700 Million Yuan Astronomical Compensation Looms Over合众思壮 Founder Guo Xinping, Risk of Complete Exit

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A massive debt dispute involving the new and former controlling shareholders of Union Space Technologies is pushing the company’s founder, Guo Xinping, to the brink of “exclusion.”

On the evening of March 11, Union Space Technologies issued a notice revealing that the Zhengzhou Intermediate People’s Court in Henan Province issued a first-instance judgment in a debt dispute involving Guo Xinping and his controlled Youhe Technology, as well as the company’s controlling shareholder, Xinghui Electronics. The court ordered Guo Xinping to repay debts and interest totaling over 4.7 billion yuan, and his core shares in the company have been frozen, facing judicial disposal risks.

According to the announcement, the judgment involves a principal debt of 3.346 billion yuan, with interest and penalties totaling 1.417 billion yuan, bringing the total to 4.763 billion yuan. As of the announcement, Guo Xinping held approximately 164 million shares of Union Space, accounting for 22.21% of the total share capital. These shares have already been subject to an initial judicial freeze requested by Xinghui Electronics. More notably, about 162 million of Guo Xinping’s shares are pledged to Xinghui Electronics, with a pledge ratio of 98.59%, due to the current debt dispute between the two parties.

The root of this dispute traces back to state-owned capital’s entry in 2019. As one of China’s early companies in the satellite navigation field, Union Space Technologies was founded in 1994 by Guo Xinping, with business covering high-precision navigation, spatiotemporal IoT, and intelligent manufacturing.

In 2019, facing operational difficulties and liquidity pressures, Union Space Technologies experienced a turning point. Xinghui Electronics, under Zhengzhou Aviation Port District, became the company’s controlling shareholder through share transfers and voting rights entrustment, with control shifting to Zhengzhou Aviation Port District. Guo Xinping no longer served as the actual controller but remained the largest shareholder.

At that time, Guo Xinping signed a control rights betting and compensation agreement with Xinghui Electronics, setting performance targets and compensation obligations. Xinghui Electronics’ entry was seen as a rescue measure by local state-owned capital.

However, after the state-owned capital’s entry, Union Space Technologies did not see a fundamental improvement in operations and instead fell into ongoing losses. Financial reports show that from 2019 to 2024, the company’s net profit excluding non-recurring gains and losses has been in the red for six consecutive years, with a loss of over 1.3 billion yuan in 2020 alone, indicating continued operational pressure.

Adding to the difficulties, Guo Xinping was penalized by the China Securities Regulatory Commission in 2023 for financial fraud, receiving a 10-year market ban and a fine of 4 million yuan, effectively removing him from company management.

Investigations revealed that between 2017 and 2020, Union Space Technologies inflated its revenue and profits through fictitious radar and private network communication businesses, with total inflated profits exceeding 5.2 billion yuan. As then-chairman and general manager, Guo Xinping bore primary responsibility for these illegal activities.

Now, the first-instance judgment in the debt dispute has further worsened Guo Xinping’s situation. The announcement states that if the judgment is upheld and Guo Xinping fails to fulfill his debt repayment obligations promptly, Xinghui Electronics will have the right to enforce the judgment. His 22.21% stake could then face forced reduction, judicial auction, or other disposal methods.

If Xinghui Electronics obtains these shares through enforcement, its stake will increase from the current 20.13% to 42.34%, further consolidating control over Union Space Technologies.

However, many uncertainties remain.

Union Space Technologies clarified in the announcement that the first-instance judgment has not yet taken legal effect, and the involved parties can file an appeal within the statutory period. The final outcome of the litigation remains uncertain. Even if the judgment becomes effective and enforcement begins, subsequent steps such as share bidding, auctioning, payment, and transfer of ownership involve multiple stages, with auction results and final disposal methods subject to change.

From an industry perspective, this shareholder dispute reflects a broader power struggle between the company’s founder and state-owned capital. As an established enterprise in the BeiDou navigation field, the stable development of Union Space Technologies has a certain influence on the industry.

If Xinghui Electronics can further strengthen its control, it may bring more funds and resources to the company, helping to alleviate liquidity issues and focus on core business. However, for Guo Xinping, losing all his shares would mean being completely ousted from the company he founded, becoming a typical case of a founder leaving the market due to a failed betting agreement and massive compensation.

Currently, staff from Union Space Technologies’ board office stated that the company and Xinghui Electronics are still in the process of adjustment and are working to improve liquidity. The final outcome of this 4.7 billion yuan debt dispute will not only affect Guo Xinping’s personal future but also influence the future development pattern of Union Space Technologies, warranting ongoing market attention.