New Concepts (HKG:2221) said Shenzhen Dingxin has defaulted on a 19 million yuan loan, leaving an outstanding principal of about 16.8 million yuan, according to a Tuesday filing with the Hong Kong stock exchange.

Shares of the firm were down nearly 13% in midday Wednesday trade.

The company said the loan originated from a planned investment in a Huizhou kitchen waste treatment project that was later put on hold by local authorities.

Its indirect wholly owned unit, Yisheng (Tianjin), had initially contributed 19 million yuan to the project.

Yisheng (Tianjin) and Shenzhen Dingxin subsequently agreed to convert that capital contribution into a two-year unsecured loan at an annual interest rate of 10%, the filing said.

New Concepts said Shenzhen Dingxin made partial repayments and interest payments in 2022, 2023, and 2024, including a 1.05 million yuan repayment and a 1.43 million yuan debt offset.

The company said it has issued multiple demand letters and is pursuing recovery through legal channels. It has already recognised full impairment on the loan.