On 30 Aug 2007, Foshan Intermediate People’s Court ordered Chujun Gu to pay RMB 165 Mln of debt misappropriated from Jiangxi Kelon. However, Gu’s brother said that he will appeal the sentence in a higher court.

Kelon asked for the seizure of Gu’s assets but the request is yet to be evaluated. Gu’s brother said that Jiangxi Kelon did not mention the relevant debts in its 2005 and 2006 annual reports and therefore should not sue Gu, it was claimed.

Jiangxi Kelon is still suspended. Kelon also announced the following events:

• Kelon is preparing to rearrange its relations with creditors, in the light of the debt as well as look at the stock ownership of its subsidiary companies

• Kelon is likely to have some affiliate transactions which were not immediately released.

Source: China Business Network

Date: 13 Sept 2007