Zhenbao Island: Responding to issues related to the actual controller's debt-to-equity swap price adjustment and pledge risks

Investor’s Question:

Hello, Secretary of the Board. The convertible bonds issued by the actual controller of the company have recently revised the conversion price downward multiple times, and the latest conversion price has fallen below the company’s net asset value per share. Could you please clarify whether the actual controller lacks confidence in the company’s long-term value and future development, and whether there is an intention to reduce holdings or indirectly sell equity through convertible bonds? The current pledge rate of the actual controller exceeds 80%. Can you provide the specific warning line and liquidation line corresponding to each pledged share? Has the current stock price triggered or is it about to trigger forced liquidation? If the stock price continues to decline, does the actual controller have sufficient funds and assets to supplement the pledge? Has a risk emergency plan been formulated?

Secretary of the Board’s Response (Zhenbao Island SH603567):

Dear Investor, hello. Regarding the situation of multiple revisions to the conversion price of the convertible bonds by the actual controller, this falls under the regular adjustment mechanism within the issuance terms and does not involve the actual controller’s judgment on the company’s long-term value or intentions to reduce holdings. The adjusted number of shares available for exchange still meets the conversion demand. As for the specific parameters of the warning line and liquidation line for the pledged shares of the controlling shareholder, these are set by the pledgee based on market conditions, the pledge contract, and internal risk control requirements, and the company does not have access to the relevant detailed information. According to the publicly disclosed response mechanism of the controlling shareholder (such as supplementary pledges, additional margin, or early repayment measures), if stock price fluctuations reach the pledge risk warning standards, they will ensure the stability of the pledge through the aforementioned methods. The company has maintained regular communication with the controlling shareholder and closely monitors changes in pledge risks. Should there be significant changes in risk in the future, the company will make timely announcements. Thank you for your attention to the company!

See more Q&A from the Secretary of the Board >>

Disclaimer: This information is excerpted from public sources by Sina Finance and does not constitute any investment advice; Sina Finance does not guarantee the accuracy of the data, and the content is for reference only.

Massive information, precise interpretation, all in the Sina Finance APP