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Facing a takeover proposal from a secretive fund, Tsinghua Unigroup Co.’s chairman has vowed to “fight to the end” — amplifying an unusually public dispute over the troubled chipmaker’s $9 billion rescue plan.

Zhao Weiguo, whose company controls 49% of the debt-ridden semiconductor giant, is doubling down on a rare outburst this month against a takeover bid led by JAC Capital.

Jiankun, Zhao’s holding firm, is now intent on unearthing the backers behind JAC, a fund headed by reclusive financier Li Bin that had kept a low profile until its consortium emerged as Unigroup’s winning bidders, the executive said in an interview Tuesday.

The public spectacle around the envisioned rescue of one of China’s most important semiconductor players has transfixed an industry accustomed to meticulously crafted private deals. In a communique distributed last week, the industry veteran singled out how JAC’s deal valued Yangtze Memory — one of the Tsinghua group’s prime assets — at just 47.9 billion yuan ($7.5 billion), versus a deserved valuation closer to 160 billion yuan. Zhao claimed in his memo that JAC’s rescue plan would result in 73.4 billion yuan of state asset losses.

Zhao’s outcry ignited a public spat that state censors have so far allowed to flourish in government newspapers and on social media. Tsinghua’s court-appointed custodian rebuked Zhao on Friday for landing Unigroup in its current predicament in the first place, through years of reckless expansion. It added that the bidding process that resulted in JAC’s winning bid was fair and that it will continue to work with creditors to get the proposal approved during a meeting on Dec. 29.

“The proposed deal is an intent to commit a crime,” Zhao said from the top floor of Unigroup’s headquarters in northern Beijing. “Even if the creditors’ committee approves the deal, I will fight a legal battle until the end.”

Representatives for Unigroup, the court-appointed custodians and JAC did not respond to messages and calls seeking comment.

Zhao’s stance threatens to disrupt the proposed rescue of Unigroup, which has become a national security issue since Chinese President Xi Jinping advanced a strategy for self-sufficiency in key technologies in competition with the U.S.

The Beijing-based company linked to prestigious Tsinghua University — Xi’s alma mater — remains a linchpin in a race for technological supremacy.

The proposal by JAC, a state-backed semiconductor investment fund, defeated a rival consortium led by Chinese e-commerce leader Alibaba Group Holding Ltd. Chinese officials had been leaning toward the Alibaba consortium as recently as last month, but the e-commerce giant’s stock listing in the U.S. has raised concerns, according to reports. American regulators are tightening auditing requirements for U.S.-listed companies, which could expose China’s leading chip company to the disclosure of sensitive information if it were owned by Alibaba, people familiar with the matter said.

JAC and private firm Wise Road Capital, both controlled by Li, had offered 60 billion yuan ($9.4 billion) to pay off debts to creditors. The Alibaba consortium, which includes funds backed by the Zhejiang government, had proposed a deal of more than 50 billion yuan to help keep the chipmaker afloat.

Any agreement would likely include conditions for restructuring Unigroup’s roughly 100 billion yuan-plus of onshore and offshore debt, according to reports in November.

“I don’t regret inviting the government to handle Unigroup’s case,” Zhao said on Tuesday. “There was also no problem from the government’s decision level.”

Unigroup expanded rapidly during a decadelong stimulus blitz that fueled heady economic expansion through binging on credit. Unigroup and its affiliates went on an acquisition spree, buying up foreign names including RDA Microelectronics Inc. and Spreadtrum Communications Inc. en route to building China’s most sophisticated maker of 5G chips in Unisoc.

H3C, a joint venture with Hewlett Packard Enterprise Co., is a key server supplier to the Chinese government and state-owned enterprises. In 2017, it unveiled its signature project: Yangtze Memory, which competes against Micron Technology Inc. and Samsung Electronics Co. The company at one point harbored aspirations to become the nation’s first giant in the global semiconductor industry, and once planned a $23 billion bid for U.S. memory-chip giant Micron.

But concern over the scale of China’s resulting debt mountain prompted a deleveraging campaign from around 2017, choking off the spigot for borrowing. That coincided with a newfound impetus to restructure the sprawling corporate empires that have sprung up around the nation’s top universities, including Tsinghua.

In 2020, the Chinese semiconductor titan defaulted on a bond and, in July, a court ordered it to overhaul its debt, prompting the firm to invite strategic investors with deep pockets as well as the capability to run a major chipmaking and cloud business.

“Unigroup’s high debt ratio wasn’t enough” to hurt the company, Zhao said. But a confluence of factors, including the pressure on academic institutions and COVID-19, spooked creditors. Nonetheless, he insists, “there’s no reason why I can’t win this case.”

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