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Yu Diamond: Announcement on guarantees for wholly-owned subsidiaries
**Abstract**
Stock Code: 300064
Securities Abbreviation: Yu Diamond
Announcement No.: 2014-004
Zhengzhou Huajing Diamond Co., Ltd. announces that it has provided a guarantee for its wholly-owned subsidiary, Huajing Precision Manufacturing Co., Ltd. The company and all members of the board of directors confirm the accuracy, completeness, and truthfulness of the information disclosed in this announcement. There are no false statements, misleading information, or material omissions.
**Overview of the Guarantee**
Huajing Precision Manufacturing Co., Ltd., a wholly-owned subsidiary of Zhengzhou Huajing Diamond Co., Ltd., intends to apply for bank loans from Minsheng Bank and Kaifeng Bank for production and operational purposes. In order to support its financial needs, the company will provide a joint and several liability guarantee amounting to RMB 100 million.
On January 24, 2014, the second board of directors of the company reviewed and approved the proposal to provide guarantees for its wholly-owned subsidiaries. According to the Shenzhen Stock Exchange GEM Listing Rules (revised in 2012), the company’s Articles of Association, and the External Guarantee Management System, this type of guarantee does not require approval by the shareholders’ meeting.
**Basic Information About the Guarantor**
1. **Huajing Precision Manufacturing Co., Ltd.**
- Established: August 8, 2011
- Registered Address: West of the 10th Street, North of Jingbei 4th Road, Zhengzhou Economic and Technological Development Zone (Henan Export Processing Zone)
- Legal Representative: Liu Yongqi
- Registered Capital: RMB 220 million
- Main Business: Production and sales of synthetic diamond downstream products and equipment; technology research and development and transfer; export of company products and import of machinery, spare parts, and raw materials; processing and "three to one" supplementary business.
2. **Equity Structure**
Huajing Precision is fully owned by Zhengzhou Huajing Diamond Co., Ltd., with 100% equity held by the parent company.
3. **Financial Status**
The 2012 financial data was audited by Asia Pacific (Group) Certified Public Accountants Co., Ltd. While the 2013 data remains unaudited, Huajing Precision has maintained good compliance with national laws and regulations. There are no major legal disputes or credit issues. The company operates smoothly, with a stable financial position.
**Main Terms of the Guarantee Agreement**
The company provides a joint and several liability guarantee for Huajing Precision. The specific terms, including the amount and duration of each individual guarantee, will be determined based on the loan agreements signed between Huajing Precision and the banks. The total guaranteed amount will not exceed the limit set by the board of directors, which is RMB 100 million.
**Board of Directors' Opinion**
The board of directors believes that Huajing Precision has continuously improved its operational capabilities and has now reached a certain scale and competitive advantage. As a wholly-owned subsidiary, it is under full control of the parent company. This guarantee supports the sustainable growth of Huajing Precision’s core business, helps resolve capital constraints, and enhances profitability.
**Independent Directors’ Opinion**
The independent directors have reviewed the matter and believe that Huajing Precision has a strong reputation and solid operations. There is no indication that the company would be required to fulfill the guarantee due to any default by the subsidiary. This arrangement supports the development of Huajing Precision without affecting the normal operations or long-term interests of the company or its shareholders. The decision-making process was in accordance with applicable laws and regulations, and the directors unanimously approve the guarantee.
**Supervisory Board’s Opinion**
The Supervisory Board confirms that the guarantee complies with relevant laws, regulations, and internal procedures. It does not harm the interests of the company or its shareholders.
**Cumulative External Guarantees and Overdue Guarantees**
As of the date of this announcement, the total external guarantees of the company and its subsidiaries amount to RMB 200 million, representing 14.85% of the company’s audited net assets for 2012. All guarantees are provided to subsidiaries, and there are no violations or overdue guarantees.
**Other Matters**
The board of directors has authorized management to determine the time and amount of individual guarantees according to applicable laws, company rules, and loan contracts. The company will monitor the progress of the guarantees and disclose any changes accordingly.
**Reference Documents**
1. Resolution of the 22nd Meeting of the Second Board of Directors
2. Resolution of the 16th Meeting of the Second Board of Supervisors
3. Independent Directors’ Independent Opinion on the Company’s Guarantee for the Subsidiary
**Special Announcement**
Zhengzhou Huajing Diamond Co., Ltd.
Board of Directors
January 24, 2014