What was originally supposed to be a joyous remarriage turned into a source of conflict when performance fell short of expectations, triggering compensation clauses. This was due to the decision-making process and implementation of the compensation plan. China-Italy Due to disagreements over the terms of the agreement, Shandong Land & Mineral Resources and the company’s third-largest shareholder have ended up in court. Moreover, the company’s performance compensation has been hampered by the third shareholder’s lack of cooperation. For Shandong Land & Mineral Resources, which once engaged in intensive asset acquisitions, the outcome of its expansion efforts has not been particularly favorable, and the company’s operational condition has consequently been affected. Industry The slump has hit a bottleneck.

The two sides are taking each other to court.

Yesterday, Shandong Land & Mineral Resources publicly released a “Notice of Response” to investors. Shandong Land & Mineral Resources has been sued by Shandong Huayuan Venture Investment Co., Ltd.—the company’s third-largest shareholder (hereinafter referred to as)—due to dissatisfaction with the decision-making and implementation process regarding the performance compensation arrangement. “ Shandong Huayuan ” ) File a lawsuit.

In the announcement, Shandong Huayuan stated that during the deliberation of the performance compensation mechanism, the company’s board of directors and shareholders’ meeting allowed directors or shareholders with special vested interests to participate in the voting process. After the resolution was passed, the measures taken during its implementation clearly favored the interests of those with special vested interests, thereby infringing upon the legitimate rights and interests of other shareholders. In light of this, Shandong Huayuan requests the court to legally declare the aforementioned adopted resolution invalid.

It’s worth noting that prior to this, Shandong Land & Mineral Resources had already taken Shandong Huayuan to court. The reason the two parties ended up in court stems from the fact that three years ago, during the company’s asset restructuring, the poorly performing operations of the restructured entity triggered the performance compensation clause. Due to Shandong Huayuan and other entities... 3 The issuer failed to fulfill its performance compensation commitment within the prescribed time limit and has been sued by Shandong Land & Mineral Resources. As for whether the reason behind Shandong Huayuan’s lawsuit is valid, a reporter from Beijing Business Today called Shandong Land & Mineral Resources. A company employee stated, “ The announcement is very clear. ” However, when the reporter continued to press for more information, the staff member told the reporter to contact the company’s secretary of the board. Yet, the reporter was never able to get through to the secretary’s phone number.

2012 At the end of the year, Tai Fu Industrial, which had not yet been renamed Shandong Land & Mineral Resources, carried out a major asset restructuring. The company transferred assets to Shandong Lu Di Investment Holding Co., Ltd., Shandong Provincial Institute of Geological Survey and Mapping, Shandong Huayuan, and others. 8 The institution issued [it] together with natural persons. 3.01 100 million shares, to purchase its holdings in Ludi Investment. 100% Equity, Xulou Mining 49% Equity and Loufan Mining 40% the equity. Upon completion of the transaction, Tai Fu Industrial will transform into a... Iron ore A company engaged in mining, processing, and sales of iron concentrate powder.

During the transaction, the two parties had signed a performance compensation agreement. If the target asset... 2013-2015 Net profit after deducting non-recurring items for the year is lower than... 12857.6 Ten thousand yuan, 15677.86 Ten thousand yuan and 21439.65 Ten thousand yuan (totaling) 49975.11 Ten thousand yuan), 8 The designated issuer shall compensate the listed company for the profit shortfall, with the company bearing the responsibility. 1 at the original price for repurchase. However, unfortunately, due to... Iron ore Prices plummet, the company 2014 The net profit after deducting non-recurring items for the year turned negative, triggering the performance compensation clause.

Performance compensation is difficult to advance.

2014 One month after the annual report was disclosed, the company initiated the process of performance compensation. 5 Moon 28 On [date], Shandong Land & Mineral Resources held a shareholders’ meeting to deliberate on the method of performance compensation. After rejecting several options—including repurchase and cancellation of the combination, full repurchase and cancellation, and combined gift schemes—the company ultimately adopted a phased gift approach. According to the company’s announcement, due to... 8 The named issuer is the party concerned and did not exercise voting rights at the shareholders’ meeting.

According to the performance-based compensation clause, Shandong Land & Mineral’s 8 The designated issuer needs to provide compensation. 1.01 Hundreds of millions of shares. Although the compensation plan has been finalized, the company’s performance-compensation process has not been smooth. 7 Moon 22 On [date], the company issued an announcement confirming the completion of the first batch of performance-compensation share grants. The recipients include the Geological and Mineral Resources Group, the Shandong Provincial Institute of Geological Surveying and Mapping, Beijing Zhengrun Venture Capital, and the State-owned Assets Supervision and Administration Commission of Shandong Province. 4 The designated issuer fulfilled its commitment and completed the donation task by, among other measures, releasing restricted shares ahead of schedule. Meanwhile, another entity—including Shandong Huayuan— 4 The named entity is uncooperative, as the shares it holds are either pledged or fall below the required compensation amount. 4 The named issuer has still not taken any action to fulfill its commitment; accordingly, Shandong Land & Mineral Resources has filed a lawsuit against it.

The company announcement indicates that, during the restructuring, the company issued shares to Shandong Huayuan. 7121.2 Tens of thousands of shares—but as soon as the lock-up period expired, Shandong Huayuan immediately sold them off. 75% of the shares; currently, the company’s shareholding has been reduced to only 1780 tens of thousands of shares, and they have already been pledged. In this performance compensation, Shandong Huayuan is required to donate shares amounting to: 2394.5 Tens of thousands of shares—according to the agreement, after Shandong Huayuan lifts the pledge on these shares, it will also need to repurchase them from the secondary market. 614.2 Tens of thousands of shares to complete the gift assignment.

Many investors expressed dissatisfaction with Shandong Huayuan’s practice of not fulfilling its commitments and instead suing the company. “ Last year, the company’s performance declined, and Shandong Huayuan even carried out large-scale share reductions. Now, it’s refusing to honor its commitment to compensate for the performance shortfall—could it be trying to dodge its financial obligations? ” In this regard, a reporter from the Beijing Business Today called Shandong Huayuan but did not receive a response.

An analyst familiar with Shandong’s geological and mining resources said, “ It’s not hard to see from the several compensation plans that various parties have been engaged in a complex game of interests, and the company has made considerable efforts as well. However, now that a default has occurred and litigation has been triggered, it seems highly unlikely that the performance-based compensation can be fulfilled in the short term. Regardless of the outcome of the lawsuit, the investors—especially small and medium-sized ones—are likely to be the ones who suffer the most. ”。

The outlook is hard to be optimistic about.

After the listed company took legal action against Shandong Huayuan, Shandong Land & Mineral’s dismal business performance was also laid bare.

After successfully completing the reverse takeover, Shandong Land & Mineral Resources, as the first stock in China’s land and mineral resources sector, once enjoyed great popularity among investors. Moreover, the robust resource and technological advantages of the Shandong Bureau of Land & Mineral Resources were highly anticipated. However, unfortunately, China’s iron ore market has been characterized by an oversupply, causing iron ore prices to plummet dramatically. As a result, iron ore mining and processing companies are facing a severe situation—and Shandong Land & Mineral Resources has not been spared either. In... 2013 Annual harvest 1.2 After achieving a net profit of 100 million yuan, Shandong Geological Mining’s business performance plummeted, and by the time... 2014 At the end of the year, the company appeared. 3000 A loss of over ten thousand yuan—now this downward trend has spread to... 2015 Year.

In addition, after listing on the capital market, Shandong Land & Mineral Resources also carried out a series of mineral acquisitions: 2013 In that year, the company first acquired Congxing Mining. 60% The equity deal fell through, and then... 1.8 The company successfully took controlling interest in Taiping Mining for 100 million yuan, and to accelerate its expansion, Shandong Land & Mineral Resources also established a mining equity investment fund. By now... 2014 In that year, the company extended its reach to companies such as Shengxin Mining and Penglai Wantai Mining. Market observers once questioned the company’s sustained profitability in light of its intensive acquisition activities. Moreover, due to the downturn in the industry, some assets of Shandong Geological & Mineral Resources have... 2013 The year's revenue performance has already fallen short of expectations.

From the perspective of industry analysts, Shandong Land & Mineral Resources’ prospects remain pessimistic in the short term. Affected by weak domestic market demand, steel prices continue to stay at low levels, which will likely keep iron ore demand sluggish. It cannot be ruled out that iron ore prices may fall further, and the company’s inventory value also faces the risk of declining.