HF Foods Files Complaint in US District Court to Protect Stockholders and Employees
HF Foods Takes Legal Action to Stop Group Attempting to Illegally Seize Control of the Company
In Response, Group Withdraws Slate of Nominees in Connection with Annual Meeting
LAS VEGAS, May 17, 2023 HF Foods Group Inc. (NASDAQ: HFFG), a leading food distributor to Asian restaurants across the United States (HF
Foods or the Company), today announced that it filed a complaint (the Complaint) against Maodong Xu, Zhou Min Ni, Fai Lam in his capacity as Trustee of the Irrevocable Trust for Raymond Ni, Weihui Kwok, and Yuanyuan Wu
(collectively, the Xu Group) in the United States District Court, District of Nevada.
The Complaint alleges, among other things, that the Xu
Group is attempting to seize control of HF Foods in violation of the federal securities laws through:
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obfuscating the true identity and purpose of their group as legally required and by filing false and misleading
regulatory disclosures with the SEC, and |
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conducting an illegal tender offer that includes strong-arming current HF Foods stockholders into selling their
Company shares in violation of the Williams Act of 1968. |
The Complaint details evidence that the Xu Group has engaged in a coordinated,
illegal, and undisclosed campaign to take over the Company, starting from October 2022, if not earlier. This campaign has included Mr. Xu conducting a series of meetings with, and outreach to, HF Foods stockholders, in which he has represented,
among other things, that he has agreements in place that give him control of the Company, stated his intention to become CEO or Chairman of the Company and pressured stockholders to sell their Company shares for cash or stock in a Maodong Xu
affiliated company. These meetings and outreach have continued to the present time. Mr. Xu has been banned by Chinese regulators from participation in Chinese public markets due to a history of market manipulation and corporate asset stripping,
and is being pursued by stockholders and creditors from China through U.S. courts. The Company is deeply concerned he is employing the same tactics and strategy in his illicit efforts at creeping control of HF Foods, to the detriment of the Company
and all stakeholders, including our stockholders, employees and partners.
The Complaint, which was filed on May 11, 2023, included an emergency
motion for a temporary restraining order and preliminary injunction (the Emergency Motion) seeking to prevent the Xu Group from interfering with the upcoming 2022 & 2023 Annual Meeting of HF Foods Stockholders (the Annual
Meeting) by fraudulently soliciting votes for a slate of purported director nominees, composed of an assortment of close family members and associated persons of the Xu Group, none of whom were up for election at the Annual Meeting under the
Companys Bylaws. On May 15, 2023, the members of the Xu Group who jointly filed the associated proxy statement announced that they were withdrawing their purported slate of director nominees and would not solicit proxies in connection
with the Annual Meeting. In light of these actions, the Company has elected to withdraw the Emergency Motion. However, the Company intends to proceed with the Complaint given the serious and potentially ongoing nature of the alleged illegal conduct,
including Mr. Xus furtherance of an illegal tender offer scheme.
The HF Foods Board of Directors and management team will continue to act in
the best interests of the Company and all of its stakeholders, including taking legal and other steps to halt activities designed to mislead stockholders, and to surreptitiously seek to acquire control of the Company. These actions have also
included the adoption of a limited duration stockholder rights plan on April 11, 2023.