BEIJING, June 6, 2014 /PRNewswire/ -- Lentuo International Inc. (NYSE: LAS) ("Lentuo" or "the Company"), a leading non-state-owned automobile retailer headquartered in Beijing, today responded to another article issued by GeoInvesting (the "Article") on June 5, 2014. The Company stated that the Article distorted the Company's previous response and repeatedly fabricated misleading allegations. The Company further stated that all of the allegations are based on incorrect information that has been issued by third-parties over which the Company has no control.
The Company and Mr. Hetong Guo ("Mr. Guo"), the Chairman of the Company who also controls Lentuo Electromechanical ("LE"), which is not part of the Company, further clarified the following:
(a) The RMB150 million trust loan was incurred by LE in January 2014. None of the revenues of the Company were ever nor are they currently pledged as collateral for the trust loan. The trust loan is primarily secured by the real estate assets of an independent third party with a value exceeding two times the amount of the loan. The loan is also personally guaranteed by the borrower's controlling shareholder, Mr. Guo, which is typically required by banks in China. Mr. Guo believes that, in light of the assets that back the loan, any risk of triggering his personal guarantee of this particular loan is remote. The Company believes that Mr. Guo's handling of his personal wealth and affairs poses no particular risk to the Company and thus does not warrant disclosure.
(b) Among all of the loans incurred by LE, there is not a trust loan in the amount of RMB100 million. Furthermore, neither the Company nor LE has any dealership in Beijing Yayuncun area or in the City of Changchun nor do they currently plan to establish dealerships in these places.(c) The new Audi dealership in Beijing is under construction, owned by the Company and was consolidated in the Company's financial statements for the fiscal year ended December 31, 2013. Once it is completed, it will be operated by the Company and not LE. No proceeds from the RMB150 million trust loan have been used by the Company. If in the future the Company receives financing from LE, Mr. Guo or any other related party, such transaction will be disclosed in accordance with the rules and regulations under the U.S. securities law. LE is not carrying out any business that competes with the Company's business and does not operate any automobile dealerships. All of the automobile dealerships legally owned by LE are variable interest entities of the Company, controlled and operated by the Company through contractual arrangements, as clearly disclosed in the Company's annual report.
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