said that it had recently come to the attention of its board of directors that Zhao Ming and Zhu Liping are both involved in a litigation instituted by the Securities and Exchange Commission of the US for the alleged misappropriation of assets of Puda Coal, Inc., namely its indirect 90% equity interests in Shanxi Puda Coal Group Co., Ltd..
King Stone Energy's board emphasizes that neither Zhao nor Zhu was a director or a staff of any member of the group and that the group was not involved and none of the staff of the group, including directors, were involved in the litigation.
Zhao is the holder of convertible notes (CNs) of principal amount of HK$50 million due 2014 issued by King Stone Energy in 2009 but has entered into agreement to dispose of his entire CNs to Simsen International (00993)
As at 7 March 2012, Zhao and Zhu did not have a notifiable interests in the shares, underlying shares or debenture of King Stone Energy.
King Stone Energy's board confirmed that its group companies had no business relationship with either Zhao, Zhu, Puda Coal or Shanxi Puda. However, Zhao and Shanxi Puda Coal had provided guarantees in favour of King Stone Energy group in respect of certain bank loans which were disclosed in the interim report of the company for the six months ended 30 June 2011.
Up to 7 March 2012, King Stone Energy's board was not aware that the loans provided by the banks were adversely affected by the litigation and did not envisage that the litigation would have any material adverse impact on the business and operation of the group.
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