HONG KONG, Aug. 24, 2023 /PRNewswire/ — Minsheng Education Group Company Limited (Hong Kong Stock Exchange Stock Code 1569) (“Minsheng Group“) published an announcement on August 3, 2023 (“August 3 Announcement“) claiming to “grant” an option in relation to the acquisition of 49% of the issued share capital (“49% Shares“) of Leed International Education Group Inc. (“Leed International“), and published a further announcement on August 18 (“August 18 Announcement,” together with the August 3 Announcement, collectively “Option Announcements“) claiming that such option expired on August 17, 2023. We, as the “Vendors” in the Option Announcements, are the minority shareholders who currently hold 49% Shares of Leed International. In view of the materially untrue or misleading disclosures with respect to the matters involving 49% Shares of Leed International in Minsheng Group’s Option Announcements and the Interim Results Announcement for the Six Months Ended 30 June 2023 published on August 23, 2023 (“Interim Announcement“), we hereby issue this clarification announcement to set the record straight on these matters and remind shareholders of Minsheng Group, relevant stakeholders and/or potential investors to pay close attention and exercise caution. There have been ongoing disputes between us and Minsheng Vocational Education Company Limited (“Minsheng Vocational Education“), a wholly-owned subsidiary of Minsheng Group, regarding the sale of 49% Shares of Leed International and we have been engaged in arbitration and litigation proceedings since October 2021 (“Dispute Proceedings“). This clarification announcement does not and has no intention to give up or waive any privileged information relating to the Dispute Proceedings.
First of all, Minsheng Group issued an announcement on December 21, 2021 (“December 21 Announcement“) acknowledging that Minsheng Vocational Education and our company are resolving disputes over the matter of the sale of 49% Shares of Leed International in the manner as stipulated under the share purchase agreement executed on August 20, 2018 (“SPA“). However, Minsheng Group has not made any further disclosure on this material dispute since then and has been avoiding the facts that we have exercised the option to sell 49% Shares of Leed International pursuant to the SPA in October 2021 and commenced arbitration in connection therewith in the same month. Minsheng Group, in the August 3 Announcement, created the so-called “grant of option in relation to the acquisition of 49% of the issued share capital of Leed International” that appeared out of thin air after nearly two years of Dispute Proceedings, and then in the August 18 Announcement, unilaterally claimed that the option had expired without being exercised disregarding our written responses to the so-called “grant” of option, and continued to maintain these untrue disclosures in the Interim Announcement. We hereby solemnly clarify that the contents of these announcements made by Minsheng Group are seriously inaccurate and considerably misleading. In fact, since October 26, 2021, we have commenced an arbitration in Hong Kong against Minsheng Vocational Education’s breach of the SPA, and such arbitration is still ongoing. By a judgment of the Grand Court of the Cayman Islands dated August 3, 2023 (i.e., the same day as the August 3 Announcement), we also successfully obtained a quia timet injunction to prevent Minsheng Vocational Education from enforcing its security over the 49% Shares, which judgment has been published on the website of the Grand Court of the Cayman Islands. Minsheng Group has never made truthful disclosures about the Dispute Proceedings between us, and even incorrectly disclosed in the 2021 and 2022 annual reports that it “was not engaged in any litigation of material importance” and has no “litigation of material importance … pending or threatening against [Minsheng Group].” Even in the special disclosure of the events after the reporting period in the Interim Announcement, Minsheng Group still remained silent about the facts that matters relevant to the 49% Shares had long been under Dispute Proceedings.
Secondly, Minsheng Group’s descriptions of the terms of the SPA in the December 21 Announcement and August 3 Announcement also materially deviated from the facts, including (but not limited to) Minsheng Group’s incorrect (though intentional) statement that the put option held by us to sell 49% Shares of Leed International needs to be “granted” separately by Minsheng Vocational Education. According to the relevant terms of the SPA, the put option can be directly exercised by us during the exercise period. We have validly exercised the put option on October 15, 2021 within the exercise period in the manner provided under the SPA, and Minsheng Vocational Education was therefore obliged to purchase 49% Shares of Leed International at the exercise price of the US dollars equivalent of RMB2,180,735,567.50 as provided in the SPA. Minsheng Vocational Education refused to fulfill its obligation to purchase 49% Shares of Leed International in breach of the SPA. Therefore we commenced a Hong Kong arbitration proceeding against Minsheng Vocational Education on October 26, 2021.
Lastly, with respect to the two loan agreements relating to us referred to in the announcements of Minsheng Group dated December 26, 2018, January 4, 2019, June 27, 2019 and July 28, 2023 and in the Interim Announcement, the loan agreements contain specific provisions stipulating that all outstanding principal and interest shall be deducted from the purchase price after we have exercised the put option to sell 49% Shares of Leed International. We and our affiliated entity Leed National Education Technology (Beijing) Co., Ltd. have already triggered the said deduction mechanism; therefore, all the sums under the loan agreements have been fully deducted. Disputes in connection therewith have been under arbitration in Beijing according to the terms of the loan agreements. Therefore, Minsheng Group’s allegation in the announcement dated July 28, 2023 and in the Interim Announcement that there were still outstanding amounts under the loan agreements was groundless, and its disclosure about the pledge over 49% Shares of Leed International was also incomplete and untrue, and deliberately omitted the relevant judgment by the Grant Court of the Cayman Islands imposing the injunction.
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