NEW YORK, Dec. 13, 2018 /PRNewswire/ -- Yangtze River
Port and Logistics Limited (Nasdaq: YRIV) (the "Company"), an
international infrastructure company that engages in the business
of real estate development via a port logistic project located in
the middle reaches of China's
Yangtze River in Wuhan, China,
today categorically refutes all the allegations made against the
Company in Hindenburg Research's report dated December 6, 2018 (the "Report"). In
particular, the Company wishes to broadly address certain patently
false allegations made in the Report:
1. Worthless/Overinflated Assets
"The unconstructed part of the project is a planned
"Logistics Center" that YRIV states it will build on 1.2 million
square meters of land leased from a local village. On YRIV's latest
quarterly balance sheet, the rights to the land are reported as
having a value of $299 million,
comprising over 77% of the company's total assets… Despite claiming
to lease 1.2 million square meters from the village, our
government-sourced maps…show that the total area of the village is
only 610 thousand square meters. Moreover, conversations with
officials from the village in question revealed that contrary to
the company's claims, YRIV has not leased any land from
them."
- The value of $299 million
reflected in the Company's latest quarterly balance sheet is not
related to the 1.2 million square meters of land. Instead, the
reported value of $299 million
relates to the value of land use rights of the unused portion of 6
parcels of commercial land (steel logistics park). Originally, the
value of these land use rights of the 6 parcels of commercial land
totaling 515,600 square meters, was booked at a cost of
$308 million, of which 79,200 square
meters of land have been used for constructing commercial buildings
with 92,700 square meters of floor area, leaving 436,400 square
meters of unused land. It is this unused piece of land that we have
reported a value of $299 million. As
of today, due to the significant appreciation of the local real
estate market, we estimate that the 515,600 square meters of land
that the Company has obtained land use right certificates for and
was accounted at cost value, has nearly doubled to a value of
nearly $600 million.
- The Company's lease of 1.2 million square meters of land
mentioned in the Report comprises land not only from the Chunfeng
Village but also Junmin Village and Jiangdi Village, which were
brokered and represented through Chunfeng Village.
2. Undisclosed Legal Judgments
A list of the 11 undisclosed legal judgments mentioned in the
Report is set forth below:
- Items 1-6 relate to the litigation and judgements arising from
the sale of commercial house flats by the Company's subsidiary,
Wuhan Yangtze River Newport Logistics Co., Ltd. ("Wuhan Newport").
These commercial house flats were sold in or before 2015. According
to the relevant contracts of sale, if Wuhan Newport fails to
develop the area in accordance with its original development plan
within one year after the sale and purchase, Wuhan Newport would
have to repurchase the commercial house flats at the original
contracted price back from the purchasers. These proceedings were
instituted by the purchasers before the said properties appreciated
and doubled in value between 2017 and 2018. Consequently, the
purchasers are now reluctant to enforce the judgments and sell back
the properties to Wuhan Newport. The Company has already made
provisions for the purchase of the properties in the financial
statements in its annual report for the year ended December 31, 2015. Because the judgments were
already rendered, the Company has not disclosed these judgements as
ongoing "Legal Proceedings".
- Item 7 refers to the loan of RMB 290
million due to China Construction Bank Gangcheng Branch
dated May 28, 2014 mentioned in the
Report, plus interest totaling approximately RMB 325 million, and not in addition to such
loan. The loan and interest payable obligations have been disclosed
and accounted for in the Company's financial statements in its
annual report for the year ended December
31, 2017.
10. LOANS
PAYABLE
|
|
Bank
name
|
|
Term
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
|
|
|
|
China Construction
Bank
|
|
From May 30, 2014 to
May 29, 2020
|
|
$
|
44,221,399
|
|
$
|
41,456,074
|
The Company is in the process of
negotiating a loan restructure with the bank and in the meantime,
all payments due are suspended. Also, as a result of negotiations,
the bank has not instituted enforcement proceedings. As in the
above Items 1-6, because a judgement has already been rendered, the
Company has not disclosed it as an ongoing "Legal Proceedings".
- Items 8-11 refer to judgements obtained against Wuhan Newport
as a guarantor for certain loans taken out by a large shareholder
of Wuhan Newport before it became a subsidiary of the Company.
Since the judgments were rendered, the shareholder has undertaken
in writing to be solely responsible for all these loans without
recourse to Wuhan Newport and has entered into a repayment plan
with his creditor(s). Accordingly, no enforcement actions have been
instituted against Wuhan Newport and in accordance with legal
opinion from PRC counsel, there are no legal or financial liability
accorded to Wuhan Newport.
3. Money from YRIV's Capital Raises Has Been Used to Pay
the Chairman/Controlling Shareholder Rather Than Advance Company's
Projects
The Report alleges that the Company has consistently reported
large liability balances "due to related parties" on its
financial statements. These, in turn, seem to accrue large interest
rates which simply get added to the "advances" over time. When
capital is raised, cash is then used to pay back the supposed
related-party "advances", rather than being employed to further the
company's projects.
- Ever since the closing of the reverse merger in December 2015, the Company has taken out 19
short-term loans via convertible notes totaling $8.546 million. The money from these loans was
mainly used for paying the proposed upfront deposit payments for
acquiring another entity, Wuhan Economic Development Port Limited
("Wuhan Port EDP"). Because the acquisition of Wuhan Port EDP as
aborted, the Company began repaying the convertible notes from the
loan proceeds. As of the end of November
2018, the Company has repaid $9.031
million ($7.846 million in
principal plus $1.184 million in
interest), leaving an unpaid principal of $699,000.
- Contrary to the Report, the Company's CEO, Mr. Xiangyao Liu has
not only not received a penny from these loans but has advanced as
much as $485,000 towards the payment
of the $9.031 million by the Company
and will likewise advance the forthcoming redemption of an
unexpired principal of $699,000 plus
interest.
- Hindenburg quoted the following from the Company's Quarter
Report on Form 10-Q for the quarter ended September 30, 2018:
The Report concluded that there was a total repayment of "loans"
of approximately $6.2 million to Mr.
Liu. This is not the case. The Report focused on the numbers
highlighted in the red circles but neglected the increased amounts
highlighted in the green circles which showed increased advances
from Mr. Liu to the Company. The net effect of the
aforementioned numbers shows a net advance from Mr. Liu to the
Company. In addition, as mentioned in the Report, "the total amount
of those 19 convertible notes amounted to $8.5 million, of which $3.39 million is outstanding while $5.15 million has been redeemed." As such, there
is no way that Mr. Liu would have received $6.2 million from the proceeds of the notes.
"The Report contains numerous errors of facts and misleading
speculations that are libelous and we categorically deny such
speculations. This Report is largely a rehash of prior allegations
made against us and only focuses on certain discrete information to
cultivate a distorted view of the Company", said Mr. Xiangyao Liu,
Chairman and Chief Executive Officer of the Company. "We have not
granted access to Hindenburg nor has Hindenberg ever contacted us
to seek any clarification or explanation to the allegations made.
These speculations have caused significant damage to our Company
and we are resolved to take such actions necessary to defend
ourselves and protect the interests of our shareholders.
Additionally, we have instructed counsel to explore our recourse
against Hindenburg for making such irresponsible, baseless and
libelous statements, including but not limited to instituting legal
proceedings against them. We are committed to a high level of
corporate governance and stand by the integrity of our financial
statements and business operations. We will be conducting a special
internal investigation into the other allegations made and will
report the outcome of such investigation in due course."
About Yangtze River Port and Logistics Limited
Yangtze River Port and Logistics
Limited primarily engages in the business of real estate
development with a port logistic project located in the middle
reaches of the Yangtze River. Yangtze River
Port and Limited is a large infrastructure development
project implemented under China's
latest "One Belt One Road" initiative and is believed to be
strategically positioned in Wuhan,
a crucial trading window between China, the Middle
East and Europe. The
logistics center is also expected to provide a number of shipping
berths for cargo ships of various sizes. Yangtze River Port and Limited is expected to provide
domestic and foreign businesses a direct access to the Free Trade
Zone in Wuhan. The project will
include commercial buildings, professional logistic supply chain
centers, direct access to the Yangtze River, Wuhan-Xinjiang-Europe
Railway and ground transportation, storage and processing centers,
IT supporting services, among others.
For additional information please go to:
http://www.yerr.com.cn
Forward-Looking Statements:
This document includes "forward-looking" statements, as that
term is defined in the Private Securities Litigation Reform Act of
1995 or by the Securities and Exchange Commission in its rules,
regulations and releases. Forward-looking statements are any
statements other than statements of historical fact, including
statements regarding Company's expectations, beliefs, hopes,
intentions or strategies regarding the future. Among other things,
these forward-looking statements may include statements regarding
the change of Company's plan of operation, future opportunities as
a result of the matter referenced in the above statements; and any
other statements regarding Company's future beliefs, expectations,
plans, intentions, financial condition or performance. In some
cases, forward-looking statements can be identified by the use of
words such as "may," "will," "expects," "should," "believes,"
"plans," "anticipates," "estimates," "predicts," "potential,"
"continue," or other words of similar meaning. Forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those discussed in, or
implied by, the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, general
economic conditions, our financial and business prospects, our
capital requirements, our financing prospects, our relationships
with employees, and our ability to realize the anticipated benefits
of such transaction, and those disclosed as risks in other reports
filed by us with the Securities and Exchange Commission, including
those described in our most recently filed Quarterly Report on Form
10-Q, Annual Report on Form 10-K and subsequent amendment on Form
10-K/A, current report on Form 8-K, and other filings with the
SEC.
We caution readers that any such statements are based on
currently available operational, financial and competitive
information, and they should not place undue reliance on these
forward-looking statements, which reflect management's opinion only
as of the date on which they were made. Except as required by law,
we disclaim any obligation to review or update these
forward-looking statements to reflect events or circumstances as
they occur.
CONTACT:
James Coleman
Executive Director
jcoleman@yerr.com.cn
646-861-3315
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