Zhongyin Cashmere Sued for Overselling Stakes in Shanda Games Privatization Deal
Zhongyin Cashmere, 12/21/15
Ningxia-based Zhongyin Cashmere (000982.SZ) has confirmed that it is being sued concerning its role in the privatization deal of Chinese online game operator Shanda Games and that RMB 10.01 mln in assets have been frozen pending resolution.
According to previous media reports, the majority of the funding going towards Shanda's privatization comes from Zhongyin Cashmere business partners or trustees, but Zhongyin has oversold the stake by selling the same equity right in a privatized Shanda to different investors, thus making it impossible to convert the stakes upon completion of the privatization. Three institutional investors, including Shanghai Haode Asset Management, and four private investors have brought suit against Zhongyin Cashmere, and the court has ordered all assets related to the Shanda Games deal be sealed.
Zhongyin Cashmere's announcement confirms that the company has received a civil complaint from Haode asking for RMB 20 mln in damages. The Shanghai Pudong District People's Court will hear the case on December 28, 2015. Portions of the frozen assets belong to Zhongyin Cashmere subsidiaries Zhongrong Chuanqi Equity Investment and Ningxia Silu Equity Investment. Zhongyin Cashmere's announcement denied receiving any notice of lawsuit filings from the other institutions and individuals mentioned by the media.
However, it has been confirmed that the other parties have established cases against Zhongyin Cashmere, but due to procedural reasons, the company has yet to receive the civil complaints. The suits will petition this week to freeze assets for the remaining portion of Zhongyin Cashmere's involvement in the Shanda privatization deal, or a total of RMB 70 mln.
Keywords: mobile gaming delist Haode Asset Management wireless Shanda Games Internet Zhongyin Cashmere 000982.SZ Zhongrong Chuanqi Silu Equity online gaming litigation law
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