According to the Zhitong Finance App, Dingfeng Group Automobile (06878) issued an announcement. The board of directors proposed a share merger based on the merger of existing shares with a face value of HK$0.0025 per 10 shares into a consolidated share of HK$0.025 per share.

The board of directors proposed increasing the company's authorized share capital from HK$50 million (divided into 100 billion existing shares, which would be equivalent to 10 billion consolidated shares) to HK$250 million (divided into HK$20 billion of existing shares, assuming the share merger takes effect) to HK$250 million (divided into 100 billion existing shares, assuming the share merger takes effect) to HK$250 million (divided into 100 billion existing shares. Assuming the share consolidation takes effect, it would be equivalent to 10 billion consolidated shares). The board of directors believes that increasing authorized share capital will, in the long run, provide flexibility for the company to raise capital and expand the company's share capital in the future, so it is in the interests of the company and shareholders as a whole.

As of the date of this announcement, existing shares were traded on the Stock Exchange with 2,000 existing shares per lot trading unit. The board of directors proposed to change the trading unit of each lot traded on the Stock Exchange from 2,000 existing shares to 10,000 consolidated shares after the share consolidation takes effect.

On December 19, 2023, the placement agent entered into a conditional placement agreement with the company. The company conditionally agreed to place 139 million shares of placement shares through the placement agent at a partial underwriting basis (up to HK$10 million (equivalent to 277.777 million placed shares)) at a placement price of HK$0.36 per share to no less than 6 contractors whose ultimate beneficial owners are independent third parties.

The placement price of HK$0.36 per share is reduced by approximately 34.5% from the closing price of HK$0.055 per share on December 19 (assuming the share consolidation has taken effect). Assuming that, apart from the increase in authorized share capital (assuming that the share consolidation has taken effect), there is no further change in the company's issued share capital from the date of this announcement until completion, then the number of shares placed under the placement event is equivalent to about 15.47% of the company's issued share capital through merger and expansion; and about 13.40% of the total issued share capital of the company after allotment and issuance of shares expanded (assuming that all of the placement matters are completed).

Upon completion and assuming that all of the placed shares are placed, it is anticipated that the total proceeds and net proceeds from the placement will be approximately HK$50 million and HK$46 million, respectively. It is anticipated that the net proceeds from the placement will be used as the general working capital of the group and repayment of part of the debt to the company's creditors.