Glonghui, March 15, 丨 Huaxia Culture Technology (01566.HK) announced that on December 12, 2022, the company and investor Kyosei-Bank Co., Ltd. entered into terms and conditions to set out the principle understanding of the proposed restructuring by the company and investors, involving the basis and plan for the implementation of the proposed transaction under the proposed restructuring. The relevant transactions included debt restructuring, subscription matters, share capital restructuring and changes in each lot of trading units carried out by creditor plans.
According to the terms and conditions, the company must carry out debt restructuring and subscription matters in the form of creditor plans. The subscription will eventually result in a change in the company's control, and investors will apply for a cleaning exemption in accordance with Rule 26 Exemption Note 1 of the Takeovers Code. After debt restructuring, all claims and liabilities faced by the company will be fully settled and resolved. To facilitate the above, the company will implement (i) share capital restructuring involving share merger, share capital reduction and authorized share capital increase; and (ii) change the trading unit for each lot.
The Board proposed capital restructuring, which would include: (a) a “10 in 1” consolidated share; (b) a reduction in the share capital of the company, which would reduce the face value of each newly issued consolidated share from HK$1.00 to HK$0.01; and (c) an increase in the authorized share capital, divided from HK$500 million into existing shares with a face value of HK$0.1 billion per share, to HK$10 billion divided into 1,000,000,000,000 new shares with a face value of HK$0.01 per share.
After the capital restructuring takes effect, the board also recommended changing the trading unit for each lot of shares traded on the Stock Exchange from 1,000 existing shares to 4,000 new shares.
Debt restructuring will be carried out in the form of a creditor plan. According to the terms of the creditor plan, if the creditor plan is successfully implemented and effective, all claims and liabilities faced by the company will be fully settled and resolved. According to the creditor plan and subject to its terms, the company will distribute a cash cost of HK$160 million to the planning company of which the plan creditors are the beneficiaries, and the company will issue and distribute a total of 59 million planned shares (HK$0.1,772 per new share at the issue price) to the planning company of which the plan creditors are the beneficiaries. The company will not generate cash inflows from issuing planned shares.
On January 26, 2023, the company entered into a share subscription agreement with investors. According to this, the investors conditionally agreed to the subscription, and the company conditionally agreed to distribute and issue 530 million subscribed shares at a cost of approximately HK$94.06 million, that is, the subscription price for each subscribed share was HK$0.1772.
On January 26, 2023, the company entered into a convertible bond subscription agreement with investors. According to this, investors conditionally agreed to subscribe, and the company conditionally agreed to issue convertible bonds with a principal amount of about HK$160.94 million.
A share subscription agreement and a convertible bond subscription agreement are mutually conditional. Stock subscription matters and convertible bond purchases must be completed at the same time, and can only be implemented after the share capital restructuring takes effect.
Furthermore, the company has applied for shares and has resumed trading since 9:00 a.m. on March 16, 2023, after the publication of this joint announcement.