impact on the cash position of Yangtze.

As previously disclosed in an Investment Update dated 9 November 2011 as well as the Interim Results announcement issued on 22 December 2011, litigation was brought against both the founding shareholder/CEO of Onbest, David Tian, and the sole operating subsidiary of Onbest (the "Onbest Sub") by an external Chinese investor, regarding the RMB 15 million portion of a personal loan for a total sum of RMB 20 million, made in November 2010 to David Tian. The personal loan is interest bearing and is secured by a corporate guarantee from Onbest Sub and the pledge of certain equity interest in the intermediate holding company of Onbest Sub currently held by David Tian. The external investor claimed that the loan agreement was invalid and called for judgment by the Court of the People's Republic of China ("PRC") for repayment of the loan plus interest to the external investor.

In March 2012, the Court in the PRC issued a judgement and ordered the repayment of the loan plus interest to the external investor by David Tian and Onbest Sub, which, as the guarantor for the loan, was also liable for the loan repayment should David Tian fail to meet the repayment obligation. In reaching its decision, the Court of the PRC confirmed the validity of the loan agreement.

Upon the advice of the legal counsel, David Tian did not appeal the judgement but instead filed in a counter lawsuit on 18 April 2012 against the external investor and claimed for damages arising from the suspension of operations. In addition, on 21 April 2012 a petition was filed to the Court of the PRC by David Tian in conjunction with Onbest Sub for a delay to compliance with the March 2012 judgement, on the basis that a counter suit had already been filed and the March 2012 judgement would cause further financial strain to the parties involved.

The Company will keep its shareholders and potential investors informed of any material development in connection with the litigation as and when appropriate.

- Ends -

For further information:

 
 Yangtze China Investment Limited 
 Wilfred Wong                            Tel: +852 2281 7222 
                                           www.yangtzecn.com 
 Yangtze Capital Advisory Limited 
 Richard Zhao                            Tel: +852 2281 7218 
                                           www.yangtzecn.com 
 Canaccord Genuity Limited 
 Bruce Garrow                           Tel: +44 (0) 20 7523 
                                                        8350 
 Philippa Underwood                 www.canaccordgenuity.com 
 

Media enquiries:

 
 Abchurch Communications Ltd 
 Henry Harrison-Topham / Quincy Allan     Tel: +44 (0) 20 7398 
                                                          7710 
 quincy.allan@abchurch-group.com        www.abchurch-group.com 
 

Notes to Editors

Yangtze China Investment Limited is a closed-end investment company established to make minority equity and equity-related investments in a portfolio of small and medium-sized growth businesses within, or associated with, the consumer sector in China. With a proprietary deal flow, the Group focuses on unlisted companies whose business operations are based principally in mainland China. Yangtze typically seeks to invest in companies that are revenue generating, ideally profitable or anticipated to generate profits in the near term and which the Group believes have strong management teams and market leading potential.

Yangtze aims to capitalise on the growing disposable income in China, investing primarily in companies operating in a variety of consumer sectors, including consumer-related technology, media and advertising, entertainment, distribution and retailing of consumer goods and services, and health goods and services.

For further information, please see www.yangtzecn.com

This information is provided by RNS

The company news service from the London Stock Exchange

END

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