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China BAK Battery discloses Wang sale of subsidiary pledged equity

China BAK Battery disclosed in a regulatory filing late Thursday that, to repay its overdue bank loans, Shenzhen BAK Battery Co., a wholly-owned subsidiary of the company, borrowed from Jinghui Wang an aggregate of RMB520M, or approximately $85.9M, in December 2013 and January 2014, as previously disclosed. To secure the repayment of the loans, the company and the company’s wholly-owned Hong Kong subsidiary, BAK International Limited, separately entered into a corporate guarantee with Wang, under which each of the company and BAK International irrevocably and unconditionally guaranteed to the lender timely performance by Shenzhen BAK of its obligation to repay the loans. In addition, the company pledged 100% of its equity interest in BAK International to the lender as security for Shenzhen BAK’s repayment of the Loans. On June 30, the company received from Wang notice that due to Shenzhen BAK’s default under the Loans, he had foreclosed his security interest in and sold and transferred to a third party the Pledged BAK International Equity for a purchase price of RMB520M. As a result of the above foreclosure, the company currently owns a Hong Kong subsidiary, China BAK Asia Holdings Limited, which in turn wholly owns two Chinese subsidiaries, Dalian BAK Trading Co., Ltd. and Dalian BAK Power Battery Co., Ltd. Dalian BAK Power is engaged in the business of developing, manufacturing and selling new energy high power batteries, which are used in electric cars, light electric vehicles and other high power applications.