East Group faces loan default, guarantees triggered by solar project failures

East Group announced that loan guarantees totaling RMB 13,708,400 have been triggered following defaults by 712 photovoltaic loan customers, its cooperative partners. These partners, who purchased and installed East Group's distributed household photovoltaic power stations, failed to repay their loans to Hefei Technology Rural Commercial Bank's Feidong Branch. The bank has issued notices for early loan maturity and fulfillment of guarantee obligations, demanding East Group and co-guarantor Anhui Yidian Electric Power Company Limited ensure repayment. The principal due is RMB 13,708,400, with an additional RMB 262,800 in interest and penalties, bringing the total to RMB 13,971,200.

The guarantee arrangements, approved by East Group's board in 2017 and 2018, involved providing joint and several liability guarantees for cooperative partners. Anhui Yidian Electric Power’s shareholders provided counter-guarantees for these arrangements. East Group acknowledges that fulfilling these obligations could strain its short-term cash flow and financial condition, despite the counter-guarantee arrangements, as their enforceability depends on the counter-guarantors' financial stability.

East Group has formed a risk management team to urge the cooperative partners to repay and is actively negotiating with the bank for a resolution. The company will closely monitor the situation and provide timely disclosures.