KINGOLD JEWELRY, INC. (NASDAQ:KGJI) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
On July 31, 2018, Wuhan Kingold Jewelry Company Limited (“Wuhan Kingold”), a contractually controlled affiliate of Kingold Jewelry, Inc. (the “Company”), and Dongguan Trust Co., Ltd. (“Dongguan Trust”) entered into a gold income rights transfer and repurchase agreement (the “Agreement”). to the Agreement, Dongguan Trust shall acquire the income rights to Wuhan Kingold’s Au9999 gold of no less than four tons from Wuhan Kingold (the “Gold Income Rights”). Dongguan Trust’s acquisition price for the Gold Income Rights shall be between RMB10 million to RMB1,000 million. (the “Acquisition Price”). Dongguan Trust is required to form a trust fund (the “Trust Plan”) to acquire the Gold Income Rights. The parties deemed the Acquisition Price payment date as the actual effective date of the Agreement. On September 6, 2018, Dongguan Trust paid Wuhan Kingold the transfer price of RMB 1,000 million which will be used by Wuhan Kingold for gold raw material purchase. Wuhan Kingold is required to repurchase the Gold Income Rights within 18 months after Wuhan Kingold receives the Acquisition Price. The repurchase price is equal to the Acquisition Price with annual return of 11% for the period from the Acquisition Price payment date and Kingold’s repayment date.
Wuhan Kingold’s obligations, responsibilities, representations and warranties, and commitments under the Agreement are guaranteed by Mr. Zhihong Jia, our CEO and Chairman, to a guarantee agreement signed by Mr. Zhihong Jia; and Wuhan Kingold’s pledged Au99.99 gold.
The repurchase obligation may be accelerated under certain conditions, including upon breach of representations or warranties, certain cross-defaults, upon the occurrence of certain material events affecting the financial viability of Wuhan Kingold, and other customary conditions.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in its entirety into this Item 2.03.
About KINGOLD JEWELRY, INC. (NASDAQ:KGJI)
Kingold Jewelry, Inc. designs and manufactures 24-karat gold jewelry and Chinese ornaments, through a variable interest entity relationship with Wuhan Kingold Jewelry Company Limited (Wuhan Kingold). The Company develops, promotes and sells a range of products to the jewelry market across the People’s Republic of China (PRC). The Company offers a range of in-house designed products, including, but not limited to, gold necklaces, rings, earrings, bracelets and pendants. The Company also sells gold bars and coins and other products through agreements with various banks in China. The Company sells its products directly to distributors, retailers and other wholesalers, who then sell its products to consumers through retail counters located in both department stores and other traditional stand-alone jewelry stores. The Company’s subsidiary, Wuhan Kingold Internet Co., Ltd., is engaged in online sales of jewelry products.