'Steel princess' sued for 4.1b yuan over stake in firm
Diana Chen Ningning and her mother are named in writ by liquidators of Pioneer Iron and Steel
The liquidators of Pioneer Iron and Steel Group have sued Diana Chen Ningning, the granddaughter of a former Chinese minister, her mother and other parties for 4.12 billion yuan (HK$5.16 billion).
They allege this is the amount stolen from the bankrupt company Chen previously owned, a writ filed in the High Court states.
Chen, dubbed the "steel princess", is the granddaughter of the late Lu Dong, the Chinese metallurgy minister in the 1960s and 70s. Chen and her mother Lu Hui are jointly ranked 72nd on the 2010 Hurun China Rich List with an estimated US$1.7 billion.
The assets the liquidators seek are shares in Shanghai-listed Inner Mongolia Baotou Steel Rare-Earth Hi-Tech, according to the writ. A Hong Kong company, Pioneer Metals, owns 9.87 per cent of Baotou Steel - worth 5.89 billion yuan given the firm's market value of 59.65 billion yuan yesterday - Baotou Steel's 2012 annual report says.
Chen owns 51.1 per cent of Pioneer Metals, while her mother owns the remainder, corporate records show. Chen is the legal representative of Pioneer Metals, which was founded in 1995 and had registered capital of HK$135 million, Baotou Steel's 2007 annual report said.
The liquidators alleged Pioneer Iron and Steel should rightfully own 70 per cent of Pioneer Metals, which means Pioneer Iron and Steel should indirectly own 6.9 per cent of Baotou Steel, a stake worth 4.12 billion yuan based on Baotou Steel's market capitalisation yesterday. The liquidators are seeking to recover this 70 per cent stake in Pioneer Metals, which they alleged has been illegally transferred to Chen and her mother, the writ states.
The liquidators are Roderick Sutton, Asia-Pacific chairman of advisory firm FTI Consulting, and Stuart Mackellar, managing partner of restructuring company Zolfo Cooper, government documents show.
In 2010, Pioneer Iron and Steel, which traded iron ore, went into provisional liquidation owing more than US$516 million to creditors.
"Chen has extensive experience and strong relationships with many key players in the Chinese steel industry through her tenure at Pioneer Metals," the 2004 annual report of China Oriental Group, a Hong Kong-listed producer of steel billets and strips, said. In October 2007, Chen was ousted as vice-chairman of China Oriental in a boardroom tussle with chairman Han Jingyuan.
Chen and her lawyers were unable to be contacted yesterday.