Announcement Concerning the Lawsuit and the Motion for Preliminary Injunction Filed By Ninestar Corporation and Some of Its Zhuhai-Based Subsidiaries in the United States (“Announcement”)

 

Ninestar Corporation and its board of directors therein warrant the content of this Announcement to be truthful, accurate, and complete, and shall be responsible for any false records, misleading statements, or major omissions in this Announcement.

 

1. BACKGROUND

On June 10, 2023, Ninestar Corporation (“Ninestar” or “Company”) learned that the United States Department of Homeland Security (DHS) had placed the Company and some of its Zhuhai-based subsidiaries on the Uyghur Forced Labor Prevention Act (UFLPA) Entity List. For details, please refer to the Announcement Concerning the Inclusion of Ninestar Corporation and Some of Its Zhuhai-Based Subsidiaries in the U.S. Department of Homeland Security Entity List (Announcement No.: 2023-055), which was published by Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and Juchao Information Website (www.cninfo.com.cn) on June 12, 2023.

 

2. SUMMARY OF THE LAWSUIT AND THE MOTION FOR PRELIMINARY INJUNCTION

Since June 11, 2023, the company has devoted significant time and resources reviewing its operations and management and has concluded that the inclusion of Ninestar and certain of its subsidiaries on the UFLPA Entity List is baseless. DHS has not presented any evidence to substantiate their claims. Ninestar has always been committed to protecting and respecting the rights of its employees.

 

In order to protect the legitimate rights and interests of the Company, its shareholders, and global partners, on August 22, 2023 (New York local time), Ninestar and certain subsidiaries jointly filed a lawsuit before the U.S. Court of International Trade, arguing that the administrative decision violated the Administrative Procedure Act (APA). At the same time, Ninestar and certain subsidiaries also filed a motion for a preliminary injunction with the U.S. Court of International Trade, requesting that the court issue an injunction to enjoin the listing decision.

The details are as follows:

 

1. Parties

Plaintiffs: Ninestar and some of its Zhuhai-based subsidiaries included on the UFLPA Entity List.

 

Defendants: United States of America; Department of Homeland Security (DHS); United States Customs and Border Protection (CBP); Forced Labor Enforcement Task Force (FLETF); and the heads of the aforementioned administrative departments.

 

2. Claims

The plaintiffs are asking the U.S. Court of International Trade to declare that the defendants have acted in an arbitrary and capricious manner in violation of the APA by failing to provide an explanation for the listing decision; to vacate FLETF’s determination to add the plaintiffs to the UFLPA Entity List; to enjoin DHS and CBP from enforcing the UFLPA’s adverse importation presumption; and to award such other relief as the court deems just and proper.

3. Facts and Reasons

Without any notice or any explanation, the defendants arbitrarily and capriciously placed Ninestar on the UFLPA Entity List.

 

This administrative decision has caused irreparable financial and reputational damage to Ninestar and its subsidiaries, including but not limited to direct losses from lost sales orders, indirect losses from reduced business opportunities, and potential losses from corporate reputational damages. The negative impact of the administrative decision to Ninestar and its subsidiaries is not limited to the U.S. market—it has also caused irreparable damage to the business of Ninestar and its subsidiaries globally.

 

Under Section 706(2) of the Administrative Procedure Act (APA) of the United States, the Court should set aside and declare the administrative decision illegal as such “agency action, findings, and conclusions” were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

 

In view of these facts, the plaintiffs filed the lawsuit in conjunction with a motion for a preliminary injunction to ask the court to grant relief as requested.

 

3. POTENTIAL IMPACTS ON THE COMPANY

The Company will continue to pay close attention to and actively pursue the aforementioned litigation matters, and firmly defend the interests of the Company and public shareholders. The impact of this litigation on the Company is subject to the outcome of the case, which is not yet possible to determine, and the impact of the UFLPA listing on the export business of the Company and relevant subsidiaries to the United States may persist. The Company will fulfill its information disclosure obligations in a timely manner according to the progress of the litigation.

 

As of the date of this announcement, there are no other litigations or arbitration cases that should be disclosed but have not been disclosed by the Company.

 

The designated information disclosure media of the Company are: Securities Times, Securities Daily, China Securities Journal, Shanghai Securities News, and Juchao Information Website (www.cninfo.com.cn). All information about the Company is subject to the announcement published in the above designated media. Investors are advised to pay attention to the Company's subsequent announcements and the investment risks.

 

It is hereby announced.

Ninestar Corporation

Board of Directors

August 23, 2023