BEIJING, CHINA–(Marketwired – April 5, 2017) – Mountain China Resorts (Holding) Limited (TSX VENTURE:MCG) (“MCR” or the “Company“), is pleased to announce that the Company, along with the Company’s subsidiaries, Heilongjiang Yabuli On Snow Asian Game Village Hotel Co., Ltd. (“Hotel Co.“), Heilongjiang Yabuluoni Zhiye Co., Ltd. (“Zhiye Co.“), Heilongjiang Yabuli Sun Village Limited (“Sun Village“), Mountain China Resorts Limited (“MCR HK“), Melco China Resorts Travel Consultancy (Beijing) Co., Ltd. (“MCR Beijing“), and Asia Snow Investment Limited (“Asia Snow“), have entered into a debt settlement agreement (the “Debt Settlement Agreement“) with Beijing Sanren Investment Ltd., which acquired the defaulted loan made by China Construction Bank Corporation (“CCB“) to Hotel Co.
In 2009, CCB made a loan with the principal amount of RMB 250 million to Hotel Co. Both Hotel Co. and Zhiye Co. pledged ten (10) real estate properties and 16 land use rights as collateral. The Company and MCR HK, as corporate parents of Hotel Co. and Zhiye Co., also entered into guarantee agreements with CCB to guarantee repayment by Hotel Co. Hotel Co. defaulted on the loan in 2012 and in 2013 CCB took legal actions to enforce repayment of the principal and accrued interests of the defaulted loan. The Court decided that the Company is obliged to pay off the amount claimed by CCB. Since the Company did not make repayment pursuant to Court decision, CCB sold the entire loan to a debt management company called China Xinda Asset Management Limited (“China Xinda“) in 2014, and in December 2015 China Xinda sold the debt to Beijing Sanren Investment Ltd. (“Beijing Sanren“), another debt management company. Accordingly, Sanren has the right to collect all the principal and accrued interest of the CCB loan, as well as the right to take possession of any or all of the pledged assets.
Pursuant to the Debt Settlement Agreement, the outstanding principal of the CCB loan in the amount of RMB 230,000,000, together with outstanding interest amount of RMB 83,842,874, and custodian fees of RMB 1,380,231 will be considered fully repaid by the Company upon the transfer by Company to Beijing Sanren all of the share equities, assets and liabilities of Zhiye Co., Sun Village, MCR Beijing, Asia Snow, and Hotel Co., except for the real properties and land use rights attached to two hotels currently owned by Hotel Co. The two hotels will have a net value of approximately RMB 475,000,000 and will continue to be owned by the Company.
Beijing Sanren is not a Non-Arm’s Length Party of the Company. The transactions contemplated under the Debt Settlement Agreement are subject to approval of the Company’s shareholders pursuant to Policy 5.3 of the TSX Venture Exchange and are also subject to final acceptance by the TSX Venture Exchange.
MCR is the premier developer of four season destination ski resorts in China. MCR is transforming existing China ski properties into world-class, four seasons luxury mountain resorts with excellent real estate investment opportunities for discerning buyers.
ON BEHALF OF THE BOARD
Gang Han, Chief Executive Officer
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release. This press release contains forward-looking statements that include our belief as to the Company’s ability to complete the transactions contemplated in the Debt Settlement Agreement and obtain the necessary approvals. Certain risks and uncertainties such as our ability to successfully complete the private placement could cause the Company’s actual results to differ materially from those in the forward-looking statements.
The TSX Venture Exchange nor its Regulation Services Provider has neither approved nor disapproved the contents of this press release.