Shandong Stock Watch | Lanrun Development Pledge Default; Longda Foods' 10 Million Shares Subject to Judicial Liquidation

Article | Chen Mingyi

On the evening of March 19, Shandong Longda Food Co., Ltd. (short: Longda Food; stock code: 002726) issued an announcement regarding the re-freezing of some shares held by the controlling shareholder and the receipt of the “Notice of Assistance in Enforcement” and “Enforcement Ruling.”

According to the announcement, 10 million shares held by Longda Food’s controlling shareholder, Lanyun Development Holding Group Co., Ltd. (short: Lanyun Development), have been re-frozen by judicial authorities and will be forcibly sold due to a pledge-backed securities repurchase dispute, to settle a debt of 36.287298 million yuan.

Image source: Screenshot from Shenzhen Stock Exchange website

Ten million shares forcibly sold, controlling shareholder’s stake drops to 26.31%

According to the announcement, the application for share freezing was made by the Jinan City Shizhong District People’s Court, with the freeze period from March 17, 2026, to March 15, 2029. The frozen 10 million shares account for 3.40% of Lanyun Development’s holdings in the company and 0.93% of the total share capital.

The incident traces back to a pledge-backed securities repurchase dispute between Lanyun Development and Zhongtai Securities Co., Ltd. The Civil Judgment No. (2025) Lu 01 Min Zhong 15709 issued by the Jinan Intermediate People’s Court has taken effect, but Lanyun Development has not fulfilled its repayment obligations. The court ordered that the 10 million shares of Longda Food held by Lanyun Development be changed to “sellable frozen shares,” and required that trading stop once the proceeds reach 36.287298 million yuan. Additionally, the court ordered the freezing and deduction of 38 million yuan or equivalent assets from Lanyun Development’s bank deposits.

If all 10 million shares are forcibly sold, Lanyun Development’s holdings will decrease from 293,885,800 shares to 283,885,800 shares, and its ownership percentage will drop from 27.23% to 26.31%. As of the announcement date, Lanyun Development’s total frozen shares of Longda Food reached 17.5134 million, accounting for 5.96% of its total holdings and 1.62% of the company’s total share capital.

Image source: Screenshot from Shenzhen Stock Exchange website

Company response: Business operations unaffected

In fact, disputes involving pledged shares are not uncommon. In recent years, as the capital market environment has changed and financing has tightened, some corporate controlling shareholders have faced liquidity pressures due to aggressive expansion and high pledge ratios of their shares.

It is worth noting that the 10 million shares forcibly sold this time were all pledged by Lanyun Development earlier. Although this forced execution will not result in a change of the company’s actual control, the judicial freezing and forced sale of the controlling shareholder’s shares may impact market confidence.

In response to this incident, Longda Food stated in the announcement that the freezing and enforcement actions will not lead to a change in the company’s actual control and will not adversely affect its production, operations, or governance. The company maintains independence in assets, business, and finances from its controlling shareholder, and there are no issues such as non-operating funds occupation or illegal guarantees that harm the interests of the listed company.

From a fundamental perspective, according to the 2025 performance forecast, Longda Food expects to achieve a net profit attributable to shareholders of the listed company between -620 million yuan and -760 million yuan in 2025; net profit attributable to shareholders after deducting non-recurring gains and losses is expected to be between -621 million yuan and -761 million yuan. The company’s own operations are also facing certain challenges.

Whether Longda Food can maintain steady development amid the pledge-related turmoil of its controlling shareholder remains to be seen. However, this event will likely prompt more companies and investors to be vigilant about pledge risks and promote healthier, more rational development of the capital market.