Tianyi Film and Television's performance in the first half of the year was unsatisfactory. Lugang Culture plans to terminate the acquisition of its 49% stake

Lugang Culture announced on the 4th that the company plans to terminate the acquisition due to the unsatisfactory performance of Tianyi Film and Television in the first half of the year.

Original title: Lugang Culture plans to terminate the acquisition of 49% equity in Tianyi Film

and Television Lugang Culture issued a clarification announcement in response to media reports on the morning of the 4th, and said that due to Tianyi Film and Television's unsatisfactory performance in the first half of the year, the company plans to terminate the acquisition.

At present, some media published a report on July 2 titled "Judicial Freeze on Equity of Acquisition Subject Matter, Lugang Culture's Announcement of Suspension of Suspension of Trading". The report said that due to disputes involving equity pledge contracts, the remaining 49% equity of Tianyi Film and Television was frozen by the Dongyang Court in Zhejiang Province in May."Whether the equity dispute will be completely resolved as the listed company said or there are variables still to be seen."

In this regard, the company announced today that in October 2015, Jiangxi Xinyu Shangshanruoshui Asset Management Company (hereinafter referred to as "Xinyu Shangshan Ruoshui") signed an "Equity Pledge Contract" with Shaanxi Cultural Investment (Film and Television) Yinhai Investment Co., Ltd.(hereinafter referred to as "Yinhai Investment"), because Xinyu Shangshan Ruoshui's actual controller and general manager of Tianyi Film and Television Mr. Wu Yi agreed to pledge 49% of Tianyi Film and Television held by Xinyu Shangshan Ruoshui to Yinhai Investment due to personal debt issues with Yinhai Investment. After signing the agreement, both parties did not go through the equity pledge registration procedures.

In May 2016, Yinhai Investment learned based on Lugang Culture's announcement that the listed company planned to acquire a 49% stake in Tianyi Film and Television held by Xinyu Shangshan Ruoshui. Shaanxi Cultural Industry (Film and Television) Investment Co., Ltd., the controlling shareholder of Yinhai Investment, requested Zhejiang Dongyang Court to freeze the 49% stake in Tianyi Film and Television held by Xinyu Shangshan Ruoshui due to the safety of its creditor's rights.

On June 8, 2016, Xinyu Shangshanruoshui and Yinhai Investment signed the "Agreement on Dissolving the Equity Pledge Contract", and both parties unanimously agreed to terminate the "Equity Pledge Contract."

On June 16, 2016, the Xi'an Arbitration Commission complied with the application of Shaanxi Cultural Industry (Film and Television) Investment Co., Ltd., the arbitration applicant.(Xi'an Arbitration Commission Letter [2016] Xizhong Hanzi No. 816), requesting Zhejiang Dongyang Court to lift the relevant property preservation of Xinyu Shangshanruoshui Asset Management Co., Ltd., the arbitration respondent. On June 20, 2016, the company obtained the civil ruling issued by Zhejiang Dongyang Court (2016 Zhejiang 0783 Caibao No. 2), the court decided to lift the freeze on the 49% equity of Zhejiang Tianyi Film and Television Co., Ltd. held by the arbitration respondent in accordance with legal provisions.

Therefore, the company stated that during the suspension of planning and reorganization, the counterparty and relevant parties had properly resolved the matter, and the incident did not pose an obstacle to this asset acquisition.

However, the company stated in the announcement that as of the end of June 2016, judging from factors such as the delay in the start-up of some projects of the target company and the actual performance completed in the first half of 2016, the target company has completed the planned 2016 annual performance of 70 million yuan. There is a large amount of uncertainty; as of June 30, the target company has insufficient supporting materials such as sales contracts for achieving the annual performance of 70 million yuan, and there is uncertainty in completing the above performance commitments. Therefore, after friendly negotiations with the counterparty, it is planned to terminate this acquisition.

Editor: yvette