Hebei Yichen Industrial : Announcements and Notices - Inside Information and Resumption of Trading

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Hebei Yichen Industrial Group Corporation Limited* ئ̏ᑈԕྼุණྠٰ΅Ϟࠢʮ̡

(A joint stock limited liability company incorporated in the People's Republic of China)

(Stock Code: 1596)

INSIDE INFORMATION

AND

RESUMPTION OF TRADING

This announcement is made by Hebei Yichen Industrial Group Corporation Limited (the "Company"; together with its subsidiaries, the "Group") pursuant to Rule 13.09 of the Rules (the "Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

Reference is made to the announcement of the Company dated 29 January 2019 in relation to the trading halt in the H shares (the "H Shares") of the Company pending the release of an announcement by the Company in relation to events that have come to the attention of the directors (the "Directors") of the Company which may affect the recoverability of the Company's investment in certain wealth management products and constitute inside information of the Company.

THE RECOVERABILITY OF THE COMPANY'S INVESTMENT IN CERTAIN WEALTH MANAGEMENT PRODUCTS

As a means to utilise surplus cash reserves, during the period from 16 November 2016 to 24 February 2017, the Company had subscribed for a number of funds (the "Funds") managed by Shenzhen City William Financial Holding Limited* (ଉέ̹۾กږፄછٰϞࠢʮ̡) (the "Fund Manager"), a company established under the laws of the PRC principally engaged in asset management and a private equity fund manager registered with the Asset Management Association of China (ʕ਷ᗇՎҳ༟ਿږุ՘ึ). The scope of investments of the Funds include various financial instruments, such as bonds (including government bonds, financial bonds, company bonds and corporate bonds traded through banks or exchanges), reverse repurchase bonds, bank deposits, sizeable negotiable certificates of deposit, currency market funds and other bank financial products, which have a low risk profile and high liquidity. TheFunds may also invest in investment products including trust beneficial rights, trust schemes, specified asset income rights (i.e. investment products such as income rights of entrusted loan assets, equity securities and credit assets), asset-backed securities, stakes in limited partnership, collective asset management schemes, targeted asset management schemes, specific asset management schemes launched by subsidiaries of funds and security dealers, private funds and stocks.

Under the fund subscription agreements, the Company may redeem the principal investment amounts in part or in whole at any time by written notice. Upon receipt of the redemption request of the Company, the Fund Manager shall return the relevant parts of the principal investment amounts plus an agreed investment returns at the rate of 8% per annum. In the event that the Funds' assets are not sufficient to meet the redemption request of the Company, the Fund Manager shall apply its assets to make good the shortfall.

As at the date of this announcement, the total outstanding principal investment amount of the Funds is approximately RMB129.5 million, of which the subscription periods have not yet expired under the terms of the fund subscription agreements.

The Board has recently noticed from the media that Suzhou China Create Special Material Co., Ltd. (ᘽψʕ߅௴อۨҿٰࣘ΅Ϟࠢʮ̡) ("Suzhou China Create"), a company listed on the Small and Medium Enterprise (SME) Board of the Shenzhen Stock Exchange (stock code: 002290), published an announcement on 3 January 2019, in which it was disclosed that the office of Shenzhen China Create Assets Management Co., Ltd.* (ଉέ̹ʕ߅௴༟ପ၍ଣ Ϟࠢʮ̡) ("Shenzhen China Create"), the controlling shareholder of Suzhou China Create, and its subsidiaries had been seized together with some computers and documents stored there. It was also mentioned in the announcement that Mr. Zhang Wei (ੵਃ) ("Mr. Zhang"), the de facto controller of Suzhou China Create, and several other directors and senior management members of Suzhou China Create had been asked to assist the authorities with their inquiries. According to the announcement of Suzhou China Create dated 28 January 2019, the chairman of the board of directors and another director of Suzhou China Create have been released, but there was no mention of the other persons who have been requested to assist the authorities with their inquiries, including Mr. Zhang.

Mr. Zhang is the controlling shareholder, chairman of the board of directors and the general manager of China Create Financial Holding Group Co., Ltd.* (ʕ߅௴ږፄછٰණྠϞࠢ ʮ̡), the direct holding company of the Fund Manager. Upon noticing the above incidents from the media, the Company has sought to enquire about the current status of the Funds, and the future ability of the Fund Manager to provide full redemption of all the outstanding principal investment amounts of the Funds at maturity or upon exercise of the redemption rights by the Company anytime before the expiration of the subscription period. However, up to the date of this announcement, the Fund Manager has yet to provide any official confirmation in respect of the foregoing matters. The Company also noticed that the office of the Fund Manager has not been in operation. The Board is of the view that all such incidents have cast doubt on the recoverability of all or any portion of the outstanding principal investment amounts of the Funds and the accrued agreed investment returns. In the event that the Group is unable to recover all or any portion of the outstanding principal investment amounts of the Funds, the Group may record an impairment loss in connection with its investments in the Funds, which, if materialised, may have a substantial adverse impact on the financial performance of the Group for the year ended 31 December 2018.

The Company will continue to liaise with the Fund Manager for the redemption of the Funds and will consider other remedial actions with a view to minimising any negative impact arising from the possible non-recovery of all or any portion of such investment.

The Board wishes to state that this announcement is made on the basis of the information currently available to the Board and a preliminary assessment in respect thereof only. In particular, the exact amount of the impairment loss to be recorded in connection with the investments in the Funds has yet to be determined by the auditors of the Company under the applicable accounting principles. Further announcement(s) in respect of the above incidents may be made by the Company as and when appropriate. Details of the above incidents and their impact on the financial performance of the Group for the year ended 31 December 2018, if any, may be disclosed in the final results announcement of the Company, which is expected to be published in March 2019.

RESUMPTION OF TRADING

At the request of the Company, trading in the H Shares on the Stock Exchange has been halted with effect from 9:00 a.m. on Tuesday, 29 January 2019 pending the release of this announcement.

The Company has applied to the Stock Exchange for the resumption of the trading in the H Shares with effect from 9:00 a.m. on Thursday, 31 January 2019.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the H Shares.

By order of the Board

Hebei Yichen Industrial Group Corporation Limited*

ZHANG Haijun

Chairman

Shijiazhuang, The PRC, 30 January 2019

As at the date of this announcement, the executive Directors are Mr. Zhang Haijun, Mr. Zhang Ligang, Mr. Wu Jinyu, Mr. Zhang Chao, Mr. Zhang Lihuan and Ms. Fan Xiulan; and the independent non-executive Directors are Mr. Jip Ki Chi, Mr. Wang Qi and Mr. Zhang Liguo.

*

For identification purpose only