Subject: Re: The Notice of Sinopec Deal
From: "James Bulger" <[email-masked]>
To: "Hunter Biden" <[email-masked]>
Cc: "Devon Archer" <[email-masked]>
Date: Sat, 7 Mar 2015 11:01:06 -0500

You raise excellent points we need answers to your questions.  We need a
call with Jonathan we need answers so we can discuss a path forward.  We
need to have the Board on a call ASAP this affects all of us. Need to get
all of BHR board/owners on a call hear from our CEO regarding this and his
plan forward. Then the Board / owners have to decide how to move forward
What does Devon say?
Jimmy

On Saturday, March 7, 2015, Hunter Biden <[email-masked]> wrote:

> I agree- keep calm and carry on--- but I really feel that we should know
> exactly what are legal recourse is who is representing us and what pressure
> we can bring to bare on the delinquent LP. I do not want to be
> melodramatic, but between the lack of fees from the shortfall and the
> potential fine we are back in negative revenue territory.
> I don't want to pile on with Jonathan and team because I believe that
> would be counterproductive, but I do want answers- not Chinese answers
> -real answers about how we are going to move forward. For instance as 1/3
> owners of the fund do we have standing here in the US to bring an action
> immediately against the LP who failed to fund? Is that counterproductive?
> Is there any legal recourse in China in the immediate? Who will handle the
> reputation damage control? Who is smoothing this over with Sinopec? Have we
> embarrassed Henry as a board member? What are his thoughts? Etc...
>
> RHB
> 202.333.1880
>
> On Mar 7, 2015, at 10:19 AM, James Bulger <[email-masked]
> <javascript:_e(%7B%7D,'cvml',[email-masked]');>> wrote:
>
> We should at least know who the non-funding investor was. Right?
> Love to know BOC opinion on this whole matter as well since they are our
> partners.
> Let's stay calm and get the proper message across to Jonathan this is a
> big fuck up
> That's my thoughts
> Jimmy
>
> On Saturday, March 7, 2015, James Bulger <[email-masked]
> <javascript:_e(%7B%7D,'cvml',[email-masked]');>> wrote:
>
>> I believe you have the relevant points correct
>>
>> On Saturday, March 7, 2015, Hunter Biden <[email-masked]>
>> wrote:
>>
>>> So not only did they fail to fund but we may end up loosing money due to
>>> the RMB 63M fine we may have to pay. Am I reading this wrong or should I be
>>> appropriately ape shit about this. Plus we are going to pilloried in the
>>> press for being the only fund that failed to meet its obligations. WTF!
>>>
>>> RHB
>>> 202.333.1880
>>>
>>> Begin forwarded message:
>>>
>>> *From:* "Jason Zhu" <[email-masked]>
>>> *Date:* March 7, 2015 at 9:55:43 AM EST
>>> *To:* <[email-masked]>, "'Hunter Biden'" <
>>> [email-masked]>, "Bulger Jim" <[email-masked]>,
>>> "Michael Lin" <[email-masked]>
>>> *Cc:* "Leonard Mike" <[email-masked]>, "Sebastian Momtazi" <
>>> [email-masked]>, "'Jonathan.li'" <[email-masked]>, <
>>> [email-masked]>, <[email-masked]>, '李新中' <[email-masked]>,
>>> '夏雨（Yu XIA）' <[email-masked]>, "'YU, Felix'" <[email-masked]>
>>> *Subject:* *The Notice of Sinopec Deal*
>>>
>>> Dear all,
>>>
>>>
>>>
>>> In reference to the SMC Capital Increase deal, we would like to update
>>> everyone as follows:
>>>
>>>
>>>
>>> - following the signing of all relevant subscription and investment
>>> agreements in September 12, 2014 for a total subscription amount of RMB6
>>> billion, Sinopec finally issued its capital call notice on February 2, 2015
>>> requesting that all funds be fully invested by February 13, 2015
>>>
>>>
>>>
>>> - by closing of business on February 13, 2015, BHR transferred a total
>>> of RMB3.75 billion to Sinopec whereas the remaining RMB2.25 billion was not
>>> made available at the time due to the withdrawal of funds by one of our
>>> original LPs (the “*Defaulting LP*”).  Sinopec agreed to extend BHR’s
>>> closing date to March 4, 2015
>>>
>>>
>>>
>>> - as we continued to negotiate with the Defaulting LP, we immediately
>>> launched alternative fundraising efforts despite the intervening Chinese
>>> New Year holiday (which meant many of our contacts were either unavailable
>>> to not able procure the necessary funds in time).  By the closing of March
>>> 4, 2015, we were able to raise an additional RMB0.2 billion, bringing BHR’s
>>> total investment amount to RMB3.95 billion
>>>
>>>
>>>
>>> - as of March 6, 2015, Sinopec officially closed its subscription
>>> accounts, also terminating BHR’s rights to make any further subscriptions
>>> beyond the RMB3.95 invested
>>>
>>>
>>>
>>> This unfortunate incident caught each of us by surprise and despite the
>>> team’s best efforts, we were not able to raise the defaulted amount given
>>> the extremely tight timing from first receiving the capital call on
>>> February 2 to being notified at the very last minute before the original
>>> Feb. 13 closing date of the Defaulting LP’s funding withdrawal and finally
>>> to the closing of the subscription window on the morning of March 6.
>>>
>>>
>>>
>>> Sinopec issued an announcement in relation to the closing of the SMC
>>> Capital Increase last night which touched upon the failure to fund by an
>>> investor but did not name BHR.  All involved parties understand and agree
>>> that BHR's failure to fund the entire amount is an isolated event which is
>>> solely attributable to liquidity difficulties with an LP and should not
>>> serve as a testament of BHR’s abilities.  While we are confident that this
>>> incident will not have any adverse effect in the long run, we must deal
>>> with the possibility of short-term credibility issues once the market picks
>>> up the story (which will be soon).  Our position is that we maintain our
>>> support for the SMC deal as attested by our RMB3.95 billion subscription
>>> amount but given the deal fund structure of this particular transaction, we
>>> were not able to maneuver other committed funds to cover the deficiency
>>> caused by the Defaulting LP.
>>>
>>>
>>>
>>> For now, we must deal with the legal aftermath of the situation.  On the
>>> one hand, we are, vis-à-vis Sinopec, in breach of our funding obligations
>>> in respect of the RMB2.05 billion uninvested amount, which may involve
>>> monetary damages of up to RMB63.5 million.  On the other hand, we are
>>> pursuing all remedies against the Defaulting LP for its breach of relevant
>>> LP agreements, which directly caused our breach of the Sinopec agreements.
>>>
>>>
>>>
>>> Finally, we are in close discussions with Sinopec to coordinate our
>>> efforts and to mitigate any spillover effect this incident may have on our
>>> SOE fundraising efforts or on our ability to partake in future SOE reform
>>> opportunities.  We ask that all inquiries in relation to this transaction
>>> be directed to Mr. Xia Yu, who will be the house speaker on this matter on
>>> behalf of BHR.
>>>
>>>
>>>
>>>
>>>
>>> Regards,
>>>
>>>
>>>
>>> 诸晨刚 Jason Zhu
>>>
>>> 执行董事 Executive Director
>>>
>>>
>>>
>>> 渤海华美（上海）股权投资基金管理有限公司
>>>
>>> Bohai Harvest RST (Shanghai) Equity Investment Fund Management Co., Ltd.
>>>
>>> 北京市朝阳区建国路79号华贸中心写字楼2座31层3101室 邮编：100025
>>>
>>> 31/F, Unit 3101, Tower 2, China Central Place, 79 Jianguo Road,
>>>
>>> Chaoyang District, Beijing 100025, China
>>>
>>> Cellphone: 136 8169 7246
>>>
>>> Tel:  86 10 5969 5858
>>>
>>> Fax:  86 10 5969 6123
>>>
>>> Email: [email-masked]
>>>
>>>
>>>
>>>
>>
>> --
>> James J. Bulger
>> Chairman
>> Thornton Group LLC
>> 14 Beacon Street, Suite 804A
>> Boston, MA 02108
>> Office tel: 617.248.9440
>>
>
>
> --
> James J. Bulger
> Chairman
> Thornton Group LLC
> 14 Beacon Street, Suite 804A
> Boston, MA 02108
> Office tel: 617.248.9440
>
>

-- 
James J. Bulger
Chairman
Thornton Group LLC
14 Beacon Street, Suite 804A
Boston, MA 02108
Office tel: 617.248.944