ELong Issues Statement On Legal Dispute With Qunar

(RTTNews) - eLong Inc. (LONG) released a statement regarding a legal dispute with Qunar. eLong believed that Qunar breached the Agreement by seeking early termination without legal or contractual basis. on September 11, 2013, eLong filed suit against Beijing Quna, and the Court in Beijing has scheduled the first hearing for this case in late October.

eLong said it seeks a resumption of cooperation under the terms of the Agreement and damages for its losses. It will continue to take all appropriate and necessary steps to protect its legal interests.

In May 2013, after a temporary suspension of cost-per-click advertising cooperation, an eLong subsidiary entered into two contract amendments with a Qunar affiliate, "Beijing Quna", regarding hotel inventory redistribution. As per the Agreement, eLong is to provide Qunar with PRC domestic agency hotel inventory, PRC domestic pre-pay hotel inventory and international hotel inventory, pursuant to a revenue share arrangement.

The Agreement specified that domestic agency hotel inventory would be provided first, and pre-pay hotel and international hotel would be provided subsequently, and stated that the parties would separately finalize commission and settlement terms and procedures for the pre-pay and international hotel inventory.

As per the Agreement, Qunar is obligated to sell at least 900,000 stayed room nights of eLong-provided hotel inventory between July 1, 2013 and December 31, 2013, including 450,000 room nights quarterly between July 1, 2013 and September 30, 2013, and 450,000 between October 1, 2013 and December 31, 2013.

The Agreement also required Qunar to sell a higher number of room nights of eLong inventory during the future period between January 1, 2014 and June 30, 2016, and stipulates that the rate of increase must be at least 70% of Qunar's prior year fourth quarter hotel room night growth rate.

If Qunar fails to meet the sales targets, the Agreement specifies that Qunar is to compensate eLong by providing advertising credit at a rate of RMB27 per room night, and such compensation is to be paid within 20 days after the end of each calendar quarter.

Thus, under the terms of the Agreement, and without estimating any future growth rate, Qunar has committed to sell a total of 5.4 million stayed room nights of eLong hotel inventory during the period between July 1, 2013 and June 30, 2016, and to pay compensation of RMB 27 for each room night less than the sales target.