We look back at the most significant transactions and disputes of last year as we ring in the year of the tiger
Against the backdrop of a recovering economy, the market continued its buoyance during the past year. A number of exemplary transactions were closed despite prevailing strong winds in the geopolitical and regulatory environments. With our annual Deals of the Year report, we revisit with our readers the decisive moments in the legal market that brought together the efforts of various parties, and provide a glimpse into the experiences behind each deal.
For transactions that have closed or have had significant development between 1 November 2020 and 31 October 2021 ‒ and with China Business Law Journal’s years of close observation and constant reporting of the China market ‒ we have selected 126 deals that stand out as the Deals of the Year 2021 from a vast pool of submissions from law firms. During the process, we attached the most importance to the overall significance, complexity and innovative nature of the deals and cases, while also taking into account deal size and broader interests.
The capital market deals witnessed a surge in Chinese companies shifting their financing focus back to Hong Kong and the mainland. On the one hand, such issues as cybersecurity review, regulations on private education and training companies, the implementation of the Holding Foreign Companies Accountable Act by the US Securities and Exchange Commission, and speculation about a ban on overseas listings via variable interest entities (VIEs) have, to varying degrees, hindered the pace of overseas listings, with privatisation, delisting and secondary and dual primary listings in Hong Kong being commonplace.
On the other hand, the mainland capital market showed improved financing strength as a result of the wider adoption of the securities registration system, the establishment of the Beijing Stock Exchange, and major listings on both the Star Market and the Main Board of the Shanghai Stock Exchange, which overtook Hong Kong to rank third in the world in terms of accumulated financing amount in 2021.
The countercyclical bankruptcy and insolvency sector also saw the successful restructuring cases of several large enterprises last year, including not only state-owned enterprises, which have continued their ownership reforms, but also private enterprises. These winning cases attest to the gradual progress in China’s bankruptcy system, and law firms’ skill in acting as bankruptcy administrators thanks to the concerted efforts of their professionals.
From dispute resolution cases a number of “firsts” were established, providing important references for future commercial activities and business decisions ‒ the first class action in China, the first recognition and enforcement of a foreign judgment in an IP case, the first “pre-judgment + interim injunction” decision in a patent case, the first investment arbitration against an African country, etc.
The winning deals and cases are presented to you in four sections: Capital market deals; Domestic deals; Cross-border deals; and Disputes and investigations. In each section, the deals or cases are listed in alphabetical order, to avoid presumptions of ranking.
- 51job’s take-private offer
- Baidu’s secondary listing on SEHK
- Bilibili’s secondary Hong Kong listing
- BYD’s USD3.8bn H-share placement
- CCB’s USD12.5bn secondary capital bond issue
- CCB’s USD18bn ESG-themed bond sale
- China Biologic’s Nasdaq delisting
- China Telecom’s USD8.4bn A-share listing
- CIMC Vehicles’ Shenzhen GEM listing
- CRCC’s spin-off Star listing
- CSSC’s green and blue dollar bonds
- Didi Global’s USD4.4bn NYSE IPO
- Fubon’s Taiwan leveraged and inverse ETF in HK
- Fullgoal Capital Water REIT listing
- Hengli’s USD1.8bn exchangeable bonds
- Hengxing Gold privatisation
- Infra REIT listing Shenzhen: Bosera CMS Shekou
- JD Health’s USD3.4bn Hong Kong IPO
- JD Logistics’ USD3.5bn Hong Kong listing
- KE Holdings’ USD2bn follow-on offering
- Kuaishou Technology’s USD5.4bn Hong Kong IPO
- Luso Bank’s panda bond issuance
- SF REIT’s Hong Kong listing
- Shenzhen government sells RMB bonds in HK
- SIP issues first FTZ offshore bond
- Tencent’s senior notes under global MTN programme
- Tencent’s Sogou privatised from NYSE
- Three Gorges Renewables’ Shanghai IPO
- Trip.com lists in Hong Kong
- Weibo’s Hong Kong secondary listing
- Xiaomi’s Hong Kong top-up placement
- Xiaomi’s USD1.2bn bond issuance
- Xinjiang Daqo’s Star board listing
- Xpeng’s Hong Kong listing
- AVIC units undergo restructuring
- Baoshang Bank bankruptcy case
- Baowu’s blockchain-based ABS
- China Education acquires Jincheng College
- China Railway’s USD3.1bn receivables ABS
- CNCEC’s USD1.6bn private placement
- CR Pharmaceutical acquires Boya
- Dalian Port’s merger with Yingkou Port
- Energy China merges with Gezhouba
- Establishment of National Pension Insurance Company
- Feima International restructuring
- First biodiversity-themed charitable trust
- Founder Group’s USD11bn restructuring
- GD Power, China Energy asset swap
- HNA Group restructuring
- HT Aero’s series A financing
- Lifan Group’s restructuring
- Moore Threads’ series A financing
- New Tianjin Steel’s mixed-ownership reforms
- Reorganisation of Bestway Marine
- Sanpower Group debt restructuring
- SenseTime’s series D and D+ financing
- Shandong Hi-Speed absorbs Qilu Transportation
- Tewoo Group’s USD44bn reorganisation
- Tianjin Pharma’s restructuring and merger
- Tianshan Cement’s USD15.4bn acquisition
- Universal Beijing Resort establishment
- Weichai’s acquisition of Lovol Heavy
- Yanzhou Coal’s USD1.4bn project financing
- Blackstone’s airport logistics park acquisition
- China New Town Development’s stake transfer
- China Oceanwide’s sale of IDG
- China Yangtze invests in Peru power
- Consortium acquires 49% stake in Aramco
- Cosco Shipping Development’s asset restructuring
- Cross-border green financing for Total-Envision JV
- Establishment of Schroder-BOCOM JV
- Galanz acquires Whirlpool (China)
- Goldman buys remaining Gao Hua Securities stake
- ICBC Aviation Leasing’s restructuring
- ICBC-Goldman Sachs wealth management JV
- Ineos’ investment in ABS production base
- JAC-VW’s strategic co-operation
- Kazakhstan wind farm financing
- MBK’s USD2.2bn acquisition of CAR Inc
- Nestlé sells China water business to Tsingtao
- Pelješac Bridge logistics project in Croatia
- Revamp of Port of Djibouti
- Shanshan acquires LG Chem LCD assets
- Sheng Ye obtains first factoring offshore loan
- Sichuan Road & Bridge’s Bangladesh PPP financing
- State Grid’s USD3bn acquisition of CGE
- Three Gorges Europe buys Spanish renewable assets
- USD1bn financing of Xiamen Xiangyu’s Indonesian steel plant
- Volvo acquires JMC Heavy Duty Vehicle
- CGWAM, Xingfu Industry loan agreement dispute
- Chalco quashes Korean anti-dumping investigation
- Citric acid industry trade remedy case
- CMNC, Jaguar Energy post-award dispute
- Combating AIMA pre-IPO patent threats
- Domestic business aircraft cross-border dispute
- Epoint’s GUI design patent infringement
- First investment arbitration against African country
- First IP recognition of foreign judgment
- Gree sues AUX for patent infringement
- Greenland, Shandong Tobacco equity transfer dispute
- Guo Hanwei wins TME equity dispute
- Kangmei Pharma’s fraud liability dispute
- Kingold’s fake gold bars dispute
- Lawsuits over failed Everbright investment
- Lufax, Luzhitou unfair competition dispute
- Luzhou Daqu’s trademark dispute
- NavInfo electronic map case against Qihoo 360
- Novartis fights patent validations on Entresto
- Opposition to Kinder 3D trademark refusal
- Proceedings over DJI patent infringement
- Record IP enforcement on famous alcoholic beverages
- SEP dispute between ZTE, Conversant
- Sichuan Trust sues Tahoe over loan contract
- Sinosure, DSIC insurance claim dispute
- SPC jurisdiction finding in SEP dispute
- Taihehui, Jinggong corporate bonds dispute
- TCL, Ericsson unfair competition dispute
- Theft of EBP’s trade secret
- WADA arbitration with Sun Yang
- ‘Wuyang bonds’ securities misrepresentation
- Xuhong and AGC’s unfair competition dispute
- Ye and Yang sue Cambodian government
- Yonglight’s misrepresentation liability dispute
- Zhang Lan’s post-award dispute
- Zhongtian’s exemplary compliance rectification
- Zhuhai Ports, Antong settle leasing dispute
51job’s take-private offer
CATEGORIES: Privatisation; internet
LEGAL COUNSEL: Paul Weiss, Davis Polk, Kirkland & Ellis, Simpson Thacher, Sullivan & Cromwell, and Weil assisted 51job in its take-private deal.
KEY POINTS: A DCP Capital Partners-led consortium offered to privatise Nasdaq-listed 51job, one of China’s largest human resource solutions providers. The original take-private offer by the consortium, which also includes Ocean Link Partners and the company’s co-founder and chief, Rick Yan, valued 51job at USD5.7 billion.
The take-private acquisition faced significant legal challenges because the company’s shareholders included several international parties and there are new regulations in China that target such international acquisitions and privatisations.
Baidu’s secondary listing on SEHK
CATEGORIES: Hong Kong listing; internet
LEGAL COUNSEL: Skadden advised on Hong Kong and US law. King & Wood Mallesons advised on PRC law. Davis Polk acted as joint sponsor and underwriter for Hong Kong and US law. Haiwen & Partners acted as joint sponsor and underwriter for PRC law. Maples Group advised on Cayman Islands law.
KEY POINTS: In March 2021, Baidu, the dominant internet search engine service and one of the largest AI companies in China, completed its secondary listing on the main board of the Hong Kong stock exchange. At the time of listing, Baidu had sold 95,000,000 shares for USD32 apiece, with total net proceeds of more than USD3.1 billion. Before its secondary listing Baidu was listed on the Nasdaq, in 2005. The internet giant plans to use part of the proceeds from the share sale to invest in AI technology, including its AI cloud solutions and an autonomous driving platform called Apollo.
Bilibili’s secondary Hong Kong listing
CATEGORIES: Hong Kong listing; internet
LEGAL COUNSEL: Skadden, Tian Yuan Law Firm, and Walkers advised on Hong Kong and US law. AnJie advised on PRC law. Clifford Chance and Commerce & Finance advised the joint sponsors and underwriters.
KEY POINTS: Bilibili, one of the largest video streaming websites in China, completed its secondary listing on the Hong Kong stock exchange, with a market value of USD2.5 billion. Bilibili is the first company to complete a secondary listing, following the Hong Kong Listing Rules as a “non-grandfathered Greater China issuer” with a weighted voting rights structure.
BYD’s USD3.8bn H-share placement
CATEGORIES: Hong Kong listing; H-share placement
LEGAL COUNSEL: JunHe, Tian Yuan Law Firm, Linklaters acted as the domestic legal adviser for the placement of shares.
KEY POINTS: BYD, a China-based automobile manufacturing company, completed its placement of 133 million H shares valued at USD3.8 billion. This deal represents the largest share financing project in Asia’s automobile industry in the past decade, the largest new share placement by a non-financial company in Hong Kong, and the largest share issuance project in the history of the Chinese green energy automobile industry.
CCB’s USD12.5bn secondary capital bond issue
CATEGORIES: Bond issuance; banking
LEGAL COUNSEL: Jincheng Tongda & Neal served as the legal counsel to China Construction Bank, the issuer.
KEY POINTS: China Construction Bank issued USD12.5 billion worth of domestic secondary capital bonds into China’s interbank bond market. It is the largest single issue secondary capital bond issuance in China. China Construction Bank is one of the ‘big four’ banks in China, the second-largest bank in the world measured by market capitalisation.
CCB’s USD18bn ESG-themed bond sale
CATEGORIES: Bond issuance; banking
LEGAL COUNSEL: Dentons, Global Law Office, Allen & Overy, and Linklaters.
KEY POINTS: China Construction Bank, the second largest bank globally by market capitalisation, issued more than USD18 billion in international green bonds. The bond sale was the first simultaneous issuance of multicurrency ESG bonds and the first sustainable USD bond issued by a Chinese financial institution globally. The bond was issued internationally at multiple institutions in different currencies, such as a Euro bond in Luxembourg, an RMB bond in Singapore, and a USD bond in Hong Kong. The bonds issued will provide financial support for green and renewable building infrastructure projects.
China Biologic’s Nasdaq delisting
CATEGORIES: Privatisation; medicine; JunHe
LEGAL COUNSEL: Haiwen & Partners, Cleary Gottlieb, Kirkland & Ellis, Latham & Watkins, Maples Group, Weil, Wilson Sonsini, Davis Polk, Fangda Partners, Gibson Dunn, JunHe and Merits & Tree Law Offices advised on the take-private process.
KEY POINTS: China Biologic Products, one of China’s largest medical and biomedicine companies, delisted from the Nasdaq in a USD4.76 billion take-private deal. The company hopes that privatisation will help it gain a better foothold in China and extend research and development domestically.
China Telecom’s USD8.4bn A-share listing
CATEGORIES: A-share listing; telecommunications
LEGAL COUNSEL: Haiwen & Partners and King & Wood Mallesons acted for the issuer and the underwriters, respectively.
KEY POINTS: China Telecom, the largest fixed-line service provider and third-largest mobile provider in China, completed its USD8.4 billion A-share listing. This makes China Telecom the first A+H share listed telecommunications operator. It is also the largest A-share listing project in the past 10 years, and the fifth largest A-share first time equity fundraising in history.
CIMC Vehicles’ Shenzhen GEM listing
CATEGORIES: GEM listing; transport
LEGAL COUNSEL: Shu Jin acted as the PRC counsel. Paul Hastings acted as Hong Kong counsel. Jia Yuan Law Offices advised the sponsor to the issue.
KEY POINTS: CIMC Vehicles, a subsidiary of CIMC Group that produces semi-trailers and vehicle parts, spun off from its parent company and issued A shares on Shenzhen GEM. The parent company is listed in Hong Kong and on the Shenzhen GEM. The deal presented significant legal challenges; the parent company (CIMC group) is both an H+A share company and the majority controller of CIMC Vehicles. CIMC Vehicles also has hundreds of subsidiaries and overseas assets, which required co-ordination with lawyers in many overseas jurisdictions simultaneously. The legal methods and frameworks established in this deal could become a template for future companies that wish to do the same.
CRCC’s spin-off Star listing
CATEGORIES: Star Market; railway
LEGAL COUNSEL: JunHe and King & Wood Mallesons advised the issuer and underwriters, respectively. DeHeng Law Firm advised CRCC.
KEY POINTS: China Railway Construction Heavy Industry Corporation, a subsidiary of China Railway Construction Corporation (CRCC), was successfully listed on the Shanghai Stock Exchange Star board for a total of USD577 million. This listing is the first domestic spin-off listing after the new spin-off regulations were announced. China Railway Construction is one of the largest engineering companies in the world by revenue.
CSSC’s green and blue dollar bonds
CATEGORIES: Bond issuance; environment
LEGAL COUNSEL: Global Law Office provided the legal services to CSSC.
KEY POINTS: CSSC, one of the world’s largest ship-leasing companies, sold USD500 million of five-year green and blue double-label bonds in Hong Kong with a coupon of 2.1%. This is the first time a green and blue certified bond was issued in USD in the Greater China region. CSSC aims to use the proceeds to improve greenhouse gas emissions and meet environmental emission targets.
Didi Global’s USD4.4bn NYSE IPO
CATEGORIES: US listing; IPO; internet
LEGAL COUNSEL: Skadden acted as the adviser for US law. Fangda Partners was the legal adviser for PRC law. Maples Group advised on Cayman Islands law. Simpson Thacher advised the underwriter on US laws. Han Kun Law Offices advised the underwriter on PRC law.
KEY POINTS: Didi, one of the largest mobile transportation platforms and largest rideshare operators in China, completed its IPO and was listed on the New York Stock Exchange with a base offering size of USD4.4 billion. The IPO represents the year’s largest US IPO by a Chinese company and the biggest US share sale of a Chinese company since Alibaba’s IPO in 2014.
Fubon’s Taiwan leveraged and inverse ETF in HK
CATEGORY: L&I ETF
LEGAL COUNSEL: Deacons provided full legal support.
KEY POINTS: Fubon Fund Management, a Taiwan-headquartered group that provides financial, property development, telecommunication & media, e-commerce, culture, and philanthropy services, launched leveraged and inverse exchange traded funds (L&I ETFs) on the HKEX.
It is the first Taiwan L&I ETF listed in Hong Kong and is Fubon’s debut on the Hong Kong ETF market. It is also one of the first products in Hong Kong to track the performance of the FTSE Taiwan RIC Capped Price Index using futures traded on the Singapore Exchange, giving Hong Kong investors access to a market previously unavailable to them.
Fullgoal Capital Water REIT listing
CATEGORIES: Fund establishment; infrastructure
LEGAL COUNSEL: East & Concord Partners provided the legal advice in this case.
KEY POINTS: Fullgoal Capital Water, a infrastructure fund operator, was among the first batch of publicly offered real estate investment trusts (REIT) to list on the Shanghai Stock Exchange. Fullgoal Capital Water is also the first in water treatment infrastructure sector. The REIT completed the offering and started trading in June 2021. Fullgoal Capital Water owns sewage treatment projects in Shenzhen and Hefei.
As it is among the first publicly offered REITs, future issuers may use the legal framework in this deal as a reference to explore investment and financing models.
Hengli’s USD1.8bn exchangeable bonds
CATEGORY: Bond issuance
LEGAL COUNSEL: Kangda provided the legal services to Hengli Group.
KEY POINTS: Hengli Group, a privately held oil refiner and petrochemicals company, sold USD1.8 billion of bonds exchangeable into shares of its listed subsidiary Hengli Petrochemical. The three-year, 0.5% coupon domestic bonds did not use typical pledging methods for the underlying stocks and the bond trustee.
In this case, a trust guarantee method was used. That is, a trust account was set up with the bondholders as the beneficiary and the underlying shares were transferred to the trust. The trust account was then used to transfer the guarantee for the subsequent repayment of the principal and interest amounts. This new method allows the issuer to optimise the debt structure and reduce asset liability.
Hengxing Gold privatisation
LEGAL COUNSEL: Zhong Lun Law Firm, Kirkland Ellis and Baker McKenzie provided legal services for the entire transaction, including legal due diligence, drafting transaction documents, reviews, negotiations, government and regulatory approval, domestic and overseas capital market disclosures, and asset delivery.
KEY POINTS: Hengxing Gold, a company mainly engaged in gold mining and gold production, was purchased by Shandong Gold Mining and privatised. The transaction was the first time that an A+H stock listed company was taken private by a Hong Kong-listed red chip company issuing H shares. The most significant assets of Hengxing Gold lie in Xinjiang, which has one of the largest gold reserves in China.
Shandong Gold aims to improve regional coverage and optimise gold acquisition through this transaction, resulting in global competitive advantages. Using H shares in the acquisition also improves capital structures and strengthens the influence of the capital market.
Infra REIT listing Shenzhen: Bosera CMS Shekou
CATEGORIES: REIT; GEM listing
LEGAL COUNSEL: Zhong Lun Law Firm served as legal counsel.
KEY POINTS: Bosera China Merchants Shekou Industrial Zone Close-Ended Infrastructure REIT was approved by the China Securities Regulatory Commission and listed on the Shenzhen Stock Exchange.
China Merchants Shekou Industrial Zone, a subsidiary of China Merchants Group, owns the REIT.
JD Health’s USD3.4bn Hong Kong IPO
CATEGORIES: Hong Kong listing; pharmaceuticals
LEGAL COUNSEL: Skadden advised on Hong Kong and US laws. Shihui Partners acted as the legal adviser for PRC law. Maples Group advised the company on Cayman Islands law. Cleary Gottlieb acted as the legal adviser to the joint sponsors and underwriters for the Hong Kong and US laws. Han Kun Law Offices acted as the legal adviser to the joint sponsors and underwriters for PRC law.
KEY POINTS: JD Health, one of the largest online healthcare platforms in China, was successfully listed in Hong Kong for USD3.41 billion. The listing represents the largest IPO in healthcare and TMT industries in 2020. JD Health aims to use the funds raised to improve its supply chains for healthcare products and pharmaceuticals.
JD Logistics’ USD3.5bn Hong Kong listing
CATEGORIES: Hong Kong listing; logistics
LEGAL COUNSEL: Skadden advised on Hong Kong and US laws, Shihui Partners advised on PRC law, and Maples Group advised on Cayman Islands law. Han Kun Law Offices as legal advisers to the joint sponsors and underwriters for PRC law, and Cleary Gottlieb acted as legal advisers to the joint sponsors and underwriters for Hong Kong and US laws.
KEY POINTS: JD Logistics, one of China’s largest technology supply chain solutions and logistics service providers, completed its offering and primary listing on the main board of the Hong Kong stock exchange with a total value of USD3.5 billion. It was the second-largest listing in Hong Kong in 2021.
KE Holdings’ USD2bn follow-on offering
CATEGORIES: follow-on public offering; housing
LEGAL COUNSEL: Skadden advised on US law. Han Kun Law Offices acted as the legal adviser for PRC laws. Davis Polk acted as the underwriters for US law. Jingtian & Gongcheng acted as the underwriters for PRC law.
KEY POINTS: KE Holdings, one of China’s largest online and offline platforms for housing transaction services, raised USD2 billion in a follow-on public offering on the NYSE. The company offered 35 million American Depositary Shares (ADS), each representing three Class A ordinary shares. KE Holdings plans to use the proceeds to broaden its service offerings and expand to new areas of investment and infrastructure.
Kuaishou Technology’s USD5.4bn Hong Kong IPO
CATEGORIES: Hong Kong IPO; technology
LEGAL COUNSEL: Latham & Watkins acted as legal advisers for Hong Kong and US law, Haiwen & Partners acted as legal advisers for PRC law. Maples Group acted as legal advisers for Cayman Islands law. Commerce & Finance Law Offices acted as legal advisers to the underwriters for PRC law, Clifford Chance acted as legal advisers to the underwriters for Hong Kong and US law.
KEY POINTS: Kuaishou, one of China’s largest video sharing mobile applications, completed its IPO on the Hong Kong stock exchange. Kuaishou raised USD5.4 billion in the second largest technology sector offering since Uber’s Nasdaq listing in 2019. The shares, which were priced at HKD115 (USD14.7) apiece, rose 160% on the first day of trading to close at HKD300 per share.
Luso Bank’s panda bond issuance
CATEGORIES: Bond issuance; banking
LEGAL COUNSEL: Global Law Office and JNV legal advised Luso Bank on the issuance of the bonds.
KEY POINTS: Luso Bank, one of Macau’s largest banks, issued for the first time in the Macau SAR, panda bonds. The bonds were issued with a term of three years, with a total issuance value of USD231 million. The bank hopes the bonds will improve international banking in China, especially in the Greater Bay Area.
The issuance of these panda bonds marks the first time a major financial body in Macau has issued RMB bonds, creating a precedent for Macau issuers to use RMB to raise funds through bonds and improve RMB internationalisation.
SF REIT’s Hong Kong listing
CATEGORIES: REIT; Hong Kong listing
LEGAL COUNSEL: For the REIT manager, Baker McKenzie advised on Hong Kong and US law, King & Wood Mallesons advised on PRC law, and Harneys advised on the Cayman Islands and BVI law. For the listing agent and underwriter, Hogan Lovells advised theon Hong Kong and US law, and JunHe advised on PRC law. Allen & Overy acted as legal advisor to the trustee.
KEY POINTS: SF Real Estate Investment Trust (SF REIT) was listed on the main board of the Hong Kong stock exchange at a total value of USD335 million. SF REIT, a subsidiary of SF Holding, is the first REIT focused on logistics and property listed on the main board of the Hong Kong stock exchange.
In the deal, the assets and subsidiaries of SF Holding needed to be split and put into SF REIT before listing. SF Holding is also the operator of SF Express, the largest delivery company in China and one of the largest delivery companies in the world.
Due to the large number of assets and subsidiaries owned by the parent company, this deal required significant legal work and will be a model for future REIT listings in Hong Kong.
Shenzhen government sells RMB bonds in HK
CATEGORIES: Bond issuance; overseas investment
LEGAL COUNSEL: JunHe acted as the domestic legal advisor to the Shenzhen government. Linklaters served as the international advisor. Jingtian & Gongcheng acted as the legal advisor to the underwriters. Allen & Overy advised the joint lead managers and joint bookrunners.
KEY POINTS: For the first time, a local government in China sold RMB bonds on the international capital market. The sale of RMB bonds in Hong Kong also paved the way for the issuance of RMB bonds in other international territories, opening new financing channels for local governments.
Also, the issuance strengthens Shenzhen-Hong Kong co-operation and promotes domestic and foreign markets in the Greater Bay Area. These new channels will allow foreign investors to have better asset allocation targets, improving the bond markets in Hong Kong and mainland China.
SIP issues first FTZ offshore bond
CATEGORIES: Bond issuance; Singapore listing
LEGAL COUNSEL: JunHe acted as legal counsel for the issuer.
KEY POINTS: Suzhou Industrial Park Investment Holdings (SIP Holdings) listed on the Singapore Stock Exchange and issued a free trade zone offshore bond.
The listing and debt sale represent the first time a state-owned enterprise was listed on the exchange, and the first free trade zone offshore bond issued in Suzhou. It is also the first China-Singapore co-operation on a free trade zone bond and China’s first long-term public offering of a free trade zone bond.
Tencent’s senior notes under global MTN programme
CATEGORIES: Senior notes; technology
LEGAL COUNSEL: Davis Polk advised on US and English law. Shihui Partners advised on PRC law. Han Kun Law Offices advised the underwriters on PRC law. Latham & Watkins advised the underwriters on US and English law. Maples Group advised on Cayman law.
KEY POINTS: Tencent Holdings, a leading global integrated internet services company, issued USD4.1 billion in senior notes under a global medium-term note (MTN) programme.
The issuance was one of the largest multiple tranche debt sales in the technology sector and required complex legal frameworks and structures for capital market financing transactions in debt securities.
Of the notes, USD500 million fall due in 2031 and carry a coupon of 2.88%; USD90 million at 3.68% mature in 2041; USD1.75 billion paying annual interest of 3.84% mature in 2051; and the final tranche of USD1 billion will pay 3.94% until 2061. Tencent aims to use the USD4.1 billion in net proceeds for general corporate development purposes.
Tencent’s Sogou privatised from NYSE
CATEGORIES: Privatisation; technology
LEGAL COUNSEL: Davis Polk, Haiwen & Partners and Walkers (Hong Kong) were US, PRC and Cayman Islands counsel for Tencent, respectively. Zhong Lun Law Firm, Skadden and Conyers acted as Sogou’s PRC, US and Cayman Islands legal counsel, respectively. Goulston & Storrs and Han Kun Law Offices advised Sohu.com on US and PRC law, respectively. Cleary Gottlieb advised Goldman Sachs, financial advisor to Tencent.
KEY POINTS: Sogou, one of China’s largest search engines and web application providers, was privatised by Tencent for USD3.5 billion from the New York Stock Exchange. After privatisation, Sogou will become a fully owned subsidiary of Tencent.
The acquisition was made by acquiring all Sogou shares held by Sohu and required legal approval from the government state administration following the short-form merger model.
Three Gorges Renewables’ Shanghai IPO
CATEGORIES: Shanghai IPO; energy
LEGAL COUNSEL: Zhong Lun Law Firm advised the issuer. DHH Law Firm advised Citic Securities, the sponsor.
KEY POINTS: In June 2021, Three Gorges Renewables, a group focused on the development, investment and operation of wind and solar energy, launched an IPO and was listed on the main board of the Shanghai Stock Exchange. The company raised USD3.5 billion, creating the largest IPO in China’s power sector. Three Gorges Renewables is the largest clean energy group in China. Domestically, it operates in 30 regions and is one of the most profitable clean energy companies.
Trip.com lists in Hong Kong
CATEGORIES: Hong Kong listing; travel
LEGAL COUNSEL: Skadden advised on Hong Kong and US law. Commerce & Finance Law Offices advised on PRC law. Maples Group advised on Cayman Islands law. Latham & Watkins advised the joint sponsors and underwriters for Hong Kong and US law. Jingtian & Gongcheng advised the joint sponsors and underwriters for PRC law.
KEY POINTS: Trip.com, a Chinese multinational online travel agency that provides accommodation reservation, transportation ticketing, tours and corporate travel management was successfully listed on the main board of the Hong Kong stock exchange with a total value of USD1 billion.
Trip.com is also listed on the Nasdaq and is the best-known travel brand in China, holding a leading market position for more than 20 years. Trip.com plans to use the net proceeds to expand its travel offerings and improve the user experience.
Weibo’s Hong Kong secondary listing
CATEGORIES: Hong Kong listing; technology
LEGAL COUNSEL: Skadden advised on Hong Kong and US law. TransAsia acted as the legal adviser for PRC law. Maples advised the company on Cayman Islands law. Simpson Thacher acted as the legal adviser to the joint sponsors and underwriters for Hong Kong and US law. Haiwen & Partners acted as the legal adviser to the joint sponsors and underwriters for PRC law.
KEY POINTS: Weibo, China’s leading social media platform, was listed on the Hong Kong stock exchange for USD385 million. The listing is secondary to its Nasdaq listing in 2014.
Due to the nature and industry of Weibo, the listing required counsel to overcome significant legal challenges, as the internet sector in China must follow strict legal guidelines and regulations regarding data processing and security. The listing could act as a model for future tech companies that deal with sensitive data, wishing to do further listings in China and abroad.
Xiaomi’s Hong Kong top-up placement
LEGAL COUNSEL: Skadden acted for the issuer and Maples Group provided counsel on the Cayman Islands law. Linklaters advised the underwriters on English and Hong Kong laws.
KEY POINTS: Xiaomi, one of the largest designers and manufacturers of consumer electronics, software, home appliances and household items globally completed a USD3 billion top-up placement on the Hong Kong stock exchange. The top-up represents the largest placement ever offered on the exchange, offering a seven-year, zero-coupon convertible bond.
Xiaomi’s USD1.2bn bond issuance
CATEGORIES: Bond issuance; technology
LEGAL COUNSEL: Jingtian & Gongcheng advised Xiaomi in issuing the bonds.
KEY POINTS: Xiaomi, through a special purpose vehicle, Xiaomi Best Time International, sold USD1.2 billion in bonds. Of which, USD800 million were in senior bonds due in 2031 with a 2.875% coupon, and USD400 million in senior green bonds with a 4.1% coupon due in 2051.
This was the first green bond issuance by an Asian TMT company, and the largest such sale in the TMT industry globally, according to a press release by the company.
Xinjiang Daqo’s Star board listing
CATEGORIES: Star board; energy
LEGAL COUNSEL: JunHe and Han Kun Law Offices advised the issuer and underwriters, respectively.
KEY POINTS: Xinjiang Daqo Energy, one of the largest manufacturers and distributors of polysilicon in China, was listed on the Star board, raising USD1 billion in July 2021. This is the first Star board listing for a Xinjiang based company. Daqo New Energy, the parent company for Xinjiang Daqo, is listed on the NYSE.
Xpeng’s Hong Kong listing
CATEGORIES: Hong Kong listing; automotive
LEGAL COUNSEL: Sullivan & Cromwell advised on Hong Kong and US law. Fangda acted as the legal adviser for PRC law. Harneys advised the company on Cayman Islands law. Freshfields acted as the legal adviser to the joint sponsors and underwriters for Hong Kong and US law. JunHe acted as the legal adviser to the joint sponsors and underwriters for PRC law.
KEY POINTS: Xpeng was successfully listed on the main board of the Hong Kong stock exchange for USD1.8 billion. Xpeng is a Chinese manufacturer of electric vehicles headquartered in Guangzhou with offices in California.
The listing had legal challenges to overcome, as Xpeng was also listed on the NYSE for less than two years. The company did not meet the requirements for a special listing on the SEHK. Therefore, legal teams had to apply for a dual primary listing to be permitted to list simultaneously on the two stock exchanges.
AVIC units undergo restructuring
CATEGORIES: Bankruptcy restructuring; aviation
LEGAL COUNSEL: Haiwen & Partners acted as the temporary administrator of both AVIC Shixin Gas Turbine and AVIC Shixin Installation Engineering.
KEY POINTS: AVIC Shixin Gas Turbine and AVIC Shixin Installation Engineering, both state-owned enterprises under China National Aviation Holding Corporation, or Air China, completed their RMB1 billion (USD157 million) debt restructuring.
This was the first substantive consolidation restructuring with a plan approved by the Beijing Bankruptcy Court, and the first pre-restructuring case since the publication of the Guidelines for Bankruptcy Administrators by the Beijing Bankruptcy Court (Trial Implementation).
Baoshang Bank bankruptcy case
CATEGORIES: Bankruptcy restructuring; banking
LEGAL COUNSEL: Dentons advised Mengshang Bank. King & Wood Mallesons advised Baoshang Bank.
KEY POINTS: Mengshang Bank, a new commercial bank established in April 2020, acquired the assets and equity of 32 financial institutions with investment from Inner Mongolia-based Baoshang Bank of about RMB3 billion (USD472 million), amid the latter’s government-led restructuring and liquidation in China’s first regulatory bank seizure.
Baoshang Bank’s insolvency threatened hundreds of billions of renminbi belonging to depositors and clients. Mengshang Bank’s takeover involved the liquidation and capital verification of assets from 32 financial institutions, banks and non-banks alike, from different regions. This required the determination of the legality of assets based on laws and regulations that had been constantly evolving over the past 20 years.
Baowu’s blockchain-based ABS
CATEGORIES: Asset-backed securitisation; blockchain
LEGAL COUNSEL: Hansheng Law Offices acted as legal counsel for Baowu Group.
KEY POINTS: China Baowu Steel Group, through its fintech subsidiary Ouyeel Financial Service, launched a series of “Tongbao” ABS products on the Shanghai Stock Exchange applying blockchain technology, which is expected to raise an aggregate of RMB8 billion (USD1.3 billion).
The innovative arrangement involves Ouyeel, the blockchain service provider, acting as the sole asset manager. With blockchain, Baowu is able to ensure the authenticity of accounts receivable and traceability of the flow of funds, transaction results and background information. As the procedure for recovery of underlying assets bypasses the originator’s account, funds can be transferred to the designated custodian account on the same day.
Tongbao is the electronic debt certificate launched in 2018 by Shanghai-based Baowu, the world’s largest steelmaker according to the World Steel Association.
China Education acquires Jincheng College
CATEGORIES: M&A; education
LEGAL COUNSEL: Haiwen & Partners advised China Education. Tian Yuan Law Firm advised Chengdu Jincheng College. JunHe advised the financing syndicate on PRC and Hong Kong law.
KEY POINTS: China Education Group acquired a 51% stake in Jincheng College under Sichuan University for about RMB2.4 billion (USD400 million) in the country’s largest private college acquisition.
China Education Group, listed on the Hong Kong stock exchange, is a leading large-scale and private higher education group in China, operating a list of well-recognised institutions. Jincheng College is the largest independent college in China, with more than 26,000 students at the time of the acquisition. It subsequently became a private undergraduate school under the group.
China Railway’s USD3.1bn receivables ABS
CATEGORIES: Asset-backed securitisation
LEGAL COUNSEL: Zhihe Partners advised China Railway.
KEY POINTS: China Railway Group has received approval from the Shanghai Stock Exchange to issue ABS totalling RMB20 billion (USD3.1 billion), backed by trade receivables, with the first instalment amounting to RMB5 billion.
This was, according to Zhihe Partners, the first ABS product in China’s securities market backed by trade receivables with a trust of property rights as the originator, as well as the first ABS market application of the Civil Code provision: “Where the parties agree that a non-pecuniary claim may not be assigned, such agreement shall not be asserted against a bona fide third person.”
CNCEC’s USD1.6bn private placement
CATEGORIES: Private placement
LEGAL COUNSEL: Tian Yuan Law Firm advised CNCEC.
KEY POINTS: CN National Chemical Engineering (CNCEC) completed its RMB10 billion (USD1.6 billion) private placement in the largest equity financing in China’s construction sector since 2018, and the largest private placement by a state-owned enterprise since the regulatory updates on private placements in 2020.
CNCEC is a large-scale engineering group listed on the Shanghai Stock Exchange, engaged in the provision of engineering contracting in China and abroad. CNCEC intends to use part of the proceeds for China’s first domestic adiponitrile project, with military and national defence potential.
CR Pharmaceutical acquires Boya
CATEGORIES: M&A; biopharmacy
LEGAL COUNSEL: AllBright Law Offices advised CR Pharmaceutical. Shu Jin Law Firm advised Shenzhen GTJA Investment Group, the transferor.
KEY POINTS: CR Pharmaceutical, through its wholly owned subsidiary, China Resources Pharmaceutical Holdings, took a controlling stake in Boya Biopharmaceutical Group for about RMB4.7 billion (USD738 million) in 2021’s largest takeover of an A-share listed biopharmaceutical company.
The deal was made more difficult by the extensive list of approvals required, including from the State‑owned Assets Supervision and Administration Commission, which was the actual controller of CR Pharmaceutical, as well as the substantial debts of Boya.
CR Pharmaceutical is a Hong Kong-listed investment holding company engaged in the R&D, manufacturing, distribution and retail of pharmaceutical and other healthcare products. Boya Biopharmaceutical Group is a Jiangxi-based pharmaceutical manufacturer focused on blood products.
Dalian Port’s merger with Yingkou Port
LEGAL COUNSEL: King & Wood Mallesons and Paul Hastings advised Dalian Port. Zhong Lun Law Firm advised Yingkou Port.
KEY POINTS: Dalian Port completed its merger with Yingkou Port and issued new shares on the Shanghai Stock Exchange. The entities, consolidated under the new name of Liaoning Port, now own more than RMB50 billion (USD7.9 billion) in assets and account for 70% of cargo throughput along the Liaoning coast.
This was the first merger by absorption of equity in a listed company in China’s port industry, and a rare occurrence of an A+H-share company, in this case Dalian Port, absorbing an A-share company. The merger is expected to optimise regional distribution of state-owned assets.
Energy China merges with Gezhouba
LEGAL COUNSEL: Jia Yuan Law Offices advised Energy China on PRC law. Commerce & Finance Law Offices advised the financial adviser to Energy China. Hubei Shouyi Lawyer Office advised Gezhouba Group.
KEY POINTS: Hong Kong-listed China Energy Engineering Corporation, or Energy China, completed its all-share acquisition of Gezhouba Group by issuing new equity to Gezhouba’s stockholders on the Shanghai Stock Exchange.
This is the largest “H absorbing A” merger yet, and Energy China became a dual-listed company upon completion. Energy China is a state-owned energy conglomerate mainly engaged in the power industry. Gezhouba Group is a state-owned construction and engineering company based in Wuhan.
Establishment of National Pension Insurance Company
CATEGORIES: Pension insurance; wealth management
LEGAL COUNSEL: East & Concord Partners advised National Pension Insurance Company. Haiwen & Partners advised ICBC Wealth Management, an investor.
KEY POINTS: The China Banking and Insurance Regulatory Commission approved the establishment of the National Pension Insurance Company. With its registered capital of RMB11.2 billion (USD1.8 billion), the Beijing-based company far exceeds other professional pension insurance companies.
This is the first pension insurance company jointly established by numerous wealth management companies. Its 17 investors include heavyweights such as the wealth management arms of China’s “big five” banks, Citic Securities, and Taikang Life Insurance. The company’s foundation comes at a time of growing concerns over China’s rapidly ageing population.
Feima International restructuring
CATEGORIES: Bankruptcy restructuring; logistics
LEGAL COUNSEL: Zhong Lun Law Firm acted as both the temporary administrator in pre-reorganisation and the administrator in reorganisation.
KEY POINTS: Shenzhen Feima International Supply Chain completed its bankruptcy reorganisation in November 2021, which involved the asset restructuring of not just itself, but also Feima Investment Holding, its controlling shareholder, and Shenzhen Junma Environmental Protection, its wholly owned subsidiary. At one point, Feima International had more than RMB13 billion (USD2 billion) in debts, but only RMB2.6 billion in assets.
Feima International is a supply chain service provider listed on the SME board of Shenzhen Stock Exchange, and the first Shenzhen-listed company to successfully complete its bankruptcy restructuring since 2015. It is also China’s first reorganisation that combined the pre-approval and pre-organisation procedures, such as the participation of prospective investors in pre-approval.
Prominent hindrances to the process included the necessary reporting to both the China Securities and Regulatory Commission and the Supreme People’s Court, the requirement for early practical solutions to Feima International’s contingent guarantees, and its own struggle to justify the value for its revival when delisting had become normalised under the new Securities Law.
First biodiversity-themed charitable trust
CATEGORIES: Charity; green finance
LEGAL COUNSEL: Merits & Tree Law Offices advised CIIT.
KEY POINTS: China Industrial International Trust (CIIT), in collaboration with the China Environmental Protection Foundation, established China’s first biodiversity-themed green charitable trust.
Industrial Bank, the parent company of CIIT, was the first commercial bank in China to explore green finance. For its first phase, the trust will conduct activities revolving around the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity.
China’s first biodiversity-themed green charitable trust
By Long Haitao and Li Kailun, Merits & Tree Law Offices
Founder Group’s USD11bn restructuring
CATEGORIES: Bankruptcy reorganisation
LEGAL COUNSEL: Dentons was an administrator in the restructuring of Founder Group and four other companies. TianTong Law Firm and AnJie Law Firm advised Ping An Life Insurance. Zhong Lun Law Firm and GFE Law Office advised Zhuhai Huafa. Fangda Partners advised Shenzhen Special Economic Zone Development Group.
KEY POINTS: An investor consortium comprising Ping An Life Insurance, Zhuhai Huafa and Shenzhen Special Economic Zone Development Group participated in the RMB69.7 billion (USD11 billion) merger and reorganisation of Founder Group and four other companies. The consolidated new Founder Group, set up with retained assets, is majority-owned by Ping An.
Founder Group’s well-publicised insolvency involved six listed companies and almost 400 entities, consolidated assets of more than RMB300 billion (USD47 billion), and reorganised debts of RMB200 billion.
The restructuring was as complex as it was extensive, involving an innovative sale-based reorganisation model, designed to shield investors from Founder Group’s potential debts or risks, change of actual controller of listed companies, and third-party benefit trust of property rights.
GD Power, China Energy asset swap
CATEGORIES: Asset swap; energy
LEGAL COUNSEL: Zhong Lun Law Firm advised GD Power Development.
KEY POINTS: GD Power Development completed an RMB20 billion (USD3.1 billion) asset swap with China Energy Investment, its controlling shareholder.
Under the swap, GD Power Development transferred assets valued at RMB7.7 billion, including equity in Hebei Bank and Guodian Younglight Energy Chemical, as well as RMB12.3 billion of cash consideration, to China Energy Investment, in exchange for RMB20 billion worth of thermal and hydro power-related assets across six provinces.
China Energy Investment is by asset size the largest energy company in China, ranking 101st in the 2021 edition of the Fortune Global 500. GD Power Development is the second-largest listed company in China’s power sector.
Apart from the sheer size of the assets swapped, the parties were challenged by numerous drawn-out issues plaguing the land and property involved, such as an alarmingly high level of title defects and tax disputes for agricultural land.
HNA Group restructuring
CATEGORIES: Bankruptcy restructuring; aviation
LEGAL COUNSEL: King & Wood Mallesons is one of the administrators. DeHeng Law Offices advised Liaoning Fangda. Han Kun Law Offices advised 32 out of 41 aircraft operating lessors with aircraft on lease to HNA. TianTong Law Firm represented, among others, Korea Line Corporation and China National Trade Financial & Leasing in the reorganisation of 321 companies, including HNA. Global Law Office advised Bank of China and Korea Development Bank. Zhong Lun Law Firm represented Hainan Development Holdings.
KEY POINTS: Liaoning Fangda, an industrial conglomerate, as the selected strategic investor, took over the aviation business of HNA at RMB41 billion (USD6.4 billion), as part of the latter’s high-profile bankruptcy reorganisation. The scope of the acquisition encompassed the control of 16 passenger airlines, including the Shanghai-listed Hainan Airlines, four cargo airlines and four general aviation companies, consisting of more than 800 aircraft and 60,000 staff.
Hainan Development Holdings, a wholly state-owned company, took over HNA’s airport business as the strategic investor.
HNA was at the time the largest listed company bankruptcy reorganisation in China in terms of asset and debt size, as well as China’s first airline bankruptcy reorganisation. The scale of the debt that needed to be unravelled was in part down to HNA’s extensive history of M&A, with heavy investments in Hilton, Deutsche Bank and the real estate sector.
HT Aero’s series A financing
CATEGORIES: Financing; new energy
LEGAL COUNSEL: Jia Yuan Law Offices acted for Xpeng Motors, Fangda Partners represented IDG Capital and AnJie Law Firm advised 5Y Capital.
KEY POINTS: HT Aero, an urban air mobility company and an affiliate of Chinese electric vehicle manufacturer Xpeng Motors, raised more than USD500 million in its series A financing, the largest single-tranche fundraising by far for low-altitude flying vehicle space start-ups in Asia. The company says the proceeds will be used to acquire talent and R&D.
Xpeng, along with IDG Capital and 5Y Capital, led the funding round. The investor consortium also includes Sequoia China, Eastern Bell Capital, GGV Capital, GL Ventures and Yunfeng Capital.
Lifan Group’s restructuring
CATEGORIES: Bankruptcy restructuring; automobiles
LEGAL COUNSEL: King & Wood Mallesons acted as legal adviser to Lifan Group.
KEY POINTS: Lifan Group, owner of one of the most recognised motorcycle brands and the first civilian-owned automobile manufacturer to become listed in mainland China, conducted judicial bankruptcy restructuring for its RMB27 billion (USD4.2 billion) of debt under a creditor-approved reorganisation plan.
The assets of 24 companies affiliated with Lifan Group were approached for restructuring via a combination of debt-to-equity swap, cash payment, establishment of trust, and equity transfer, depending on the nature of the company. Lifan Group resumed production in the second half of 2021.
Geely, the multinational automotive company headquartered in Hangzhou, Zhejiang, emerged as Lifan’s strategic investor. Geely has holdings in the likes of Lotus, Volvo, Polestar and Maple.
Moore Threads’ series A financing
CATEGORIES: Financing; semiconductors
LEGAL COUNSEL: Zhong Lun Law Firm provided legal service to Moore Threads.
KEY POINTS: Moore Threads completed its RMB2 billion (USD314 million) series A financing, which was jointly led by Shanghai Guosheng Group, 5Y Capital and Bohai Sheng (Hubei) Industrial Fund Management, with participation from nine institutions including CCB International, China Merchants Securities and Hubei Hongtai High-Quality Development Fund.
The funds raised will primarily be invested in the mass production and manufacturing of China’s first GPU chip, IP development related to GPU SOC and the expansion of China’s domestic GPU ecosystem.
Established in 2020, Moore Threads is a leader of GPU in China dedicated to graphical computation and artificial intelligence. In 2021, it became the first Chinese company to introduce a domestic, “fully featured” GPU solution.
New Tianjin Steel’s mixed-ownership reforms
CATEGORIES: Bankruptcy restructuring; steel
LEGAL COUNSEL: Commerce & Finance Law Offices advised Tangshan Delong Steel.
KEY POINTS: Tangshan Delong Steel’s takeover of 17 units of debt-laden Bohai Steel Group for RMB20 billion (USD3.1 billion) saw the emergence of the New Tianjin Streel Group in China’s largest mixed-ownership reform since the late 1970s.
Bohai Steel, a former Fortune Global 500 company founded in 2010 by the Tianjin municipal government through the merger of four local steelmakers, collapsed under huge debts in 2016. In 2020, the nascent New Tianjin Steel ranked 101st of China’s top 500 private enterprises.
A dual-GP fund structure was created for Delong Steel to ensure its de facto control of New Tianjin Steel, and due diligence was performed for 50 affiliated companies across Tianjin and Hebei province in the span of a month.
Reorganisation of Bestway Marine
CATEGORIES: Bankruptcy restructuring; maritime
LEGAL COUNSEL: Commerce & Finance Law Offices advised Bestway Marine & Energy.
KEY POINTS: Bestway Marine & Energy Technology, after failing to rescue itself from its RMB1 billion (USD157 million) of matured debt, completed its court-approved reorganisation plan via self-management. Reorganisation investors were secured after the procedure of revival commenced and more than 30 rounds of negotiations.
The procedure was complicated by an internal struggle for control of the company, legal action by external creditors to the company’s de facto controller, and an application for interim measures. It was selected among the Model Cases Tried by the Shanghai Bankruptcy Court in 2020.
Sanpower Group debt restructuring
LEGAL COUNSEL: Zhong Lun Law Firm provided legal counsel for Sanpower Group.
KEY POINTS: The out-of-court reorganisation scheme of Sanpower Group received a near-90% rate of approval at the fourth meeting of the creditors’ committee after three years of liquidity distress. This was China’s first successful out-of-court reorganisation of a large civilian-owned enterprise, and the first since the promulgation of the Work Procedures of Financial Institutional Creditors’ Committees.
Founded in 1993, Sanpower Group is a Nanjing-based multinational holding company operating in a wide array of sectors including finance, information, healthcare and real estate. By November 2021, Sanpower Group accumulated RMB62.4 billion (USD9.8 billion) of debt.
The approved scheme, including RMB8 billion of bailout funds from China Huarong Asset Management in its capacity as the strategic investor, and conditional repayment with stock and minimum performing assets, was notable in that Sanpower Group was able to retain its independent legal person status.
SenseTime’s series D and D+ financing
CATEGORIES: Financing; artificial intelligence
LEGAL COUNSEL: Llinks Law Offices represented SenseTime. Simpson Thacher represented the investor.
KEY POINTS: SenseTime completed its series D and D+ rounds of financing – raising more than USD2.3 billion and valuing the global leader in artificial intelligence at more than USD12 billion before its IPO. Investors included Amind, Abadi and Zhuhai Yingfan International Trade, according to SenseTime’s prospectus.
Headquartered in Hong Kong, SenseTime secured the largest amount of financing and the highest valuation among the world’s AI firms, according to Llinks Law Offices. It was listed on the Hong Kong stock exchange in December 2021.
Challenges for the project, as cited by Llinks Law Offices, lay in the rigorous schedule and the diversity of its many investors, which required the creation of a complex structure in a relatively short span of time.
Shandong Hi-Speed absorbs Qilu Transportation
LEGAL COUNSEL: Tahota Law Firm represented Shandong Hi-Speed Company, the buyer.
KEY POINTS: In 2020, the Shandong provincial government’s plan to deepen the reform of state-owned enterprises identified a restructuring plan for Shandong Hi-Speed Company to absorb and merge with Qilu Transportation Development Group. Upon completion, the total assets and revenue of the new Shandong Hi-Speed Company will reach RMB945.2 billion (USD149.4 billion) and RMB123.7 billion, respectively.
Tahota says that the social impact of the restructuring project is huge and is directly related to the stability of key provincial enterprises and subordinate companies in Shandong Province. The process involved not only the approval of antitrust authority, but also key matters such as information disclosure and horizontal competition for three A-share main board listed subsidiary and a Hong Kong listed company.
Tewoo Group’s USD44bn reorganisation
CATEGORIES: Bankruptcy; state-owned enterprises
LEGAL COUNSEL: Global Law Office acted for the Bank of China, and MHP Law Firm represented some of the bondholders. King Wood & Mallesons also participated in the reorganisation.
KEY POINTS: Due to a series of bond defaults, 44 enterprises under Tewoo Group ˗ hived off from the former Tianjin Municipality Material Management Bureau and once a Fortune 500 company ˗ entered judicial bankruptcy reorganisation proceedings in August 2020, involving creditors’ rights in the sum of more than RMB280 billion (USD44 billion).
The debt-to-equity swap reorganisation plan was approved by the court in December 2020, making it the largest restructuring case of the year. Directly hit by Bohai Steel Group’s bankruptcy, the main business of Tewoo Group was to provide finance to one of Bohai Steel’s main subsidiaries.
Global Law Office says that when selecting investors and assisting the committee of financial creditors, complex legal matters such as the determination of the nature of creditors’ rights, the determination of mortgage effectiveness without mortgage registration, the realisation of security rights provided by non-bankrupt enterprises, were key to the success of the plan.
Tianjin Pharma’s restructuring and merger
CATEGORIES: M&A; healthcare
LEGAL COUNSEL: Grandall Law Firm represented Jinhushen Biomedical Technology.
KEY POINTS: Jinhushen, set up for the mixed-ownership reform of state-owned Tianjin Pharma, acquired 67% of Tianjin Pharma for RMB11.55 billion (USD1.8 billion) in cash, making it the largest M&A in the pharmaceutical sector in recent years.
The transaction triggered a tender offer for a Shanghai and Singapore dual-listed company under Tianjin Pharma, which was the first of its kind in the market, and thus involving co-ordination of securities regulation compliance in China and Singapore. These matters included post-merger reorganisation, state capital regulation and antitrust review.
Tianshan Cement’s USD15.4bn acquisition
LEGAL COUNSEL: Jia Yuan Law Offices advised Xinjiang Tianshan Cement.
KEY POINTS: The China Securities Regulatory Commission approved in September Xinjiang Tianshan Cement’s massive RMB98.1 billion (USD15.5 billion) plan to acquire controlling stakes in four regional peers via issuing new shares and cash payment to 26 counterparties, meanwhile raising RMB5 billion from up to 35 investors through private placements.
Upon completion of the restructuring process, the Shenzhen-listed Xinjiang Tianshan Cement will become the country’s biggest cement maker. Jia Yuan says the deal is the second-largest merger and restructuring by transaction amount in the history of A-share companies.
The assets are priced through the market method, using trading cases on the market for reference. In order to protect the interests of the listed company and small and medium-sized shareholders, impairment compensation and performance bet-on arrangements were made.
Universal Beijing Resort establishment
CATEGORIES: Joint venture; tourism
LEGAL COUNSEL: Zhong Lun Law Firm and Paul Hastings advised the Chinese owner Beijing Shouhuan Cultural Tourism Investment, Haiwen & Partners acted as NBCUniversal’s PRC counsel, and DOCVIT Law Firm advised Ping An Asset Management.
KEY POINTS: Universal Beijing Resort, NBCUniversal’s first theme park and entertainment resort complex in China and its largest globally, opened in September 2021, with 70% owned by Beijing Shouhuan and 30% by NBCUniversal.
The construction project was divided into six bidding sections due to its size, according to Zhong Lun. With the foreign investor having control over the IP, the demand for different sections to be built with uniform standards and similar materials posed a great challenge on the technical specifications in contract drafting and the statutory bidding procedures.
To finance part of the project, Beijing Tourism Group, one of the five state co-owners of Beijing Shouhuan, teamed up Ping An Asset Management to set up an infrastructure debt investment scheme with RMB5 billion (USD788 million) of investment from Ping An.
Weichai’s acquisition of Lovol Heavy
LEGAL COUNSEL: Commerce & Finance Law Offices advised Weichai Group and its Hong Kong-listed subsidiary Weichai Power, and AnJie Law Firm represented Arbos Technology Group.
KEY POINTS: Weichai Power, one of the largest diesel engine suppliers in China, bought 39.31% of diversified machinery manufacturer Lovol Heavy Industry in July 2021 for RMB985 million (USD155 million) from Arbos Technology Group and Qingte, becoming the second-largest shareholder of Lovol Heavy after its holding company Weichai Group.
Six months earlier, aided by the Shandong provincial government, Weichai Group accomplished a strategic reorganisation of Lovol Heavy, holding about 60% of the total issued shares of the company.
Yanzhou Coal’s USD1.4bn project financing
CATEGORIES: Project financing; infrastructure
LEGAL COUNSEL: Jincheng Tongda & Neal (JT&N) acted as transaction counsel.
KEY POINTS: Amid China’s carbon neutral pledge, Yanzhou Coal Mining, a leading energy company listed in Shanghai, Hong Kong, New York and Sydney, joined by PICC Capital Investment Management, was set to build a national level of exemplary new energy chemical base that produces 400,000 tonnes of coal-extracted ethylene glycol and 300,000 tonnes of polymethoxy dimethyl, both of which are alternatives to petroleum.
According to JT&N, the counsel’s work focused on demonstrating the feasibility and compliance issues of the new energy industry by analysing macro and regional energy policies. The team prioritised locating and eliminating defects in the due diligence process and drafted special transaction terms to ensure compliance, environmental benefits and profitability for the investor and the builder.
Blackstone’s airport logistics park acquisition
CATEGORIES: M&A; logistics
LEGAL COUNSEL: Simpson Thacher represented Blackstone. Zhong Lun Law Firm and JunHe advised Blackstone on PRC law, while Mourant acted as Cayman Islands counsel. Dorsey advised Guangzhou R&F Properties.
KEY POINTS: Blackstone acquired a 70% stake in the 1.2 million-square-metre Guangzhou International Airport R&F Integrated Logistics Park from Guangzhou R&F Properties for USD1.1 billion, expanding Blackstone’s China logistics portfolio by approximately one-third. The deal is not only a rarity in China for the size of the logistics asset sale, it was also Blackstone’s largest real estate asset acquisition in China at the time.
The logistics park, located 15 kilometres from the Guangzhou International Airport, houses a myriad of blue-chip tenants across sectors such as SF Express, Tmall, JD.com, Sinopharm and China Mobile.
China New Town Development’s stake transfer
CATEGORIES: M&A; state-owned asset transfer
LEGAL COUNSEL: Haiwen & Partners advised China Development Bank International on PRC and Hong Kong law.
KEY POINTS: China Development Bank International, an overseas subsidiary of China Development Bank Capital, transferred 29.99% equity in China New Town Development to Xitong International, a Hong Kong-based subsidiary of Wuxi Communications Industry Group. This marked the first time the state-owned shareholder of a red-chip company made an openly solicited transfer by publishing announcements through the Hong Kong Stock Exchange.
China New Town Development is a large-scale town planner and developer dual-listed in Singapore and Hong Kong.
The transaction is complicated by the multi-jurisdictional nature of its participants and accordingly high standards of compliance. China New Town Development was incorporated in the BVI and listed in Hong Kong, while the parent companies of both the transferor and transferee were state-owned companies, a scenario not covered by established regulations on state-owned asset transfers.
China Oceanwide’s sale of IDG
CATEGORIES: M&A; technology media
LEGAL COUNSEL: King & Wood Mallesons advised China Oceanwide. Simpson Thacher advised Blackstone.
KEY POINTS: Through its subsidiary, China Oceanwide completed its sale of 100% equity in International Data Group (IDG) to Blackstone for USD1.3 billion. IDG is a world leading technology media and provider of market intelligence.
The sizeable transaction, beset with difficulties, commenced with a highly competitive auction organised by Goldman Sachs, the financial adviser to China Oceanwide. Approvals had to be obtained from anti-monopoly, foreign investment and national security authorities across numerous jurisdictions on different continents. Furthermore, it was only able to move forward after a Chinese-funded bank unpledged China Oceanwide’s equity in IDG.
China Yangtze invests in Peru power
CATEGORIES: M&A; energy
LEGAL COUNSEL: Tian Yuan Law Firm advised Yangtze Andes and China Yangtze Power, while Estudio Muniz advised both on Peruvian law. Clifford Chance advised Llamas. JunHe advised Cyan and Magenta.
KEY POINTS: China Yangtze Power acquired power distribution assets in Peru via Yangtze Andes, the subsidiary of China Yangtze Power International (Hong Kong) (Yangtze International), itself a wholly-owned subsidiary of China Yangtze Power, for a consideration of USD3.6 billion. At the core of the acquisition is 83.64% equity in Luz del Sur, an electric power distribution company listed on the Lima Stock Exchange.
Cyan Holdings, a Cayman Islands company, Magenta Investment, a Cayman Islands company, and Llamas (BVI) Investment, a BVI company, were introduced as co-investors. They each subscribed for 9.99% of equity in Yangtze Andes by contributing about USD71 million, and each received 9.99% of shareholder loans at USD288 million provided by Yangtze International to Yangtze Andes.
The conclusion of the deal required regulatory approvals from China, Bermuda and Peru, including an anti-monopoly review in Peru and disclosure requirements from both Shanghai and Peru’s stock exchanges.
Consortium acquires 49% stake in Aramco
CATEGORIES: M&A; energy; Belt and Road
LEGAL COUNSEL: Morgan Lewis advised Silk Road Fund. Sunland Law Firm advised the investor consortium on merger control filing in China. Latham & Watkins was foreign counsel for EIG. White & Case advised Aramco.
KEY POINTS: Silk Road Fund was part of a global investor consortium led by EIG Global Energy Partners (EIG), which acquired a 49% stake in Aramco Oil Pipelines, a joint venture with Saudi Arabian Oil, for USD12.4 billion.
The transaction, one of the largest energy infrastructure deals globally in 2021, is expected to promote both China’s Belt and Road Initiative (BRI), and Saudi Arabia’s “Vision 2030”. It involves a complex lease and lease back model designed for Aramco’s stabilised crude oil pipeline network.
Silk Road Fund is a Chinese state-owned investment fund designed to foster increased investment for the BRI. EIG is one of the world’s leading energy infrastructure investors. Aramco is a Saudi Arabian public petroleum and natural gas company based in Dhahran. As of 2020, it is one of the largest companies in the world by revenue.
Cosco Shipping Development’s asset restructuring
CATEGORIES: Asset restructuring; supply chain finance
LEGAL COUNSEL: Grandall Law Firm and Paul Hastings acted for Cosco Shipping Development, and Commerce & Finance Law Offices advised CICC, the independent financial adviser to Cosco Shipping Development.
KEY POINTS: Cosco Shipping Development received China Securities Regulatory Commission approval for acquiring the entire equity of Global Orient International Container (Qidong), Global Orient International Container (Qingdao), Global Orient International Container (Ningbo), and Shanghai Huanyu Logistics Equipment by way of share issuance. Supporting funds are further being raised via non-public offering of shares to up to 35 qualified investors.
The restructuring, valued at about RMB3.4 billion (USD531 million), integrates and streamlines the shipping industry along the Qiongzhou Strait, linking up with the development of Hainan Free Trade Port and the Greater Bay Area. Upon completion, Cosco Shipping Development will be the second-largest container manufacturer in the world.
Cross-border green financing for Total-Envision JV
CATEGORIES: Project financing; new energy
LEGAL COUNSEL: JunHe provided legal counsel for the loan syndicate.
KEY POINTS: A French syndicate comprising BNP Paribas, Société Générale, Natixis and Crédit Agricole Corporate and Investment Bank completed a USD80 million cross-border financing to Total Energies Envision Energy Services & Solutions, a Total-Envision joint venture established in 2019 to provide renewable energy solutions.
The deal is noteworthy for being the first non-recourse project financing in China’s new energy sector, and the first green loan for China’s industrial/commercial distributed photovoltaic industry. Multiple projects within Total Energies Envision were integrated into a single asset portfolio to lower financing costs, complemented with a capital pool and a follow-up mechanism to facilitate sustainable financing.
As the deal was non-recourse, the debt will primarily be repaid with project income, and the project company was not required to provide other security.
Establishment of Schroder-BOCOM JV
CATEGORIES: Joint venture; wealth management
LEGAL COUNSEL: Zhong Lun Law Firm acted as legal counsel for BOCOM Wealth Management, with its London office conducting due diligence on Schroders.
KEY POINTS: Regulatory approval was obtained for the establishment of Schroder Bank of Communications Wealth Management, a joint venture between Schroder Investment Management and BOCOM Wealth Management, which is a wholly owned subsidiary of the Bank of Communications. The venture will be majority owned by Schroder, with 51%, while BOCOM Wealth Management will hold 49%.
Schroder Bank of Communications Wealth Management is the third wealth management JV approved by the China Securities Regulatory Commission. Schroders is a two-centuries-old British multinational asset management company. It previously collaborated with the Bank of Communications on the establishment of BOCOM Schroder Fund Management, in 2005.
Galanz acquires Whirlpool (China)
CATEGORIES: M&A; home appliances
LEGLA COUNSEL: Zhong Lun Law Firm advised Galanz.
KEY POINTS: Guangdong Galanz Household Appliances Manufacturing acquired 51.1% equity in the Shanghai-listed Whirlpool (China), becoming its controlling shareholder.
Galanz is a Foshan-headquartered manufacturer of electronic home appliances and provider of smart home system solutions. A global leader in kitchen appliances, it has customers in more than 200 countries and regions. Whirlpool (China), prior to the transaction, was a subsidiary of Whirlpool Corporation, a US-based home appliance manufacturer and marketer listed on the New York Stock Exchange.
Galanz notably made the voluntary offer to acquire control of an A-share listed company. The transaction required an innovative structure and anti-monopoly filings with numerous jurisdictions including China, the US, Brazil, Germany, Turkey, Austria and Colombia.
Goldman buys remaining Gao Hua Securities stake
CATEGORIES: Joint venture; M&A
LEGAL COUNSEL: Han Kun Law Offices represented Gao Hua Securities. Paul Weiss and Haiwen & Partners acted as offshore and onshore counsel to Goldman Sachs, respectively.
KEY POINTS: Gao Hua Securities completed the sale of its entire equity interest in Goldman Sachs Gao Hua to Goldman Sachs, allowing the latter to take full control of its securities business in mainland China.
Goldman Sachs Gao Hua was a joint venture established in 2004, initially owned by Goldman Sachs and Gao Hua Securities at 33% and 67%, respectively. Goldman Sachs subsequently became the majority owner by increasing its shareholding to 51% in 2020.
With Goldman Sachs acquiring the remaining 49% equity from Gao Hua Securities, Goldman Sachs Gao Hua joined the first batch of wholly foreign owned securities companies in China.
ICBC Aviation Leasing’s restructuring
CATEGORIES: Asset restructuring; Aviation
LEGAL COUNSEL: Stephenson Harwood acted as legal counsel to ICBC Aviation Leasing (ICBCAL). Skrine acted as Malaysian counsel to ICBCAL. K&L Gates acted as transaction counsel to the Vietnamese low-cost carrier. ICML Advisory, Squire Patton Boggs, Stephenson Harwood, and Chandler MHM advised ICBCAL on Vietnamese law, Japanese law, Singaporean law and Thai law, respectively. Baker McKenzie acted as Thai counsel to Thai Airways.
KEY POINTS: ICBCAL completed a series of aircraft repossessions and airline reorganisations involving more than 17 airlines across 11 jurisdictions, and 50 aircraft across the Asia-Pacific region.
In the repossession of three aircraft from AirAsia X, a Malaysian airline going through restructuring under a scheme of arrangement, a Malaysian court became the first court to pass a judgment on a number of important points relating to the Cape Town Convention. The three aircraft were further leased to a Vietnamese low-cost carrier.
ICBCAL also repossessed two aircraft from Tigerair Australia, a subsidiary of Virgin Australia under voluntary administration and mandatary moratorium; and repossessed aircraft from Thai Airways during its rehabilitation proceedings.
ICBC-Goldman Sachs wealth management JV
CATEGORIES: Joint venture; asset management
LEGAL COUNSEL: King & Wood Mallesons advised ICBC Wealth Management.
KEY POINTS: ICBC Wealth Management, a wholly-owned subsidiary of Industrial and Commercial Bank of China, obtained China Banking and Insurance Regulatory Commission approval to set up a joint venture with Goldman Sachs Asset Management. ICBC Wealth Management will contribute 49% of the capital, with Goldman Sachs Asset Management putting in the remaining 51%.
ICBC Wealth Management, established in 2019, was one of the first bank subsidiaries in wealth management to be approved in China. The venture will develop a broad range of investment products for the Chinese market over time, including quantitative investment strategies, cross-border products and innovative solutions in alternatives, according to Goldman Sachs.
Ineos’ investment in ABS production base
CATEGORIES: Petrochemicals; energy
LEGAL COUNSEL: AllBright Law Offices advised Ineos. Harnest & Garner Law Firm represented Ningbo Petrochemical Economic and Technological Development Zone.
KEY POINTS: Ineos Styrolution commenced its 600,000-ton environmental friendly ABS investment project located in Ningbo Petrochemical Economic and Technological Development Zone. The project was announced just six months after Ineos acquired two polystyrene production bases in China. Construction began in 2020, and is expected to last until 2023.
Ineos is one of the world’s top four petrochemical multinational giants, with an annual output of more than 54 million tons of petrochemical products and 20 million tons of refined petroleum products. Ineos Styrolution, its subsidiary, is a world leading supplier of styrene products.
JAC-VW’s strategic co-operation
CATEGORIES: Restructuring; automotive
LEGAL COUNSEL: AllBright Law Offices advised the Anhui State-owned Assets Supervision and Administration Commission (SASAC) and JAC Holdings. Baker McKenzie, Freshfields and Han Kun Law Offices advised Volkswagen.
KEY POINTS: Anhui Jianghuai Automobile Group (JAC) and Volkswagen concluded an approximately EUR1 billion (US$1.12 billion) strategic co-operation project in December 2020. Subsequently, Volkswagen (China) Investment and Anhui SASAC each held a 50% stake in JAC Holdings. Volkswagen (China) Investment held 75% equity in Volkswagen (Anhui) Automotive, while JAC Holdings held the remaining 25%.
The transaction had to overcome compliance-related challenges for not being carried out via exchanges and for the transferral of state-owned equity, and faced complex industrial review and approval procedures. The high-profile collaboration gained support from senior government officials in China and Germany, and is expected to contribute to China’s advancement in new energy vehicle manufacturing.
Kazakhstan wind farm financing
CATEGORIES: Financing; renewable energy
LEGAL COUNSEL: White & Case advised AIIB, EBRD and ICBC. Sunshine Law Firm acted as legal counsel to China Power International Development.
KEY POINTS: The Asian Infrastructure Investment Bank (AIIB), European Bank for Reconstruction and Development (EBRD), Green Climate Fund (GCF) and Industrial and Commercial Bank of China (ICBC) provided financing for the construction and operation of a 100MW wind farm in the Zhanatas region of Zhambyl district, southern Kazakhstan.
The Zhanatas wind project, when completed, will be the largest wind farm in Central Asia. It is the first wind farm developed in Kazakhstan under a project finance structure, the first renewables project in Central Asia funded by the AIIB, the first renewables project in Kazakhstan to be co-financed by a commercial bank, and the first wind farm in Central Asia to be developed by a leading Chinese energy developer, in this case China Power International Development.
MBK’s USD2.2bn acquisition of CAR Inc
CATEGORIES: M&A; privatisation
LEGAL COUNSEL: Weil Gotshal & Manges served as lead international and Hong Kong legal counsel to MBK Partners. Fangda Partners advised MBK Partners on PRC law. Clifford Chance acted as special counsel to MBK Partners. T&D Associates advised MBK Partners on PRC antitrust matters. Davis Polk and Kirkland & Ellis provided legal counsel for CAR Inc. Conyers advised CAR Inc and Indigo Glamour on Cayman law. Sullivan & Cromwell advised Goldman Sachs and JP Morgan, the financial advisers.
KEY POINTS: Indigo Glamour, a special purpose vehicle established by MBK Partners, completed the USD2.2 billion acquisition and privatisation of CAR Inc, enabling it to delist from the Hong Kong Stock Exchange.
This is an uncommon private equity sponsor-led takeover of a Hong Kong-listed company, given the high thresholds for take-privates in the market. The transaction involved an initial acquisition of a 20.86% stake of CAR Inc and a voluntary general cash offer for its remaining shares.
MBK Partners is a leading North Asia private equity firm based in South Korea. Car Inc, headquartered in Beijing, is the largest car rental service provider in China.
Nestlé sells China water business to Tsingtao
CATEGORIES: M&A; food and beverage
LEGAL COUNSEL: White & Case acted as legal counsel for Nestlé Waters.
KEY POINTS: Nestlé Waters, the Paris-based bottled water division of Nestlé, transferred its water operations in China to Tsingtao Brewery, including the global brand Nestlé Pure Life, the local brand Dashan Yunnan Shan Quan, and three factories located in Kunming, Shanghai and Tianjin.
Nestlé Waters also granted a licensing agreement to Tsingtao Brewery for the production and distribution of Nestlé Pure Life in mainland China. Swiss law and Hong Kong law were applied to the trademark licence agreements and the main sale and purchase agreement, respectively.
Tsingtao Brewery is the second-largest brewery in China, and internationally recognised. The transaction is part of a strategic co-operation between the two companies.
Pelješac Bridge logistics project in Croatia
CATEGORIES: Infrastructure; Belt and Road
LEGAL COUNSEL: DOCVIT Law Firm represented the international freight forwarding agents.
KEY POINTS: Pelješac Bridge is a 2,440 metres long, 22.5 metres wide cable-stayed bridge designed to connect the Dubrovnik exclave to mainland Croatia. The bridge was connected in July 2021 after three years of construction by China Road and Bridge Corporation, and is expected to open for traffic in June 2022.
The bridge is the largest co-operation project between China and Croatia, the largest EU-funded project constructed by a Chinese company, and the largest transportation infrastructure project undertaken by a Chinese company in Croatia since the two countries established diplomatic ties in 1992.
Revamp of Port of Djibouti
CATEGORIES: Urban development; Belt and Road
LEGAL COUNSEL: Jingtian & Gongcheng advised China Merchants Shekou. Cabinet Avocats & Associés Abayazid and Abdourahman advised China Merchants Shekou on Djiboutian law. Simmons & Simmons advised the Port of Djibouti.
KEY POINTS: China Merchants Shekou Industrial Zone Holdings carried out an approximately USD120 million investment in the revamp of Port of Djibouti, a strategically significant port at the Horn of Africa connecting major international shipping lines to and from Asia, Africa and Europe.
The revamp project, located in the ambitious Djibouti International Free Trade Zone, covers 840,000 square metres and involves the redevelopment of all wharves, container yards and warehouses in the century-old port.
Shanshan acquires LG Chem LCD assets
CATEGORIES: M&A; chemical
LEGAL COUNSEL: MHP Law Firm advised Shanshan. King & Wood Mallesons advised LG Chem. Logos Law and PricewaterhouseCoopers Legal acted as overseas counsel for Shanshan.
KEY POINTS: Ningbo Shanshan acquired the liquid crystal display (LCD) polariser business and related assets of LG Chem across mainland China, Taiwan and South Korea for USD1.1 billion.
The scope of the acquisition includes the 100% equity of LG Chem’s Beijing subsidiary, the LCD polariser businesses of LG Chem’s Nanjing, Guangzhou and Taiwan subsidiaries, and the LCD polariser-related assets and IP directly held by LG Chem. The transaction also involves the establishment of a joint venture between the two companies.
Ningbo Shanshan is a producer and developer of lithium batteries and new energy materials. LG Chem is the largest chemical company in South Korea, headquartered in Seoul. The transaction makes China the largest and fastest growing LCD polariser market in the world, as the global market is dominated by only a few leading players.
Sheng Ye obtains first factoring offshore loan
CATEGORIES: Factoring; supply chain finance
LEGAL COUNSEL: Joius Law Firm represented the consortium.
KEY POINTS: SY Factoring, a subsidiary of Hong Kong-listed Sheng Ye Capital, entered into a two-year RMB525 million (USD82.7 million) offshore syndicated loan agreement with a consortium led by Mega International Commercial and Bank SinoPac.
This marked the first offshore syndicated loan in China’s factoring market, as well as the first offshore syndicated loan in China with factoring accounts receivable as the main collateral. The introduction of the innovative financing structure met uncertainties, as it occurred amid extensive legal reforms brought by the Civil Code and its subsequent interpretations.
Sheng Ye Capital is China’s first commercial factoring company listed on the main board of the Hong Kong Stock Exchange. Joius Law Firm was further commissioned to provide legal advice for Sheng Ye Capital in this transaction.
Sichuan Road & Bridge’s Bangladesh PPP financing
CATEGORIES: Project financing; Belt and Road
LEGAL COUNSEL: Kangda Law Firm acted as PRC counsel for Sichuan Road & Bridge and the Dhaka project company. Hogan Lovells advised China Development Bank. Doulah & Doulah and AS & Associates advised the lenders and the borrower on Bangladesh law, respectively.
KEY POINTS: A consortium comprising the Sichuan branch of China Development Bank (CDB) and a local infrastructure construction fund corporation signed a consortium loan contract to finance the upgrading of the Dhaka Bypass road public-private partnership (PPP) project under investment and construction by Chengdu-based Sichuan Road & Bridge. The 18-year loan includes USD184 million from CDB and 10.8 billion Bangladesh taka (BDT) (USD123 million) from the local lender.
Marking the first time a consortium of Chinese and Bangladesh banks provided financing for a Bangladesh PPP project, the deal involved innovative ways of forming a consortium, and complex negotiations to ensure multi-jurisdictional compliance.
The 48-kilometre Dhaka Bypass road is a strategic corridor connecting the manufacturing centre to the north and the port in the south.
International legal loan services for Dhaka Bypass Expressway
By Tian Yuan and Deng Zhenhua, Kangda Law Firm
State Grid’s USD3bn acquisition of CGE
CATEGORIES: M&A; energy; Belt and Road
LEGAL COUNSEL: Paul Weiss advised State Grid International. Claro & Cia advised State Grid on Chilean law. Guerrero Olivos acted as Chilean counsel to CGE and Naturgy.
KEY POINTS: In the largest transaction signed in Chile in 2020, China-based utilities company State Grid International acquired a 96% holding in Compania General de Electricidad (CGE) from Naturgy Energy for approximately USD3 billion.
Listed on the Santiago Stock Exchange, CGE is the largest distribution network and second-largest transmission network in Chile. The transaction is further noteworthy for being the first overseas M&A by a Chinese company since the covid-19 outbreak.
Three Gorges Europe buys Spanish renewable assets
CATEGORIES: M&A; green energy
LEGAL COUNSEL: King & Wood Mallesons advised Three Gorges Europe. Linklaters advised Three Gorges Europe on Spanish law. KPMG Abogados advised Three Gorges Europe on taxation. Allen & Overy advised the consortium.
KEY POINTS: Three Gorges Europe acquired a 100% interest in a number of wind power and photovoltaic assets in Spain for about EUR300 million (US$338 million), specifically 11 wind farms and one photovoltaic plant, from a consortium led by Corporacion Masaveu. The target assets, with a total installed capacity of 404,900KW, were known for their operating stability and reliability.
The transaction required much deliberation due to the high level of compliance requirements for foreign investment of a state-owned enterprise, and arrangements were made to prevent loss or material adverse impact to state-owned assets. The result was a careful balance between M&A practice, preferences of domestic companies, and compliance requirements of a state-owned enterprise.
Corporacion Masaveu is a family-owned investment management company founded in 1840. Although the notarisation requirement to conclude an equity purchase from a Spanish company further complicated the process, the situation was ameliorated with the division of “notarisation” and “payment” into separate steps.
USD1bn financing of Xiamen Xiangyu’s Indonesian steel plant
CATEGORIES: Manufacturing; Belt and Road
LEGAL COUNSEL: Pinsent Masons advised the Bank of China and the financing syndicate. Hermawan Juniarto & Partners and Chang An Law Firm advised the Bank of China on Indonesian and PRC law, respectively.
KEY POINTS: A financing syndicate of 11 banks, led by the Bank of China, provided USD1 billion in project financing to an integrated stainless steel plant owned by Shanghai-listed logistics services company Xiamen Xiangyu.
The plant, located in South Sulawesi province in Indonesia, comprises a nickel mine, a 2.5 million metric tonne per year stainless steel smelting plant, a 1,440MW thermal power project, and a 40 million metric tonne multi-functional port.
According to the National Development and Reform Commission, this project is the largest overseas investment from Xiamen to date, and is one of the largest project financings in Asia in 2020. The project financing involved a complex, multi-layered dual-currency facility permitting drawings in both renminbi and US dollars, a multi-jurisdictional credit enhancement arrangement, and an inter-creditor mechanism among creditor groups and bondholders.
Volvo acquires JMC Heavy Duty Vehicle
CATEGORIES: M&A; Automotive
LEGAL COUNSEL: AllBright Law Offices provided legal counsel for Jiangling Motors.
KEY POINTS: Volvo acquired JMC Heavy Duty Vehicle, a subsidiary of Jiangling Motors, for an amount of RMB800 million (USD126 million), substantially advancing Volvo’s localisation and market share in China.
Uncertainties accompanied the sale due to the fact that the 2020 edition of Special Administrative Measures (Negative List) for the Access of Foreign Investment had not come out during initial negotiations. The measures cancelled the proportion requirement of foreign equity in the commercial vehicle sector.
As the transaction involved a listed state-owned enterprise selling its subsidiary to a listed foreign company, it required approval for transfer of state-owned assets, and disclosure of both intention of process. Further, Jiangling Motors stripped away certain assets in order to proceed with the sale, which required its own approval and disclosure.
CGWAM, Xingfu Industry loan agreement dispute
CATEGORIES: Contract dispute; asset management
LEGAL COUNSEL: Zhong Lun W&D Law Firm represented the appellant, China Great Wall Asset Management (CGWAM), while Huichuan Law Firm represented three appellees including Xingfu Industry.
KEY POINTS: Bank of Communications (BOCOM) Tianjin branch lent money to Xinguang Henghui Petroleum Machinery Sales Company in 2014 and 2015 respectively, with the three appellees providing collateral and guarantees for the 2014 borrowings, and Xinguang Henghui also issued a repayment plan when borrowing money for the second time. Both loans were meant for repaying existing loans. In 2015, the loan contract was overdue and BOCOM took the borrower and the guarantor to the Tianjin High People’s Court. In the first instance, the guarantors all argued that they were not responsible for the 2015 loan contract and repayment plan on the grounds that these documents were not signed by themselves and were not aware of them. In the end, the court ruled that the three guarantors were not liable for the guarantee.
During the appeal to the Supreme People’s Court (SPC), BOCOM transferred all the creditor’s rights in question to CGWAM, which continued the proceedings as the appellant. In the second instance, the SPC held that once a maximum amount guarantor makes a promise to extend credit, it should anticipate the risks and pitfalls of uncertain claims in the future, and that the guarantor itself should exercise sufficient care and take responsibility for the qualification of the debtor, monitoring of future debts and prevention of its own risks. Therefore, the SPC retracted the first instance judgment, and the amount of secured claims corresponding to the guarantees upheld by the ruling amounted to RMB680 million (USD107.5 million).
Chalco quashes Korean anti-dumping investigation
CATEGORIES: Anti-dumping investigation; international trade
LEGAL COUNSEL: DeHeng Law Offices acted as PRC counsel to the Aluminum Corporation of China (Chalco), while Lee & Ko was Korean counsel.
KEY POINTS: Five related subsidiaries of Chalco ̶ a state-owned conglomerate and the largest supplier of aluminium hydroxide worldwide ̶ managed to convince the Korean applicant companies who filed for anti-dumping investigations that the classification of the products in question was so was ambiguous that they could easily fall into other categories. These applicants then dropped their applications.
Consequently, the Korean authority terminated its anti-dumping investigation on aluminium hydroxide imports from China and Australia.
DeHeng says a complete termination is not common in anti-dumping investigations in Korea, and the case could serve as a valid reference for Chinese companies in other sectors for future probes in the country.
Citric acid industry trade remedy case
CATEGORY: Anti-dumping investigation
LEGAL COUNSEL: Globe-law Law Firm represented COFCO Biochemical (Thailand) and Sunshine Biotech International.
KEY POINTS: Via an administrative review process, the Globe-law team helped their China-invested Thai clients obtain favourable tax rates of 0.76% and 0%, respectively, overturning the previous finding of 6.47% to 15.71% dumping margins by the US Department of Commerce in 2018.
Having the largest citric acid market, the US has since 2000 initiated a number of anti-dumping and countervailing investigations against global imports at the request of domestic citric acid companies.
In 2017, such investigations targeted imports from Belgium, Columbia and Thailand. As none of the home-grown Thai companies export to the US, the China-invested Thai companies were thrust into the limelight.
CMNC, Jaguar Energy post-award dispute
CATEGORIES: Outbound investment; International arbitration
LEGAL COUNSEL: Before the High Court of Singapore, Rajah & Tann Singapore represented the appellant, China Machine New Energy Corporation (CMNC), while Virtus Law acted for the respondents, Jaguar Energy Guatemala and AEI Guatemala Jaguar. Before the Singapore Court of Appeal, Nicholas & Tan Partnership and TSMP Law Corporation advised CMNC and both defendants, respectively.
KEY POINTS: With CMNC’s application to set aside a Singapore-seated award over breach of natural justice – rendered by the International Court of Arbitration of the International Chamber of Commerce (ICC Court) – the Singapore Court of Appeal ruled to dismiss its appeal against the previous high court decision of upholding the award validity, setting an example for Singapore courts to be guided by the same principles when parties try to resist enforcement of an arbitration award on such grounds in the future.
Rajah & Tann Singapore says the dispute contained complex construction issues regarding a power plant in Guatemala, and the 600-page final award made by the ICC Court was set to dismiss CMNC’s counterclaims of more than USD800 million, while allowing for Jaguar’s claims of about USD200 million. The project was and remains the largest construction project in Guatemala with high-level governmental involvement to date.
Combating AIMA pre-IPO patent threats
CATEGORY: Intellectual property
LEGAL COUNSEL: King & Wood Mallesons (KWM) represented AIMA Technology Group.
KEY POINTS: Two days after AIMA Technology Group’s planned IPO preview date with the China Securities Regulatory Commission, Woqu Niuniu Company filed a patent infringement lawsuit with the Hangzhou Intermediate People’s Court, accusing the group and its affiliates of infringing on its design patent rights and demanding RMB30 million (USD47.2 million) compensation. AIMA’s IPO preview was then cancelled.
By initiating an administrative procedure of patent invalidation, KWM helped the client to secure an evaluation report that found the patent rights involved invalid, issued by the China National Intellectual Property Administration within six months. Woqu later withdrew its lawsuit, and AIMA’s listing process went back on track and eventually became public on the main board of the Shanghai Stock Exchange in June 2021.
Domestic business aircraft cross-border dispute
LEGAL COUNSEL: Hui Ye Law Firm represented the domestic legal owner of the aircraft.
KEY POINTS: A business aircraft previously owned by a platform company and registered with the Civil Aviation Administration of China was transferred without shareholders’ authorisation by an executive of the company to his own overseas platform company, and later was registered in the US via a US trust structure, and then leased out.
But the leasing relationship soon became unsustainable due to the non-payment of the charterer. In order to preserve the domestic client’s interest to the greatest extent, Hui Ye’s team took all necessary measures in maintaining the airworthiness, resolved the non-payment dispute, and meanwhile approached new charterers for aircraft.
Epoint’s GUI design patent infringement
CATEGORY: Intellectual property
LEGAL COUNSEL: Wanhuida Intellectual Property represented the appellant, Epoint Systems, Long An Law Firm represented Henan Administration for Market Regulation (AMR), and YiJu Law Firm represented the patentee, Glodon Technology before the Supreme People’s Court (SPC).
KEY POINTS: Glodon Technology accused Epoint Systems of infringement in its software interface with regard to two of Glodon’s graphical user interface (GUI) design patents. Epoint appealed to the SPC and successfully convinced the court to revoke the previous unfavourable administrative decision, and the first instance judgment, by leveraging an invalidity action to ascertain the distinguishing design features of the patent at issue. This is the first administrative case involving a GUI design patent infringement adjudicated by the SPC, says Wanhuida.
Previously, Epoint received unfavourable administrative decisions from Henan AMR and a first instance judgment by Zhengzhou Intermediate People’s Court.
Although the China National Intellectual Property Administration (CNIPA) rejected Epoint’s patent invalidation application towards one of Glodon’s patents, it also in essence reaffirmed the distinguishing design features of Glodon’s patent, which formed estoppels in the infringement case. In the final proceedings, Glodon was also barred from admitting something to the CNIPA, and later contradicting that admission before the SPC.
First investment arbitration against African country
CATEGORIES: International arbitration; Belt and Road Initiative
LEGAL COUNSEL: Zhong Lun Law Firm acted for the claimant, a Chinese contractor.
KEY POINTS: A Chinese contractor recently filed a notice of arbitration with the government of Ghana under the China-Ghana Bilateral Investment Treaty, and officially commenced ad hoc arbitration proceedings. This is the first time that a Chinese company has initiated investment arbitration against an African government under a bilateral or multilateral investment treaty.
The Ghanaian government signed a contract with the Chinese claimant for an important project in its capital, Accra, the contract had entered into force, and the Chinese contractor had completed a substantial amount of work. Subsequently, the government signed a new contract with a third party for the same project, and the local parliament unilaterally revoked the approval of the earlier contract.
The Chinese contractor accordingly claimed that the Ghanaian government had committed a serious breach of the host country’s obligations under the China-Ghana treaty and therefore initiated the arbitration.
First IP recognition of foreign judgment
CATEGORY: Intellectual property
LEGAL COUNSEL: JunHe represented SD Biotechnologies, and Korean firm Kim & Chang IP provided assistance in the case.
KEY POINTS: To expand its market share in China, SD Biotechnologies, a listed Korean cosmetic company, signed an agreement with another Korean company, Jiujiu Trading, which had a certain resource in the Chinese market. To avoid operational complexity, SD’s trademarks in China were guaranteed to Jiujiu via transfer. Subsequently, SD discovered that Jiujiu had repeatedly breached the contract in bad faith, and took the case to the Korean courts, where all three proceedings found against Jiujiu for damages and the transfer of the Chinese trademark back to SD.
Because the case involved the transfer of trademarks in China, a request that the Chinese court recognise and enforce the Korean judgments was inevitable. As there is no agreement on mutual recognition of court judgments between the two countries, the JunHe team had to deal with various complex legal issues such as the confirmation and identification of Korean judicial documents, the existence of legal and factual reciprocity, and the legal service of various documents over three years, before the Beijing No. 4 Intermediate People’s Court finally ruled that it recognised the judgment of the Korean court, and ruled to enforce the judgment.
Gree sues AUX for patent infringement
CATEGORY: Intellectual property
LEGAL COUNSEL: Merits & Tree Law Offices represented Gree, while Liu Shen & Associates and Longyuan IP Group represented AUX Group.
KEY POINTS: The legal wars between two Chinese home appliance manufacturers, Gree and AUX Group, have been going on for years with huge claims. Since 2015, Gree has initiated 20 infringement lawsuits against AUX on the alleged patents used on AUX’s best-selling models of air conditioners, all of which Gree won in the first instance proceedings. It then appealed against the total amount of RMB8.4 million (USD1.3 million) awarded by the original judgments. In the final proceedings, the Supreme People’s Court heard all 20 cases together and upheld the first instance judgments.
Apart from civil proceedings, AUX Group applied for invalidity and later an administrative litigation towards the patent at issue, both of which Gree successfully defended and upheld the validity of the patent. According to Merits & Tree, for the 20 cases the amount involved was nearly RMB64 million, with complex technical details and an enormous amount of evidence.
Greenland, Shandong Tobacco equity transfer dispute
CATEGORY: Contract dispute
LEGAL COUNSEL: Grandall Law Firm represented Greenland Group before the Supreme People’s Court (SPC).
KEY POINTS: Greenland Group entered into a property rights transfer contract with the defendant, Shandong Tobacco Investment Management, in which Greenland agreed to acquire a total of 3,568 mu (237.9 hectares) of commercial and residential land through the purchase of Shandong Tobacco’s equity in the project companies. The transaction took place on the Shandong Property Rights Exchange and was valued at more than RMB1 billion (USD157.4 million). Subsequently, Greenland discovered that nearly one-third of the land involved was for public service purposes, which prevented it from further development.
Greenland requested the court to rescind the property transaction contract, and the defendant to return the money and compensate for damages on the grounds that Shandong Tobacco had committed fraud. In the first and second instance proceedings, the Shandong High People’s Court and the SPC ruled in favour of Greenland.
This is the first decision made by the SPC to rescind a transaction done on the property rights exchange, redefining the fine lines of disclosure obligations for such transactions.
Guo Hanwei wins TME equity dispute
CATEGORIES: International arbitration; equity dispute
LEGAL COUNSEL: Duan & Duan Law Firm represented Guo Hanwei.
KEY POINTS: The investor, Guo Hanwei, took action before the China International Economic and Trade Arbitration Commission (CIETAC) against eight respondents, including Tencent Music Entertainment (TME) and its then co-president, Xie Guomin, demanding they return his equity stake in TME and compensate him for USD2.15 billion. This is one of the largest arbitration cases since CIETAC’s establishment, by claim amount.
Guo had invested RMB180 million (USD28.4 million) in Ocean Music, which was founded by Xie, in 2012. Later, according to Guo, Xie told him that Ocean Music was not doing well and suggested Guo sell his shares, and even threatened Guo with government investigation if he did not sell. Guo said he was forced to sell at a low price. The company since became TME, a top music streaming company valued at more than USD20 billion.
Duan & Duan says the difficulty of the case for Guo lay in cross-jurisdictional evidence collection, and establishing the fact of fraud before the tribunal. In order to gather evidence, Guo filed a motion for discovery in the US, the first time such an application was made in the US in order to facilitate a Chinese arbitration proceeding. In 2021, the CIETAC tribunal awarded in favour of Guo, finding that Xie’s conduct constituted fraud and awarding damages exceeding USD100 million.
Kangmei Pharma’s fraud liability dispute
CATEGORIES: Capital markets; litigation
LEGAL COUNSEL: Kangmei Pharmaceutical was advised by W&H Law Firm. Song Law Firm represented Kangmei’s former chairman and vice-chairman. Commerce & Finance Law Offices represented eight former directors, supervisors and senior executives of Kangmei Pharmaceutical. Mingsi Law Firm acted for Kangmei’s accounting firm, Zhengzhong Pearl River Accounting Firm. AllBright Law Offices and Shanghai Walson Law Firm acted for the investors’ representative. Hylands Law Firm and Hopesun Law Firm also represented some of the defendants.
KEY POINTS: Once a giant in the healthcare industry, Kangmei Pharmaceutical was found in 2019 to have forged monetary funds to the tune of nearly RMB90 billion (USD14.2 billion), the largest for a financial reporting fraud case in the A-share market to date.
In December 2020, the China Securities Investors Service Centre represented about 55,000 investors and filed a securities misrepresentation claim lawsuit against Kangmei and its directors and supervisors, demanding RMB4.87 billion in compensation from the defendants for investment and related losses. This is the first special representative litigation (SPL) case in China since the implementation of the revised Chinese Securities Law, paving the way for China’s equivalent of a class action.
The first instance proceedings ruled that Kangmei and other relevant defendants should bear RMB2.46 billion for investor losses, specifying the proportion of liability to be borne by each defendant, especially the controllers, directors, supervisors and senior executives of the company, with its accounting firm bearing 100% joint and several liability. The civil damages will ultimately be paid by Kangmei through a bankruptcy reorganisation process.
According to Commerce & Finance, the “discovery date” related argument made by the firm successfully persuaded the court to shorten the overall claim period, reducing the damage amount to RMB2.46 billion, while achieving the exoneration of two directors.
Kingold’s fake gold bars dispute
CATEGORY: Contract dispute
LEGAL COUNSEL: DeHeng Law Offices, TianTong Law Firm and Grandall Law Firm advised in the disputes.
KEY POINTS: Since 2015, Kingold Jewelry has pledged pure gold bars to a number of trust companies to raise funds for its Tri-Ring Group acquisition project, with insurance companies such as PICC providing corporate property insurance as a means of credit enhancement for Kingold Jewelry.
In late 2019, the gold bars pledged in trust company warehouses got tested and were found to be in fact copper alloy, and a number of trust products faced default. PICC announced that the property insurance contract was invalid and that PICC was not liable for the payout, as Kingold Jewelry was suspected of insurance fraud, a statement that led to a number of trusts launching civil lawsuits in various courts against PICC.
The series of disputes in the fake gold bars case revolved around who could claim compensation, and whether the insurance company should pay out. According to DeHeng, the disputed amount reached RMB25.6 billion (USD4 billion) and the disputes were extremely complex, involving not only various legal relationships such as insurance and trusts, but also criminal offences. These disputes are ongoing.
Lawsuits over failed Everbright investment
CATEGORIES: Financial dispute; overseas investment
LEGAL COUNSEL: Kangda Law Firm advised Baofeng Group and its legal representative, Feng Xin. Hiways Law Firm represented Zhaoyuan Yongjin. Dentons represented China Merchants Bank. Shanghai Zhendan Law Firm represented Everbright Capital. Jincheng Tongda & Neal also advised on the series of disputes.
KEY POINTS: Visible developments were made in 2021 in some of the series of domestic disputes among the different layers of investors and Baofeng Group, the initiator of the investment, stemming from a failed USD1 billion Chinese investment to acquire the Italian sports media company MP & Silva (MPS) in 2016.
Among them, Beijing High People’s Court ruled in the first instance to dismiss all the requests of Everbright Securities, which sought a total of RMB750 million (USD117 million) from Baofeng for part of the RMB5.3 billion of losses it claimed from the failed overseas takeover. Everbright then filed for an appeal with the Supreme People’s Court, and the case is ongoing.
Shanghai Financial Court ruled in the first instance to support RMB180 million out of Zhaoyuan Yongjin’s RMB600 million claim of investment loss from Everbright Capital. Zhaoyuan Yongjin was one of the investors for Shanghai Jinxin, the Chinese investment vehicle.
In a separate case where China Merchants Bank requested Everbright Capital to perform its obligation under the difference making-up clause and repay RMB3.5 billion, Shanghai Financial Court ruled in the final instance to dismiss Everbright’s appeal and sustained the first-instance judgement that ruled Everbright pay RMB3.1 billion.
Lufax, Luzhitou unfair competition dispute
CATEGORIES: Intellectual property; Unfair competition
LEGAL COUNSEL: Zhenghan Law Firm acted for Lufax Holding, while Yunde Law Firm represented Luzhitou Technology.
KEY POINTS: A popular debt investment product of fintech giant Lufax Holdings that can only be directly subscribed or transferred from other investors on Lufax’s platform was found via clients’ complaint to be usurped by external software of Luzhitou, which could automatically retrieve the release of such products and purchase them 24/7 by simply pre-setting the subscription amount.
The possibility of successful subscription for investors who did not use the software was basically zero, and investors who complied with the platform’s trading rules were squeezed out of trading opportunities. Lufax filed an unfair competition lawsuit with the Shanghai Pudong New District People’s Court and obtained a favourable first-instance judgment, which ordered Luzhitou to stop infringing, and compensation of RMB500,000 (USD78,900).
According to Zhenghan, it took 18 months from the filing of the case to the first-instance verdict, during which the court repeatedly weighed and discussed the balance between technological advancement and the protection of commercial interests, and ultimately found that the defendant’s actions constituted unfair competition.
Luzhou Daqu’s trademark dispute
CATEGORIES: Intellectual property; trademark dispute
LEGAL COUNSEL: Hui Ye Law Firm represented its client in the case.
KEY POINTS: Due to disagreements between its shareholders, the operator of the production and sale of “Luzhou Daqu” distilled spirits, had to join forces with one shareholder to take legal action and invalidate the trademark “Luzhou Daqu” that was held by the other shareholder.
It took four years to finalise the legal procedures. The civil proceedings started at local courts and went all the way to the Supreme People’s Court, with the trademark invalidation process going through the Trademark Office, the Trademark Review and Adjudication Board, Beijing Intellectual Property Court and Beijing High People’s Court.
Luzhou Daqu is a well-known Chinese liquor brand with a mark value of billions of renminbi.
As of press time, the procuratorate authority has accepted an application for administrative supervision related to the case.
NavInfo electronic map case against Qihoo 360
CATEGORY: Intellectual property
LEGAL COUNSEL: Before Beijing Intellectual Property Court, King & Wood Mallesons (KWM) represented NavInfo, the plaintiff. For the defendants, Qihoo 360 were advised by Jingcheng Tongda & Neal, and Leador Spatial Information Technology and its invested iShowChina were advised by Zhong Lun Law Firm.
KEY POINTS: In 2014, when the co-operation plan between Qihoo 360 and NavInfo didn’t go well, Qihoo decided to purchase NavInfo’s map data products at a low price from iShowChina, which provided an exclusive server for the dedicated data services of Qihoo. NavInfo argued that the co-operation of the three defendants constituted the resale of its data products and infringed its copyright, and filed a lawsuit.
However, the court of first instance held that the electronic map in question was not copyrightable, and rejected NavInfo’s request. KWM says that its core litigation strategy of the appeal on behalf of NavInfo was to confirm that the electronic map as a whole was a copyrighted work.
Ultimately, the final instance ruling reversed first instance judgments and upheld the plaintiff’s claim for RMB10.5 million (USD1.66 million) in infringement damages, while clarifying in the judgment the claim that data competitive advantage is a protectable legal interest, which could serve as a favourable judicial reference for the topical issue of attribution of data rights and competition.
Novartis fights patent validations on Entresto
CATEGORY: Intellectual property
LEGAL COUNSEL: King & Wood Mallesons (KWM) and Zhongzi Law Firm represented Novartis.
KEY POINTS: and Zhongzi Law FirmInnovative heart failure drug Entresto® – developed by Novartis, one of the world’s largest pharmaceutical companies – is a key hot-selling drug with sales of more than RMB1.5 billion (USD236.7 million) in China out of its total USD2.5 billion global sales in 2020.
Since entry into the Chinese market in 2017, the drug has faced numerous patent challenges from domestic companies, with its core compound patent being invalidated in 2017 by the former patent re-examination board of the China National Intellectual Property Administration (CNIPA). Eleven domestic companies have filed a total of 13 invalidation requests against two compound patents since 2018. According to KWM, this case has become the largest and most challenged in the field of pharmaceutical IP in China since the invalidation of the use patent of Viagra® in 2000.
After three years of follow-up of new changes in practice in the field of patent examination, attention to R&D developments of invalidation claimants, and a comprehensive negotiation strategy of breaking down each case, eight of the 11 domestic companies eventually withdrew their 10 invalidation requests, and in July 2021, the CNIPA upheld the validity of the Entresto® compound patents.
Opposition to Kinder 3D trademark refusal
CATEGORY: Intellectual property
LEGAL COUNSEL: JunHe represented Ferrero Group.
KEY POINTS: The renowned candy and chocolate company, Ferrero Group, filed a trademark registration application with the China National Intellectual Property Administration (CNIPA) for a three-dimensional trademark used for its famous product KINDER JOY, but the application was rejected, citing that “the applied-for trademark lacks distinctiveness and is not recognisable as a trademark”. Ferrero then filed for a refusal review.
With regard to the distinctiveness of the three-dimensional trademark, JunHe says that the legal team examined the inherent distinctive features of the three-dimensional trademark logo as a commodity packaging, in terms of both inherent distinctiveness and non-functionality, and submitted a large amount of evidence to prove that the trademark had acquired distinctiveness through extensive use over a long period of time, which was eventually supported by the CNIPA. The case was also selected as one of the exemplary cases of trademark review in 2020 by the CNIPA.
Proceedings over DJI patent infringement
CATEGORIES: Intellectual property; Civil procedure law
LEGAL COUNSEL: JunZeJun Law Offices represented DJI.
KEY POINTS: In DJI v FIMI, Beyondsky Technology over infringement of DJI’s gimbal camera design patent, the Shenzhen Intermediate People’s Court recognised the infringement by the two defendants and gave a prejudgment that the two defendants should stop the infringing acts, while continuing to hear the plaintiff’s claim for damages. However, because the complete judgment of the first instance proceedings was not in place, the prejudgement couldn’t be enforced. Therefore, the court accepted DJI’s application of an injunction, initiated during the proceedings, on the two defendants to stop infringements by the end of the proceedings.
This the first time in China that a combination of prejudgment and interim injunction order was handed down in a patent case. It was made clear in this patent decision that, where the fact of patent infringement was clear and the fact of infringement damages needed to be further ascertained, the court could take the initiative to make a prejudgment ex officio to stop the infringement and separate the trial into two parts, namely the determination of infringement and infringement damages.
Record IP enforcement on famous alcoholic beverages
CATEGORY: IP enforcement
LEGAL COUNSEL: Tahota Law Firm represented Martell, Chivas Holdings IP, Rémy Martin and Allied Domecq Spirits ＆ Wine.
KEY POINTS: Local public security authorities found out that hundreds of people in Guangdong province were engaging in the manufacture and sale of counterfeit alcoholic beverages of famous brands from Martell, Chivas Holdings IP, Rémy Martin and Allied Domecq Spirits ＆ Wine. More than 15 cases were built through close co-operation among the international rights holders and their legal counsel, law enforcement, and prosecutors. For legal counsel, this also means a huge amount of work in the series of proceedings, apart from authenticating the beverages and preparing legal documents.
Tahota says this case was the largest organised criminal case of manufacturing and selling counterfeit alcoholic beverages in China to date, in which the principal offender was fined RMB166 million (USD26.2 million) and other persons were fined tens of millions of renminbi cumulatively. The number of persons arrested and prosecuted in a single case, and the labour and resources invested by the local procuratorates and courts were also record breaking. The series of cases are ongoing, and most of them are under enforcement.
SEP dispute between ZTE, Conversant
CATEGORY: Intellectual property
LEGAL COUNSEL: Chang Tsi & Partners represented ZTE Corporation.
KEY POINTS: Due to a standard essential patent (SEP) licensing dispute between China’s largest communications equipment manufacturer, ZTE, and Conversant Wireless Licensing, the world’s largest patent portfolios holder, in late 2017 Conversant sued ZTE in the UK for patent infringement and asked the UK High Court to determine a global SEP licence rate.
In January 2018, ZTE filed a lawsuit with Shenzhen Intermediate People’s Court, requesting the court to determine the Chinese local SEP licence rate. Conversant then, in April 2018, filed a lawsuit against ZTE and its German affiliates for SEP rights infringement in the Düsseldorf Court of Germany.
On 25 August 2020, China’s Supreme People’s Court issued a final ruling on Conversant’s objections to Chinese courts’ jurisdiction. The UK Supreme Court published a final judgment against ZTE the following day. On the third day, the Düsseldorf court issued a first instance decision finding that ZTE had infringed Conversant’s European patents. On the fourth day, ZTE applied to Shenzhen Intermediate People’s Court for an anti-suit injunction to restrain Conversant from applying to enforce the German judgment before a final judgment was rendered in China, which was upheld by the Shenzhen court.
After the injunction was served, Conversant proactively started the SEP licensing negotiation with ZTE, which eventually led to a FRAND agreement between the two, and in November 2020, ZTE applied to the Shenzhen court for the withdrawal of the lawsuit.
Sichuan Trust sues Tahoe over loan contract
CATEGORY: Contract dispute
LEGAL COUNSEL: JunHe represented Sichuan Trust, the plaintiff.
KEY POINTS: Sichuan Trust entered into a trust loan contract with listed property company Tahoe Group in December 2017, granting a loan of RMB4 billion (USD631.2 million) to Tahoe, which was guaranteed by four companies.
When Tahoe later failed to pay the interest as agreed, Sichuan Trust filed a lawsuit with the Shanghai Financial Court, requesting that Tahoe repay the principal, interest, penalties and compound interest totalling RMB4.8 billion. This was the largest case heard by Shanghai Financial Court since its establishment, in terms of the target amount.
According to JunHe, the case focused on issues such as whether the trust protection fund paid by the trust company on behalf of the borrower should be deducted from the principal, how to determine the point at which the loan became overdue, and whether the default interest rate of 24% per annum was too high. In the end, the court upheld the majority of Sichuan Trust’s claims.
Sinosure, DSIC insurance claim dispute
CATEGORIES: Insurance dispute; shipping and marine
LEGAL COUNSEL: SGLA Law Firm acted as PRC counsel to Sinosure, while Holman Fenwick Willan advised on UK and US law.
KEY POINTS: Dalian Shipbuilding Industry Company (DSIC) encountered operational difficulties and several of its platforms were insured against buyer’s breach of contract by Sinosure. At a time when platform construction was about to be completed, the buyer group failed to make contractual payments and was in the process of bankruptcy under US law. Subsequently, DSIC also entered into bankruptcy reorganisation in China, and a significant source of funding for the reorganisation was the potential liability of Sinosure under the corresponding policies.
According to the policy requirements, the payment process involved the buyer’s liability for breach of contract under the corresponding shipbuilding contract, which was governed by English law, but the policy was governed by Chinese law. Meanwhile, it involved bankruptcy reorganisation proceedings in a number of countries. SGLA says the core strategy for Sinosure lay in how to play its role of a policy insurance company while complying with laws to settle claims and fully protect the relevant rights of DSIC under the underlying contracts.
In November 2021, Sinosure paid RMB1.78 billion (USD280.9 million) in insurance claims to DSIC, which is the highest single payout for the marine equipment industry to date.
SPC jurisdiction finding in SEP dispute
CATEGORIES: Intellectual property; jurisdiction dispute
LEGAL COUNSEL: Jingtian & Gongcheng represented OPPO, AnJie Law Firm acted for Sharp, and co-represented Sharp’s negotiation agent, ScienBizipJapan, along with King & Wood Mallesons.
KEY POINTS: Sharp and OPPO negotiated on the licensing of Sharp’s standard essential patents (SEPs), but no agreement was reached. Sharp then initiated a patent infringement lawsuit against OPPO in Japan and Germany, which OPPO considered violations of FRAND (fair reasonable and non-discriminatory) obligations, and therefore filed a lawsuit with the Shenzhen Intermediate People’s Court (SIPC), requesting it to make a decision on the global rate for licensing of relevant SEPs owned by Sharp to OPPO.
The court held that Shenzhen was the place where the SEPs in question were implemented and where negotiations between the parties took place, and therefore the SIPC was the convenient court to hear the SEP dispute, with jurisdiction over global rates. It ruled that Sharp must not file new lawsuits, or apply for injunctions against OPPO in other countries or regions, in relation to the patents in question until the final judgment was rendered.
Seven hours after the SIPC issued the anti-suit injunction, District Court I of Munich in Germany issued a counter-injunction to OPPO, requiring it to apply to the Chinese court to withdraw the previous injunction.
In the final proceedings, the Supreme People’s Court (SPC) sustained the original ruling and reaffirmed the SIPC’s jurisdiction, being the first time it has clarified that Chinese courts have jurisdiction over global FRAND licensing conditions in a SEP patent litigation. The two companies eventually agreed to enter into a patent licensing agreement in October 2021, and ended their global litigation.
Taihehui, Jinggong corporate bonds dispute
LEGAL COUNSEL: Hylands Law Firm represented Taihehui Investment Management (Kunshan), the plaintiff, and Yueguang Law Firm represented Shaoxing Zhongfu Holdings and the other defendant.
KEY POINTS: Taihehui and Zhongfu entered into a co-operation agreement whereby Taihehui acted as trustee and underwrote bonds to be issued by Zhongfu named “targeted debt financing instruments”. They also agreed that Taihehui had the right to initiate civil proceedings on behalf of the holders of the financing products should Zhongfu not pay out its debts.
Later, given Zhongfu’s breach of contract, Taihehui sued for the early maturity of the outstanding financing instruments and return of principal and interest, amounting to RMB1 billion (USD157.8 million).
Taihehui, as the trustee of a non-standardised corporate bond, was not eligible to file a lawsuit on behalf of the investors. As a result, the Shanghai High People’s Court in first-instance proceedings held that the trustee could not be the plaintiff, and ruled to dismiss Taihehui’s requests.
Hylands extended the application of the original legal basis and regulations of standardised corporate bonds to the final trial proceedings by clarifying that the non-standardised corporate bonds in the case were still corporate bonds in nature. The Supreme People’s Court (SPC) ultimately affirmed Hylands’ argument and ruled to retract the first-instance ruling, which confirmed for the first time the litigation status of a trustee in non-standard corporate bonds as a plaintiff, filling a gap in law and jurisprudence.
Affirming the right of action for bondholders
By Xu Yu, Hylands Law Firm
TCL, Ericsson unfair competition dispute
CATEGORIES: Intellectual property; Unfair competition
LEGAL COUNSEL: Jingcheng Tongda & Neal acted for TCL Technology, while AnJie Law Firm, Global Law Office and LexField Law Offices represented Ericsson in different court proceedings.
KEY POINTS: Ten years ago, Ericsson, which had dominant pricing power in 4G/3G/2G standard essential patents (SEPs), sued TCL in 17 countries around the world after failing to reach an agreement on licensing rates. TCL filed for and successfully obtained an anti-suit injunction in the US in 2015, suspending the global litigation battle between the two and leaving only the US court trials to continue.
However, as a result of the unfavourable first-instance decision by the Eastern District Court of Texas, TCL continued to appeal in the US and started legal actions in China.
According to Jingcheng Tongda & Neal, one of TCL’s strategies was to push Chinese antitrust authorities to conduct investigations into Ericsson and form an affirmative opinion on Ericsson’s abuse of the dominant market position.
TCL filed a series of antitrust and unfair competition lawsuits in the Shenzhen Intermediate People’s Court and Guangzhou Intellectual Property Court. Ericsson then filed jurisdictional objections to these lawsuits, arguing that the Chinese courts were not entitled to hear a case already heard in US courts.
However, China’s Supreme People’s Court ultimately determined that Chinese courts had jurisdiction over this series of cases, and that the place where the outcome of the monopolistic conduct complained of outside China had an exclusionary or restrictive effect on competition in the Chinese market could serve as the jurisdictional link to the case.
In 2020, the US Court of Appeals invalidated the Texas court decision, and in July 2021, the two reached a settlement on their decades-long global litigations.
Theft of EBP’s trade secret
CATEGORIES: Intellectual property; trade secret
LEGAL COUNSEL: Guantao Law Firm represented the plaintiff, EBP.
KEY POINTS: Plastic product maker EBP, which developed and held the manufacturing technology of “ecologically degradable plastic”, found that the mulch film produced by a new company ˗ set up by its former technical director after he left EBP ˗ was almost identical to the company’s products, so it filed a criminal report suggesting the person was infringing its trade secrets for profit. Later, the suspect was prosecuted and found guilty by Jinan Gaoxin District High People’s Court.
According to Guantao, the greatest difficulty in trade secrets criminal cases is to build a case to the court that the suspect has illegally disclosed a trade secret and applied it to a product for profit. In terms of legal procedures, the infringed party’s lawyer not only needs to prove that the technology of the right holder was not known to the public, but also that the alleged infringing product was indeed produced based on the same technical solution as the right holder’s.
Solving trade secret cases with IP attorneys
By Li Hongjiang, Guantao Law Firm
WADA arbitration with Sun Yang
CATEGORY: Sports arbitration
LEGAL COUNSEL: In the appeal arbitration procedure before the Court of Arbitration for Sport (CAS), Bryan Cave Leighton Paisner represented World Anti-Doping Agency (WADA), the appellant, while Hui Zhong Law Firm and Schellenberg Wittmer and Bonnard Lawson Law Firm represented Sun Yan, the respondent.
KEY POINTS: In February 2020, the Court of Arbitration for Sport (CAS) rendered an award against Chinese swimmer Sun Yang based on arbitration applications by the WADA, finding Sun guilty of an anti-doping rule violation and sanctioning him with a period of eight-year ineligibility. Sun appealed to the Swiss Supreme Court to set aside the award and requested a new CAS hearing, citing a lack of impartiality from the president of the arbitral panel.
In December 2020, the Swiss Supreme Court upheld Sun’s request and acknowledged that the impartiality of the presiding arbitrator was questionable. As a result, the Swiss Supreme Court decided to set aside the award and ordered a replacement of the presiding arbitrator. Hui Zhong says this is one of a very few cases in the history of the CAS in which an award has been successfully set aside, with fewer than 10 such instances in the past 36 years.
The CAS replaced all three arbitrators and held a new hearing, which eventually reduced Sun’s doping ban to four years and three months compared to the original award.
‘Wuyang bonds’ securities misrepresentation
CATEGORIES: Capital market; litigation
LEGAL COUNSEL: In the second instance trial, Jincheng Tongda & Neal and Tian Yuan Law Firm acted for some of the plaintiffs, Zhong Lun Law Firm represented WUYIGE Certified Public Accountants (Daxin), while King & Wood Mallesons and Jingtian & Gongcheng advised other defendants.
KEY POINTS: Following a high-profile first instance judgment in 2020, which found that the intermediaries (including the underwriter, the accounting firm, the rating firm and the law firm) in Wuyang Construction Group’s bonds defaults should assume joint and several liability for a total of RMB740 million, Zhejiang High People’s Court affirmed the original judgment in September 2021. The case sets a precedent for intermediary agencies to be financially responsible for bondholders’ losses.
Although the high court’s ruling sustained Daxin’s joint liability status, Zhong Lun managed to convince the court to remove the “gross negligence” decision for Daxin.
Being China’s first dispute over liability in bond issuance frauds, the case is also the first in which the ordinary representative litigation regime was applied to a securities dispute, with the largest amount of civil damages involved in securities litigation to date.
Xuhong and AGC’s unfair competition dispute
CATEGORIES: Intellectual property; Unfair competition
LEGAL COUNSEL: Lifang Partners acted for Sichuan Xuhong Opto-Electronic Technical, and King & Wood Mallesons represented AGC.
KEY POINTS: Between 2015 and 2017, as Xuhong promoted its glass products to downstream clients, international glass product giant AGC continued to send infringement warnings to Xuhong’s downstream clients that Xuhong’s products infringed its patent rights.
Xuhong then applied for the invalidation of the patents in question with the China National Intellectual Property Administration (CNIPA), which was approved, and also upheld by the Beijing Intellectual Property Court. After the invalidation, AGC did not withdraw its infringement warnings, instead filing for new patents and continuing to claim Xuhong’s products infringed the company’s other patents rights, causing Xuhong’s potential clients to withdraw.
In June 2018, Xuhong filed an unfair competition lawsuit with the Mianyang Intermediate People’s Court, requesting the court to order AGC to cease and withdraw its infringement warnings and claiming RMB20 million (USD3.2 million) in damages.
In September 2021, the court ruled in the first instance ruled in favour of Xuhong and awarded AGC damages totalling RMB10.5 million for economic losses and reasonable expenses.
Ye and Yang sue Cambodian government
CATEGORIES: International arbitration; overseas investment
LEGAL COUNSEL: Hui Zhong Law Firm represented Ye Qiong and Yang Jianping, and Arent Fox was their US counsel.
KEY POINTS: Chinese investors Ye Qiong and Yang Jianping argued that the Cambodian government had arbitrarily and illegally revoked a telecommunication licence of their wholly-owned Cambodian telecom company, making it impossible for the company to continue its operations, violating the obligations of fair and equitable treatment and constituting expropriation under the Investment Agreement of the Framework Agreement on China-ASEAN Comprehensive Economic Co-operation. Therefore, they initiated an international investment arbitration against the Cambodian government.
This was the first investment arbitration case filed by Chinese investors against Cambodia, and the first investment arbitration case filed pursuant to the China-ASEAN investment agreement. The amount in dispute was USD320 million.
According to Hui Zhong, the case involved the telecommunications sector, the legal aspects involved international and Cambodian law, and the legal documents were in Chinese, Cambodian and English, which made it more difficult to sort out the facts and communicate with multiple parties.
Yonglight’s misrepresentation liability dispute
CATEGORIES: Capital market; litigation
LEGAL COUNSEL: Jincheng Tongda & Neal (JT&N) represented Guodian Yonglight Energy Chemical Group, the defendant.
KEY POINTS: In response to a supplemental agreement in an acquisition project that was not disclosed by Yonglight, Yang Sen, a retail investor, filed a lawsuit against Yonglight on the grounds of securities misrepresentation. According to the law at the time of the first trial, there must be a prior administrative penalty or a criminal court decision before the court will hear such case.
In the case, Yonglight’s warning letter issued by the local regulator did not meet the standard of “administrative penalty” stipulated in the Administrative Punishment Law, so the court of first and second instance did not accept to hear the case.
The plaintiff applied to the Supreme People’s Court (SPC) for a retrial, however the Sixth Circuit Court decided to hear the case. This is the first time the SPC accepted a securities misrepresentation case without previous administrative penalties since it promulgated, in 2003, the judicial interpretation of securities misrepresentation. The case signals that the criteria for the SPC to consider and hear such cases have fundamentally changed.
According to JT&N, after the SPC took in the case, the legal team organised top Chinese legal scholars to give an expert opinion, and put forward strong defence arguments. Eventually, Yang withdrew his retrial requests, and the case was heard and concluded.
Discussion in this very case around criteria for accepting securities misrepresentation cases drove the SPC to abolish the relevant prerequisite provisions.
Zhang Lan’s post-award dispute
CATEGORY: International arbitration
LEGAL COUNSEL: Before the China International Commercial Court (CICC), East & Concord Partners represented the applicants, celebrity Chinese restaurant owner Zhang Lan and her holding companies, while Hui Zhong Law Firm represented the respondent, the investment vehicle of CVC Capital. Clifford Chance was also counsel to the respondent.
KEY POINTS: Following a series of disputes over CVC’s USD300 million equity investment in 2014 between the famous restaurateur and the European private equity group, the CICC dismissed Zhang’s two applications to set aside two parts of a CIETAC award, during which the newly formed court clarified its principle of honouring the parties’ right to appoint arbitrators in explicit arrangements.
The two decisions are the CICC’s fourth and fifth since its establishment, and involved a total of USD140 million.
The applicants sought to challenge the award on the ground that CIETAC had erred in procedure by deviating from its own rules on appointment of arbitrators in multiparty arbitration when constituting the tribunal. The CICC held that where parties expressly agreed in the arbitration clause that each side of the arbitration should appoint one arbitrator, that clause shall override the CIETAC rules.
Zhongtian’s exemplary compliance rectification
LEGAL COUNSEL: JunHe advised Zhongtian Technology.
KEY POINTS: In 2017, the World Bank launched an investigation and issued a letter of inquiry to Zhongtian Technology about unintentional misconduct of individual employees of a Zhongtian subsidiary during the bidding process of a World Bank-funded infrastructure project in an African country.
JunHe says the legal team assisted the company in collecting and collating evidence that would help mitigate the penalty, and conducted several rounds of negotiations with the World Bank, eventually reaching a settlement agreement with the bank.
Based on the settlement agreement, the JunHe team assisted Zhongtian to establish 13 sets of compliance systems in line with the bank’s standards and conducted compliance training sessions for senior management, compliance officers and staff. The legal team also assisted the company to actively co-operate with an independent integrity compliance consultant appointed by the bank, and he recognised these achievements of the company’s compliance rectification. Finally, in January 2021, the bank formally lifted its sanctions.
Bank officials spoke highly of Zhongtian’s compliance work and invited it to become a “mentor” for other companies sanctioned by the bank to promote its successful experience.
Zhuhai Ports, Antong settle leasing dispute
CATEGORIES: Contract dispute; shipping
LEGAL COUNSEL: Huang & Huang Co Law Firm acted for Zhuhai Ports Holdings. King & Wood Mallesons was the bankruptcy administrator for the defendant after it went into the judicial bankruptcy reorganisation process. Wang Jing & Co represented Viewer Development Company.
KEY POINTS: In view of the non-payment of marine container rentals by Antong Holdings and its affiliates, Zhuhai Port Holdings filed a lawsuit against it with the Guangzhou Maritime Court, demanding termination of a lease contract, return of leased containers, payment of rentals, payment of late payment liquidated damages and liquidated damages totalling RMB426 million (USD67.2 million).
The 15,000 containers leased by Zhuhai Port Holdings to Antong were actually leased by it from a third party in the case, Viewer Development Company. Therefore, in the event that Antong defaulted on the late payment of container rentals, Zhuhai Port Holdings had also defaulted on the late payment of rentals to Viewer Development Company. During the trial, two of the defendants entered into bankruptcy reorganisation proceedings, one after another. As a result, the priority status of the bankruptcy proceedings intertwined and contradicted the ordinary civil proceedings.
According to Huang & Huang, the financial pressure on Zhuhai Port Holdings was reduced by using the deposit paid by Antong in the course of contract performance to offset the outstanding rent, and by implementing and realising it through the procedure of hearing organised by the maritime court. The case was finally settled by way of mediation, and all of Zhuhai Port Holdings’ claims were legally upheld. The mediation result was also approved by the bankruptcy court, which ruled to confirm all legal claims of Zhuhai Port Holdings, which were successfully settled by debt-equity swap.