*ST Kerry (002072): Reply Letter Of Concern, $277 Million Outstanding.

In November 13th, *ST 002072.SZ released a reply to the Shenzhen stock exchange's letter of concern.

According to the announcement, Kai Reed Cmi Holdings Ltd (hereinafter referred to as "Kay Reed" or "company") received the letter from Shenzhen Stock Exchange on the letter to Kay Reed and Cmi Holdings Ltd in November 1, 2019 (concern letter of small and medium board [2019] 373rd]. Now it is responding to the inquiries made by the Shenzhen stock exchange that the payment made by the German cotton group should not be paid, and the specific basis for the price is 277 million yuan. The details are as follows:

According to the notice on the alleged infringement of reputation rights, the German cotton group said that the "Reed Cmi Holdings Ltd key asset sale framework agreement" signed by the company and the "Kai Reed Cmi Holdings Ltd supplementary sale agreement for the sale of major assets" were truly effective and fully implemented, and the German cotton group said it did not owe any transaction price to the company. The Shenzhen stock exchange requires that:

In connection with the relevant agreements signed by the company and the German cotton group, the transfer of assets from the company to the German cotton group, the payment of the price by the German cotton group to the company and the payment of the price by other parties, the company's specific basis for the payment of the price of the decotton group, which was disclosed in the reply of Kai Reed Cmi Holdings Ltd to the Shenzhen stock exchange semi annual report in 2019, was 277 million yuan.

*ST Kay said that in February 4, 2015, the German cotton group and the company signed the "Kay Reed Cmi Holdings Ltd major asset sale framework agreement", the agreement agreed to the company's own textile equipment and part of the debt and debt package sold. In July 22, 2015, the German cotton group signed a supplementary agreement with Cmi Holdings Ltd on the sale of major assets of Kai Reed Cmi Holdings Ltd, which agreed that the transfer price of the above assets was 488 million 529 thousand and 500 yuan. In July 23, 2015, the company disclosed the sale of major assets (Draft). The company sold the 100% stake in the Dezhou Jinmian Textile Co., Ltd. (hereinafter referred to as "Jinmian textile"), the textile equipment and part of the debt and debt portfolio, and made a valuation of 488 million 529 thousand and 500 yuan according to the agreement. After the company's creditors refused to transfer their creditor's rights to the 100% stake of the German cotton group and Jinmian textile, they were unable to transfer the transfer, and many other factors. The company and Jinmian textile finally transferred the assets to the decotton group for a total of 819 million 617 thousand and 100 yuan. Up to now, the company's property transaction has received a total of 538 million 546 thousand and 900 yuan, and 281 million 70 thousand and 200 yuan has not been recovered.

Upon examination, the counterparty's current payment should be paid at the expense of the specific amount of the transaction consideration, amounting to 281070273.11 yuan. The amount payable by the company to the counterparty before the asset is set aside is 3841574.11 yuan. After deducting the amount, the amount of the outstanding receivable from the company shall be 277228699 yuan.

According to the "Notice of infringement on Shandong decotton Group Co., Ltd.", the company disclosed that in 2011, the German cotton group transferred the controlling rights of the company to the fifth quarter industries. The company and the German cotton group were in the 18 Office of Shun he road, Dezhou City, Germany (hereinafter referred to as "18 of Shun he road"). In March 2019, the German cotton group refused to enter the 18 Office of the Shun he road, and seized all the accounting documents, account sets and financial software data of the company. The Shenzhen stock exchange requires that:

The German cotton group has seized the progress of the company's accounting information, such as accounting vouchers, account sets and financial software data. Please explain the measures that the company has taken and intends to take to solve this matter.

*ST Kerry said that the company has repeatedly communicated with the government working group of decotton group and decotton group for all the accounting documents, account sets and financial software data of decotton group. The company filed a lawsuit against the Dezhou intermediate people's Court on the afternoon of October 30, 2019, requesting the Dezhou intermediate people's court to order the decotton group to return all the accounting documents, account sets, financial software data and other enterprise information collected by the decotton group and compensate the company for this reason.

The loss caused by the matter was 30 million yuan. In October 30, 2019, the court of intermediate people's Court of Dezhou City charged the company's civil complaint. Details of the announcement of the company's infringement on Shandong de cotton Group Co., Ltd., announced on November 1, 2019 by the company on the Internet.

Up to now, the company is in the process of clearing the company's historical account data, financial software data and enterprise information with the German cotton group. According to the relevant progress, the company will decide whether to apply for withdrawal from the Dezhou intermediate people's court.

Due to the fact that the company's annual report 2018 was issued by accountants with no opinion on audit reports, the Shenzhen Stock Exchange implemented a warning of delisting risks for the company's stock. According to the relevant provisions of the thirteenth chapter of the Listing Rules of the stock market (2018 Revision), the company's current delisting risk warning situation is explained one by one, and it suggests that the relevant risks of suspension and listing are suspended. In addition, according to the sixty-sixth section of the securities law, it is the company's statutory obligation to disclose the annual report within the statutory time limit. If the company fails to disclose the annual report within the statutory time limit, it will face the risk of delisting.

*ST carry said the company's current warning of delisting risk and the risk of suspension and listing are as follows:

(1) the current warning of delisting risks in the company is as follows: (1) the net profit of the company in 2017 and 2018 has been negative for two consecutive accounting years; second, the net assets at the end of the audited year in 2018 are negative; 3.

(2) risk warning for suspension of listing and delisting

According to the relevant provisions of the Stock Exchange Listing Rules of the Shenzhen stock exchange, if the company continues to appear in one of the following circumstances after audited by the annual auditor in 2019, the company's shares will be suspended from the date of the announcement of the annual report 2019: (1) the net profit after audited will continue to be negative; second, the net assets of the audited end will continue to be negative; third, the annual financial report will continue to be issued an audit report which can not express opinions or negates opinions.

(3) when the stock is suspended, the company will face the risk of terminating the listing transaction if the following rules are stipulated in the Shenzhen Stock Exchange Listing Rules. (1) after being suspended from listing, the company failed to disclose the first annual report after the suspension of the listing within the statutory period. Second, after the company suspended the listing due to the above circumstances, the first annual report shows that the net profit of the company's net profit or after deducting the non recurring gains and losses is negative. Third, after the company's suspension of the listing, the first annual report shows that the net assets of the company are negative at the end of the year.

If the company fails to disclose the 2019 annual report within the statutory time limit, it will face the risk of delisting. Up to now, the company is in the process of clearing the company's historical account data, financial software data and enterprise information with the German cotton group. If the company's financial data and enterprise information do not affect the company's 2019 annual report, there will be no delisting risk arising from the failure to disclose the annual report within the statutory period.